Exhibit 10.9
INDEX
1. Series A Securities Purchase Agreement, dated as of December 1, 1994, by
and among the Blue Rhino Corporation, a Delaware corporation and the
"Purchasers" (as defined in such Purchase Agreement)
Schedules
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1 Investors/Investors Allocation
2 Shareholders
5.1 Organization of Corporation
5.5 Owners of Capital Stock
5.10 Undisclosed Liabilities
5.12 Contracts, Leases, Etc.
5.13 Employee Benefit Plans
5.14 Employee Salaries
5.15 Personnel Contracts, Agreements, Etc.
5.16 Arrangements with Affiliates
5.18 Insurance
5.22 Proprietary Rights
5.24 Licenses and Permits
7.08(p) Liens
Exhibits
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A Form of Certificate of Incorporation
B Form of Noncompete Agreements
C Form of Registration Agreement (See Tab 2)
D Form of Shareholders' Agreement (See Tab 3)
E Form of Warrants
F Form of Opinion of Counsel to the Corporation
G Business Plan (Not Enclosed - Previously Delivered)
2. Registrations Rights Agreement dated as of December 1, 1994 by and among
the Corporation and Purchasers.
Schedules
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1 Investors
3. Shareholders' Agreement dated as of December 1, 1994 by and among the
Corporation and Purchasers.
Schedules
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1 Investors
2 Management Stockholders
PURCHASE OF
SERIES A CONVERTIBLE
PARTICIPATING PREFERRED STOCK
FROM
BLUE RHINO CORPORATION,
a Delaware corporation
Dated December 1, 1994
BLUE RHINO CORPORATION
SERIES A SECURITIES PURCHASE AGREEMENT
This Series A Securities Purchase Agreement (this "Agreement") is
dated as of December 1, 1994, by and among BLUE RHINO CORPORATION, a Delaware
corporation (the "Corporation"), and PLATINUM VENTURE PARTNERS I, L.P., a
Delaware limited partnership ("Platinum") and the Persons listed on Schedule 1
attached hereto (collectively, the "Investors"). Platinum and the Investors are
sometimes referred to herein, individually, as a "Purchaser," and collectively,
as the "Purchasers."
RECITALS
A. The Corporation is in the business of distributing propane gas
cylinders (the "Business").
B. Purchasers desire to purchase from the Corporation, and the Corporation
desires to issue and sell to the Purchasers, 20,796,172 shares of Series A
Convertible Participating Preferred Stock of the Corporation, $0.001 par value
per share, at a purchase price of $0.347037 per share, and 4,214,185 Warrants at
an exercise price of $0.0347037 for an aggregate purchase price of
$7,217,026.33, which shall be allocated among Purchasers as set forth on
Schedule 1 attached hereto.
AGREEMENTS
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In consideration of the premises and the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement:
"Affiliate" as applied to any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. The term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to vote
10% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the ownership interest, beneficial or otherwise) of
such Person or otherwise to direct or cause the direction of the management and
policies of that Person, whether through the ownership of Voting Stock or other
ownership interest, by contract or otherwise. All of the Corporation's executive
officers, 10% shareholders, directors,
Subsidiaries, joint ventures and partners shall be deemed to be Affiliates
of the Corporation for purposes of this Agreement.
"Board" means the Board of Directors of the Corporation.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Corporation in the form and substance of that attached hereto as Exhibit
A to be adopted in accordance with Section 2.1 of this Agreement.
"Closing" means the closing of the sale and purchase of the Series A
Securities pursuant to this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means shares of common stock of the Corporation, $0.001 par
value per share.
"Default" means the failure of the Corporation or any Subsidiary to duly
observe or perform any covenant, condition or agreement required to be performed
by the Corporation or a Subsidiary under the Merger Agreement, this Agreement,
the Related Agreements or the Certificate of Incorporation or an Event of
Noncompliance under the Certificate of Incorporation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Hazardous Substances" means hazardous substances or hazardous wastes,
as those terms are defined by the Resource Conservation and Recovery Act 42
U.S.C. (S)6901, et seq. ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S)9601, et seq. ("CERCLA") or any
applicable federal, state, or local law, regulation, ordinance or requirement,
as amended, or hereafter amended. "Hazardous Substances" shall also include,
but not be limited to, petroleum, including but not limited to, crude oil or any
fraction thereof which is liquid at standard conditions of temperature and
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute) and
any radioactive material, including but not limited to, any source, special
nuclear or by-product material as defined at 42 U.S.C. (S) 2011, et. seq.,
as amended or hereafter amended and asbestos in any form or condition.
"Indebtedness" of any Person shall mean the principal of, premium, if any,
and unpaid interest on: (a) indebtedness for money borrowed from others; (b)
indebtedness guaranteed, directly or indirectly, in any manner by such Person,
or in effect guaranteed, directly or indirectly, in any manner by such Person
through an agreement, contingent or otherwise, to supply funds to, or in any
other manner invest in, the debtor, or to purchase indebtedness, or to purchase
and pay for property if not delivered or pay for services if not performed,
primarily for the purpose of enabling the debtor to make payment of the
indebtedness or to assure the
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owners of the indebtedness against loss; (c) all indebtedness secured by any
mortgage, lien, pledge, charge or other encumbrance upon property owned by such
Person, even though such Person has not in any manner become liable for the
payment of such indebtedness; (d) all indebtedness of such Person created or
arising under any conditional sale, lease (intended primarily as a financing
device) or other title retention or security agreement with respect to property
acquired by such Person even though the rights and remedies of the seller,
lessor or lender under such agreement or lease in the event of default may be
limited to repossession or sale of such property; and (e) renewals, extensions
and refundings of any such indebtedness.
"Investment" as applied to any Person means (a) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest of any other Person and (b)
any capital contribution by such Person to any other Person.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, claim or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or charge
arising by statute or other law.
"Noncompete Agreements" means those certain Noncompete Agreements by and
between the Corporation and each of Xxxxx Xxxx, X.X. Xxxxxxxx, III, Xxxxx
Xxxxxxx, Xxx Xxxxxxx, Xxxx Xxxx, Xxxxx Xxxx and Xxxxxx Xxxxx in the form of
Exhibit B attached hereto, to be executed and delivered as a condition to
Closing by the Purchasers under Section 4.7 of this Agreement.
"Permitted Lien" shall mean (a) Liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by appropriate
proceedings conducted with due diligence and for which the Corporation has
furnished adequate security for payment; (b) Liens in respect of pledges or
carriers', warehousemen's, mechanics', laborers' and materialmen's and similar
liens, if the obligations secured by such Liens are not then delinquent or are
being contested in good faith by appropriate proceedings conducted with due
diligence and for which the Corporation has furnished adequate security for
payment; and (c) statutory Liens incidental to the conduct of the business of
the Corporation or any Subsidiary which were not incurred in connection with the
borrowing of money or the obtaining of advances or credits and which do not in
the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business.
"Person" means a natural person, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.
"Proprietary Rights" means all proprietary information of the Corporation,
including all patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice); all
trademarks, service marks, trade dress, trade names and corporate names; all
registered and unregistered statutory and common law copyrights; all
registrations, applications and renewals for any of the foregoing; all trade
secrets, confidential
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information, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, improvements, proposals,
technical and computer data, documentation and software, financial,
business and marketing plans, and customer and supplier lists and related
information and all other proprietary rights.
"Registration Agreement" means the Registration Rights Agreement by and
among the Corporation and the Purchasers in the form of Exhibit C attached
hereto, to be executed and delivered as a condition to Closing by the Purchasers
under Section 4.5 of this Agreement.
"Related Agreements" means the Registration Agreement, the Shareholders'
Agreement, and the Warrants.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Shares" means shares of the Corporation's Series A
Convertible Participating Preferred Stock, $0.001 par value per share, to be
sold to Purchasers pursuant to this Agreement.
"Series A Securities" means the Series A Preferred Shares and the Warrants,
collectively.
"Shareholders" means those Persons listed on Schedule 2, being all of the
holders of the Common Shares issued and outstanding as of the Closing.
"Shareholders' Agreement" means the Shareholders' Agreement by and among
the Corporation, the Shareholders and the Purchasers in the form of Exhibit D
attached hereto, to be executed and delivered as a condition to Closing by the
Purchasers under Section 4.6 of this Agreement.
"Subsidiary" means any corporation, association or other business entity of
which securities or other ownership interests representing more than fifty
percent (50%) of the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled by the Corporation or one or
more Subsidiaries of the Corporation or by the Corporation and one or more
Subsidiaries of the Corporation.
"Voting Stock" of any Person means securities of any class or classes of
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors of such Person.
"Warrants" mean the warrants to purchase Common Shares in the form of
Exhibit E attached hereto, to be issued to certain Purchasers pursuant to this
Agreement.
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ARTICLE II
AUTHORIZATION AND SALE OF SERIES A SECURITIES
---------------------------------------------
2.1 Authorization. The Corporation will, prior to the Closing, (a) take
all actions necessary to make the Merger and the Merger Agreement valid, binding
and fully effective, (b) file the Merger Agreement and the Certificate of
Incorporation with the Secretary of State of the State of Delaware, and (c)
authorize the issuance to the Purchasers of the Series A Securities.
2.2 Sale of Series A Securities to Purchasers. Subject to the
satisfaction of the terms and conditions herein set forth and in reliance upon
the respective representations and warranties of the parties set forth herein or
in any document delivered pursuant hereto, the Corporation agrees to sell to the
Purchasers, free and clear of any Liens, and the Purchasers agrees to purchase
from the Corporation, at the Closing, 20,796,172 Series A Preferred Shares and
4,214,185 Warrants for the aggregate purchase price of $7,217,026.33.
ARTICLE III
CLOSING; DELIVERY
-----------------
3.1 Closing. The Closing will be held at the offices of Xxxxxx Xxxxxx &
Zavis, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, on December 1,
1994, at 10:00 a.m., Chicago time, or at such other time, date and place or
manner as may be agreed to by the Corporation and the Purchasers' counsel.
3.2 Delivery. At the Closing, the Corporation will deliver to each
Purchaser a certificate for the number of Series A Preferred Shares and Warrants
indicated on Schedule 1 attached hereto, duly executed and registered in the
name of such Purchaser, against (i) the principal and accrued interest on any
promissory note or loan owed to such Purchaser by the Corporation as indicated
on Schedule 1 and/or (ii) payment by the Purchaser of the amount indicated on
Schedule 1 attached hereto, by check drawn on a United States domiciled bank
payable to the order of the Corporation or by wire transfer of funds to an
account designated by the Corporation.
ARTICLE IV
CONDITIONS TO CLOSING BY THE PURCHASERS
---------------------------------------
The obligation of Purchasers to purchase Series A Securities at the Closing
is subject to the fulfillment to their satisfaction of each of the following
conditions:
4.1 Representations and Warranties Correct. The representations and
warranties made by the Corporation in Article V shall be true and correct when
made, and shall be true and correct in all material respects as of the Closing
as if made at the Closing.
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4.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation at or prior
to the Closing shall have been performed or complied with in all material
respects.
4.3 Compliance Certificate. At the Closing, the Corporation shall have
delivered to Purchasers' counsel a certificate of the Corporation, executed by
its Chief Executive Officer dated the date of Closing, certifying to the
fulfillment of the conditions specified in Sections 4.1 and 4.2 of this
Agreement and such other matters as the Purchasers shall have reasonably
requested.
4.4 Secretary's Certificate. At the Closing, the Corporation shall have
delivered to Purchasers' counsel copies of each of the following, in each case
certified by the Secretary of the Corporation to be in full force and effect on
the date of the Closing:
(i) the certificate of incorporation of the Corporation as of the
Closing (which shall be the Certificate of Incorporation) certified by the
Secretary of State of the State of Delaware as of a date not more than
fifteen days prior to the Closing;
(ii) a long-form good standing certificate with respect to the
Corporation certified by the Secretary of State of Delaware as of a date
not more than fifteen days prior to the Closing;
(iii) a good standing certificate with respect to the Corporation
certified by the Secretary of State of the State of North Carolina as of a
date not more than fifteen days prior to the Closing;
(iv) good standing certificates with respect to the Corporation
certified by the Secretaries of State of the states in which the conduct of
its business requires it to be in good standing, in each case as of a date
not more than fifteen days prior to the Closing;
(v) a copy of the Merger Agreement (the "Merger Agreement") between
the Corporation and Blue Rhino Corporation, a North Carolina corporation
("BRC-North Carolina") as filed with and certified by the Secretary of
State of the State of Delaware;
(vi) the by-laws of the Corporation, acceptable in form and substance
to Purchasers' counsel; and
(vii) resolutions of the Board, and, as necessary, the Shareholders,
the form and substance of which are satisfactory to Purchasers' counsel,
authorizing the adoption, execution and filing of the Certificate of
Incorporation, and authorizing the execution, delivery and performance of
the Merger Agreement, this Agreement and the Related Agreements, and the
transactions contemplated hereby and thereby, including the issuance and
sale of the Series A Securities to the Purchasers.
4.5 Registration Agreement. At or prior to the Closing, the Corporation
and the Purchasers shall have executed and delivered the Registration Agreement.
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4.6 Shareholders' Agreements. At or prior to the Closing, the Corporation
and each of Shareholders and the Purchasers shall have executed and delivered
the Shareholders' Agreement.
4.7 Noncompete Agreements. At or prior to the Closing, the Corporation
and each of Xxxxx Xxxx, X.X. Xxxxxxxx, III, Xxxxx Xxxxxxx, Xxx Xxxxxxx, Xxxx
Xxxx, Xxxxx Xxxx and Xxxxxx Xxxxx shall have executed and delivered the
Noncompete Agreements.
4.8 Legal Opinion. At the Closing, the Corporation shall have delivered
to Purchasers' counsel the opinion of House Law Firm, counsel to the
Corporation, dated the date of Closing, addressed to the Purchasers and in the
form of that attached hereto as Exhibit F.
4.9 Legal Investment. As of the Closing, the purchase of Series A
Securities by the Purchasers hereunder shall be legally permitted by all laws
and regulations to which the Purchasers and the Corporation are subject.
4.10 Proceedings and Documents. As of the Closing, all corporate and other
proceedings in connection with the transactions contemplated hereby and by the
Related Agreements, and all documents and instruments incident to such
transactions, shall be satisfactory in form and substance to the Purchasers, and
Purchasers' counsel shall have received at or prior to the Closing all such
documents as they shall have reasonably requested.
4.11 Qualifications. As of the Closing, all authorizations, approvals, or
permits of, or filings with, any governmental authority, including state
securities or "Blue Sky" offices, that are required by law in connection with
the lawful offer, sale and issuance of the Series A Securities shall have been
obtained by the Corporation, and shall be effective as of the Closing.
4.12 Due Diligence. Purchasers and their advisers, including legal
counsel, shall have completed their due diligence review of the Corporation and
its business with results satisfactory to Purchasers, in their sole discretion.
4.13 Expenses. At Closing, the Corporation shall have reimbursed the
Purchasers for their expenses and out-of-pocket costs incurred in connection
with their negotiation of the Merger Agreement, this Agreement and the Related
Agreements, documentation of the transactions contemplated hereunder and
thereunder and closing costs, including without limitation, reasonable
attorneys' fees and expenses.
4.14 Election of Directors. At or prior to Closing the Board shall have
been constituted and elected in accordance with the Shareholders' Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
-------------------------------------------------
The Corporation hereby represents and warrants to the Purchasers as
follows:
5.1 Organization and Standing. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Corporation has the requisite legal and corporate power and
authority to own all the properties owned by it, and to conduct its business as
presently being conducted and as proposed to be conducted by it. The Corporation
is duly qualified to do business in those jurisdictions listed in Schedule 5.1.
The Corporation does not own or lease property or engage in any activity in any
jurisdiction which might require its qualification to do business as a foreign
corporation in any jurisdiction not listed on Schedule 5.1.
5.2 Corporate Power; Successor Corporation. The Corporation has all
requisite legal and corporate power and authority to enter into the Merger
Agreement, this Agreement and the Related Agreements, to issue and sell the
Series A Securities and to carry out and perform its obligations under the
terms of the Merger Agreement, this Agreement and the Related Agreements. The
Corporation is the successor corporation of BRC-North Carolina pursuant to a
statutory merger (the "Merger") under Delaware Law in which the Corporation is
the survivor and is successor to all rights, titles and interests of BRC-North
Carolina. Where appropriate, references to the Corporation in this Article V
shall mean both the Corporation and BRC-North Carolina as its predecessor.
5.3 Subsidiaries; Investments. The Corporation has no Subsidiaries. The
Corporation does not own of record or beneficially any Investment other than
Investments of the type permitted under Section 7.9(i) of this Agreement.
5.4 Minute Books. The minute books of the Corporation contain a complete
and correct summary of all meetings of the Board and the Corporation's
shareholders since the time of incorporation of the Corporation.
5.5 Capitalization. As of the Closing, the Corporation's authorized
capital stock will consist of (a) 60,000,000 Common Shares, and (b) 25,000,000
Series A Preferred Shares. As of the Closing, except as disclosed on Schedule
5.5, there shall be no declared but unpaid dividends or undeclared dividend
arrearages on any shares of capital stock of the Corporation. After giving
effect to the consummation of the transactions contemplated by this Agreement,
the only shares of capital stock issued and outstanding, reserved for issuance
or committed to be issued will be:
(a) 22,260,000 fully paid and non-assessable Common Shares, duly
issued and outstanding and owned of record and beneficially by the persons,
and issued on the dates, and for the consideration, listed on Schedule
5.5;
(b) 465,000 Common Shares reserved for issuance to the employees,
directors or consultants;
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(c) 2,000,000 Common Shares reserved for future grants under the
Corporation's stock incentive plan;
(d) 20,796,172 fully paid and non-assessable Series A Preferred
Shares, duly issued and outstanding and owned of record and beneficially by
the Purchasers;
(e) 35,275,000 Common Shares reserved for issuance upon conversion of
the Series A Preferred Shares and/or exercise of the Warrants.
There are no outstanding preemptive, conversion or other rights, options,
warrants or agreements granted or issued by or binding upon the Corporation for
the purchase or acquisition of any shares of its capital stock, other than
those issued, reserved or committed to be issued pursuant to this Agreement or
as provided for in the Shareholders' Agreement or the Certificate of
Incorporation. All outstanding securities of the Corporation were issued in
compliance with all federal and state securities laws.
The provisions of this section notwithstanding, as of the Closing,
4,203,828 shares of the Series A Preferred Stock shall be authorized and
reserved for issuance as provided in Section 9.14 hereof. In the event that such
shares shall not be issued on or prior to January 31, 1995, the authorization
for issuance of such shares shall be deemed to be cancelled.
5.6 Authorization. All corporate action on the part of the Corporation,
its directors and shareholders necessary for the authorization, execution,
delivery and performance by the Corporation of the Merger Agreement, this
Agreement and the Related Agreements, and the consummation of the transactions
contemplated hereby and thereby, and for the authorization, issuance and
delivery of the Series A Securities, has been taken. The Merger Agreement, this
Agreement and the Related Agreements are legal, valid and binding obligations of
the Corporation, enforceable against the Corporation in accordance with their
terms.
5.7 No Violation. None of the execution and delivery of the Merger
Agreement, this Agreement and the Related Agreements, the consummation of the
transactions provided for herein and therein or contemplated hereby and thereby,
and the fulfillment by the Corporation of the terms hereof or thereof, will
(with or without notice or passage of time or both) (a) conflict with or result
in a breach of any provision of the certificate of incorporation or by laws of
the Corporation, (b) result in a default, give rise to any right of termination,
cancellation or acceleration, or require any consent or approval (other than
approval by the Board and, in the case of the adoption of the Certificate of
Incorporation, the Shareholders) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, loan, factoring arrangement,
license, agreement, lease or other instrument or obligation to which the
Corporation is a party or by which it or any of its assets may be bound or (c)
violate any law, judgment, order, writ, injunction, decree, statute, rule or
regulation of any court, administrative agency, bureau, board, commission,
office, authority, department or other governmental entity applicable to the
Corporation or any of its assets.
5.8 Validity of Stock. The Series A Securities, when issued, sold and
delivered in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid, nonassessable and free and clear of all Liens. The
Common Shares issuable upon conversion of the
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Series A Preferred Shares have been duly and validly reserved and, upon issuance
in accordance with the conversion provisions of the Series A Preferred Shares,
will be duly and validly issued, fully paid, non-assessable and free and clear
of all Liens. The Common Shares issuable upon exercise of the Warrants have been
duly and validly reserved and, upon issuance in accordance with the exercise
provisions of the Warrants, will be duly and validly issued, fully paid,
nonassessable and free and clear of all Liens.
5.9 Financial Statements. The Corporation has furnished Purchasers' with
(a) the unaudited balance sheet of the Corporation for the period ended October
31, 1994 (the "Unaudited Balance Sheet"), together with the unaudited statements
of income and changes in financial position for the period then ended
(collectively, including the Unaudited Balance Sheet, the "Unaudited Financial
Statements"), and (b) its projected consolidated balance sheet and statement of
income and changes in financial position for the one fiscal year ending December
31, 1994 (the "Projected Financial Statements"). The Unaudited Financial
Statements have been prepared in accordance with GAAP, subject to the absence of
footnotes and statements in changes in cash and changes resulting from normal
year-end adjustments, and fairly and accurately present the financial position
of the Corporation as of October 31, 1994, and the results of its operations for
the year then ended. The Projected Financial Statements have been prepared by
the Corporation in good faith, based upon information and assumptions reasonably
believed by it to be sound and accurate, and represent, to its best knowledge
and belief, reasonable forecasts as to the Corporation's future operations and
financial performance. All the books, records and accounts of the Corporation
are in all material respects accurate and complete, are in all material respects
in accordance with good business practice and all laws, regulations and rules
applicable to the Corporation and the conduct of its business and accurately
present and reflect in all material respects all of the transactions described
therein.
5.10 Absence of Undisclosed Liabilities. As of the Closing, the
Corporation will not have any material debts, liabilities or obligations of any
nature (whether accrued, absolute, contingent, direct, indirect, perfected,
inchoate, unliquidated or otherwise and whether due or to become due) arising
out of transactions entered into on or prior to the Closing, or any transaction,
series of transactions, action or inaction occurring on or prior to the Closing,
or any state of facts or condition existing on or prior to the Closing
(regardless of when such liability or obligation is asserted), including but not
limited to liabilities or obligations on account of taxes or governmental
charges or penalties, interest or fines thereon or in respect thereof, except
(a) as and to the extent clearly and accurately reflected and accrued for or
reserved against in the Unaudited Balance Sheet, (b) for liabilities
specifically delineated on Schedule 5.10, and (c) for liabilities and
obligations arising after October 31, 1994 in the ordinary course of business
consistent with past customs and practice and in accordance with the Budget or
which would not exceed $50,000 in the aggregate.
5.11 Absence of Certain Changes. Since October 31, 1994, there has not
been (a) any change, occurrence, condition or development that has materially
and adversely affected, or is likely to materially and adversely affect, the
Corporation's business, affairs, assets, prospects, operations, employee
or vendor relations or condition, financial or otherwise or ability to meet its
obligations hereunder, (b) any dividend or other distribution, or any
recapitalization, combination or subdivision with respect to, or any purchase or
redemption by the Corporation of; any shares of its capital stock, (c) any
Indebtedness incurred by the Corporation, (d) any
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sale, transfer, lease, mortgage or pledge of, grant of security interest in or
other Lien against any of the Corporation's assets or cancellation of any claims
of, or Indebtedness or obligations owing to, the Corporation except as a result
of payments of obligations in the ordinary course of business, (e) any increase
or change, (or offer or promise thereof, whether or not legally binding) in
salaries or other compensation or employee benefits with respect to any
employees of the Corporation, (f) any purchase of or agreement to purchase any
additional assets by the Corporation at a cost of greater than $2,500 in any one
instance, (g) cancellation or compromise by the Corporation of any debt or
claim, or waiver or release of any right or material value, (h) any physical
damage, destruction or loss (whether or not covered by insurance) adversely
affecting the properties, business or prospects of the Corporation, (i) any
changes in the accounting principles, methods or practices followed by the
Corporation or depreciation or amortization policies or rates theretofore
adopted, or (j) any action taken by the Corporation, its directors or officers
or its shareholders to authorize any of the actions contemplated by clauses
(a) - (i) above.
5.12 Contracts, Leases, and Other Agreements. Except as set forth on
Schedule 5.12, Schedule 5.13 or Schedule 5.15, the Corporation has no contract,
lease, agreement, plan, license, arrangement, obligation or commitment
(collectively, "Contracts") (a) involving aggregate payments or delivery or
licensing by or to the Corporation of money, goods or other assets or services
having, in each case, an aggregate value of more than $10,000, (b) which is a
lease of real property, (c) which is a requirement or output contract, or (d)
that is otherwise material to the business of the Corporation. All Contracts to
which the Corporation is a party or by which it or any of its assets may be
bound are valid, binding and in full force and effect, and no material breach or
default, or event which, with notice or lapse of time or both, would constitute
any such material breach or default by the Corporation (or, to the best
knowledge of the Corporation, by any other party thereto), exists with respect
thereto. The Corporation has not received any notice of cancellation or non-
renewal of any Contract.
5.13 Employment Arrangements. Except as set forth in Schedule 5.13,
neither the Corporation nor any Plan Affiliate has maintained, sponsored,
adopted, made contributions to or obligated itself to make contributions to or
to pay any benefits or grant rights under or with respect to any "Employee
Pension Benefit Plan" (as defined in Section 3(2) of ERISA), "Employee Welfare
Benefit Plan" (as defined in Section 3(1) of ERISA), "multi-employer plan" (as
defined in Section 3(37) of ERISA), plan of deferred compensation, medical plan,
life insurance plan, long-term disability plan, dental plan or other plan
providing for the welfare of any of the Corporation's or any Plan Affiliate's
employees or former employees or beneficiaries thereof, personnel policy
(including but not limited to vacation time, holiday pay, bonus programs. moving
expense reimbursement programs and sick leave), excess benefit plan, bonus or
incentive plan (including but not limited to stock options, restricted stock,
stock bonus and deferred bonus plans), salary reduction agreement, change-of-
control agreement, employment agreement, consulting agreement, workers
compensation law, unemployment compensation law, social security law or any
other benefit, program or contract (all such plans listed on Schedule 5.13
collectively, "Employee Benefit Plans"), whether written, voluntary or pursuant
to a collective bargaining agreement or law, which could give rise to or result
in the Corporation or such Plan Affiliate having any debt, liability, claim or
obligation of any kind or nature, whether accrued, absolute, contingent, direct,
indirect, known or unknown, perfected or inchoate or otherwise and whether or
not due or to become due. Correct and complete copies or
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descriptions of all Employee Benefit Plans previously have been furnished to
Purchasers counsel. For purposes of this Agreement, "Plan Affiliate" means any
person or entity with which the Corporation constitutes all or part of a
controlled group of corporations, a group of trades or businesses under common
control or an affiliated service group, as each of those terms are defined in
Section 414 of the Code.
5.14 Employee Salaries; Proprietary Agreements. Schedule 5.14 contains
a true, correct and complete list setting forth the names and current salaries
of the five employees of the Corporation receiving the highest annual
compensation and the names and total annual compensation as a group for all
other employees of the Corporation and independent contractors who render
services on a regular basis to the Corporation whose current annual compensation
and/or estimated annual commissions is $50,000 or more. Each officer and
technical employee of the Corporation has executed an agreement regarding
confidentiality and proprietary information of the Corporation. The Corporation
is not aware that any such employee is in violation thereof and will use its
best efforts to prevent any such violation. The Corporation is not aware of any
of its employees being obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
the Corporation or that would conflict with the Corporation's business as
conducted or as proposed to be conducted or that would prevent any such employee
from assigning inventions to the Corporation. The Corporation does not believe
that it is or will be necessary for the Corporation to utilize any inventions of
its employees (or people the Corporation currently intends to hire) made prior
to their employment by the Corporation.
5.15 Personnel Contracts Agreements, Plans and Arrangements. Except as
listed in Schedule 5.13 and 5.15, the Corporation is not a party to or obligated
in connection with its business, with respect to any (a) outstanding contracts
with employees, agents, consultants, advisers, salesmen, sales representatives,
distributors sales agents or dealers or (b) collective bargaining agreements or
contracts with any labor union or other representative of employees or any
employee benefits provided for by any such agreement. The Corporation has
furnished Purchasers' counsel with a true and complete copy of each document
listed in Schedule 5.15. No strike, union organizational activity, allegation,
charge or complaint of employment discrimination or other similar occurrence
occurred during the Corporation's past five completed fiscal years, or is
pending or threatened against the Corporation or otherwise might affect its
business; nor does the Corporation know any basis for any such allegation,
charge, or complaint.
5.16 Arrangements with Officers, Directors and, Others. Except for
Platinum Rotisserie Corp. and Platinum Service Corp. or as set forth on Schedule
5.16, there are no existing Contracts or arrangements or proposed transactions
between the Corporation and any Affiliate of the Corporation. No employees of
the Corporation are subject to any restrictive covenant or any other similar
agreement of which the Corporation is aware which would prohibit such employee
from being employed by the Corporation.
5.17 Tax Liabilities. The Corporation has filed all federal, state and
local tax reports and returns required by any law or regulation to be filed by
it, and such returns are true and correct. The Corporation has paid all taxes,
interest and penalties, if any, reflected on such tax
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returns or otherwise due and payable by it. The reserves for taxes reflected on
the Unaudited Balance Sheet are adequate in amount for the payment of all
liabilities for all taxes (whether or not disputed) of the Corporation accrued
through the dates of such balance sheets. Any deficiencies proposed as a result
of any governmental audits of such tax returns have been paid or settled, and
there are no present disputes as to taxes payable by the Corporation.
5.18 Insurance. Schedule 5.18 is a correct and complete list and
description, including policy numbers, of all past and present insurance
policies owned by the Corporation or otherwise pertaining to its business,
correct and complete copies of which policies have previously been delivered to
Purchasers' counsel. The present insurance policies are in full force and
effect, and the Corporation is not in default under any of them. The Corporation
has not received any notice of cancellation or intent to cancel or increase
premiums with respect to present insurance policies nor, to its knowledge, is
there any basis for any such action. Schedule 5.18 also contains a list of all
pending claims with any insurance company and any instances of a denial of
coverage of the Corporation by any insurance company.
5.19 Litigation. There are no actions, suits, proceedings or
investigations (whether or not purportedly on behalf of the Corporation) pending
or threatened (nor, to the best knowledge of the Corporation, does any basis
exist therefor) against or affecting the Corporation at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, domestic or foreign, nor has any
such action, suit, proceeding or investigation been pending during the last two
years. The Corporation is not operating under or subject to, nor in default with
respect to, any order, writ, injunction or decree of any court or federal,
state, municipal or other governmental department, commission, board, agency or
instrumentality, foreign or domestic, and the Corporation has not been charged
or threatened with a charge of violation, or under investigation with respect to
possible violation, of any provision of any federal, state or local law or
administrative ruling or regulation relating to them or their business, affairs,
assets, prospects, operations, employee relations or condition, financial or
otherwise. The Corporation has not received any material complaint from any of
its customers or suppliers.
5.20 Consents. All consents, approvals, qualifications, orders or
authorizations of, or filings with, any governmental authority, including state
securities or "Blue Sky" offices, required in connection with the Corporation's
valid execution, delivery or performance of the Merger Agreement, this Agreement
and the Related Agreements, the offer, sale and issuance of the Series A
Securities, and the consummation of any other transaction contemplated on the
part of the Corporation hereby or thereby have been obtained or made.
5.21 Title to Properties; Liens and Encumbrances. The Unaudited Balance
Sheet reflects all of the assets of the Corporation as of the date thereof. The
Corporation has good and marketable title to all of the assets reflected in the
Unaudited Balance Sheet (except as disposed of in the ordinary course of
business since the date of the Unaudited Balance Sheet), free and clear of any
Liens except as set forth on Schedule 7.08(p). The Corporation has good and
marketable title to all of the assets necessary to conduct its business as
presently conducted or as proposed to be conducted, free and clear of any Liens.
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5.22 Proprietary Rights. Schedule 5.22 contains a complete and correct
list of all patented and registered Proprietary Rights owned by the Corporation
and all pending patent applications and applications for the registration of
other Proprietary Rights owned or filed by the Corporation. Schedule 5.22 also
contains a complete and correct list of all trade or corporate names used by the
Corporation and a complete and correct list of all licenses and other rights
granted by the Corporation to any third party with respect to Proprietary Rights
and licenses and other rights granted by any third party to the Corporation.
Except as set forth on Schedule 5.22, (a) the Corporation owns and possesses all
right, title and interest in and to, or has a valid license to use, all of the
Proprietary Rights necessary for the operation of its business as presently
conducted and none of such Proprietary Rights have been abandoned; (b) no claim
by any third party contesting the validity, enforceability, use or ownership of
any such Proprietary Rights has been made, is currently outstanding or is
threatened, and there is no reasonable basis for any such claim; (c) neither the
Corporation nor any registered agent of the Corporation has received any notices
of, nor is the Corporation aware of any reasonable basis for, an allegation of,
any infringement or misappropriation by, or conflict with, any third party with
respect to such Proprietary Rights, nor has the Corporation or any registered
agent of the Corporation received any claims of infringement or misappropriation
of or other conflict with any Proprietary Rights of any third party; and (d) the
Corporation has not infringed, misappropriated or otherwise violated any
Proprietary Rights of any third parties, and the Corporation is not aware of any
infringement, misappropriation or conflict which will occur as a result of the
continued operation of its business.
5.23 Offering; Conversion. Subject in part to the truth and accuracy of
the representations of the Purchasers set forth in this Agreement, (i) the
offer, sale and issuance of the Series A Securities and (ii) the conversion of
the Series A Securities into Common Shares, as contemplated by this Agreement,
are exempt from the registration requirements of the Securities Act and all
applicable state securities laws.
5.24 Compliance with Law and Other Instruments. The Corporation is not in
violation of any term of its certificate of incorporation or by-laws or of the
provisions of any mortgage, indenture, contract, agreement, instrument,
judgment, decree, order, statute, rule or regulation to which it is subject and
a violation of which could have a material adverse effect on its business,
affairs, assets, prospects, operations, employee relations or condition,
financial or otherwise, or the Corporation's ability to perform its obligations
hereunder or under the Related Agreements. The Corporation has all franchises,
permits, licenses and approvals, necessary to conduct its business as presently
conducted. The Corporation has no knowledge of or reason to expect any change to
any law, statute, rule or regulation which could adversely affect the ability of
the Corporation to conduct its business as presently conducted or as proposed to
be conducted. Schedule 5.24 is a complete list of all permits, licenses and
approvals necessary to conduct the Corporation's business as currently conducted
and as contemplated to be conducted as described in the Business Plan.
5.25 Hazardous Substances. Except for the propane (Chemical Abstract
Series Number 74-98-6) (the "Propane"), the polystyrene racks used to hold the
propane cylinders (the "Polystyrene"), and the water-reducible acrylic coating
(Product Number F78QXA0515-4368) used to paint the propane cylinders (the
"Paint"), used by the Corporation in the ordinary course of its Business, the
Corporation has never generated, transported, treated, stored nor disposed,
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nor, in any manner, arranged for disposal or treatment within the meaning of
RCRA, CERCLA or any applicable federal, state or local law, regulation,
ordinance or requirement, as amended or hereinafter amended of any Hazardous
Substances. Except for the Propane, Polystyrene and Paint used by the
Corporation in the ordinary course of its Business, there are no Hazardous
Substances on, in, or under the premises leased or possessed by the Corporation
(including, without limitation, those which may be contained in underground
storage tanks). There have not been and there are not any past or present
events, conditions, circumstances, activities, practices, incidents or actions
which could reasonably be expected to interfere with or prevent continued
compliance with any federal, state, or local law, regulation, or ordinance, or
requirement relating to health and safety and protection of the environment
("Environmental Laws") or which may give rise to any legal liability or
otherwise forms the basis of any claim, action, suit, proceeding, hearing or
investigation against or involving the Corporation based on any condition or any
violation or alleged violation of any Environmental Laws.
5.26 Agreements Between Shareholders. Other than the Related Agreements,
there exists no agreement between any of the Shareholders related to the
Corporation or its capital stock.
5.27 Registration Rights. Except as provided for in the Registration
Agreement, the Corporation is not under any obligation to register under the
Securities Act any of its currently outstanding securities or any of its
securities which may hereafter be issued.
5.28 Fees and Commissions. The Corporation has retained no finder, broker,
agent, financial advisor or other intermediary (collectively "Intermediary") in
connection with the transactions contemplated by this Agreement and the
Corporation agrees to indemnify and hold harmless the Purchasers from liability
for any compensation to any Intermediary and the fees and expenses of defending
against such liability or alleged liability.
5.29 Disclosure. This Agreement, the schedules and exhibits hereto, and
the financial statements and other materials referred to herein as having been
delivered to the Purchasers and/or Purchasers' counsel, do not contain any
untrue statement of a material fact and do not omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in the light of the circumstances under which they were made. There
is no fact reasonably known to the Corporation relating to the business,
affairs, assets, prospects, operations, employee relations or condition,
financial or otherwise, of the Corporation that may materially adversely affect
the same which has not been disclosed in writing to the Purchasers and
Purchasers' counsel by the Corporation.
ARTICLE VI
COVENANTS, REPRESENTATIONS AND WARRANTIES
-----------------------------------------
OF THE PLATINUM AND INVESTORS
-----------------------------
6.1 Platinum covenants, represents and warrants to the Corporation as
follows:
(a) Organization and Standing. Platinum is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
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(b) Authorization; Power. Platinum has all requisite legal power to
enter into this Agreement and the Related Agreements, and to carry out and
perform its obligations under the terms of this Agreement and the Related
Agreements. All action on the part of Platinum, its general partner and the
directors and shareholders of its general partner necessary for the
authorization, execution, delivery and performance by Platinum of this
Agreement and the Related Agreements, and the consummation of the
transactions contemplated hereby and thereby, and for the authorization,
issuance and delivery of the Series A Securities, has been taken. This
Agreement and the Related Agreements are legal, valid and binding
obligations of Platinum, enforceable against Platinum in accordance with
their terms.
(c) No Violation. None of the execution and delivery of this Agreement
and the Related Agreements, the consummation of the transactions provided
for herein and therein or contemplated hereby and thereby, and the
fulfillment by Platinum of the terms hereof or thereof, will (with or
without notice or passage of time or both) (a) conflict with or result in a
breach of any provision of the limited partnership agreement or the
certificate of limited partnership of Platinum, (b) result in a default,
give rise to any right of termination, cancellation or acceleration, or
require any consent or approval under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, loan, license,
agreement, lease or other instrument or obligation to which Platinum is a
party or by which it or any of its assets may be bound or (c) violate any
law, judgment, order, writ, injunction, decree, statute, rule or regulation
of any court, administrative agency, bureau, board, commission, office,
authority, department or other governmental entity applicable to Platinum
or any of its assets.
6.2 Each Investor severally and not jointly covenants, represents and
warrants for himself, herself or itself, as the case may be, to the Corporation
as follows:
(a) Organization and Standing. Such Investor, if not an individual, is
duly organized or formed, validly existing and in good standing under the
laws of the applicable state as indicated on the signature page attached
hereto.
(b) Authorization; Power. Such Investor has all requisite legal power
to enter into this Agreement and the Related Agreements, and to carry out
and perform his, her or its obligations under the terms of this Agreement
and the Related Agreements. All action on the part of such Investor, if not
an individual, necessary for the authorization, execution, delivery and
performance by such Investor of this Agreement and the Related Agreements,
and the consummation of the transactions contemplated hereby and thereby,
and for the authorization, issuance and delivery of the Series A
Securities, has been taken. This Agreement and the Related Agreements are
legal, valid and binding obligations of such Investor, enforceable against
such Investor in accordance with their terms.
(c) No Violation. None of the execution and delivery of this Agreement
and the Related Agreements, the consummation of the transactions provided
for herein and therein or contemplated hereby and thereby, and the
fulfillment by such Investor of the terms hereof or thereof, will (with or
without notice or passage of time or both) (a) if
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such Investor is not an individual, conflict with or result in a breach of
any provision of the organizational documents of such Investor, (b) result
in a default, give rise to any right of termination, cancellation or
acceleration, or require any consent or approval under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, loan,
license, agreement, lease or other instrument or obligation to which such
Investor is a party or by which he, she or it or any of his, her or its
assets may be bound or (c) violate any law, judgment, order, writ,
injunction, decree, statute, rule or regulation of any court,
administrative agency, bureau, board, commission, office, authority,
department or other governmental entity applicable to such Investor or any
of his, her or its assets.
6.3 Each Purchaser severally and not jointly covenants, represents and
warrants for himself, herself or itself, as the case may be, to the Corporation
as follows:
(a) Purchase for Investment. Such Purchaser will acquire the Series A
Securities, for investment and not with a view to distributing all or any
part thereof in any transaction which would constitute a "distribution"
within the meaning of the Securities Act. Such Purchaser acknowledges that
the Series A Securities have not been registered under the Securities Act
and, except as provided in the Registration Agreement, the Corporation is
under no obligation to file a registration statement with the Commission
with respect to the Series A Securities.
(b) Investor Qualifications. Such Purchaser is an "accredited
investor" as such term is defined under Rule 215 adopted by the Commission
under the Securities Exchange Act of 1934, as amended. Such Purchaser (a)
has such knowledge and experience in financial and business matters that
he, she or it is capable of evaluating the merits and risks of his, her or
its investment in the Series A Securities; (b) understands that his, her or
its investment in the Series A Securities is extremely risky and
acknowledges and agrees that he, she or it is able to bear the complete
loss of his, her or its investment in such Series A Securities; and (c) has
had the opportunity to ask questions of, and receive answers from, the
Corporation and its management concerning the terms and conditions of the
offering of the Series A Securities and to obtain additional information.
Such Purchaser is not an entity formed solely to make this investment.
Such Purchaser is not relying upon any statements or instruments made or
issued by any other Purchaser or any other Person other than the
Corporation and its officers in making its decision to invest in the Series
A Securities.
(c) Future Disposition. Such Purchaser will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any of the Series A Securities (or solicit any offers to buy,
purchase, or otherwise acquire or take a pledge of any of the Series A
Securities), except in compliance with the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations under the Securities Act and the Exchange Act.
(d) Business Plan. Such Purchaser has received a copy of the
"management write-up," "marketing plan" and "projections" for the Business
in the forms attached hereto as Exhibit G (the "Business Plan").
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(e) Residence or Principal Place of Business. The mailing address
listed for such Purchaser on Schedule 1 is such Purchaser's principal residence,
if an individual, or principal place of business, if other than an individual.
(f) Indemnity. Such Purchaser agrees to indemnify, pay and hold the
Corporation harness from and against, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever, which may be imposed on,
incurred by, or asserted against Corporation, arising out of any material
falsity of the representations and warranties of such Purchaser in this
Agreement, except that such Purchaser shall have no obligation hereunder to
indemnify the Corporation with respect to any such indemnified liabilities
arising from the gross negligence or wilful misconduct of the Corporation.
ARTICLE VII
COVENANTS OF THE CORPORATION
----------------------------
7.1 Financial Statements and Other Information. So long as any Series A
Securities remain outstanding, the Corporation will deliver to each holder of
Series A Securities:
(a) Audited Annual Financial Statements. As soon as practicable after
the end of each fiscal year of the Corporation, and in any event within
ninety (90) days thereafter, consolidated and consolidating balance sheets
of the Corporation and its Subsidiaries, as of the end of such year, and
consolidated and consolidating statements of operations and sources and
uses of funds of the Corporation and its Subsidiaries, for such fiscal
year, prepared in accordance with GAAP and setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail and, in the case of the consolidated statements,
certified, without qualification or explanation, by Xxxxxx & Company for
the fiscal year ending July 31, 1995 and thereafter by a nationally
recognized independent public accountants selected by the Corporation and
acceptable to the Purchasers;
(b) Unaudited Monthly Financial Statements. As soon as practicable
after the end of each month and in any event within thirty (30) days
thereafter, consolidated and consolidating balance sheets of the
Corporation and its Subsidiaries as of the end of such period, and
consolidated and consolidating statements of operations of the Corporation
and its Subsidiaries for such period and for the current fiscal year to
date, prepared in accordance with GAAP, subject to the absence of footnotes
and statements in changes in cash and changes resulting from normal year-
end adjustments, and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, together with a
comparison of such statements to the Budget, subject to changes resulting
from normal year-end audit adjustments, all in reasonable detail and
certified by the principal financial officer of the Corporation;
(c) Budget. Not less than thirty (30) days prior to the commencement
of each fiscal year, an annual business plan, including a budget and
detailed financial projections
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for the Corporation and its Subsidiaries, for each month during such period
(the "Budget"), all in reasonable detail, together with underlying
assumptions and approved by a majority of the entire Board;
(d) Auditors' Reports. Promptly upon receipt thereof, copies of all
other reports, if any, submitted to the Corporation by independent public
accountants in connection with any annual or interim audit of the books
of the Corporation and its Subsidiaries made by such accountants;
(e) Lender Information. A copy of each financial statement, report,
notice or communication that the Corporation or any Subsidiary delivers to
any of their lenders or creditors;
(f) Litigation. Promptly upon the Corporation's learning thereof,
notice of any litigation, suit or administrative proceeding that could
reasonably be expected to have a material adverse affect on the
Corporation's or any Subsidiary's business, affairs, assets, prospects,
operations, employee relations or condition, financial or otherwise,
whether or not the claim is considered by the Corporation to be covered by
insurance;
(g) Default. Promptly upon the occurrence thereof notice of any
Default;
(h) Material Adverse Developments. Promptly upon the occurrence
thereof, notice of any event which has had, or could reasonably be expected
to have, a material adverse impact on the business, affairs, assets,
prospects, operations, employee relations or condition, financial or
otherwise, of the Corporation or any Subsidiary, including, without
limitation, the institution or threat of any material litigation or
investigation with respect to the Corporation or any Subsidiary or any
material disputes with customers; and
(k) Other Information. With reasonable promptness, all press releases
issued by the Corporation or any Subsidiary, any filings made with the
Commission by the Corporation or any Subsidiary and such other data and
information as from time to time may be reasonably requested by the
Purchasers or Purchasers' counsel or such other data as the Corporation may
from time to time furnish to any of the holders of its securities or its
directors in their capacities as such.
7.2 Budget Review. Platinum shall have the right to review, discuss
and be involved in the preparation of the Corporation's Budget each year, prior
to its required delivery to the holders of the Series A Securities under Section
7.1(c) above.
7.3 Accounting. The Corporation will maintain and will cause each of
its Subsidiaries to maintain a system of accounting established and administered
in accordance with GAAP and all financial statements or information delivered
under Section 7.1 will be prepared in accordance with GAAP, except as otherwise
provided in Section 7.1(b).
7.4 Insurance. The Corporation agrees to maintain or cause to be
maintained, with financially sound and reputable insurers rated A or above by
A.M. Best, insurance with respect to-its assets and business and the assets and
business of its Subsidiaries against loss or damage
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of the kinds customarily insured against by similarly situated corporations of
established reputation engaged in the same or similar businesses, in adequate
amounts, and at the request of any Purchasers or Purchasers' counsel shall
furnish such Purchasers with evidence of the same. The Corporation further
agrees to cause to be maintained, with financially sound and reputable insurers
rated A or above by A.M. Best, term life insurance payable to the Corporation on
the life of Xxxxx Xxxx in the amount of at least $1,000,000.
7.5 Payment of Taxes. The Corporation agrees to pay or cause to be paid
all taxes, assessments and other governmental charges levied upon any of its
assets or those of its Subsidiaries or in respect of its or their respective
franchises, businesses, income or profits, all trade accounts payable in
accordance with usual and customary business terms, and all claims for work,
labor or materials, which if unpaid might become a Lien upon any asset of the
Corporation or any Subsidiary, before the same become delinquent, except that
(unless and until foreclosure, distraint, sale or other similar proceedings
shall have been commenced) no such charge need be paid if being contested in
good faith and by appropriate measures promptly initiated and diligently
conducted if (a) such reserve or other appropriate provision, if any, as shall
be required by sound accounting practice shall have been made therefor, and (b)
such contest does not have a material adverse effect on the financial condition
of the Corporation or the ability of the Corporation to pay any Indebtedness and
no assets are in imminent danger of forfeiture.
7.6 Compliance With Laws. The Corporation agrees to use its best efforts
to comply, and shall use its best efforts to cause each Subsidiary to comply,
with all laws, rules, regulations, judgments, orders and decrees of any
governmental or regulatory authority applicable to it and its respective assets,
and with all contracts, and agreements to which it is a party or shall become a
party, and to perform all obligations which it has or shall incur the violation
of which could have a material adverse effect on the business, affairs, assets,
prospects, operations or condition, financial or otherwise, of the Corporation
and its Subsidiaries taken as a whole. Neither the Corporation nor anyone acting
on its behalf will take any action hereafter that would cause the loss of its
exemption from the registration requirements of the Securities Act.
7.7 Preservation of Corporate Existence and Property; Operations. The
Corporation agrees to preserve, protect, and maintain, and cause each Subsidiary
to preserve, protect, and maintain, (a) its corporate existence, and (b) all
rights, franchises, accreditations, privileges, and properties the failure of
which to preserve, protect, and maintain could have a material adverse effect on
the business, affairs, assets, prospects, operations, or condition, financial or
otherwise, of the Corporation and its Subsidiaries taken as a whole. The
Corporation and its Subsidiaries will comply with all material agreements and
contracts, including, without limitation, all leases and loan agreements.
7.8 Negative Covenants. So long as any Series A Securities remain
outstanding, without the approval, by vote or written consent, of the holders of
not less than the majority of the Series A Preferred Shares then outstanding,
the Corporation will not:
(a) Dividends. Directly or indirectly declare or pay, or permit any
Subsidiary which is not a wholly owned Subsidiary to declare or pay any
dividends, or make or
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permit any Subsidiary which is not a wholly owned Subsidiary to make, any
distributions upon any of its equity securities;
(b) Redemptions. Directly or indirectly redeem, purchase or otherwise
acquire, or permit any Subsidiary to directly or indirectly redeem,
purchase or otherwise acquire, any of the Corporation's or any Subsidiary's
equity securities, except as required by the terms of the Series A
Securities and by Restricted Stock Agreements with employees previously
approved by the Board;
(c) Issuances. Authorize, issue, or enter into any agreement providing
for the issuance (contingent or otherwise) of, (x) any notes or debt
securities containing equity features (including, without limitation, any
notes or debt securities convertible into or exchangeable for equity
securities, issued in connection with the issuance of equity securities or
containing profit participation features) or (y) any equity securities (or
any securities convertible into or exchangeable for any equity securities),
except for Common Shares or options to acquire 2,000,000 Common Shares as
incentives to key employees, directors and consultants of the Corporation
which may be issued by the Board only after the approval of at least two
directors elected by the holders of Series A Preferred Shares;
(d) Mergers. Merge or consolidate with any Person or permit any
Subsidiary to merge or consolidate with any Person (other than, in the case
of a wholly-owned Subsidiary, with or into the Corporation or any other
wholly-owned Subsidiary);
(e) Sale of Assets. Sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, assets in one or a
series of related transactions that represent 10% or more of the
Corporation's assets or income, or are valued at $1,000,000, whichever is
less;
(f) Liquidations. Liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(g) Charter Amendments. Make any amendment to the Corporation's
certificate of incorporation or by-laws, including without limitation, an
amendment altering, changing or otherwise amending the preferences or
rights of the Series A Securities or increasing or decreasing the number of
directors constituting the Board, or file any resolution of the Board with
the Secretary of State of Delaware;
(h) Affiliate Transactions. Enter into, or permit any Subsidiary to
enter into, any transaction with any of its or any Subsidiary's Affiliates
in excess of $25,000, except for normal employment arrangements and benefit
programs on reasonable terms; provided, however, nothing in this paragraph
(h) shall be deemed to prohibit transactions contemplated by this Agreement
and the Related Agreements; provided further, however, nothing in this
paragraph (h) shall be deemed to prohibit transactions among the
Corporation and Platinum Rotisserie Corp. and/or Platinum Service Corp. if
(i) such transactions are on arm's length terms which are no less favorable
to the Corporation then the Corporation could obtain from a non-Affiliate
and (ii) at least two (2) Series A
-21-
Preferred Directors (as defined in the Certificate of Incorporation) shall
have approved or ratified such transactions at any Board meeting;
(i) Investments. Make or permit to exist, or permit any Subsidiary
to make or permit to exist, any Investment other than: (i) Investments in
short term obligations issued by, or guaranteed by, the United States
Government, (ii) Investments in negotiable certificates of deposit,
bankers' acceptances or money market securities issued by any bank or
branch of a bank having capital and surplus of at least $50 million in the
aggregate at all times, and (iii) Investments in commercial paper rated P1
or A1 by Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation,
respectively;
(j) Loans. Make, or permit any Subsidiary to make, any loans or
advances to, or guarantees for the benefit of, any Person, other than
travel advances and similar loans to employees not to exceed $25,000 at any
one time in the aggregate;
(k) Other Business. Enter into (directly or indirectly through a new
Subsidiary), or permit any Subsidiary to enter into, the ownership, active
management or operation of any business other than the business or type of
business conducted by the Corporation or such Subsidiary as of the date of
Closing, or acquire the business or assets of any other Person other than
acquiring assets in the ordinary course of business;
(l) Subsidiaries. Establish or acquire any Subsidiaries;
(m) Indebtedness. Create, incur, assume or suffer to exist, or permit
the Corporation and its Subsidiaries, taken as a whole, to create, incur,
assume or suffer to exist, Indebtedness other than as indicated in the
Business Plan and other than purchase money obligations or trade debt in
the ordinary course of business;
(n) Capital Expenditures. Make, or permit the Corporation and its
Subsidiaries, taken as a whole, to make, any capital expenditure or series
of related capital expenditures (including, without limitation, payments
with respect to capitalized leases) or any other acquisition of assets
other than as indicated in the Business Plan;
(o) Related Agreements. Amend, modify or waive any provision of any of
the Related Agreements, fail to enforce the provisions of any of the
Related Agreements or avail itself of all rights and remedies thereunder;
(p) Liens. Create, assume or permit, or permit any Subsidiary to
create, assume or permit, any Lien upon any of its properties or assets,
whether now owned or hereafter acquired, except (i) Liens existing as of
the date hereof as disclosed in Schedule 7.08(p), (ii) any Lien existing on
any asset prior to the acquisition thereof by the Corporation and not
created in contemplation of such event, (iii) any Lien created on any real
property or equipment in connection with the leasing of such real property
or equipment, (iv) Permitted Liens, and (v) Liens contemplated by the
Business Plan;
(q) Leases. Enter into any leases or other rental agreements
(including capitalized leases) other than as indicated in the Business
Plan;
-22-
(r) Restrictive Agreements. Become subject to, or permit any of its
Subsidiaries to become subject to, any agreement or instrument, which by
its terms would (under any circumstances) restrict the Corporation's right
to perform any of its obligations pursuant to the terms of this Agreement,
the Related Agreements, the Certificate of Incorporation or the
Corporation's by-laws (including, without limitation, all obligations
relating to payment of dividends on and making redemptions of the Series A
Securities); or
(s) Investment Bankers. Select or permit any Subsidiary to select,
any investment banker or underwriter in connection with any public offering
by the Corporation.
7.9 Legend. Until (a) the securities represented by such certificate
are effectively registered under the Securities Act, or (b) the holder of such
securities delivers to the Corporation a written opinion of counsel to such
holder to the effect that such legend is no longer necessary under the
Securities Act, the Corporation will cause each certificate representing its
securities to be stamped or otherwise imprinted with a legend to substantially
the following effect:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and thus may
not be transferred unless so registered or unless an exemption from
registration is available."
7.10 Rule 144A. In connection with any prospective transfer pursuant to
Rule 144A promulgated by the Commission, to the extent permitted under such
rule, of (a) Series A Preferred Shares or Warrants, (b) Common Shares issued
upon conversion of Series A Preferred Shares or exercise of Warrants, or (c)
Common Shares or other securities issued as, or upon conversion or exercise of
other securities issued as, a dividend or other distribution with respect to or
in replacement of any shares referred to in clause (a) or (b), upon the written
request of any holder of such shares, the Corporation will make available to
such holder and any prospective purchaser of such shares, promptly after such
request, the information required pursuant to paragraph (d)(4)(i) of Rule 144A
of the Commission. This provision shall not limit the Corporation's ability to
publicly list Common Shares or any other shares of its capital stock.
7.11 Small Business Stock. The Corporation will cooperate with the
Purchasers, and take all actions reasonably necessary, to comply, to the extent
reasonably possible, with the reporting and recordkeeping requirements
applicable to shares of "Small Business Stock" under Section 1202 of the Code.
7.12 Best Effort Upon Exercise of Warrants. Upon the exercise of any
Warrant, the Corporation will cooperate and use its best efforts to insure that
the Common Shares issued upon exercise of such Warrant are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws or if exemptions from the such registration requirements are
unavailable, to obtain or make, as applicable, all authorizations, approvals, or
permits of, or filings with, any governmental authority, including state
securities or "Blue Sky" offices, that are required by law in connection with
the exercise of such Warrant.
-23-
7.13 Compliance With Environmental Laws. The Corporation agrees to use all
Hazardous Substances (including the Propane, Polystyrene and Paint if any or all
of them are deemed Hazardous Substances) in compliance with all Environmental
Laws and to obtain all required permits, licenses, certificates and
registrations relating to health, safety or protection of the environment which,
if not possessed, would have a material adverse effect on the Corporation or
result in a violation of any applicable Environmental Laws.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1. Expenses. The Corporation agrees to pay on demand: (a) all costs and
expenses of compliance with all agreements and conditions contained in the
Merger Agreement, this Agreement and in the Related Agreements; (b) the fees,
expenses and disbursements of counsel to the Purchasers, in connection with the
administration of the Merger Agreement, this Agreement and the Related
Agreements and any amendments hereto or thereto, waivers hereof and thereof and
consents hereunder and thereunder; (c) all other out-of-pocket expenses incurred
by the Purchasers in connection with the performance of the Merger Agreement,
this Agreement and the Related Agreements by Purchasers after the Closing; and
(d) all costs and expenses (including attorney's fees and costs) incurred by the
Purchasers or any holder of Series A Securities arising out of or in connection
with the enforcement or preservation of any rights under the Merger Agreement,
this Agreement and the Related Agreements.
8.2. General Indemnity.
(a) The Corporation agrees to indemnify, pay and hold the Purchasers
and its Affiliates and any subsequent holder of any Series A Securities,
and the officers, directors, employees and agents of the Purchasers and
its Affiliates and such holders (collectively called the "Indemnities"),
harmless from and against, any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs,
expenses and disbursements of any kind or nature whatsoever including,
without limitation, the fees and disbursements of counsel for such
Indemnities in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnities shall be designated a
party thereto, which may be imposed on, incurred by, or asserted against
such Indemnitee, in any manner relating to or arising out of the
transactions contemplated by this Agreement and the ownership of any Series
A Securities (a "Claim"), except that the Corporation shall have no
obligation hereunder to an Indemnitee with respect to any such indemnified
liabilities arising from the gross negligence or wilful misconduct of such
Indemnitee. If any indemnity provided for in the preceding sentence is not
available solely because it is found to be contrary to public policy or
otherwise unlawful, then the Corporation and the Indemnities shall
contribute to the amount payable in such proportion as is appropriate to
reflect the relative faults and benefits and any other relevant equitable
considerations. Each Indemnitee shall reimburse the Corporation for any
amounts paid to such Indemnitee by the Corporation pursuant to this Section
8.2 with respect to claims by the Corporation against such Indemnitee
which are finally determined by a court of competent jurisdiction in favor
of the Corporation against such Indemnitee.
-24-
(b) If any Claim or alleged Claim shall be brought against any
Indemnitee in respect of which such Indemnitee may be indemnified under
this Section 8.2 by the Corporation, such Indemnitee shall promptly notify
the Corporation in writing. No indemnity in respect of such Claim shall be
available under this Section 8.2 to such Indemnitee if such notice was not
given to the Corporation and the Corporation was unaware of such action and
was materially prejudiced by such Indemnitee's failure to give such notice,
but in no event shall such failure relieve the Corporation from any
liability which it may have to such Indemnitee arising otherwise than under
this Section 8.2. The Corporation at its option may assume the defense of
any action in respect of which it has acknowledged its obligation to
indemnify such Indemnitee under this Section 8.2. If the Corporation
assumes the defense of any action, the Indemnitee shall not be liable for
any settlement thereof without its consent (but such consent will not be
unreasonably withheld). If the Corporation assumes the defense of any such
action, such Indemnitee shall have the right to employ separate counsel in
such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be paid by such Indemnitee unless in the
reasonable opinion of such Indemnitee there may be a conflict between the
positions of the Corporation and of such Indemnitee in conducting the
defense of such action or that there may be legal defenses available to
such Indemnitee different from or in addition to those which counsel to the
Corporation would be able to raise, in which event the fees and expenses of
such counsel shall be paid by the Corporation.
8.3. Taxes. The Corporation agrees to pay all governmental assessments,
charges or taxes (except income or other similar taxes imposed on a Purchasers
or any other holder of Series A Securities), including any interest or penalties
thereon, at any time payable or ruled to be payable in respect of the existence,
execution, delivery or performance of the Merger Agreement, this Agreement and
the Related Agreements or the issuance or existence of Series A Securities, by
reason of an existing or hereafter enacted Federal, state or local statute, and
to indemnify and hold the Purchasers, and each and every holder of Series A
Shares, harmless against liability in connection with any such assessments,
charges or taxes.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Consent to Amendments; Waivers. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended or waived at
any time only by the written agreement of the Corporation and holders of not
less than 66 2/3% of the Series A Preferred Shares then outstanding. Any waiver,
permit, consent or approval of any kind or character on the part of any such
holder of any provisions or conditions of this Agreement must be made in writing
and shall be effective only to the extent specifically set forth in such
writing. No course of dealing between the Corporation and any holder and no
delay in exercising any right, remedy, or power conferred hereby, by the Related
Agreements, or the Certificate of Incorporation, or now or hereafter existing at
law or under equity, by statute or otherwise, shall operate as a waiver of or
otherwise prejudice any such right, power or remedy.
-25-
9.2 Representations and Warranties. All representations and warranties
contained herein or made in writing by any party in connection herewith will
survive the execution and delivery of this Agreement and any investigation made
at any time by or on behalf of the Purchasers or holders of Series A Securities.
9.3 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of the Purchasers or
holders of Series A Securities are also for the benefit of, and enforceable by,
any subsequent holders of such shares.
9.4 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
9.5 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of and
shall not be utilized in interpreting this Agreement.
9.6 Notices. Any notices required or permitted to be sent hereunder shall
be delivered personally or mailed, certified mail, return receipt requested, or
delivered by overnight courier service to the following addresses, or such other
address as any party hereto designates by written notice to the Corporation, and
shall be deemed to have been given upon delivery, if delivered personally, three
days after mailing, if mailed, or one business day after delivery to the
courier, if delivered by overnight courier service:
If to the Corporation, to:
Blue Rhino Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxx, Chief Executive Officer
with a copy to:
House Law Firm
P.O. Drawer 26015
Winston-Salem, North Carolina 27114-6015
Attention: Don R. House, Esq.
-26-
If to Purchasers, to:
Platinum Venture Partners I, L.P.
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
9.7 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement, and the performance of the obligations
imposed by this Agreement, shall be governed by the laws of the State of
Delaware applicable to contracts made and wholly to be performed in that state.
9.8 Exhibits and Schedules. All exhibits and schedules hereto are an
integral part of this Agreement.
9.9 Exchange of Certificates. Upon surrender by any holder to the
Corporation of any certificate or certificates evidencing any shares of stock of
the Corporation, the Corporation at its expense will issue in exchange therefor,
and deliver to such holder, a new certificate or certificates representing such
shares of stock of the Corporation, in such denomination or denominations as may
be requested by such holder. Upon receipt of evidence satisfactory to the
Corporation of the loss, theft, destruction or mutilation of any certificate
representing any shares of stock of the Corporation, and in case of any such
loss, theft or destruction, upon delivery of an indemnity agreement satisfactory
to the Corporation, or in case of any such mutilation, upon surrender and
cancellation of such certificate, the Corporation at its expense will issue and
deliver to any such holder a new certificate evidencing such shares of stock of
the Corporation of like tenor, in lieu of such lost, stolen, destroyed or
mutilated certificate.
9.10 Final Agreement. This Agreement, together with the Merger Agreement,
the Related Agreements and the Certificate of Incorporation, constitutes the
complete and final agreement of the parties concerning the matters referred to
herein, and supersedes all prior agreements and understandings.
9.11 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one
instrument.
9.12 No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be used against any party.
-27-
9.13 Breach of Covenant. Without limiting the rights of the parties (the
"Non-Breaching Parties") to pursue all other legal and equitable rights
available to them for the other parties' failure to perform any of their
respective obligations under the Merger Agreement, this Agreement, the Related
Agreements or the Certificate of Incorporation, the parties hereto acknowledge
and agree that, while the Non-Breaching Parties will be entitled to seek to
recover damages and to exercise all other rights granted by law, the remedy at
law for any failure by the other parties to perform any such obligations may be
inadequate and that the Non-Breaching Parties will be entitled to specific
performance, injunctive relief or other equitable remedies in the event of any
such inadequacy.
9.14 Additional Issuance of Series A Preferred Shares. On or prior to
January 31, 1995, the Corporation may issue up to 4,203,828 additional Series A
Preferred Shares (but no Warrants) to any "accredited investor" (as such term is
defined under Rule 215 adopted by the Commission under the Securities Exchange
Act of 1934, as amended) ("Potential Investors") so long as such Series A
Preferred Shares shall be issued on the same terms and conditions as the Series
A Preferred Shares issued to the Purchasers at the Closing. Upon such purchase,
the purchaser or purchasers of such Series A Preferred Shares shall be deemed to
be a party to this Agreement and included within the term "Purchasers" hereunder
and added to Schedule 1 hereto. Such purchaser or purchasers shall execute a
counterpart of the Registration Agreement and thereby such purchaser or
purchasers shall be deemed to be a party to such agreement and included within
the term "Purchasers" thereunder and added to Schedule 1 thereto. Such
purchasers of purchasers shall execute a counterpart of the Shareholders'
Agreement and thereby such purchaser or purchasers shall be deemed to be a party
to such agreement and included within the term "Investors" thereunder and added
to Schedule 1 thereto. Notice of issuance of any Series A Preferred Shares as
permitted under this Section 9.14 shall be given promptly to the Purchasers.
9.15 Adjustments. The Corporation acknowledges and agrees that the
addition of Potential Investors pursuant to Section 9.14 is an accommodation and
as such to the extent that the Conversion Price (as defined in the Certificate
of Incorporation) or the Exercise Price (as defined in the Warrants) needs to be
adjusted to equitably account for the addition of such Potential Investors, the
Corporation will accept the Purchasers recommended adjustments, if any, to the
Conversion Price and Exercise Price, unless such recommendations by the
Purchasers are manifestly in error.
-28-
The parties hereto have executed this Series A Securities Purchase
Agreement on the date first set forth above.
Signatures
BLUE RHINO CORPORATION
By: /s/ XXXXX XXXX
------------------
Xxxxx Xxxx, Chief Executive Officer
PLATINUM VENTURE PARTNERS I, L.P.
By: PLATINUM VENTURE PARTNERS, INC.
By: /s/ XXXXXXX XXXXXX
----------------------
Xxxxxxx Xxxxxx, Vice President
/s/ XXXXXX X. XXXXXXXXXX
------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXX X. XXXXXXXXXX
-----------------------
Xxxxx X. Xxxxxxxxxx
/s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx
/s/ XXXXX X. XXXXXX
-------------------
Xxxxx X. Xxxxxx
/s/ XXXXXX X. STEEL & XXXXXXXX XXXXX
------------------------------------
Xxxxxx X. Steel & Xxxxxxxx Xxxxx JTWROS
/s/ XXXXXX X. XXXXXXXXX
-----------------------
Xxxxxx X. Xxxxxxxxx
/s/ XXX XXXXXX
--------------
Xxx Xxxxxx
/s/ XXX XXXXXXX
---------------
Xxx Xxxxxxx
/s/ XXXXXX X. XXXXXX
--------------------
Xxxxxx X. Xxxxxx
/s/ XXXXX XXXXXXX. SR.
----------------------
Xxxxx Xxxxxxx, Xx.
-29-
/s/ XXXXX XXXXXXX XX.
---------------------
Xxxxx Xxxxxxx, Xx.
XXXXXXX, INC.
By: /s/ XXXXX XXXXXXXX
----------------------
Xxxxx Xxxxxxxx, Director
/s/ XXXXX XXXX XXXX
-------------------
Xxxxx Xxxx Xxxx
/s/ XXX XXXXXXX
---------------
Xxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
-------------------
Xxxxxxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
-------------------
Xxxxxxx Xxxxxxx
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx
/s/ XXXXX XXXXXXX
-----------------
Xxxxx Xxxxxxx
/s/ XXXXX XXXXXXXXX
-------------------
Xxxxx Xxxxxxxxx
/s/ XXXXX XXXXXX
----------------
Xxxxx Xxxxxx
/s/ XXXXXXXXX XXXXXXXXXX
------------------------
Xxxxxxxxx Xxxxxxxxxx
XXXX XXXXXX BANK CUSTODIAN FBO
XXXXXX XXXXX XXX #8417
By: /s/ XXXXX X. XXXXX
----------------------
Xxxxx X. Xxxxx, Trust Officer, XXX
XXXXXXXX CAPITAL MANAGEMENT
By: /s/ XXXXX X. XXXXXXXX
-------------------------
Xxxxx X. Xxxxxxxx, Sole Proprietor
XXXXX X. XXXXXXXX TESTAMENTARY TRUST
By: /s/ XXXXX X. XXXXXXXX
-------------------------
Xxxxx X. Xxxxxxxx, Trustee
-30-
/s/ XXXXX XXXX
--------------
Xxxxx Xxxx
XXXXXXXX FAMILY DISCRETIONARY TRUST
By: /s/ XXXXX X. XXXXXXXXXX
---------------------------
Xxxxx X. Xxxxxxxxxx, Trustee
/s/ XXXXXX X. XXXXXXX & XXXXX XXXXXXXXXX-XXXXXXX
Xxxxxx X. Xxxxxxx & Xxxxx Xxxxxxxxxx-Xxxxxxx JTWROS
-31-
EXHIBITS AND SCHEDULES
Schedules
---------
1 Investors/Investors Allocation
2 Shareholders
5.1 Organization of Corporation
5.5 Owners of Capital Stock
5.10 Undisclosed Liabilities
5.12 Contracts, Leases, Etc.
5.13 Employee Benefit Plans
5.14 Employee Salaries
5.15 Personnel Contracts, Agreements, Etc.
5.16 Arrangements with Affiliates
5.18 Insurance
5.22 Proprietary Rights
5.24 Licenses and Permits
7.08(p) Liens
Exhibits
--------
A Form of Certificate of Incorporation
B Form of Noncompete Agreements
C Form of Registration Agreement
D Form of Shareholders' Agreement
E Form of Warrants
F Form of Opinion of Counsel to the Corporation
G Business Plan
Schedule 1
Investors List/Allocations
Purchase Amount
Series A via loan or purchase
Investor Preferred Shares Warrants through 12/21/94
-------- ---------------- --------- --------------------
Platinum Venture Partners I, L.P. 2,965,539 847,297 $1,029,150.68
Attn: Xxxxxxx X. Xxxxxx
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxxx 5,880,236 1,680,067 $2,040,657.53
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxx Xxxxxxxxxx 2,187,048 419,047 $758,986.30
Duchossois Industries, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxx 1,466,664 419,047 $508,986.30
000 X. Xxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Xxxxx X. Xxxxxx 293,333 83,809 $101,797.26
0000 Xxxxxxx Xxxxxxx Xxxxx, 00X
Xxxxxx Xxxxx, XX 00000
Xxxxxx X. Steel & 293,396 83,827 $101,819.18
Xxxxxxxx Xxxxx JTWROS
000 X. 0xx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx 293,522 83,864 $101,863.01
0000 Xxxxxxxxxxx Xxxxx
Xxxxxx Xxxx Xxxx, XX 00000
Xxx Xxxxxx 292,953 41,905 $101,655.75
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Xxx Xxxxxxx 146,951 41,986 $50,997.26
X.X. Xxx 000
Xxxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxx 73,349 20,957 $25,454.79
000 00xx Xxxxxx
Xxxxxxx Xxxxxxx, XX 00000
Xxxxx Xxxxxxx, Xx. 73,333 20,952 $25,449.32
000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Xxxxx Xxxxxxx, Xx. 73,333 20,952 $25,449.32
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Xxxxxxx, Inc. 1,466,664 419,047 $508,986.30
c/o Xxxxx Xxxxxxxx
000 X. Xxxxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxx Xxxx 73,333 20,952 $25,449.32
0000 Xxxxxxx Xxxxx
Xxxxxxx-Xxxxx, XX 00000
Xxx Xxxxxxx 58,414 0 $20,271.78
Industrial Advisory Group, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 248,957 0 $86,397.26
0000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 73,223 0 $25,410.96
1447 Altgeld
Xxxxxxx, XX 00000
Xxxxxx Xxxxx 58,313 0 $20,236.71
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Xxxxx Xxxxxxx 58,212 0 $20,201.64
0000 X. Xxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxxxxxx 14,524.5 0 $5,040.5
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxxx 14,524.5 0 $5,040.5
-2-
000 X. Xxxx
Xx Xxxxxx Xxxx, XX 00000
Xxxxxxxxx Xxxxxxxxxx 36,667 10,476 $12,724.66
000 Xxxxxxx Xxxx Xxxx #000
Xxx Xxxx, XX 00000
Xxxx Xxxxxx Bank Custodian 288,154 0 $ 100,000
FBO Xxxxxx Xxxxx XXX #8417
MBA Xxxxxx Inc.
0000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Xxxxxxxx Capital Management 1,440,769 0 $ 500,000
c/o Xxxxx Xxxxxxxx
0000 Xxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxx Xxxxxx
Xxxxx X. Xxxxxxxx Testamentary Trust 1,440,769 0 $ 500,000
c/o Xxxxx Xxxxxxxx, sole trustee
0000 Xxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxx Xxxxxx
Xxxxx Xxxx 43,223 0 $ 15,000
000 Xxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, X.X. 00000
Xxxxxxxx Family Discretionary Trust 720,384 0 $ 250,000
c/o Xxxxx Xxxxxxxxxx, Trustee
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx &
Xxxxx Xxxxxxxxxx-Xxxxxxx JTWROS 720,384 0 $ 250,000
0000 X. Xxxxxxx
Xxxxxxx, XX 00000
Schedule 2
Shareholders
Shareholder Number of Common Shares
----------- -----------------------
Xxxxx X. Xxxx 9,935,000
000 Xxxx Xxxxxx Xxxx.
Xxxxxxx Xxx, XX 00000
Xxxxxx X. Xxxxxxxxxx 7,800,000
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxxx X. Xxxx 100,000
000 Xxxx Xxxxxx Xxxx.
Xxxxxxx Xxx, XX 00000
Mayo X. XxXxxxxxx 100,000
X.X. Xxx 00
Xxxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx 25,000
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000
Xxxxxx Xxxxxx 25,000
Xxxxx 0, Xxx 000
Xxxxxxxxxx, XX 00000
Xxxxx Xxxxxx 25,000
Xxxxx 0, Xxx 000
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxx 25,000
Trustee for Sarkanda X. Xxxxxxxxxxxx
000 Xxxx Xxxxxx Xxxx.
Xxxxxxx, XX 00000
Xxxxxx X. Xxxx 25,000
Trustee for Xxxxxxx X. Xxxxxxxxxxxx
000 Xxxx Xxxxxx Xxxx.
Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxxxx 100,000
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
-1-
Xxxxxxxx X. Xxxxxxxxxx 25,000
000 Xxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, XX 00000
Xxxxxx X. Xxxxxxxxxx 25,000
Trustee for Xxxxxx X. Xxxxxxxxxx
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxxxx 25,000
Trustee for Xxxxxxxxxx Xxxxxxxxxx
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 000000
Xxxxxxxx Xxxxxxxx 25,000
Trustee for Xxxxx Xxxxxxx
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Family Limited Partnership 1,600,000
x/x Xxx X. Xxxxxx
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Xx. Xxxxxx Xxxxxx 200,000
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
-------------------------------------------------------------------------------
Total 20,060,000
-2-
Restricted Stock Shareholders
Shareholder Number of Restricted Common Shares
----------- ----------------------------------
Xxxxx X. Xxxx 500,000
000 Xxxx Xxxxxx Xxxx.
Xxxxxxx Xxx, XX 00000
Xxxxxxxx Xxxxxxxx 750,000
0000 Xxxxxx Xxxxxx
Xxxxxxxx'x Xxxxxx, XX 00000
Xxxxx Xxxxxxx 500,000
000 Xxxxxx Xxxx Xxx
Xxxxxxx, XX 00000
X.X. Xxxxxxxx, III 200,000
0000 Xxxxxxxx Xxxx
Xxxxxxx-Xxxxx, XX 00000
Xxx Xxxxxxx 100,000
000 Xxxxxxxxxx Xxxxx
Xxxx, XX 00000
Xxxx Xxxx 75,000
Telenitche Marketing
0000 X. Xxxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxx 50,000
0000 Xxxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, XX 00000
Xxxxxx Xxxxx 25,000
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
Total 2,200,000
-3-
Blue Rhino Corporation
Series A Securities Purchase Agreement
Schedule 5.1 - Organization of Corporation
------------------------------------------
1. State of Incorporation: Delaware
Qualified: None
2. State of Incorporation: North Carolina
Qualified: Texas
Applied to be Qualified:
Arizona - in process
California - in process
Florida - in process
Georgia - in process
Louisiana - in process
Tennessee - in process
BLUE RHINO CORPORATION
SERIES A SECURITIES PURCHASE AGREEMENT
EXHIBIT 5.5
(Page 1 of 2)
A. BLUE RHINO CORPORATION
Common Stock
Shareholder Certificate /Number of Shares/Date Issued
----------- -----------------------------------------
Xxxxx X. Xxxx #1 - 6,420,000 - 3/25/94
#2 - 40,000 - 3/25/94
#3 - 3,455,000 - 5/01/94
#3A - 20,000 - 5/01/94
Xxxxxx X. Xxxxxxxxxx #4 - 5,200,000 - 3/25/94
#5 - 2,600,000 - 5/01/94
Xxxxxx X. Xxxx #6 - 100,000 - 5/01/94
Mayo X. XxXxxxxxx #7 - 100,000 - 5/01/94
Xxxxxxx Xxxxxx #8 - 25,000 - 5/01/94
Xxxxxx Xxxxxx #9 - 25,000 - 5/01/94
Xxxxx Xxxxxx #10 - 25,000 - 5/01/94
Xxxxxx X. Xxxx #11 - 25,000 - 5/01/94
Trustee for
Sarkanda X. Xxxxxxxxxxxx
Xxxxxx X. Xxxx #12 - 25,000 - 5/01/94
Trustee for
Xxxxxxx X. Xxxxxxxxxxxx
Xxxxxxxx Xxxxxxxx #00 - 100,000 - 5/01/94
Xxxxxxxx X. Xxxxxxxxxx #14 - 25,000 - 5/01/94
Xxxxxx X Xxxxxxxxxx #15 - 25,000 - 5/01/94
Trustee for
Xxxxxx X. Xxxxxxxxxx
Xxxxxxxx Xxxxxxxx #16 - 25,000 - 5/01/94
Trustee for
Xxxxxxxxxx Xxxxxxxxxx
EXHIBIT 5.5
(Page 2 of 2)
Xxxxxxxx Xxxxxxxx #17 - 25,000 - 5/01/94
Trustee for
Xxxxx Xxxxxxx
Xxxxxx Family #18 - 1,600,000 - 5/01/94
Limited Xxxxxxxxxxx
Xx Xxxxxx Xxxxxx #00 - 200,000 - 5/01/94
----------
TOTAL 20,060,000
BLUE RHINO CORPORATION
Restricted Class A Common Stock
Shareholder Certificate/Number of Shares/Date Issued
----------- ----------------------------------------
Xxxxx X. Xxxx #1 - 500,000 - 11/01/94
Xxxxxxxx Xxxxxxxx #2 - 750,000 - 11/01/94
Xxxxx Xxxxxxx #3 - 500,000 - 11/01/94
X. X. Xxxxxxxx, III #4 - 200,000 - 11/01/94
Xxx Xxxxxxx #5 - 100,000 - 11/01/94
Xxxx Xxxx #6 - 75,000 - 11/01/94
Xxxxx Xxxx #7 - 50,000 - 11/01/94
Xxxxxx X. Xxxxx #8 - 25,000 - 11/01/94
---------
TOTAL 2,200,000
B. All of the above common Shares were issued at a purchase price of $0.001
per share.
C. There are no declared but unpaid dividends or undeclared dividend arrearage
on the above Common Stock.
Blue Rhino Corporation
----------------------
Series A Securities Purchase Agreement
--------------------------------------
Schedule 5.10 - Undisclosed Liabilities
---------------------------------------
None
Blue Rhino Corporation
Series A Securities Purchase Agreement
Schedule 5.12 - Contracts, Leases. Etc.
---------------------------------------
1. Oral Ground Lease for Boonville Distribution Facility from Prim family with
rent of $1,500 per month.
2. Oral Lease for 30,000 gallon propane tank located at Boonville Distribution
Facility from American Oil & Gas which is an Affiliate. Proposed rent is
$500 per month
3. Negotiations are in process for the lease of real estate in California for
a distribution facility.
4. Negotiations are in process for the lease of real estate in Florida for a
distribution facility.
Blue Rhino Corporation
----------------------
Series A Securities Purchase Agreement
--------------------------------------
Schedule 5.13 - Employee Benefits
---------------------------------
1. Platinum 401(k) Retirement Plan
2. The Platinum Plan (a self-funded welfare benefit plan)
3. Platinum Life Insurance Plan for Salaried Employees
4. Platinum Life Insurance Plan for Hourly Employees
5. Platinum Long-term Disability Plan for Salaried Employees
6. Paid Vacation
7. Holiday Pay
Blue Rhino Corporation
----------------------
Series A Securities Purchase Agreement
--------------------------------------
Schedule 5.14 - Employee Salaries
---------------------------------
Xxxxx X. Xxxx, Chairman, Chief Executive Officer 125,000*
Xxxxxx X. Xxxxxxxxxx, Vice Chairman 125,000*
Xxxxxxxx X. Xxxxxxxx - President, Chief Operating Officer 150,000
Xxxxx X. Xxxxxxx - Vice President of Sales 110,000
X.X. Xxxxxxxx, III - Chief Financial Officer, Secretary, Treasurer 100,000*
All others with annual salaries exceeding $50,000 $210,000
* - Paid through Platinum Service Corporation
Blue Rhino Corporation
Series A Securities Purchase Agreement
Schedule 5.15 - Personnel Contracts, Agreements, Etc.
-----------------------------------------------------
1. Executive Employment Agreement dated April 22, 1994 between Blue Rhino
Corporation and Xxxxx X. Xxxxxxx.
2. Marketing Agreement with Xxxxxxxx Associates, Inc.
Schedule 5.16
Arrangements with Affiliates
Management Agreement. Management Agreement between Blue Rhino Corporation and
Platinum Service Corporation, in draft form and not yet finalized, covering
primarily human resources, risk management, employee benefits, accounting and
finance which services shall be provided at cost and in no event will exceed the
charges for such services from an independent third party. Such Management
Agreement will be subject to approval by the Board and at least two (2) Series A
Preferred Directors.
Management Bonus Compensation Plan. Management Bonus Compensation Plan as set
forth in October 7, 1994 Term Sheet from Platinum Venture which provides in
pertinent part that:
The Purchasers desire to provide additional cash incentives to management to
meet and exceed operating plans. Accordingly, an additional cash bonus incentive
pool for management will be established equal to 10% of pre-tax profits, payable
to the extent that pre-tax profits after the bonus pool exceed the annual agreed
upon operating plan. For example, if the approved operating plan forecasts pre-
tax profit of $1.0 million, the first $110,000 of pre-tax profit over the
$1,000,000 threshold will be payable as a bonus and thereafter the bonus pool
will increase pro rate 1:10 for every additional $10 of pre-tax income.
This profit sharing arrangement will be reviewed annually by the Board and will
be subject to approval by two (2) Series A Preferred Directors.
Oral Leases. Oral Leases for Boonville Distribution Facility and storage tank
set forth on Schedule 5.12.
Blue Rhino Corporation
----------------------
Series A Securities Purchase Aqreement
--------------------------------------
Schedule 5.1 8 - Insurance
--------------------------
Type Insurer Policy # Expiration Date
---- ------- ------- ---------------
General Liability Federated 2031615 10/01/94
Automobile Liability Federated 2031615 10/01/94
Excess Liability Federated 2031616 10/01/94
Worker's Compensation Federated 2031617 10/01/94
General Liability U.S. Fire Ins. Co 000-000000-0 07/31/95
Automobile Liability U.S. Fire Ins. Co 000-000000-0 07/31/95
Excess Liability U.S. Fire Ins. Co 553-0176801 07/31/95
Worker's Compensation U.S. Fire Ins. Co 000-000000-0 07/31/95
Blue Rhino Corporation
Series A Securities Purchase Agreement
Schedule 5.22 - Proprietary Rights
----------------------------------
1. Application for federal trademark registration for the name Blue Rhino and
the logo of the blue rhino animal character.
Blue Rhino Corporation
Series A Securities Purchase Agreement
Schedule 5.24 - Permits, Licenses and Approvals
-----------------------------------------------
l. North Carolina, Forsyth County and Yadkin County privilege licenses.
2. Qualification in states other than Delaware - see Schedule 5.1.
3. Approval for Distribution Facility in Polk County, Texas by Railway
Commissioner of Texas, Liquified Petroleum Gas Division, dated November 17,
1994.
4. Application for Air Quality Permit for Distribution Facility located in
Boonville, North Carolina - in process.
5. Liquified Petroleum Gas License for Florida dated August 2, 1994.
6. Conditional Use Permit for Distribution Facility in Montclair, California
dated November 15, 1994.
7. Each retail cylinder exchange location is required to have local city or
county approval. These approvals are in various stages of completion and
will require continuous processing.
Blue Rhino Corporation
Series A Securities Purchase Agreement
Schedule 7.08(p) Liens
-----------------------
1. Security interest under finance leases on the following:
Trailers - 4
Truck - 1
Tractors - 4
Pick-ups - 3
Flat Trailers - 3
Box Trailers - 2
Exhibit A
CERTIFICATE OF INCORPORATION
OF
BLUE RHINO CORPORATION
FIRST: The name of the Corporation is Blue Rhino Corporation (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx of New Castle. The
name of the registered agent of the Corporation at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation shall have
authority to issue is 85,000,000 which are divided into two classes as follows:
(a) 25,000,000 shares of Series A Convertible Participating Preferred
Stock, $0.001 par value per share (the "Series A Preferred" and shares of
Series A Preferred the "Series A Preferred Shares"); and
(b) 60,000,000 shares of common stock of the Corporation, $0.001 par
value per share (the "Common Stock").
The powers, preferences and relative, participating, optional or other
rights of the capital stock and the qualifications, limitations or restrictions
thereof are as follows:
PART A. TERMS APPLICABLE TO SERIES A PREFERRED
Section 1. Liquidation.
1.1 Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of Series A Preferred will be
entitled to be paid, before any distribution or payment is made upon any
Common Stock, an amount in cash equal to the aggregate Liquidation Value of
all shares of Series A Preferred outstanding. If upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets available for distribution to the shareholders of
the Corporation (the "Distributable Funds") shall be insufficient to permit
the payment to the holders of Series A Preferred Shares of the aforesaid
full preferential amount, then the Distributable Funds shall be distributed
to the holders of Series A Preferred Shares, ratably in proportion to the
number of Series A Preferred Shares held by each such holder on the date of
liquidation, dissolution or winding up of the Corporation.
(b) After the payment or the setting aside for such payment of the
preferential amounts payable pursuant to the preceding paragraph, the
holders of the Series A
Preferred Shares shall be entitled to receive a ratable portion of all of
the remaining assets of the Corporation (together with the holders of the
Common Stock), if any, based upon the number (including any fraction) of
shares of Common Stock into which the Series A Preferred Shares then held
by such holders are then convertible.
(c) The Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the payment date
stated therein, to each record holder of Series A Preferred.
1.2 Other Liquidation Events. A Change of Control, Change in Ownership
(as hereinafter defined), Fundamental Change (as hereinafter defined) or other
reorganization in which the stockholders of the Corporation immediately prior to
the transaction possess less than 50% of the voting power of the surviving
entity (or its parent) immediately after the transaction shall be deemed to be a
liquidation for purposes of Section 1.l above, unless the holders of a majority
of the Series A Preferred Shares outstanding elect by written notice to the
Corporation that such Change in Control, Change of Ownership, Fundamental Change
or other reorganization shall not be deemed a liquidation. The term "Change in
Ownership" means any sale or issuance or series of sales and/or issuances of
shares of the Corporation's capital stock by the Corporation or any holders
thereof which results in any Person or group of affiliated Persons (other than
the holders of Common Stock and Series A Preferred Shares as of the date of the
Securities Purchase Agreement) owning capital stock of the Corporation
possessing the voting power (under ordinary circumstances) to elect a majority
of the Board. The term "Fundamental Change" means (a) a sale or transfer of all
or substantially all of the assets of the Corporation, or of the Corporation and
its Subsidiaries on a consolidated basis, in any transaction or series of
transactions, and (b) any merger or consolidation to which the Corporation is a
party, except for a merger in which the Corporation is the surviving Corporation
and, after giving effect to such merger, the holders of the Corporation's
outstanding capital stock immediately prior to the merger shall own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Board after such merger.
Nothing contained in this Section 1.2 shall be deemed to prevent any holder
of Series A Preferred Shares from (i) exercising such holder's right of
conversion pursuant to Section 4.1 hereof, with respect to any share of Series A
Preferred at any time prior to the liquidation, including following the giving
of any notice of such liquidation, or (ii) as a holder of Series A Preferred
Shares, participating in, or being a party to, the reorganization or the
transaction in which a Change in Control, Change of Ownership, Fundamental
Change or other reorganization shall occur, as described in this Section 1.2.
Section 2. Dividends.
2.1 General Obligation. When and as declared by the Board and to the
extent legally permissible, the Corporation will pay preferential dividends as
provided in this Section 2 to the holders of the Series A Preferred. Except as
otherwise provided herein, dividends on each Series A Preferred Share will
accumulate cumulatively on a daily basis at the rate of 8% per annum of the
Liquidation Value thereof, from and including the date of issuance of such
Series A Preferred Share. Such dividends will accumulate whether or not they
have been declared and whether or not there are profits, surplus or other funds
of the Corporation legally
-2-
available for the payment of dividends. The date on which the Corporation
initially issues any Series A Preferred Share will be deemed to be its "date of
issuance" regardless of the number of times transfer of such Series A Preferred
Share is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence such
Series A Preferred Share.
2.2 Distribution of Partial Dividend Payments. If at any time the
Corporation declares less than the total amount of dividends then accumulated
with respect to the Series A Preferred, such dividends will be payable to the
holders of the Series A Preferred, ratably in proportion to the number of Series
A Preferred Shares held by each such holder on the date such dividends were
declared.
2.3 Dividends With Respect to Common Stock. If at any time the
Corporation pays any dividends or makes any other distributions with respect to
the Common Stock, the Corporation shall pay at such time to each holder of
Series A Preferred the dividends or other distributions which such holder would
have been entitled to receive had such holder converted all of his, her or its
Series A Preferred Shares into Common Stock on the date as of which the holders
of Common Stock of record entitled to such dividends or other distributions were
determined.
Section 3. Voting Rights. The Series A Preferred shall have those voting
rights set forth for the Series A Preferred in Part C below.
Section 4. Conversion
4.1 Conversion Procedure.
(a) At any time and from time to time, any holder of Series A
Preferred may convert all or any portion of the Series A Preferred Shares
(including any fraction of a share) held by such holder into the number of
shares of Common Stock computed by (i) multiplying the number of Series A
Preferred Shares to be converted by $0.347037 and (ii) dividing the
resulting product by the Conversion Price then in effect.
(b) Each conversion of Series A Preferred Shares will be deemed to
have been effected as of the close of business on the date on which the
certificate or certificates representing the Series A Preferred Shares to
be converted have been surrendered at the principal office of the
Corporation. At such time as such conversion has been effected, the rights
of the holder of such Series A Preferred Shares as such holder will cease
and the Person or Persons in whose name or names any certificate or
certificates for shares of Common Stock are to be issued upon such
conversion will be deemed to have become the holder or holders of record of
the shares of Common Stock represented thereby.
(c) As soon as possible after a conversion has been effected (but in
any event within 10 business days in the case of Section 4.1(c)(i) below),
the Corporation will deliver to the converting holder:
-3-
(i) a certificate or certificates representing the number of shares of
Common Stock issuable by reason of such conversion in such name or names
and such denomination or denominations as the converting holder has
specified;
(ii) payment in an amount equal to the amount payable under Section
4.1(f) below with respect to such conversion; and
(iii) a certificate representing any Series A Preferred Shares which
were represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not
converted.
(d) The issuance of certificates for shares of Common Stock upon conversion
of Series A Preferred Shares will be made without charge to the holders of such
Series A Preferred Shares for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of shares of Common Stock. Upon conversion of each Series A Preferred
Share, the Corporation will take all such actions as are necessary in order to
insure that the Common Stock issuable with respect to such conversion will be
validly issued, fully paid and nonassessable.
(e) The Corporation will not close its books against the transfer of Series
A Preferred Shares or shares of Common Stock issued or issuable upon conversion
of Series A Preferred Shares in any manner which interferes with the timely
conversion of Series A Preferred Shares.
(f) If any fractional interest in a share of Common Stock would, except for
the provisions of this Section 4.l(f), be deliverable upon any conversion of
the Series A Preferred Shares, the Corporation, in lieu of delivering the
fractional share therefor, may pay an amount to the holder thereof equal to the
fair market value (as determined by the Board) of such fractional interest as of
the date of conversion.
4.2 Conversion Price.
(a) Initial Conversion Price. The initial Conversion Price will be
determined by the following formula:
$8,000,000 - .067/.933 (PI)
--------------------------
$20,060,000(1 + .067/.933)
Where
PI = The total dollar amount invested in Series A Preferred
Shares pursuant to the Securities Purchase Agreement.
By way of illustration, in the event PI equals $7,500,000 the
initial Conversion Price will be approximately $0.347.
-4-
In order to prevent dilution of the conversion rights granted to holders of
Series A Preferred hereunder, the Conversion Price will be subject to
adjustment from time to time pursuant to this Section 4.2 and Sections 4.4
and 4.5 below. For purposes of this Section 4.2, the Corporation shall be
deemed to have issued or sold Common Stock as set forth in Section 4.3
below.
(b) Adjustment for Dilutive Events. If and whenever on or after the
original date of issuance of the Series A Preferred the Corporation issues
or sells, or in accordance with Section 4.3 below is deemed to have issued
or sold, any shares of Common Stock for consideration per share less than
the Conversion Price (the "Diluted Share Price") in effect immediately
prior to the time of such issue or sale (a "Dilutive Event"), then
forthwith upon the occurrence of any such Dilutive Event the Conversion
Price will be reduced so that the Conversion Price in effect immediately
following the Dilutive Event will equal the Diluted Share Price.
Notwithstanding the foregoing, the issuance by the Corporation of up to
2,000,000 shares of Common Stock, or securities convertible into or options
to acquire up to 2,000,000 shares of Common Stock, issued pursuant to stock
option plans or grants to officers or employees approved by the Board or
the issuance of Common Stock pursuant to the Warrants issued pursuant to
the Securities Purchase Agreement shall not constitute a Dilutive Event. As
used in this Section 4.2(b) and in Section 4.3 below, the term "Common
Stock" shall include Common Stock Equivalents. Notwithstanding anything
contained herein to the contrary, the Conversion Price of Series A
Preferred held by a particular holder shall not be adjusted pursuant to
this Section 4 in connection with a particular Dilutive Event, or any
subsequent Dilutive Event, if such holder of Series A Preferred fails to
purchase, after being offered by the Corporation the opportunity to
purchase, a percentage of the securities, rights or options, or any
combination thereof, the sale of which constitute the Dilutive Event, which
is equal to or greater than 75% of the percentage ownership of the
Corporation's Common Stock on a fully diluted basis held by such holder
immediately prior to such Dilutive Event. Series A Preferred which is no
longer subject to adjustment as a result of the preceding sentence shall
remain subject to such limitation regardless of any subsequent transfers,
and at each time that any Series A Preferred so loses its rights to such
adjustment, all shares of Series A Preferred which have lost their right to
such adjustment as of such time shall be automatically classified into (and
the outstanding certificates representing such Series A Preferred will
automatically be deemed to represent) new sub-series X-0, X-0, X-0, etc.,
consecutively, beginning with A-1. The holders of shares of each such sub-
series shall promptly deliver the certificate(s) representing such stock to
the Corporation upon the Corporation's request, for exchange or notation to
reflect such sub-series. If any such certificates are not delivered to the
Corporation, the Corporation shall make appropriate notations on its stock
records, which may include stop transfer instructions, and may place in
escrow, pending receipt of such certificates, all dividend payments or
other distributions owing with respect to the shares represented by such
certificates.
4.3 Issuance and Sale of Common Stock. For purposes of determining the
adjusted Conversion Price pursuant to Section 4.2(b) above the following events
shall be deemed to be an issuance and sale of Common Stock by the Corporation:
-5-
(a) Issuance of Rights or Options. If (i) the Corporation in any
manner grants any rights or options to subscribe for or to purchase shares
of Common Stock or any securities convertible into or exchangeable for
shares of Common Stock (such rights or options referred to herein as
"Options" and such convertible or exchangeable stock or securities referred
to herein as "Convertible Securities") and (ii) the Price Per Share of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Conversion Price in effect immediately prior to the time of the granting of
such Options then the shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of such Convertible Securities
will be deemed to have been issued and sold by the Corporation for such
Price Per Share. For the purposes of this Section 4.3(a), the "Price Per
Share" is determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon exercise of all such Options, plus in the
case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the issuance or sale of such Convertible Securities and
the conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion Price
will be made when Convertible Securities are actually issued upon the
exercise of such Options or when Common Stock is actually issued upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(b) Issuance of Convertible Securities. If (i) the Corporation in any
manner issues or sells any Convertible Securities and (ii) the Price Per
Share of shares of Common Stock issuable upon such conversion or exchange
is less than the Conversion Price in effect immediately prior to the time
of such issue or sale then the shares of Common Stock issuable upon the
conversion or exchange of such Convertible Securities will be deemed to
have been issued and sold by the Corporation for such Price Per Share. For
the purposes of this Section 4.3(b), the "Price Per Share" will be
determined by dividing (i) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, payable to the Corporation upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No further
adjustment of the Conversion Price will be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is
made upon exercise of any Options for which adjustments to the Conversion
Price had been or are to be made pursuant to Section 4.3(a) above, no
further adjustment of the Conversion Price will be made by reason of such
issue or sale.
(c) Change in Option Price or Conversion Rate. If at any time there is
a change in (i) the purchase price provided for in any Options, (ii) the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible
-6-
Securities, or (iii) the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock, then the Conversion
Price in effect at the time of such change will be readjusted to the
Conversion Price which would have been in effect had those Options or
Convertible Securities still outstanding at the time of such change
provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time such Options or
Convertible Securities were initially granted, issued or sold; provided
that if such adjustment would result in an increase of the Conversion Price
then in effect, such adjustment will not be effective until 30 days after
written notice thereof has been given by the Corporation to all holders of
the Series A Preferred.
(d) Calculation of Consideration Received. If any shares of Common
Stock, Option or Convertible Security is issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor or the
Price Per Share, as the case may be, will be deemed to be the net amount
received or to be received, respectively, by the Corporation therefor. In
case any shares of Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation or the non-cash
portion of the Price Per Share, as the case may be, will be the fair value
of such consideration received or to be received, respectively, by the
Corporation; except where such consideration consists of securities, in
which case the amount of consideration received or to be received,
respectively, by the Corporation will be the Market Price thereof as of the
date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving corporation as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash and securities
will be determined jointly by the Corporation and the holders of a majority
of the outstanding Series A Preferred Shares. If such parties are unable to
reach agreement within a reasonable period of time, the fair value of such
consideration will be determined by an independent appraiser jointly
selected by the Corporation and the holders of a majority of the
outstanding Series A Preferred Shares.
(e) Integrated Transactions. In case any Option is issued in
connection with the issuance or sale of other securities of the
Corporation, together comprising one integrated transaction in which no
specific consideration is allocated to such Option by the parties thereto,
the Option will be deemed to have been issued for a consideration of $.01.
(f) Record Date. If the Corporation takes a record of the holders of
Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in shares of Common Stock, Options or in
Convertible Securities or (ii) to subscribe for or purchase shares of
Common Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issuance or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
-7-
dividend or upon the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
4.4 Subdivision or Combination of Common Stock. If the Corporation at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Corporation at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination will be
proportionately increased.
4.5 Organic Change. Prior to the consummation of any Organic Change, the
Corporation will make appropriate provisions (in form and substance satisfactory
to the holders of a majority of the shares of Series A Preferred then
outstanding) to insure that each of the holders of Series A Preferred Shares
with respect to all or any of the shares of Series A Preferred held thereby will
thereafter have the right to acquire and receive (in addition to the
liquidation, redemption and other relative rights and preferences of the Series
A Preferred Shares), in lieu of or in addition to the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's shares of Series A Preferred, such shares of stock, securities or
assets as such holder would have received in connection with such Organic Change
if such holder had converted his, her or its Series A Preferred Shares
immediately prior to such Organic Change. In any such case, the Corporation will
make appropriate provisions (in form and substance satisfactory to the holders
of a majority of the shares of Series A Preferred then outstanding) to insure
that the provisions of this Section 4.5 will thereafter be applicable to the
Series A Preferred (including, an immediate adjustment of the Series A Preferred
Conversion Price to the value for the Common Stock reflected by the terms of
such Organic Change and a corresponding immediate adjustment in the number of
shares of Common Stock acquirable and receivable upon conversion of shares of
Series A Preferred, if the value so reflected is less than the Series A
Preferred Conversion Price in effect immediately prior to such Organic Change).
The Corporation will not effect any such Organic Change, unless prior to the
consummation thereof, the successor Corporation resulting from such Organic
Change assumes by written instrument (in form reasonably satisfactory to the
holders of a majority of the shares of Series A Preferred then outstanding), the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
All other terms of the Series A Preferred shall remain in full force and
effect following such an Organic Change. The provisions of this Section 4.5
shall similarly apply to successive Organic Changes.
4.6 Notices.
(a) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Series A
Preferred specifying the Conversion Price in effect thereafter with respect
to the particular holder.
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(b) The Corporation shall give written notice to all holders of Series
A Preferred at least 20 days prior to the date on which the Corporation
closes its books or takes a record for determining rights to vote with
respect to any Organic Change, Change in Control, Change of Ownership,
Fundamental Change, other reorganization, dissolution or liquidation. The
Corporation shall also give written notice to the holders of Series A
Preferred at least 20 days prior to the date on which any Organic Change,
Change in Control, Change of Ownership, Fundamental Change, other
reorganization, dissolution or liquidation shall occur.
4.7 Mandatory Conversion.
(a) If the Corporation shall effect a firm commitment underwritten
Public Offering of shares of its Common Stock in which (a) the aggregate
price paid by the public for the shares will be at least $15 million and
(b) the price per share paid by the public for such shares will be at least
four times the Conversion Price then in effect ("Qualified Public
Offering") then the Corporation shall require the conversion of, and the
holders shall convert, all of the outstanding Series A Preferred Shares
into shares of Common Stock and upon such conversion each holder of Series
A Preferred Shares shall also receive from the Corporation in respect to
each share of Series A Preferred so converted, at such holder's election,
either (i) a cash amount equal to the Liquidation Value, or (ii) an
additional number of shares of registered Common Stock equal to the number
obtained by dividing the Liquidation Value by the price per share received
by the Corporation in such Qualified Public Offering, all without any
further action by the holders of such Series A Preferred Shares and whether
or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent. Any such mandatory conversion shall only
be effected at the time of and subject to the closing of the sale of such
shares pursuant to such Qualified Public Offering and upon written notice
of such mandatory conversion delivered to all holders of Series A Preferred
at least seven but not more than 20 days prior to such closing.
(b) If (i) the Corporation shall effect a firm commitment underwritten
Public Offering of shares of its Common Stock which is not a Qualified
Public Offering (a "Non-Qualified Public Offering") and (ii) the holders
of at least 66 2/3% of the Series A Preferred Shares outstanding at such
time shall approve such Non-Qualified Public Offering then the Corporation
shall require the conversion of, and the holders shall convert, all of the
outstanding Series A Preferred Shares into shares of Common Stock and upon
such conversion each holder of Series A Preferred Shares shall also receive
from the Corporation in respect to each share of Series A Preferred so
converted, at such holder's election, either (i) a cash amount equal to the
Liquidation Value, or (ii) an additional number of shares of registered
Common Stock equal to the number obtained by dividing the Liquidation Value
by the price per share received by the Corporation in such Non-Qualified
Public Offering, all without any further action by the holders of such
Series A Preferred Shares and whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer agent. Any
such mandatory conversion shall only be effected at the time of and subject
to the closing of the sale of such shares pursuant to such Non-Qualified
Public Offering and upon written notice of such
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mandatory conversion delivered to all holders of Series A Preferred at
least seven but not more than 20 days prior to such closing.
4.8 Certain Events. If any event similar to or of the type contemplated
by the provisions of this Section 4, but not expressly provided for by such
provisions, occurs, then the Board will make an appropriate and equitable
adjustment in the Conversion Price so as to protect the rights of the holders of
Series A Preferred; provided that no such adjustment will increase the
Conversion Price as otherwise determined pursuant to this Section 4 or decrease
the number of shares of Common Stock issuable upon conversion of each Series A
Preferred Share.
Section 5. Redemptions.
5.1 Scheduled and Optional Redemptions.
(a) The Corporation shall offer to redeem a number of Series A
Preferred Shares equal to 25% of the Series A Preferred Shares outstanding
as of October 31, 2000 on each of October 31, 2000, April 30, 2001 and
October 31, 2001 (each such date a "Scheduled Redemption Date") at a price
per share equal to the Series A Liquidation Value. The Corporation shall
offer to redeem all of the Series A Preferred Shares remaining outstanding
on April 30, 2002 (the "Final Redemption Date"), at a price per share equal
to the Series A Liquidation Value.
(b) Any holder of outstanding Series A Preferred Shares outstanding
after the Final Redemption Date may elect to require the Corporation to
redeem any or all of such outstanding Series A Preferred Shares at a price
per share equal to the Series A Liquidation Value by giving written notice
to the Corporation of such election (an "Optional Redemption Notice").
Within five days of receipt of such Optional Redemption Notice, the
Corporation shall give written notice of such election to all other holders
of Series A Preferred Shares, and such other holders may elect to require
the Corporation to redeem all or any portion of their Series A Preferred
Shares by giving written notice of such election to the Corporation within
30 days of receipt of the Corporation's notice. Upon receipt of such
elections, the Corporation shall be obligated to redeem from such holders,
at a price per share equal to the Series A Liquidation Value, all shares of
Series A Preferred with respect to which redemption elections have been
received within 60 days of receipt of the Optional Redemption Notice (the
"Optional Redemption Date").
(c) In the event that any Series A Preferred Shares scheduled to be
redeemed in a redemption under Section 5.1 are not redeemed ("Unredeemed
Shares"), the Corporation shall give written notice to each holder of
Series A Preferred Shares who redeemed shares in such redemption
("Redeeming Shareholders") that such Redeeming Shareholder may elect to
have redeemed his, her or its ratable portion of such Unredeemed Shares
based on the number of Series A Preferred Shares held by all such Redeeming
Shareholders at a price per share equal to the Series A Liquidation Value
by giving written notice to the Corporation of such election (an
"Additional Redemption Notice"). Upon receipt of such Additional Redemption
Notice, the Corporation shall be obligated to redeem from such Redeeming
Shareholders, at a price per share equal to the
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Series A Liquidation Value, all shares of Series A Preferred (but not more
than the Unredeemed Shares) with respect to which redemption elections have
been received within 60 days of receipt of the Additional Redemption Notice
(the "Additional Redemption Date").
(d) Nothing contained in this Section 5 shall be deemed to prevent any
holder of Series A Preferred Shares from (i) exercising such holder's right
of conversion pursuant to Section 4.1 hereof with respect to any share of
Series A Preferred or (ii) electing by written notice to the Corporation to
retain the Series A Preferred Shares held by such holder, at any time prior
to the redemption of shares of Series A Preferred, including following the
giving of any notice of such redemption.
5.2 Redemption Payment. For each Series A Preferred Share that is to be
redeemed, the Corporation shall be obligated on the Scheduled Redemption Date,
the Final Redemption Date, the Optional Redemption Date or the Additional
Redemption Date, as the case may be (each a "Redemption Date"), to pay to the
holder thereof (upon surrender by such holder at the Corporation's principal
office of the certificate representing such Series A Preferred Share) an amount
in immediately available funds equal to the Series A Liquidation Value of such
Series A Preferred Share. If the funds of the Corporation legally available for
redemption of Series A Preferred on any Redemption Date are insufficient to
redeem the total number of Series A Preferred Shares to be redeemed on such
date, those funds which are legally available shall be used first, to pay any
and all accumulated and unpaid dividends on the Series A Preferred Shares to be
redeemed, and thereafter, to redeem the Series A Preferred to be redeemed on
such Redemption Date, paid to the holders of the Series A Preferred ratably in
proportion to the number of Series A Preferred Shares held by each such holder
on such Redemption Date. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of Series A Preferred
Shares, such funds shall immediately be used to redeem the balance of the Series
A Preferred Shares which the Corporation had become obligated to redeem but had
not redeemed, paid to the holders of the Series A Preferred ratably in
proportion to the number of Series A Preferred Shares held by each such holder
on the date such funds become legally available. In case fewer than the total
number of Series A Preferred Shares represented by any certificate are redeemed,
a new certificate representing the number of unredeemed Series A Preferred
Shares shall be issued to the holder thereof without cost to such holder within
three business days after surrender of the certificate representing the redeemed
Series A Preferred Shares.
5.3 Determination of Each Holder's Series A Preferred Shares to be
Redeemed. The number of Series A Preferred Shares to be redeemed from each
holder thereof in redemptions under Section 5.1 shall be the number of Series A
Preferred Shares equal to (i) the total number of Series A Preferred Shares to
be redeemed from all holders of Series A Preferred in such redemption, times
(ii) the quotient derived by dividing the total number of Series A Preferred
Shares then held by such holder by the total number of Series A Preferred Shares
then outstanding.
5.4 No Rights After Redemption. No Series A Preferred Share which has
been redeemed is entitled to any dividends declared after the date on which the
Series A Liquidation Value of such Series A Preferred Share is paid to the
holder thereof. On such date all rights
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of the holder of such Series A Preferred Share shall cease, and such Series A
Preferred Share shall no longer be deemed to be outstanding.
5.5 Redeemed or Otherwise Acquired Shares. No share or shares of Series A
Preferred acquired by the Corporation by reason of redemption, conversion or
otherwise shall be reissued, and all such shares shall be cancelled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.
5.6 Events of Noncompliance.
(a) An Event of Noncompliance shall be deemed to have occurred:
(i) If the Corporation fails to pay dividends that have been
declared by the Board on the Series A Preferred (and such failure
continues for a period of 30 days);
(ii) If the Corporation fails to make any redemption payment with
respect to the Series A Preferred that it is obligated to make
hereunder;
(iii) If the Corporation breaches or otherwise fails to perform
or observe any other covenant or agreement contained herein or in the
Securities Purchase Agreement or the Related Agreements (as defined in
the Securities Purchase Agreement) and such failure to perform or
observe a covenant or agreement is not cured within 20 days after the
Corporation receives notice of the occurrence thereof;
(iv) If any representation, warranty or information contained in
the Securities Purchase Agreement or required to be furnished to any
holder of the Series A Preferred pursuant to the Securities Purchase
Agreement, or any writing furnished by the Corporation to any holder
of the Series A Preferred, is false or misleading in any material
respect on the date made or furnished;
(v) If the Corporation or any Subsidiary makes an assignment for
the benefit of creditors or admits in writing its inability to pay its
debts generally as they become due; or an order, judgment or decree is
entered adjudicating the Corporation or any Subsidiary bankrupt or
insolvent; or any order for relief with respect to the Corporation or
any Subsidiary is entered under the United States Bankruptcy Code; or
the Corporation or any Subsidiary petitions or applies to any tribunal
for the appointment of a custodian, trustee, receiver or liquidator of
the Corporation or any Subsidiary, or of any substantial part of the
assets of the Corporation or any Subsidiary, or commences any
proceeding (other than a proceeding for the voluntary liquidation and
dissolution of any Subsidiary) relating to the Corporation or any
Subsidiary under any bankruptcy reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction; or any such petition or application is filed, or
any such proceeding is commenced, against the Corporation or any
Subsidiary and either (x) the Corporation or any such Subsidiary by
any act indicates its
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approval thereof, consent thereto or acquiescence therein or (y) such
petition, application or proceeding is not dismissed within sixty (60)
days;
(vi) If any money judgment, writ or warrant of attachment, or
similar process involving an amount in any individual case in excess
of $50,000 or an amount in the aggregate in excess of $200,000 is
entered or filed against the Corporation or any of its Subsidiaries or
any of their respective assets and remains undischarged, unvacated,
unbonded or unstayed for a period of 30 days; or
(vii) If the Corporation or any Subsidiary defaults in the
performance of any obligation or obligations if the effect of such
default is to cause an amount having an individual principal amount in
excess of $100,000 or having an aggregate principal amount in excess
of $200,000 to become due prior to its stated maturity or to permit
the holder or holders of such obligation or obligations to cause an
amount having an individual principal amount in excess of $100,000 or
having an aggregate principal amount in excess of $200,000 to become
due prior to its stated maturity.
(b) If an Event of Noncompliance of the type described in Section
5.6(a)(v) above shall have occurred, the Corporation shall become obligated
to immediately redeem all of the Series A Preferred Shares outstanding at a
price per share equal to the Series A Liquidation Value, without any demand
or other action on the part of the holders thereof.
(c) If any Event of Noncompliance shall have occurred, the holders of
a majority of the Series A Preferred Shares then outstanding may demand by
written notice delivered to the Corporation immediate redemption of all or
any portion of the Series A Preferred Shares owned by such holder or
holders at a price per share equal to Series A Liquidation Value. The
Corporation shall give prompt written notice of any such election to the
other holders of Series A Preferred (but in any event within five days
after the receipt of the initial demand for redemption), and each such
other holder may demand immediate redemption of all or any portion of such
holder's Series A Preferred Shares by giving written notice thereof to the
Corporation within seven days after receipt of the Corporation's notice. If
any holder or holders of the Series A Preferred demands immediate
redemption of all or any portion of such holder's Series A Preferred Shares
pursuant to the terms of this Section 5.6(c), the Corporation shall pay to
such holder or holders the aggregate Series A Liquidation Value of the
Series A Preferred Shares requested to be redeemed by such holder or
holders within 10 days after receipt of the initial demand for redemption;
provided that if at any time after the requisite number of holders of
Series A Preferred Shares shall have demanded immediate redemption pursuant
to this Section 5.6(c), the Corporation shall pay all accumulated and
unpaid dividends on the Series A Preferred Shares and make all redemption
payments (if any) with respect to the Series A Preferred Shares which it
shall have been obligated to make otherwise than pursuant to this Section
5.6(c), and all Events of Noncompliance (other than nonpayment of dividends
and failure to make any redemption payment due and payable solely by virtue
of this Section 5.6(c)) shall be remedied or waived by such
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holders, then, and in every such case, such holders may, by written notice
to the Corporation, rescind and annul such demand for immediate redemption
and its consequences.
5.7 Pro Rata Redemptions. The Corporation shall not, and shall not permit
any Subsidiary of the Corporation to, purchase or acquire any shares of Series A
Preferred other than pursuant to the terms of this Section or pursuant to an
offer made on the equivalent terms to all holders of Series A Preferred Shares
at the time outstanding.
Section 6. Purchase Rights. If at any time the Corporation grants, issues
or sells any equity securities or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of Common Stock ("Purchase
Rights"), then each holder of Series A Preferred will be entitled to such
Purchase Rights, ratably in proportion to the number of shares of Common Stock
each such holder would have held if each had converted all Series A Preferred
Shares held by it into Common Stock on the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issuance or sale of such Purchase Rights.
Section 7. Miscellaneous.
7.1 Registration of Transfer. The Corporation will keep at its principal
office a register for the registration of Series A Preferred Shares. Upon the
surrender of any certificate representing Series A Preferred Shares at such
place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Series A Preferred Shares represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of Series A Preferred Shares as is requested by the holder
of the surrendered certificate and will be substantially identical in form to
the surrendered certificate, and dividends will accrue on the Series A Preferred
Shares represented by such new certificate from the date to which dividends have
been fully paid on such Series A Preferred Shares represented by the surrendered
certificate.
7.2 Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder will be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Series A Preferred Shares, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is an institutional investor its own
agreement will be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation will (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the number of Series A Preferred Shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends will accrue on the
Series A Preferred Shares represented by such new certificate from the date to
which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.
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7.3 Amendment and Waiver. No amendment, modification or waiver will be
binding or effective with respect to any provision of this Article IV without
the prior written consent of the holders of at least 66 2/3% of the Series A
Preferred Shares outstanding at the time such action is taken; provided that no
action will discriminate against any holder of Series A Preferred other than as
a result of a difference in the number of Series A Preferred Shares held by such
holders.
7.4 Notices. Except as otherwise expressly provided, all notices referred
to herein will be in writing and will be delivered by registered or certified
mail, return receipt requested, postage prepaid and will be deemed to have been
given on the third day after mailing (a) to the Corporation, at its principal
executive offices and (b) to any shareholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated in
writing by such holder).
PART B. TERMS APPLICABLE TO COMMON STOCK
Section 1. Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and after the payment
of any preferential amounts to be distributed to the holders of Series A
Preferred, the remaining Distributable Funds shall be distributed to the holders
of Common Stock and to the holders of the Series A Preferred, ratably in
proportion to the number of shares of Common Stock that each such holder holds,
or would hold if each holder of the Series A Preferred had converted all of the
Series A Preferred Shares held by it into Common Stock on the date of
liquidation, dissolution or winding up of the Corporation.
Section 2. Dividends. Whenever preferential dividends upon the Series A
Preferred, to the extent such stock may be entitled thereto, shall have been
paid or declared and set apart for payment, and not otherwise, the Board may
declare a dividend or distribution upon the Common Stock. Subject to the right
of the holders of the Series A Preferred to participate in such dividend or
distribution, dividends or distributions so declared by the Board shall be paid
to the holders of Common Stock ratably in proportion to the number of shares of
Common Stock held by each such holder on the date as of which the holders of
Common Stock of record entitled to receive such dividends or distribution were
determined.
Section 3. Voting Rights. The Common Stock shall have those voting rights
set forth for the Common Stock in Part C below.
PART C. VOTING RIGHTS
Section 1. In General. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by this Certificate of Incorporation
or any amendments thereto, on all matters submitted to a vote of the
shareholders of the Corporation, the Common Stock and Series A Preferred shall
vote together as a single class. For purposes of this Section 1, each holder of
Series A Preferred shall have the number of votes equal to the number of shares
of Common Stock which such holder would have been entitled to receive had such
holder converted all of his, her or its Series A Preferred Shares into Common
Stock on the date as of which the holders of Common Stock of record entitled to
vote were determined (assuming for this purpose only that Series A Preferred
Shares are convertible into fractional shares) and each holder of
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Common Stock shall have one vote per share of Common Stock held by such holder
on the date as of which the holders of Common Stock of record entitled to vote
were determined.
Section 2. Series A Preferred Directors.
2.1 Number of Series A Preferred Directors. The Board of Directors of the
Corporation shall include four directors designated as "Series A Preferred
Directors," who shall be nominated and elected in accordance with the provisions
of this Section 2.
2.2 Series A Preferred Directors.
(a) The Series A Preferred Directors shall be nominated by the holders
of a majority of the issued and outstanding Series A Preferred Shares
entitled to vote thereon, voting as a separate class. Once nominated, the
Series A Preferred Directors shall be elected to the Board by the holders
of a majority of the issued and outstanding Series A Preferred Shares
entitled to vote thereon, voting as a separate class, at any annual meeting
of the shareholders or special meeting of the shareholders called for that
purpose or by written consent in lieu of a meeting.
(b) The Series A Preferred Directors may be removed with or without
cause at any time by the holders of a majority of the issued and
outstanding Series A Preferred Shares entitled to vote thereon, voting as a
separate class.
(c) Vacancies of Series A Preferred Directors shall be filled in the
same manner as set forth for the election of Series A Preferred Directors
in Section 2.2 (a) above.
(d) Each Series A Preferred Director shall be entitled to cast one (1)
vote on each matter submitted to the Board for a vote, unless an Event of
Noncompliance shall have occurred, in which case each Series A Preferred
Director shall be entitled to cast three (3) votes on each matter submitted
to the Board. The special voting rights granted to Series A Preferred
Directors in this Section 2.2(d) shall continue for one year from the date
the Event of Noncompliance giving rise to such "super" voting rights ceases
to exist, but automatically will apply again if an additional Event of
Noncompliance occurs.
2.3 Quorum, Required Vote and Adjournment. At all meetings of the Board,
directors entitled to cast a majority of the votes of the entire Board shall
constitute a quorum for the transaction of business and the act of directors
entitled to cast a majority of the votes present at any meeting at which there
is a quorum shall be the act of the Board, except as may be otherwise
specifically provided by the General Corporation Law of the State of Delaware or
by this Certificate of Incorporation or any amendments thereto. Notwithstanding
the foregoing, a quorum shall not be present for the transaction of business of
the Board unless at least one Series A Preferred Director shall be present at a
meeting of the Board. If a quorum shall not be present at any meeting of the
Board, then the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
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Section 3. Special Matters. The affirmative vote of the holders of at
least a majority of the outstanding shares of the Corporation entitled to vote
thereon shall be required to approve: (a) any amendment to this Certificate of
Incorporation; and (b) any merger, consolidation or share exchange; provided
that where, pursuant to the General Corporation Law of the State of Delaware,
the holders of the outstanding shares of any class shall be entitled to vote as
a class in respect of any such amendment or transaction, the proposed amendment
or transaction shall be approved upon receiving the affirmative vote of the
holders of at least a majority of the outstanding shares of each class of shares
entitled to vote as a class in respect thereof and of the total outstanding
shares entitled to vote. In addition, so long as any Series A Preferred Shares
remain outstanding the Corporation shall not, without the affirmative vote or
written consent by the holders of not less than 51% of the Series A Preferred
Shares then outstanding:
(a) Issuances. Authorize, issue, or enter into any agreement providing
for the issuance (contingent or otherwise) of, (x) any notes or debt
securities containing equity features (including, without limitation, any
notes or debt securities convertible into or exchangeable for equity
securities, issued in connection with the issuance of equity securities or
containing profit participation features) or (y) any equity securities (or
any securities convertible into or exchangeable for any equity securities),
except for Common Stock or options to acquire Common Stock representing no
more than five percent (5%) of the fully diluted equity capital which may
be issued by the Board only after the approval of at least two of the
Series A Preferred Directors, as incentives to key employees, consultants
and directors of the Corporation;
(b) Mergers. Merge or consolidate with any Person or permit any
Subsidiary to merge or consolidate with any Person;
(c) Sale of Assets. Sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, assets in one or a
series of related transactions that represent 10% or more of the
Corporation's assets or income, or are valued at $1,000,000, whichever is
less;
(d) Liquidations. Liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(e) Charter Amendments. Make any amendment to the Corporation's
certificate of incorporation or by-laws, including without limitation, an
amendment altering, changing or otherwise amending the preferences or
rights of the Series A Preferred Shares or increasing or decreasing the
number of directors constituting the Board, or file any resolution of the
Board with the Secretary of State of Delaware.
PART D. DEFINITIONS IN THIS CERTIFICATE OF INCORPORATION
"Board" means the Corporation's Board of Directors.
"Change of Control" means any transaction, circumstance or event that shall
cause or result in Xxxxx Xxxx and Xxxxxx Xxxxxxxxxx either (a) owning, directly
or indirectly, beneficial or record ownership of shares of the Corporation's
capital stock or securities having less than
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20% of the issued and outstanding shares of the Corporation entitled to vote on
matters submitted to the Corporation's shareholders, or (b) resigning or being
removed or otherwise not serving as a member of the Board.
"Common Stock Equivalent" means, collectively, any capital stock of any
class of the Corporation hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation or similar equity like
participation rights or phantom stock interests.
"Liquidation Value" of any share of Series A Preferred as of any particular
date will be equal to $0.347037 (adjusted for any divisions, whether by stock
split, stock dividend or otherwise, or combinations, whether by reverse stock
split or otherwise, of the Series A Preferred Shares) plus accumulated but
unpaid dividends on such share.
"Market Price" of any security means the average of the closing prices of
such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there has been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on the primary
exchange on which such security is listed at the end of such day, or, if on any
day such security is not so listed, the average of the representative bid and
asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if
on any day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the day as of which "Market Price" is being determined and
the 20 consecutive business days prior to such day. The "Market Price" of a note
or other obligation which is not listed on a securities exchange or quoted in
the NASDAQ System or reported by the National Quotation Bureau, Incorporated,
the total consideration received by the Corporation (including interest) will be
discounted at the prime rate of interest at the First National Bank of Chicago
in effect at the time the note or obligation is deemed to have been issued. If
at any other time such security is not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, the "Market Price"
will be the fair value thereof determined jointly by the Corporation and the
holders of a majority of the Series A Preferred Shares. If such parties are
unable to reach agreement within a reasonable period of time, such fair value
will be determined by an independent appraiser jointly selected by the
Corporation and the holders of a majority of the Series A Preferred Shares.
"Organic Change" means any capital reorganization, reclassification,
consolidation, merger, lease, or sale of all or substantially all of the
Corporation's assets to another Person (other than a liquidation as determined
under Section 1.1 above) which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for shares of Common
Stock.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.
-18-
"Public Offering" means any offering by the Corporation of its equity
securities to the public pursuant to an effective registration statement under
the Securities Act of 1933, as then in effect, or any comparable statement under
any similar federal statute then in force; provided that for purposes of Section
4.7 above a Public Offering will not include an offering made in connection with
a business acquisition or an employee benefit plan.
"Securities Purchase Agreement" means the Series A Securities Purchase
Agreement, dated as of or about December 1, 1994, by and among the Corporation
and Platinum Venture Partners I, L.P. and the Investors (as defined in the
Securities Purchase Agreement), as such agreement may be amended from time to
time in accordance with its terms.
"Subsidiary" means any corporation, association or other business entity of
which securities or other ownership interests representing more than fifty
percent (50%) of the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled by the Corporation or one or
more Subsidiaries of the Corporation or by the Corporation and one or more
Subsidiaries of the Corporation.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board is, by action of the full Board, expressly authorized to
adopt, amend or repeal the by-laws of the Corporation.
SIXTH: Except as otherwise provided in this Certificate of Incorporation,
the Corporation reserves the right to amend, alter or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon the stockholders herein are
granted subject to this reservation.
SEVENTH: Each person who is or was a director or officer of the Corporation
and each person who serves or served at the request of the Corporation as a
director, officer or partner of another enterprise shall be indemnified by the
Corporation in accordance with, and to the fullest extent authorized by, the
General Corporation Law of the State of Delaware as the same now exists or may
be hereafter amended. No amendment to or repeal of this ARTICLE SEVENTH shall
apply to or have any effect on the rights of any individual referred to in this
ARTICLE SEVENTH for or with respect to acts or omissions of such individual
occurring prior to such amendment or repeal.
EIGHTH: To the fullest extent permitted by the General Corporation Law of
the State of Delaware as the same now exists or may be hereafter amended, a
director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director. No
amendment to or repeal of this ARTICLE EIGHTH shall apply to or have any effect
on the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to the
effective date of such amendment or repeal.
NINTH: Meetings of stockholders may be held within or outside of the State
of Delaware, as the by-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time
-19-
to time by the Board or in the by-laws of the Corporation. Election of directors
need not be by written ballot unless the by-laws of the Corporation so provide.
TENTH: The name and address of the incorporator is:
Xxxx Xxxxxxxxxxx
Xxxxxx Xxxxxx & Zavis
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
I, THE UNDERSIGNED, being the incorporator hereinabove named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate of Incorporation, hereby declaring
and certifying that this is my act and deed and the facts herein stated are
true, and accordingly have hereunto set my hand this 29th day of November, 1994.
---------------------------------
Xxxx Xxxxxxxxxxx
-20-
Exhibit B
NONCOMPETITION AGREEMENT
------------------------
This Noncompetition Agreement (the "Agreement") is made as of November 23,
1994, by and among the undersigned employee ("Employee") and Blue Rhino
Corporation, a Delaware corporation (the "Company").
RECITALS:
--------
WHEREAS, the Company is engaged in the business of distributing propane gas
cylinders (the "Businesses").
WHEREAS, Employee is an employee of and shareholder in the Company.
WHEREAS, if Employee were to compete with Company great harm would come to
the Company, destroying part of the goodwill associated with the Company;
WHEREAS, to provide working capital for the development of its Business,
the Company on the date hereof is entering into a Series A Securities Purchase
Agreement (the "Securities Purchase Agreement") with the Purchasers for the sale
to the Purchasers of Series A Preferred Shares and Warrants of the Company on
the terms and subject to the conditions therein.
WHEREAS, Pursuant to the Securities Purchase Agreement, the execution of
this Agreement is a condition of the Closing of the Securities Purchase
Agreement.
AGREEMENTS
----------
For and in consideration of the sum of Ten and No/100 Dollars ($10.00) in
hand paid and other good and valuable consideration, the receipt, adequacy and
sufficiency of which hereby are acknowledged, the Company and Employee hereby
agree as follows:
ARTICLE I
Covenant Not to Compete
-----------------------
1.1 Employee's Knowledge. Employee acknowledges and agrees that he has and
will occupy a position of trust and confidence with the Company and in the
course of his past employment and his engagement hereunder with the Company, has
and will become familiar with the Company's trade secrets and other proprietary
and confidential information concerning the Company. Employee acknowledges and
agrees that his services are of a special, unique, and extraordinary value to
the Company and that the Company would be irreparably damaged if Employee were
to provide similar services to any person or entity in violation of the
provisions of this Agreement.
1.2 Non-Compete. Employee hereby agrees that, during the period beginning
as of the date first above written, and ending when Employee ceases, for any
reason, to be a consultant to, employee or director of the Company (the
"Employment periods"), and thereafter, through the period ending on the second
anniversary of the Employment Period (such later period together with the
Employment Period being collectively, the "Restricted Period"), he shall not,
directly or indirectly, as employee, agent, consultant, stockholder, director,
co-partner, or in any other individual or representative capacity, own, operate,
manage, control, engage in, invest in, or participate in any manner in, act as a
consultant or advisor to, render services for (alone or in association with any
person, firm, corporation, or entity), or otherwise assist any person or entity
that engages in or owns, invests in, operates, manages, or controls any venture
or enterprise that directly or indirectly engages or proposes to engage in, the
Business anywhere in the United States (the "Territory"); provided, however,
that nothing contained herein shall be construed to prevent Employee from
investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but only if
Employee is not involved in the business of said corporation and if Employee and
his associates (as such term is defined in Regulation 14(A) promulgated under
the Securities Exchange Act of 1934, as in effect on the date hereof),
collectively, do not own more than an aggregate of two (2%) percent of the stock
of such corporation. With respect to the Territory, Employee specifically
acknowledges that the Company plans to expand the Business throughout the
Territory.
1.3 Non-Solicitation. Without limiting the generality of the provisions of
Section 1.2 hereof, Employee hereby agrees that, during the Restricted Period,
he will not, directly or indirectly, solicit or participate as employee, agent,
consultant, stockholder, director, partner, or in any other individual or
representative capacity, in any business which solicits business from any
person, firm, corporation, or other entity which was a client of the Company
during the Restricted Period, or which was a "Hot Prospect" (as hereinafter
defined), or from any successor in interest to any such person, firm,
corporation or other entity for the purpose of securing business or contracts
related to the Business; provided, however, that nothing contained herein shall
be construed to prohibit or restrict Employee, if applicable, from soliciting
business from any such parties on behalf of the Company in performance of his
duties as an employee of the Company. The term "hot Prospect" shall mean those
persons or entities to whom the Company shall have submitted a written
presentation to provide services or products within six (6) months prior to the
termination of the Employment Period.
1.4 Interference with Relationships. During the Restricted Period,
Employee shall not, directly or indirectly, as employee, agent, consultant,
stockholder, director, co-partner, or in any other individual or representative
capacity: (i) except on behalf of the Company, employ or engage, recruit, or
solicit for employment or engagement, any person who is or becomes employed or
engaged by the Company during the Restricted Period, or otherwise
-2-
seek to influence or alter any such person's relationship with the Company, or
(ii) solicit or encourage any client of the Company to terminate or otherwise
alter his, her, or its relationship with the Company.
1.5 Confidential Information. Employee agrees that during the Employment
Period or at any time thereafter, he shall not disclose to any person not
employed by the Company and not engaged to render services to the Company or
otherwise use any Confidential Information obtained while in the employ of the
Company, except on behalf of the Company in accordance with its policies or as
such disclosure may be required by law or a court order. As used in this
Agreement, "Confidential Information" shall mean any information relating to the
business or affairs of the Company or its clients, including but not limited to
information relating to: financial statements, client identities, potential
clients, employees, information, analyses, or other proprietary information used
by the Company in connection with the Business; provided, however, that
Confidential Information shall not include any information which is in the
public domain through no wrongful act on the part of Employee. Employee
acknowledges that the Confidential Information is vital, sensitive,
confidential, and proprietary to the Company.
1.6 Blue-Pencil. If any court of competent jurisdiction shall at any time
deem the term of this Agreement or any particular Restrictive Covenant (as
defined) too lengthy or the Territory too extensive, the other provisions of
this Section 1 shall nevertheless stand, the Restricted Period herein shall be
deemed to be the longest period permissible by law under the circumstances, and
the Territory herein shall be deemed to comprise the largest territory
permissible by law under the circumstances. The court in each case shall reduce
the time period and/or Territory to permissible duration or size.
1.7 Remedies.
(a) Employee agrees that the recitals to this Agreement are true and
are part of this Agreement. Further, Employee has carefully considered the
nature and extent of the restrictions upon him and the rights and remedies
conferred upon the Company under this Agreement, and Employee hereby
acknowledges and agrees that such restrictions, rights and remedies are
reasonable in time and territory, are designed to eliminate competition
which otherwise would be unfair to the Company, do not stifle the inherent
skill and experience of Employee, would not operate as a bar to Employee's
sole means of support, are fully required to protect the legitimate
interests of the Company, and do not confer upon the Company a benefit
disproportionate tithe detriment to Employee.
(b) Employee acknowledges and agrees that the covenants set forth in
this Section 1 (collectively, the "Restrictive Covenants") are reasonable
and necessary for the protection of the Company's business interests, that
irreparable injury will result to the Company if Employee breaches any of
the terms of
-3-
said Restrictive Covenants, and that in the event of Employee's actual or
threatened breach of any such Restrictive Covenants, the Company will have
no adequate remedy at law. Employee accordingly agrees that in the event of
any actual or threatened breach by him of any of the Restrictive Covenants,
the Company shall be entitled to immediate temporary injunctive and other
equitable relief, without bond and without the necessity of showing actual
monetary damages, subject to hearing as soon thereafter as possible.
Nothing contained herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of any damages which it is able to prove.
ARTICLE II
Miscellaneous
-------------
2.1 Notices. Any notices, consents, or other communication required to be
sent or given hereunder by any of the parties shall in every case be in writing
and shall be deemed properly served if (a) delivered personally, (b) sent by
registered or certified mail, in all such cases with first class postage
prepaid, return receipt requested, (c) delivered by a recognized overnight
courier service, or (d) sent by facsimile transmission (along with a copy sent
by first-class mail) to the parties at the addresses as set forth below or at
such other addresses as may be furnished in writing.
If to Company: Blue Rhino Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
If to Employee: At the address set forth on the signature page hereto.
Date of service of such notice shall be (w) the date such notice is personally
delivered, (x) three (3) days after the date of mailing if sent by certified or
registered mail, (y) one (1) day after date of delivery to the overnight courier
if sent by overnight courier, or (z) the next succeeding business day after
transmission by facsimile.
2.2 Severability. The unenforceability or invalidity of any provision of
this Agreement shall not affect the enforceability or validity of any other
provision.
2.3 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to the subject matter hereof; this Agreement
supersedes any and other Agreements, either oral or in writing, between the
parties hereto with respect to the subject matter hereof.
-4-
2.4 Counterparts. This Agreement may be executed on separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
2.5 Assignment. This Agreement will be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto.
2.6 No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto.
2.7 Amendment and Waiver. Any provision of this Agreement may be amended,
or any provision of this Agreement may be waived, provided that any such
amendment or waiver will be binding on the Company or Employee only if such
amendment or waiver is set forth in a writing executed by the Company and
Employee. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other breach.
2.8 Construction. This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of North Carolina, without giving effect to provisions thereof
regarding conflict of laws.
2.9 WAIVER OF JURY TRIAL. EMPLOYEE AND THE COMPANY HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED HEREBY. EMPLOYEE AND THE COMPANY ALSO WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
OTHER PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EMPLOYEE AND THE COMPANY ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EMPLOYEE AND THE COMPANY FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS, OR HIS, AS
THE CASE MAY BE, LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS, OR HIS, AS THE CASE MAY BE, JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED HEREBY.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
-5-
2.10 Employee Acknowledgment. Employee acknowledges (a) that he has
consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement and has been advised to do so by the
Company and (b) that he has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on his own judgment
2.11 Not Employment Agreement; Disclaimer. This Agreement is intended to
protect the Company from competition and disclosure of Confidential Information
and is not an "Employment Agreement." The Company has no express or implied
contract with Employee concerning the terms and conditions of employment.
Nothing in this Agreement shall alter or change Employee's "at will" employment
relationship (meaning that either the Company or Employee may terminate the
employment relationship at any time, with or without cause, and with or without
notice) and the existence of this Agreement shall not be deemed a waiver of a
right or defense with respect to such employment relationship.
-6-
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
BLUE RHINO CORPORATION:
----------------------------------
Xxxxx X. Xxxx
Chief Executive Officer
EMPLOYEE:
(SEAL)
----------------------------------
[Signature]
Print Name:
------------------------------------
Address:
------------------------------------
------------------------------------
------------------------------------
-7-
Exhibit C
See Tab 2 for Registration Agreement
Exhibit D
See Tab 3 for Shareholders' Agreement
Exhibit E
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OFFERED FOR
SALE UNLESS REGISTERED UNDER SAID ACT OR UNLESS THE HOLDER OF THIS WARRANT
DELIVERS TO BLUE RHINO CORPORATION AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO BLUE RHINO CORPORATION STATING THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE
ALSO BENEFITED BY AND SUBJECT TO A SERIES A SECURITIES PURCHASE AGREEMENT, A
REGISTRATION RIGHTS AGREEMENT EACH DATED AS OF DECEMBER 1, 1994, AND EACH BY AND
AMONG BLUE RHINO CORPORATION, A DELAWARE CORPORATION, PLATINUM VENTURE PARTNERS
I, L.P., A DELAWARE LIMITED PARTNERSHIP, AND CERTAIN OTHER INVESTORS, AND A
SHAREHOLDERS' AGREEMENT DATED THE SAME DATE, BY AND AMONG BLUE RHINO
CORPORATION, A DELAWARE CORPORATION, THE INVESTORS AND THE MANAGEMENT
STOCKHOLDERS, COPIES OF WHICH ARE ON FILE WITH THE CORPORATION.
Dated: December 1, 1994
WARRANT
To Purchase ______ Shares of Common Stock (Subject to adjustment herein)
-------------------------------
Expiring December 1, 2004
THIS IS TO CERTIFY THAT, for value received, _____________________, or
registered assigns is entitled to purchase from Blue Rhino Corporation, a
Delaware corporation (the "Corporation"), at any time and from time to time
prior to 5:00 p.m., Chicago, Illinois time, on December 1, 1994, at the
principal office of the Corporation which is currently 000 Xxxxxxxxx Xxxx,
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000 (or such other address as the Corporation
shall specify by notice to all Warrantholders), at the Exercise Price, the
number of shares of Common Stock, $0.001 par value (the "Common Stock"), of
the Corporation shown above, all subject to adjustment and upon the terms and
conditions as hereinafter provided, and is entitled also to exercise the other
appurtenant rights, powers and privileges hereinafter described.
This Warrant is one of the one or more warrants (the "Warrants"), of the
same form and having substantially the same terms as this Warrant, which have
been or will be issued pursuant to the Securities Purchase Agreement.
Certain terms used in this Warrant are defined in Article VI.
-1-
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise and Payment.
(a) Method of Exercise. To exercise this Warrant in whole or in part,
the Holder shall deliver to the Corporation, at the principal office of the
Corporation, (a) this Warrant, (b) a written notice, in substantially the
form of the Subscription Notice attached hereto, of such Holder's election
to exercise this Warrant, which notice shall specify the number of shares
of Common Stock to be purchased or converted into, as the case may be, the
denominations of the share certificate or certificates desired and the name
or names in which such certificates are to be registered, and (c) payment
to the Corporation of the amount equal to the product of the then
applicable Exercise Price multiplied by the number of shares of Common
Stock then being purchased pursuant to one of the payment methods permitted
under Section l.l(b) below.
(b) Method of Payment. Payment shall be made either (1) by cash, money
order, certified or bank cashier's check, (2) by wire transfer, (3) by
converting the Warrant, or any portion thereof, into Common Stock pursuant
to Section 1.l(c) below ("Warrant Conversion") or (4) any combination of
the foregoing at the option of the Holder.
(c) Payment by Warrant Conversion. Subject to any limitations set
forth in this Warrant, the Holder may exercise the purchase right
represented by this Warrant with respect to a particular number of shares
of Common Stock subject to this Warrant ("Converted Warrant Stock") and
elect to pay for the Converted Warrant Stock through Warrant Conversion as
defined in Section l.l(b), by specifying such election in the Subscription
Notice. In such event, the Corporation shall deliver to the Holder (without
payment by the Holder of any Exercise Price or any cash or other
consideration) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the value of this Warrant (or the specified
portion hereof) on the Exercise Date, which value shall be determined by
subtracting (A) the aggregate Exercise Price of the Converted Warrant Stock
immediately prior to the exercise of the Warrant from (B) the aggregate
Fair Market Value of the Converted Warrant Stock issuable upon exercise of
this Warrant (or the specified portion hereof) on the Exercise Date, by (y)
the Fair Market Value of one share of Common Stock on the Exercise Date.
For purposes of this Section 1, "Fair Market Value" of a share of Common
Stock as of a particular date shall mean:
(i) If the Corporation's registration under the Securities Act,
covering its initial underwritten public offering of stock had been
declared effective by the Commission, then the fair market value of a
share of Common Stock as of the last Business Day immediately prior to
the Exercise Date.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is
not consummated in accordance
-2-
with the terms of the underwriting agreement between the Corporation
and its underwriters relating to such registration statement, then as
determined in good faith by the Board upon review of the relevant
factors; provided, however, that if the Exercise Date falls within one
day prior to the effective date of such registration statement, the
fair market value of a share of Common Stock will be deemed to be the
public offering price per share provided for in such registration
statement.
(d) Mechanics. The Corporation shall, as promptly as practicable and
in any event within three days after delivery of a Subscription Notice as
described above, execute and deliver or cause to be executed and delivered,
in accordance with such Subscription Notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in
said Subscription Notice. The share certificate or certificates so
delivered shall be in such denominations as may be specified in such
Subscription Notice or, if such Subscription Notice shall not specify
denominations, in denominations of 100 shares each, and shall be issued in
the name of the Holder or such other name or names as shall be designated
in such Subscription Notice. Such certificate or certificates shall be
deemed to have been issued (and this Warrant or the portion thereof
specified in the Subscription Notice shall be deemed to have been
exercised), and such Holder or any other Person so designated to be named
therein shall be deemed for all purposes to have become a holder of record
of such shares, as of the date the aforementioned Subscription Notice is
received by the Corporation, or delivery thereof is refused (the "Exercise
Date"). If this Warrant shall have been exercised only in part, the
Corporation shall, at the time of delivery of the certificate or
certificates, deliver to the Holder a new Warrant evidencing the rights to
purchase or convert the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with
this Warrant, or, at the request of the Holder, appropriate notation may be
made on this Warrant which shall then be returned to the Holder. The
Corporation shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of share
certificates and new Warrants, except that, if share certificates or new
Warrants shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of
such transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written
request of the Corporation for payment.
1.2 Shares to Be Fully Paid and Nonassessable. All shares of Common Stock
issued upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder, and from
all taxes, liens and charges with respect to the issue thereof (other than
transfer taxes) and, if the Common Stock is then listed on any national
securities exchanges (as defined in the Exchange Act) or quoted on NASDAQ, shall
be duly listed or quoted thereon, as the case may be.
1.3 No-Fractional Shares to Be Issued. The Corporation shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the
Corporation may pay to the Holder, in cash, an amount equal to such
-3-
fraction of the fair market value (as determined in good faith by the Board) per
share of outstanding Common Stock of the Corporation in the Business Day
immediately prior to the date of such exercise.
1.4 Share Legends. Each certificate for shares of Common Stock issued
upon exercise of this Warrant, unless at the time of exercise such shares are
registered under the Securities Act, shall bear the following legend:
"This security has not been registered under the Securities Act of
1933 and may not be sold or offered for sale unless registered pursuant to
such Act or unless the holder hereof delivers to Blue Rhino Corporation an
opinion of counsel reasonably acceptable to Blue Rhino Corporation stating
that an exemption from such registration is available."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act) shall also bear such legend unless, in the opinion of counsel
selected by the holder of such certificate (who may be an employee of such
holder) and reasonably acceptable to the Corporation, the securities represented
thereby need no longer be subject to restrictions on resale under the Securities
Act. Each certificate for shares of Common Stock issued upon exercise of this
Warrant shall also bear any legends required under the Shareholders' Agreement,
to the extent required thereby. Any certificate issued at any time in exchange
or substitution for any certificate bearing such legend shall also bear such
legend unless in the opinion of counsel selected by the holder of such
certificate (who may be an employee of such holder) and reasonably acceptable to
the Corporation, the restrictions contained in such Shareholders' Agreement no
longer apply because of the occurrence of one or more of certain events
described therein.
1.5 Reservation: Authorization. The Corporation has reserved and will
keep available for issuance upon exercise of the Warrants the total number of
shares of Common Stock deliverable upon exercise of all Warrants from time to
time outstanding. The issuance of the shares of Common Stock upon exercise of
the Warrants has been duly and validly authorized and, when issued and sold in
accordance with the Warrants, such shares of Common Stock will be duly and
validly issued, fully paid and nonassessable. The Corporation will take all such
actions as are necessary in order to insure the foregoing.
1.6 Result of Exercise. On the Exercise Date the rights of the holder
of such Warrant as such holder will cease and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock are to
be issued upon such exercise will be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby.
1.7 Not Close Books Until Exercise. The Corporation will not close its
books against the transfer of this Warrant or shares of Common Stock issued or
issuable upon exercise of this Warrant in any manner which interferes with
the timely exercise of this Warrant.
ARTICLE II
-4-
TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1 Ownership of Warrant. The Corporation may deem and treat the Person
in whose name this Warrant is registered as the holder and owner hereof for all
purposes and shall not be affected by any notice to the contrary, until this
Warrant is presented for registration of transfer as provided in this Article
II.
2.2 Transfer of Warrant. The Corporation agrees to maintain books for the
registration of transfers of the Warrants, and any transfer, in whole or in
part, of this Warrant and all rights hereunder shall be registered on such
books, upon surrender of this Warrant at the principal office of the Corporation
together with a written assignment of this Warrant duly executed by the Holder
or his, her or its duly authorized agent or attorney and funds sufficient to pay
any transfer taxes payable upon such transfer. Upon surrender the Corporation
shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denominations specified in the instrument of assignment,
and this Warrant shall promptly be canceled. Notwithstanding the foregoing, a
Warrant may be exercised by a new holder without having a new Warrant issued.
This Warrant may not be transferred in whole or in part, and the Corporation
shall not be required to register any transfers unless the Corporation has
received an opinion of counsel selected by the transferor (who may be an
employee of such party) and reasonably satisfactory to the Corporation that such
transfer is exempt from the registration requirements of the Securities Act.
If the Warrantholder delivers to the Corporation an opinion of counsel
selected by such holder (who may be an employee of such holder) and reasonably
acceptable to the Corporation, that no subsequent transfer of the Warrant will
require registration under the Securities Act, the Corporation will promptly
deliver to such holder or his, her or its designee, new Warrants in exchange for
the Warrant delivered by such holder, which will not bear the Securities Act
legend set forth at the beginning of the first page of the Warrant, and
thereafter no further opinions of counsel shall be required in connection with
the subsequent transfer of such Warrant.
2.3 Division or Combination of Warrants. This Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Corporation, together
with a written notice specifying the names and denominations in which the new
Warrant or Warrants are to be issued, signed by the holders hereof and thereof
or their respective duly authorized agents or attorneys. Subject to compliance
with Section 2.2 as to any transfer which may be involved in the division or
combination, the Corporation shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
2.4 Loss, Theft, Destruction of Warrant Certificates. Upon receipt of
evidence reasonably satisfactory to the Corporation (an affidavit of the
registered holder will be satisfactory) of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Corporation (an Original Warrantholder's indemnity being satisfactory
indemnity in the event of loss, theft or destruction of any Warrant owned by
such holder), or, in the case of any such mutilation, upon surrender and
cancellation of such warrant, the Corporation will (at its
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expense) make and deliver, in lieu of such lost, stolen, destroyed or mutilated
Warrant, a new Warrant of like tenor and representing the right to purchase the
same aggregate number of shares of Common Stock.
2.5 Expenses of Delivery of Warrants. The Corporation shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants and Warrant
Stock hereunder. If, pursuant to Section 2.2, the opinion of counsel provides
that registration is not required for the proposed exercise or transfer of this
Warrant or the proposed transfer of the Warrant Stock and that the proposed
exercise or transfer in the absence of registration would require the
Corporation to take any action including executing and filing forms or other
documents with the Commission or any state securities agency, or delivering to
the Warrantholder any form or document in order to establish the right of the
Warrantholder to effectuate the proposed exercise or transfer, the Corporation
agrees promptly, at its expense, to take any such action; and provided, further,
that the Corporation will reimburse the Warrantholder in full for any expenses
(including but not limited to the fees and disbursements of such counsel, but
excluding brokers' commissions) incurred by the Warrantholder or owner of
Warrant Stock on his, her or its behalf in connection with such exercise or
transfer of the Warrant or transfer of Warrant Stock.
ARTICLE III
CERTAIN RIGHTS
3.1 Rights Under Securities Purchase Agreement, Registration Agreement
and Shareholders' Agreement. This Warrant and the Warrant Stock are entitled to
the benefits of and are subject to the Securities Purchase Agreement,
Registration Agreement and the Shareholders' Agreement to the extent provided
therein. The Corporation shall keep a copy of the Securities Purchase Agreement,
Registration Agreement, the Shareholders' Agreement, and any amendments,
restatements, modifications and supplements thereto, at the principal office of
the Corporation and shall furnish copies thereof to any Holder or any transferee
upon request.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of shares of
Common Stock (or other securities or property) issuable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events, as provided in this Article IV.
4.2 Exercise of Warrant. At any time and from time to time, any holder
of this Warrant may exercise all or any portion of this Warrant into the number
of shares of Common Stock computed by (i) multiplying the number of shares of
Common Stock sought to be purchased pursuant to this Warrant by $0.0347037 and
(ii) dividing the resulting product by the Exercise Price then in effect.
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4.3 Exercise Price.
(a) Exercise Price Based on Conversion Price. The "Exercise Price"
shall be one-tenth of the Conversion Price then in effect pursuant to the
Certificate of Incorporation of the Corporation. In order to prevent
dilution of the exercise rights granted to the holder of this Warrant, the
Conversion Price and consequently the Exercise Price will be subject to
adjustment from time to time pursuant to this Section 4.3 and Sections 4.5
and 4.6 below. For purposes of this Section 4.3, the Corporation shall be
deemed to have issued or sold Common Stock as set forth in Section 4.4
below.
(b) Adjustment for Dilutive Events. If and whenever on or after the
original date of issuance of this Warrant the Corporation issues or sells,
or in accordance with Section 4.4 below is deemed to have issued or sold,
any shares of Common Stock for consideration per share less than the
Conversion Price (the "Diluted Share Price") in effect immediately prior to
the time of such issue or sale (a "Dilutive Event"), then forthwith upon
the occurrence of any such Dilutive Event the Conversion Price will be
reduced so that the Conversion Price in effect immediately following the
Dilutive Event will equal the Diluted Share Price. Notwithstanding the
foregoing, the issuance by the Corporation of up to 2,000,000 shares of
Common Stock, or securities convertible into or options to acquire up to
2,000,000 shares of Common Stock, issued pursuant to stock option plans or
grants to officers or employees approved by the Board or the issuance of
Common Stock upon conversion of the Series A Preferred Shares issued
pursuant to the Securities Purchase Agreement shall not constitute a
Dilutive Event. As used in this Section 4.3(b) and in Section 4.4 below,
the term "Common Stock" shall include Common Stock Equivalents.
Notwithstanding anything contained herein to the contrary, the Exercise
Price of this Warrant held by a particular holder shall not be adjusted
pursuant to this Article 4 in connection with a particular Dilutive Event,
or any subsequent Dilutive Event, if such holder of this Warrant fails to
purchase, after being offered by the Corporation the opportunity to
purchase, a percentage of the securities, rights or options, or any
combination thereof, the sale of which constitute the Dilutive Event, which
is equal to or greater than 75% of the percentage ownership of the
Corporation's Common Stock on a fully diluted basis held by such holder
immediately prior to such Dilutive Event. A Warrant which is no longer
subject to adjustment as a result of the preceding sentence shall remain
subject to such limitation regardless of any subsequent transfers, and at
each time that any Warrant so loses its rights to such adjustment, all
Warrants which have lost their right to such adjustment as of such time
shall be automatically classified into (and the outstanding Warrant
representing such Warrant will automatically be deemed to represent) new
sub-series X-0, X-0, X-0, etc., consecutively, beginning with A-1. The
holders of Warrants of each such sub-series shall promptly deliver such
Warrants to the Corporation upon the Corporation's request, for exchange or
notation to reflect such sub-series. If any such Warrants are not delivered
to the Corporation, the Corporation shall make appropriate notations on its
stock records, which may include stop transfer instructions, and may place
in escrow, pending receipt of such Warrants, all dividend payments or
other distributions owing with respect to the Warrants represented by such
Warrants.
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4.4 Issuance and Sale of Common Stock. For purposes of determining the
adjusted Exercise Price pursuant to Sections 4.3 above the following events
shall be deemed to be an issuance and sale of Common Stock by the Corporation:
(a) Issuance of Rights or Options. If (i) the Corporation in any
manner grants any rights or options to subscribe for or to purchase shares
of Common Stock or any securities convertible into or exchangeable for
shares of Common Stock (such rights or options referred to herein as
"Options" and such convertible or exchangeable stock or securities referred
to herein as "Convertible Securities") and (ii) the Price Per Share of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Conversion Price in effect immediately prior to the time of the granting
of such Options then the shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of such Convertible
Securities will be deemed to have been issued and sold by the Corporation
for such Price Per Share. For the purposes of this Section 4.4(a), the
"Price Per Share" is determined by dividing (i) the total amount, if any,
received or receivable by the Corporation as consideration for the granting
of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon exercise of all such Options,
plus in the case of such Options which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable
to the Corporation upon the issuance or sale of such Convertible Securities
and the conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion Price
will be made when Convertible Securities are actually issued upon the
exercise of such Options or when Common Stock is actually issued upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(b) Issuance of Convertible Securities. If (i) the Corporation in any
manner issues or sells any Convertible Securities and (ii) the Price Per
Share of shares of Common Stock issuable upon such conversion or exchange
is less than the Conversion Price in effect immediately prior to the time
of such issue or sale then the shares of Common Stock issuable upon the
conversion or exchange of such Convertible Securities will be deemed to
have been issued and sold by the Corporation for such Price Per Share. For
the purposes of this Section 4.4(b), the "Price Per Share" will be
determined by dividing (i) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, payable to the Corporation upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No further
adjustment of the Conversion Price will be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is
made upon exercise of any Options for which adjustments to the Conversion
Price had been or are to be made pursuant to Section 4.4(a) above, no
further adjustment of the Conversion Price will be made by reason of
such issue or sale.
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(c) Change in Option Price or Conversion Rate. If at any time there is
a change in (i) the purchase price provided for in any Options, (ii) the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities, or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock, then the
Conversion Price in effect at the time of such change will be readjusted to
the Conversion Price which would have been in effect had those Options or
Convertible Securities still outstanding at the time of such change
provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time such Options or
Convertible Securities were initially granted, issued or sold; provided
that if such adjustment would result in an increase of the Conversion Price
then in effect, such adjustment will not be effective until 30 days after
written notice thereof has been given by the Corporation to all holders of
Warrants.
(d) Calculation of Consideration Received. If any shares of Common
Stock, Option or Convertible Security is issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor or the
Price Per Share, as the case may be, will be deemed to be the net amount
received or to be received, respectively, by the Corporation therefor. In
case any shares of Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation or the non-cash
portion of the Price Per Share, as the case may be, will be the fair value
of such consideration received or to be received, respectively, by the
Corporation; except where such consideration consists of securities, in
which case the amount of consideration received or to be received,
respectively, by the Corporation will be the Market Price thereof as of the
date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving corporation as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash and securities
will be determined jointly by the Corporation and the holders of a majority
of the outstanding Warrants. If such parties are unable to reach agreement
within a reasonable period of time, the fair value of such consideration
will be determined by an independent appraiser jointly selected by the
Corporation and the holders of a majority of the outstanding Warrants.
(e) Integrated Transactions. In case any Option is issued in
connection with the issuance or sale of other securities of the
Corporation, together comprising one integrated transaction in which no
specific consideration is allocated to such Option by the parties thereto,
the Option will be deemed to have been issued for a consideration of $.01.
(f) Record Date. If the Corporation takes a record of the holders of
Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in shares of Common Stock, Options or in
Convertible Securities or (ii) to subscribe for or purchase shares of
Common Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issuance or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
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dividend or upon the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
4.5 Subdivision or Combination of Common Stock. If the Corporation at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Corporation at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination will be
proportionately increased.
4.6 Organic Change. Prior to the consummation of any Organic Change, the
Corporation will make appropriate provisions (in form and substance satisfactory
to the holders of a majority of the Warrants then outstanding) to insure that
each of the holders of Warrants with respect to all or any of the Warrants held
thereby will thereafter have the right to acquire and receive, in lieu of or in
addition to the shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrants, such shares of stock,
securities or assets as such holder would have received in connection with such
Organic Change if such holder had exercised his, her or its Warrants immediately
prior to such Organic Change. In any such case, the Corporation will make
appropriate provisions (in form and substance satisfactory to the holders of a
majority of the Warrants then outstanding) to insure that the provisions of this
Section 4.6 will thereafter be applicable to the Warrants (including, an
immediate adjustment of the Conversion Price to the value for the Common Stock
reflected by the terms of such Organic Change and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon exercise of the Warrants, if the value so reflected is less than the
Conversion Price in effect immediately prior to such Organic Change). The
Corporation will not effect any such Organic Change, unless prior to the
consummation thereof, the successor Corporation resulting from such Organic
Change assumes by written instrument (in form reasonably satisfactory to the
holders of a majority of the Warrants then outstanding), the obligation to
deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
All other terms of the Warrants shall remain in full force and effect
following such an Organic Change. The provisions of this Section 4.6 shall
similarly apply to successive Organic Changes.
4.7 Notices.
(a) Immediately upon any adjustment of the Exercise Price, the
Corporation shall give written notice thereof to all holders of Warrants
specifying the Exercise Price in effect thereafter with respect to the
particular holder.
(b) The Corporation shall give written notice to all holders of
Warrants at least 20 days prior to the date on which the Corporation closes
its books or takes a record for determining rights to vote with respect to
any Organic Change, Change in Control, Change of Ownership, Fundamental
Change or other reorganization, dissolution or
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liquidation. The Corporation shall also give written notice to the holders
of Warrants at least 20 days prior to the date on which any Organic Change,
Change in Control, Change of Ownership, Fundamental Change or other
reorganization, dissolution or liquidation shall occur.
4.8 Certain Other Events. The Company will not, by amendment of its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issues or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Warrantholders
against dilution or other impairment. If any event occurs as to which the
foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
protect the purchase rights of the Warrants in accordance with the essential
intent and principles of such provisions, then the Board shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid, but in
no event shall any such adjustment have the effect of increasing the Exercise
Price or decreasing the number of shares of Common Stock subject to purchase
upon exercise of this Warrant.
4.9 Proceedings Prior to Any Action Requiring Adjustment. As a condition
precedent to the taking of any action which would require an adjustment pursuant
to this Article IV, the Corporation shall take any action which may be
necessary, including obtaining regulatory approvals or exemptions, in order that
the Corporation may thereafter validly and legally issue as fully paid and
nonassessable all shares of Common Stock which the holders of Warrants are
entitled to receive upon exercise thereof, and if all such approvals and actions
are not taken, the Corporation shall take any action which would cause the
Corporation to be able to issue to the holders of Warrants the full number of
shares issuable upon exercise hereof in accordance with the terms hereof.
ARTICLE V
LIQUIDATION, DISSOLUTION, DISTRIBUTIONS OR DIVIDENDS
5.1 Liquidation or Dissolution. In case the Corporation at any time while
this Warrant shall remain unexpired and unexercised, shall dissolve, liquidate,
or wind up its affairs other than in connection with an Organic Change, the
Holder shall have the right to exercise this Warrant for a period of sixty (60)
days after the later of (i) such event having occurred and (ii) receipt by the
Holder of a notice from the Company indicating the kind and amount of securities
or assets issuable or distributable to holders of shares of Common Stock with
respect to such event, and upon exercise of this Warrant during such period, the
Holder shall have the right to receive in lieu of each share of the Warrant
Stock, the same kind and amount of any securities or assets as may be
issuable, distributable or payable upon any such dissolution, liquidation, or
winding up with respect to each of the shares of the Common Stock.
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5.2 Dividends and Distributions With Respect to Common Stock. If legal
under the applicable General Corporation Law of the State of Delaware at any
time the Corporation pays any dividends or makes any other distributions with
respect to the Common Stock, the Corporation shall pay at such time to each
holder of a Warrant the dividends or other distributions which such holder would
have been entitled to receive had such holder exercised all of his, her or its
rights to acquire or receive Common Stock under such Warrant(s) on the date as
of which the holders of Common Stock of record entitled to such dividends or
other distributions were determined.
ARTICLE VI
DEFINITIONS
Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Securities Purchase Agreement. The following
terms, as used in this Warrant, have the following respective meanings:
"Board" means the Corporation's Board of Directors.
"Business Day" shall mean (a) if any class of Common Stock is listed or
admitted to trading on a national securities exchange, a day on which the
principal national securities exchange on which such class of Common Stock is
listed or admitted to trading is open for business or (b) if no class of Common
Stock is so listed or admitted to trading, a day on which any New York Stock
Exchange member firm is open for business.
"Change in Ownership" means any sale or issuance or series of sales and/or
issuances of shares of the Corporation's capital stock by the Corporation or any
holders thereof which results in any Person or group of affiliated Persons
(other than the holders of Common Stock and Series A Securities as of the date
of the Securities Purchase Agreement) owning capital stock of the Corporation
possessing the voting power (under ordinary circumstances) to elect a majority
of the Board.
"Change of Control" means any transaction, circumstance or event that shall
cause or result in Xxxxx Xxxx and Xxxxxx Xxxxxxxxxx either (a) owning, directly
or indirectly, beneficial or record ownership of shares of the Corporation's
capital stock or securities having less than 20% of the issued and outstanding
shares of the Corporation entitled to vote on matters submitted to the
Corporation's shareholders, or (b) resigning or being removed or otherwise not
serving as a member of the Board.
"Commission" means the Securities and Exchange commission.
"Common Stock Equivalent" means, collectively, any capital stock of any
class of the Corporation hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation or similar equity
like participation rights or phantom stock interests but specifically excludes
the Warrants.
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"Fundamental Change" means (a) a sale or transfer of all or substantially
all of the assets of the Corporation, or of the Corporation and its Subsidiaries
on a consolidated basis, in any transaction or series of transactions, and (b)
any merger or consolidation to which the Corporation is a party, except for a
merger in which the Corporation is the surviving Corporation and, after giving
effect to such merger, the holders of the Corporation's outstanding capital
stock immediately prior to the merger shall own the Corporation's outstanding
capital stock possessing the voting power (under ordinary circumstances) to
elect a majority of the Board after such merger.
"Holder" means the Person in whose name this Warrant is registered on the
books of the Corporation maintained for such purpose or the Person in whose name
any Warrant Stock is registered on such books.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Organic Change" means any capital reorganization, reclassification,
consolidation, merger, lease, or sale of all or substantially all of the
Corporation's assets to another Person (other than a dissolution, liquidation or
winding up of the Company as indicated in Section 5.1 above) which is effected
in such a way that holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with
respect to or in exchange for shares of Common Stock.
"Original Warrantholder" means Platinum or any Investor holding a Warrant.
"Market Price" of any security means the average of the closing prices of
such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there has been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on the primary
exchange on which such security is listed at the end of such day, or, if on any
day such security is not so listed, the average of the representative bid and
asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if
on any day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the day as of which "Market Price" is being determined and
the 20 consecutive business days prior to such day. The "Market Price" of a note
or other obligation which is not listed on a securities exchange or quoted in
the NASDAQ System or reported by the National Quotation Bureau, Incorporated,
the total consideration received by the Corporation (including interest) will be
discounted at the prime rate of interest at the First National Bank of Chicago
in effect at the time the note or obligation is deemed to have been issued. If
at any other time such security is not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, the "Market Price"
will be the fair value thereof determined jointly by the Corporation and the
holders of a majority of the Warrants. If such parties are unable to reach
agreement within a reasonable period of time, such fair value will be
determined by an independent appraiser jointly selected by the Corporation and
the holders of a majority of the Warrants.
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.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.
"Platinum" means Platinum Venture Partners I, L.P., a Delaware limited
partnership.
"Registration Agreement" means the Registration Rights Agreement, of even
date herewith, by and among the Corporation, Platinum and the Investors (as
defined in the Registration Agreement), as such agreement may be amended,
restated, modified or supplemented from time to time in accordance with its
terms.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" means the Series A Securities Purchase
Agreement, of even date herewith, by and among the Corporation, Platinum and the
Investors (as defined in the Securities Purchase Agreement), as such agreement
may be amended, restated, modified or supplemented from time to time in
accordance with its terms.
"Shareholders' Agreement" means the Shareholders' Agreement, of even date
herewith, by and among the Corporation, the Investors (as defined in the
Shareholders' Agreement) and the Management Stockholders (as defined in the
Shareholders' Agreement), as such agreement may be amended, restated, modified
or supplemented from time to time in accordance with its terms.
"Subsidiary" means any corporation, association or other business entity of
which securities or other ownership interests representing more than fifty
percent (50%) of the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled by the Corporation or one or
more Subsidiaries of the Corporation or by the Corporation and one or more
Subsidiaries of the Corporation.
"Voting Stock" of any Person means securities of any class or classes of
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors of such Person.
"Warrantholder" means a Holder of a Warrant.
"Warrants" shall have the meaning set forth in the second paragraph of this
Warrant.
"Warrant Stock" means the shares of Common Stock purchased by the
Warrantholders upon the exercise of the Warrants, including any such shares of
Common Stock transferred to any transferee of such Warrantholder, other than a
transferee who acquires such shares after the same have been publicly sold
pursuant to a Registration Statement under the Securities Act.
ARTICLE VII
MISCELLANEOUS
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7.1 Notices. Notices and other communications provided for herein shall
be in writing and shall, unless otherwise expressly required, be given in the
manner and with the effect provided in the Securities Purchase Agreement. In the
case of the Holder, such notices and communications shall be addressed to his,
her or its address as shown on the books maintained by the Corporation, unless
the Holder shall notify the Corporation that notices and communications should
be sent to a different address (or telecopy number), in which case such notices
and communications shall be sent to the address (or telecopy number) specified
by the Holder.
7.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder 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 Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Corporation and the Warrantholders voting as a
single class, entitling such Warrantholders to purchase a majority of the
Common Stock subject to purchase upon exercise of such Warrants at the time
outstanding (exclusive of Warrants then owned by the Corporation or any
Subsidiary or Affiliate thereof); provided, however, that no such amendment,
modification or waiver shall, without the written consent of each holder of
Warrants whose interest might be adversely affected by such amendment,
modification or waiver, (a) change the number of shares of Common Stock subject
to purchase upon exercise of this Warrant, the Exercise Price or provisions for
payment thereof or (b) amend, modify or waive the provisions of this Section or
Article III, IV or V hereof. The provisions of the Securities Purchase
Agreement, the Shareholders' Agreement and the Registration Agreement may be
amended, modified or waived only in accordance with the respective provisions
thereof.
Any such amendment, modification or waiver effected pursuant to this
Section or the applicable provisions of the Securities Purchase Agreement, the
Shareholders' Agreement or the Registration Agreement shall be binding upon the
holders of all Warrants and Warrant Stock, upon each future holder thereof and
upon the Corporation. In the event of any such amendment, modification or
waiver, the Corporation shall give prompt notice thereof to all Warrantholders
and, if appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Corporation in any case shall entitle the
Corporation to any other or further notice or demand in similar or other
circumstances.
7.3. Governing Law. This Warrant shall be construed in accordance with
and governed by the internal laws of the State of Delaware, without regard to
principles of conflicts of laws.
-15-
7.4 Survival of Agreements; Representations and Warranties, etc. All
warranties, representations and covenants made by the Corporation herein or in
any certificate or other instrument delivered by or on behalf of it in
connection with the Warrants shall be considered to have been relied upon by the
Holder and shall survive the issuance and delivery of the Warrants, regardless
of any investigation made by the Holder, and shall continue in full force and
effect so long as this Warrant or any Warrant Stock is outstanding. All
statements in any such certificate or other instrument shall constitute
representations and warranties hereunder.
7.5 Covenants to Bind Successor and Assigns. All covenants, stipulations,
promises and agreements in this Warrant contained by or on behalf of the
Corporation shall bind its successors and assigns, whether so expressed or not.
7.6 Severability In case any one or more of the provisions contained in
the Securities Purchase Agreement, the Shareholders' Agreement, the Registration
Agreement or this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby.
7.7 Section Headings. The section headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting
this Warrant.
7.8 No Rights as Stockholder. This Warrant shall not entitle the
Warrantholder to any rights as a stockholder of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized, and its
corporate seal to be hereunto affixed, attested by its Secretary or an Assistant
Secretary, all as of the day and year first above written.
Blue Rhino Corporation, a Delaware corporation
By:
--------------------------------------------
Xxxxx Xxxx, Chief Executive Officer
Attest:
--------------------------------------------
X.X. Xxxxxxxx, III, Assistant Secretary
-16-
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
To_________________________:
[Choose one or both of first two paragraphs, as applicable]
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to purchase thereunder,
_______________ shares of Common Stock, as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of certified or bank
cashier's check or wire transfer.
The undersigned hereby irrevocably elects to exercise the right of
conversion represented by the attached Warrant for, and to convert thereunder,
__________________ shares of Common Stock, as provided for therein.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: , 19
----------------------------------
----------------------------------
NOTE: The above signature should
correspond exactly with the name on
the face of the attached Warrant or
with the name of the assignee appearing
in the assignment form below.
-17-
Exhibit F
---------
HOUSE LAW FIRM
000 XXXXXXXXX XXXX, XXXXX 000
XXXXXXX-XXXXX, XXXXX XXXXXXXX 00000
DON R. HOUSE MAILING ADDRESS
XXXX X. XXXXXXXXX P. O. XXXXXX 00000
XXXXXXX-XXXXX, X.X. 27114-6015
December 29, 1994 -------
(000) 000-0000
FAX (000) 000-0000
To: Purchasers under Securities Purchase Agreement
Ladies and Gentlemen:
We have represented Blue Rhino Corporation, a Delaware Corporation (the
"Company") and the Company's predecessor, Blue Rhino Corporation, a North
Carolina corporation ("BRC-North Carolina") in connection with the transaction
which is the subject of that certain Series A Securities Purchase Agreement (the
"Agreement") dated as of December 1, 1994 between the Purchasers (as defined in
the Agreement) and the Company with respect to sale by the Company to the
Purchasers of Series A Preferred Shares and Warrants. This opinion is being
rendered pursuant to Section 4.8 of the Agreement. Unless otherwise defined
herein, the definitions of capitalized terms used in this opinion shall be the
same as those set forth in the Agreement.
In connection with this opinion, we have reviewed the following documents:
1. Agreement and other documents as identified in the Agreement;
2. Articles of Incorporation, By-Laws and Minutes of the Company;
3. Articles of Incorporation, By-Laws and Minutes of BRC-North
Carolina;
4. Shareholders' Agreement between the Company and the Shareholders
dated as of December 1, 1994;
5. Registration Rights Agreement dated as of December 1, 1994 between
the Company and the Investors;
6. Agreement and Plan of Merger, Articles of Merger for North Carolina
and the Certificate of Merger for Delaware; and
7. such other documents, records and papers as we have deemed
necessary or relevant in order to render this opinion.
Based upon and subject to the foregoing, and subject to the qualifications
set forth below, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has full power and
authority to carry on its business as it is now being conducted.
December 29, 1994
Page 2
-------------------------
2. Prior to the Merger, BRC-North Carolina was a corporation duly organized,
validly existing and in good standing under the laws of the State of
North Carolina, had full power and authority to carry on its business as
it was being conducted and was either qualified or had applied to be
qualified, to do business in all other jurisdictions in which it
conducted business or owned property except where the failure would not
have a material adverse effect.
3. The Merger Agreement was duly authorized, executed and delivered by the
Company and BRC-North Carolina, and their respective directors and
shareholders as necessary, and such agreement is a valid and binding
obligation of the Company and BRC-North Carolina enforceable in
accordance with its terms. The Merger has been duly consummated in
accordance with the terms of the Merger Agreement and accordingly the
Company is the successor corporation to BRC-North Carolina, is the
survivor of the Merger, and is successor to all rights, titles and
interests of BRC-North Carolina.
4. The Company's entire authorized capital stock consists of 60,000,000
Common Shares, par value $0.001 per share and 25,000,000 Series A
Preferred Shares, par value $0.001. There are presently issued and
outstanding 22,260,000 Common Shares and 20,796,172 Series A Preferred
Shares; 35,275,000 Common Shares are reserved for issuance upon the
exercise of the conversion of the Series A Preferred Shares and the
exercise of the Warrants; 2,000,000 Common Shares are reserved for future
grants under the Stock Incentive Plan; and 465,000 Common Shares are
reserved for issue to employees, directors and consultants.
5. Prior to the Merger, BRC-North Carolina's entire authorized capital stock
consisted of 50,000,000 Class A common shares, par value $.001 per
share, 60,000 Class B common shares, par value $.001 and 6,000,000
preferred shares, par value $.001 per share and there were issued and
outstanding 22,200,000 Class A common stock, 60,000 Class B common stock
and no preferred shares.
6. Prior to the Merger, the record and, to our best knowledge, beneficial
owners of the outstanding Class A common stock and Class B common stock
of BRC-North Carolina are as set forth on Exhibit A attached hereto
("BRC-Common Stock") and the offering and sale of the BRC-Common Stock
did not require registration or qualification under the Securities Act
or under any applicable state securities laws.
December 29, 1994
Page 3
-------------------------
7. The offering, sale and issuance of the Series A Preferred Shares and
Warrants under the Agreement, and the issuance of the Common Stock upon
conversion of the Series A Preferred Shares or Exercise of the Warrants,
do not require registration under the Securities Act or registration or
qualification under any state securities laws, except no opinion is
expressed regarding the conversion of the Warrants for North Carolina and
Illinois residents.
8. Prior to the Merger, the certificates representing the BRC-Common Stock
were duly authorized by BRC-North Carolina, such BRC-Common Stock was
validly issued and outstanding, fully paid and nonassessable, and there
were no statutory, or to our best knowledge contractual, or other
preemptive rights of stockholders with respect to the issuance of such
BRC-Common Stock.
9. The certificates representing the Common Shares have been duly
authorized, executed and delivered by the Company, such Common Shares
have been validly issued and are outstanding, fully paid and
nonassessable, and there are no statutory, or to our best knowledge
contractual, or other preemptive rights of stockholder with respect to
the issuance of such Common Shares except the agreements set forth
herein.
10. The certificates representing the Series A Preferred Shares have been
duly authorized, executed and delivered by the Company, such Series A
Preferred Shares have been validly issued and are outstanding, fully paid
and nonassessable, and there are no statutory, or to our best knowledge
contractual, or other preemptive rights of stockholder with respect to
the issuance of such Series A Preferred Shares except the agreements set
forth herein.
11. The Common Stock issuable upon conversion of the Series A Preferred
Shares or exercise of the Warrants has been duly authorized and reserved
for issuance by the Company, there are no statutory, or to our best
knowledge contractual, or other preemptive rights of stockholders with
respect to the issuance of such Common Stock, and the Common Stock to be
issued upon conversion of such Series A Preferred Shares or exercise of
such Warrants will upon such issuance be validly issued, fully paid and
nonassessable.
12. To the best of our knowledge, except for the Series A Preferred Shares
and the Warrants there are (a) no outstanding shares of stock or
securities convertible into or
December 29, 1994
Page 5
-------------------------
in the creation of any lien, mortgage, security interest, charge or other
encumbrance upon the Company's capital stock or assets pursuant to, (d)
give any third party the right to accelerate any obligation under, (e)
result in a violation of, or (f) require any authorization, consent,
approval, exemption or other action by or notice to any court or
administrative or governmental body pursuant to, the Company's
Certificate of Incorporation, the Company's By-Laws, any law, statute,
rule or regulation to which the Company is subject, or any agreement,
instrument, order, judgement or decree to which the Company is subject
and which is known to us.
16. The Company has all necessary corporate power and authority and all
material licenses, permits and authorizations necessary to own its
properties and to conduct its business in the manner and in the locations
presently conducted except as set forth in paragraph 17 hereof.
17. Except for the qualification of the Company to do business in North
Carolina, Arizona, California, Florida, Georgia, Louisiana, Tennessee and
Texas, no consents, approvals or other actions by, or notices to or
filing with, governmental authorities in connection with the Merger are
necessary.
18. No action of or filing with any governmental or public body or authority
is required to authorize or is otherwise required for the validity of
execution, delivery, and performance by the Company of the Agreement, the
Shareholders' Agreement, the Registration Agreement, the Warrants or the
other agreements contemplated by the Agreement to which the Company is a
party.
19. The Company does not own directly or indirectly any equity securities in
any corporation.
20. We have not prepared or delivered any opinion or memorandum or rendered
any legal advice to the effect that the Company or BRC-North Carolina is
or was exposed, from a legal standpoint, to any liability or disadvantage
which may be material to the Company's business except a memorandum dated
November 17, 1994, a copy of which is attached hereto.
21. We do not know of or have reason to believe that the Company is or BRC-
North Carolina was a party to any pending suit, action, investigation or
inquiry by any person or governmental body, or arbitration proceedings or
any material
December 29, 1994
Page 6
-------------------------
labor dispute relating to or affecting the Company, its assets or its
business except applications for local permits for retail propane
cylinder exchange locations.
22. No fact or circumstance has come to our attention which gives us cause to
believe that any representation or warranty by the Company set forth in
the Agreement is untrue.
In rendering the foregoing opinion we have relied to the extent we deem
such reliance appropriate, without investigation, on certificates and other
communications from public officials, from the register of the Company's
securities and from officers of the Company and on representations by the
Company set forth in the Agreement.
We have assumed that documents we have reviewed in connection with this
opinion which purport to have been executed by parties other than the Company
and BRC-North Carolina, have been duly executed by such parties and that such
parties had all requisite power to enter into and perform all obligations
thereunder, that execution and delivery thereof has been duly authorized by all
requisite action and that the subject instruments are valid and binding upon
said parties.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures thereon, the legal capacity of
natural persons executing such documents and the conformity to originals of all
documents submitted to us as copies.
We are qualified to practice law in the State of North Carolina and we do
not purport to be experts in and do not express any opinion herein concerning
any law other than the law of the State of North Carolina and the United States
of America and matters governed by the General Corporation Law of the State of
Delaware.
The opinions expressed herein are subject to the following qualifications:
A. As to matters wherein our opinion is stated to be "to the best of our
knowledge" or "to our knowledge", our opinion with respect to such
matters is limited to our actual knowledge and said phrases shall not
imply any inquiry or constructive knowledge on our part.
B. The enforceability of obligations and the availability of remedies are
subject to and may be limited by (i) bankruptcy, insolvency,
reorganization, arrangement, fraudulent transfer, moratorium and
similar laws affecting creditors' rights
December 29, 1994
Page 7
-------------------------
generally and (ii) general principles of equity (including, but not
limited to, concepts of materiality, reasonableness, good faith and
fair dealing and principles that may limit the availability of
specific performance or injunctive or other equitable relief) whether
such enforceability of obligations or availability of remedies is
considered in a proceeding in equity or at law.
This opinion is solely for the information of the addressees hereof and is
not to be quoted in whole or in part or otherwise referred to, nor is it to be
filed with any government agency or any other person without our prior written
consent and no one other than the addressees hereof is entitled to rely on this
opinion.
Very truly yours
HOUSE LAW FIRM
By: /s/ DON R. HOUSE
-------------------------------------
Don R. House
EXHIBIT A
(Page 1 of 2)
BLUE RHINO CORPORATION
Common Stock
Shareholder Certificate & Number of Shares
----------- -------------------------------
CLASS B COMMON:
Xxxxx X. Xxxx #2 - 40,000
#3A - 20,000
---------
TOTAL 60,000
CLASS A COMMON:
Xxxxx X. Xxxx #1 - 6,420,000
#3 - 3,455,000
Xxxxxx X. Xxxxxxxxxx #4 - 5,200,000
#5 - 2,600,000
Xxxxxx X. Xxxx #6 - 100,000
Mayo X. XxXxxxxxx #7 - 100,000
Xxxxxxx Xxxxxx #8 - 25,000
Xxxxxx Xxxxxx #9 - 25,000
Xxxxx Xxxxxx #10 - 25,000
Xxxxxx X. Xxxx #11 - 25,000
Trustee for
Sarkanda X. Xxxxxxxxxxxx
Xxxxxx X. Xxxx #12 - 25,000
Trustee for
Xxxxxxx X. Xxxxxxxxxxxx
Xxxxxxxx Xxxxxxxx #00 - 100,000
Xxxxxxxx X. Xxxxxxxxxx #14 - 25,000
Xxxxxx X. Xxxxxxxxxx #15 - 25,000
Trustee for
Xxxxxx X. Xxxxxxxxxx
EXHIBIT A
(Page 2 of 2)
Xxxxxxxx Xxxxxxxx #16 - 25,000
Trustee for
Xxxxxxxxxx Xxxxxxxxxx
Xxxxxxxx Xxxxxxxx #17 - 25,000
Trustee for
Xxxxx Xxxxxxx
Xxxxxx Family #18 - 1,600,000
Limited Partnership
Xx. Xxxxxx Xxxxxx #19 - 200,000
----------
TOTAL 20,000,000
BLUE REINO CORPORATION
Restricted Class A Common Stock
Shareholder Certificate & Number of Shares
----------- ------------------------------
Xxxxx X. Xxxx #1 - 500,000
Xxxxxxxx Xxxxxxxx #2 - 750,000
Xxxxx Xxxxxxx #3 - 500,000
X. X. Xxxxxxxx, III #4 - 200,000
Xxx Xxxxxxx #5 - 100,000
Xxxx Xxxx #6 - 75,000
Xxxxx Xxxx #7 - 50,000
Xxxxxx X. Xxxxx #8 - 25,000
----------
TOTAL 2,200,000
Memorandum dated 11/17/94 - Available Upon Request
Exhibit G
Business Plan Not Enclosed - Previously Delivered and Available Upon Request
BLUE RHINO CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of
December 1, 1994 by and among BLUE RHINO CORPORATION, a Delaware corporation
(the "Corporation"), and PLATINUM VENTURE PARTNERS I, L.P., a Delaware limited
partnership ("Platinum") and the Persons listed on Schedule 1 attached hereto
(collectively, the "Investors"). Platinum and the Investors are sometimes
referred to herein, collectively, as the "Purchasers."
R E C I T A L S:
A. Purchasers have agreed to purchase shares of the Corporation's Series
A Convertible Participating Preferred Stock (the "Series A Preferred Shares")
and Warrants (the "Warrants") pursuant to that certain Series A Securities
Purchase Agreement of even date herewith (the "Securities Purchase Agreement")
provided that the parties hereto enter into this Agreement.
B. The Corporation deems it desirable to enter into this Agreement in
order to induce Purchasers to purchase the Series A Securities pursuant to the
Securities Purchase Agreement.
AGREEMENTS
In consideration of the premises and the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. As used in this Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, $0.001 par value per share, of the
Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means a natural person, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.
"Public Offering" means any offering by the Corporation of its equity
securities to the public pursuant to an effective registration statement under
the Securities Act or any comparable statement under any comparable federal
statute then in effect.
"Registrable Shares" means at any time (i) any shares of Common Stock then
outstanding which were issued upon conversion of the Series A Securities; (ii)
any shares of Common Stock then issuable upon conversion or exercise of the then
outstanding Series A Securities; (iii) any shares of Common Stock then
outstanding which were issued as, or were issued directly or indirectly upon the
conversion or exercise of other securities issued as, a dividend or other
distribution with respect or in replacement of any shares referred to in (i) or
(ii); and (iv) any shares of Common Stock then issuable directly or indirectly
upon the conversion or exercise of other securities which were issued as a
dividend or other distribution with respect to or in replacement of any shares
referred to in (i) or (ii); provided, however, that Registrable Shares shall not
include any shares which have been registered pursuant to the Securities Act or
which have been sold to the public pursuant to Rule 144 of the Commission under
the Securities Act. For purposes of this Agreement, a person will be deemed to
be a holder of Registrable Shares whenever such person has the then-existing
right to acquire such Registrable Shares (by conversion or otherwise), whether
or not such acquisition actually has been effected.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Securities" means the Series A Preferred Shares and the Warrants,
collectively.
2. Demand Registration.
2.1 Requests for Registration. Subject to the terms of this
Agreement, the holders of at least 51% of the then outstanding Registrable
Shares may, at any time request registration under the Securities Act of
all or part of their Registrable Shares on Form S-1 or any similar long-
form registration ("Long-Form Registrations") or, if available, on Form S-2
or S-3 or any similar short-form registration ("Short-Form Registrations").
Within 10 days after receipt of any request pursuant to this Section 2.1,
the Corporation will give written notice of such request to all other
holders of Registrable Shares and will include in such registration all
Registrable Shares with respect to which the Corporation has received
written requests for inclusion within 15 days after delivery of the
Corporation's notice. All registrations requested pursuant to this Section
2.1 are referred to herein as "Demand Registrations."
2.2 Long-Form Registrations. The holders of the Registrable Shares
will be entitled to request two Long-Form Registrations in which the
Corporation will pay all Registration Expenses (as defined in Section 6
below). A registration will not count as one of the permitted Long-Form
Registrations until it has become effective (unless such Long-Form
Registration has not become effective due solely to the fault of the
holders requesting such registration), and the second or any subsequent
Long-Form Registration will not count as one of the permitted Long-Form
Registrations unless the holders of the Registrable Shares are able to
register and sell at least 90% of the Registrable Shares requested to be
included in such registration; provided, however, that in any event the
Corporation will pay all Registration Expenses in connection with any
registration initiated as a Long-Form Registration.
-2-
2.3 Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 2.2 above, the holders of
Registrable Shares will be entitled to request an unlimited number of
Short-Form Registrations in which the Company will pay all Registration
Expenses. Demand Registrations will be Short-Form Registrations whenever
the Corporation is permitted to use any applicable short form. Once the
Corporation has become subject to the reporting requirements of the
Exchange Act, the Corporation will use its best efforts to make Short-Form
Registrations available for the sale of Registrable Shares.
2.4 Priority. The Corporation will not include in any Demand
Registration any securities which are not Registrable Shares without the
written consent of the holders of at least 51% of the Registrable Shares
included in such Demand Registration. If other securities are permitted to
be included in a Demand Registration which is an underwritten offering and
the managing underwriters advise the Corporation in writing that in their
opinion the number of Registrable Shares and other securities requested to
be included exceeds the number of Registrable Shares and other securities
which can be sold in such offering, the Corporation will include in such
registration, first, the Registrable Shares requested to be included in
such Demand Registration, pro rata among the holders of such securities on
the basis of the number of Registrable Shares which are owned by such
holders, and second, other securities to be included in such Demand
Registration.
2.5 Restrictions. The Corporation will not be obligated to effect any
Long-Form Registration within nine months after the effective date of a
previous Long-Form Registration. The Corporation may postpone for up to
three months the filing or the effectiveness of a registration statement
for a Demand Registration if the Corporation reasonably believes that such
Demand Registration would have an adverse effect on any proposal or plan by
the Corporation or any of its subsidiaries to engage in any acquisition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other significant transaction.
2.6 Selection of Underwriters. The holders of at least 51% of the
Registrable Shares included in any Demand Registration shall have the right
to select the investment banker(s) and manager(s) to administer the
offering, subject to the Corporation's approval which will not be
unreasonably withheld.
2.7 Preemption. The Corporation will have the right to preempt any
Long-Form Registration with a primary registration by delivering written
notice of such intention to the holders of Registrable Shares who have
requested such Long-Form Registration within fifteen (15) days after the
Corporation has received a request for such registration. In the ensuing
primary registration, the holders of Registrable Shares will have such
piggyback registration rights as are set forth in Section 3 hereof. Upon
the Corporation's preemption of a requested Long-Form Registration, such
requested registration will not count as one of the permitted Long-Form
Registrations.
-3-
3. Piggyback Registration.
3.1 Right to Piggyback. Whenever the Corporation proposes to register
any of its securities under the Securities Act (other than pursuant to a
Demand Registration hereunder) and the registration form to be used may be
used for the registration of any Registrable Shares (a "Piggyback
Registration"), the Corporation will give prompt written notice to all
holders of the Registrable Shares of its intention to effect such a
registration and will include in such registration all Registrable Shares
(in accordance with the priorities set forth in Sections 3.2 and 3.3 below)
with respect to which the Corporation has received written requests for
inclusion within 15 days after the delivery of fee Corporation's notice.
3.2 Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Corporation and the
managing underwriters advise the Corporation in writing that in their
opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, the
Corporation will include in such registration first, the securities that
the Corporation proposes to sell, second, the Registrable Shares requested
to be included in such registration, pro rata among the holders of such
Registrable Shares on the basis of the number of shares which are owned by
such holders, and third, other securities requested to be included in such
registration.
3.3 Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the
Corporation's securities and the managing underwriters advise the
Corporation in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can
be sold in such offering, the Corporation will include in such registration
first, the securities requested to be included therein by the holders
requesting such registration and the Registrable Shares requested to be
included in such registration, pro rata among the holders of such
securities on the basis of the number of shares of Common Stock or
Registrable Shares which are owned by such holders, and second, other
securities requested to be included in such registration.
3.4 Other Registrations. If the Corporation has previously filed a
registration statement with respect to Registrable Shares pursuant to
Section 2 or pursuant to this Section 3, and if such previous registration
has not been withdrawn or abandoned, the Corporation will not file or cause
to be effected any other registration of any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-8 or any successor
form), whether on its own behalf or at the request of any holder or
holders of such securities, until a period of at least 180 days has elapsed
from the effective date of such previous registration.
3.5 Selection of Underwriters. In connection with any Piggyback
Registration, the holders of at least 51% of the Registrable Shares
requested to be registered shall have the right to select the managing
underwriters to administer any offering of the Corporation's securities in
which the Corporation does not participate, and the
-4-
Corporation will have such right in any offering in which it participates,
provided that in either case such managing underwriters shall be qualified
nationally recognized underwriters.
4. Holdback Agreements.
4.1 Holders' Agreements. Each holder of Registrable Shares agrees not
to effect any public sale or distribution of equity securities of the
Corporation, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7) days prior to, and
during the 120 days following, the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration in which
Registrable Shares are included (except as part of such underwritten
registration), unless the underwriters managing the registered public
offering otherwise agree.
4.2 Corporation's Agreements. The Corporation agrees (i) not to
effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to, and during the 120 days
following, the effective date of any underwritten Demand Registration or
any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public
offering otherwise agree and (ii) to cause each holder of at least 1% (on
a fully diluted basis) of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities to
agree not to effect any public sale or distribution of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered
public offering otherwise agree.
5. Registration Procedures. Whenever the holders of Registrable Shares
have requested that any Registrable Shares be registered pursuant to this
Agreement, the Corporation will use its best efforts to effect the registration
and sale of such Registrable Shares in accordance with the intended method of
disposition thereof and, pursuant thereto, the Corporation will as expeditiously
as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Shares and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus, or any amendments or supplements
thereto, the Corporation will furnish copies of all such documents proposed
to be filed to the counsel or counsels for the sellers of the Registrable
Shares covered by such registration statement);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus(es) used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than nine months and comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period
in
-5-
accordance with the intended methods of disposition by the sellers thereof
set forth in such registration statement;
(c) furnish to each seller of Registrable Shares such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus(es) included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Shares owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions
as any seller reasonably requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Shares
owned by such seller (provided that the Corporation will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction);
(e) notify each seller of such Registrable Shares, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller,
the Corporation will prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus will not contain any untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading;
(f) cause all such Registrable Shares to be listed on each securities
exchange on which similar securities issued by the Corporation are then
listed;
(g) provide a transfer agent and registrar for all such Registrable
Shares not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
holders of a majority of the Registrable Shares being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Shares (including, without limitation,
effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable Shares,
any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Corporation,
and cause the Corporation's officers, directors, employees and independent
-6-
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) advise each seller of such Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding
for such purpose and promptly use all reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order
should be issued;
(k) at least 48 hours prior to the filing of any registration
statement or prospectus, or any amendment or supplement to such
registration statement or prospectus, furnish a copy thereof to each seller
of such Registrable Shares and refrain from filing any such registration
statement, prospectus, amendment or supplement to which counsel selected by
the holders of a majority of the Registrable Shares being registered shall
have reasonably objected on the grounds that such document does not comply
in all material respects with the requirements of the Securities Act or the
rules and regulations thereunder, unless, in the case of an amendment or
supplement, in the opinion of counsel for the Corporation the filing of
such amendment or supplement is reasonably necessary to protect the
Corporation from any liabilities under any applicable federal or state law
and such filing will not violate applicable laws; and
(l) at the request of any seller of such Registrable Shares in
connection with an underwritten offering, furnish on the date or dates
provided for in the underwriting agreement: (i) an opinion of counsel,
addressed to the underwriters and the sellers of Registrable Shares,
covering such matters as such underwriters and sellers may reasonably
request, including such matters as are customarily furnished in connection
with an underwritten offering; and (ii) a letter or letters from the
independent certified public accountants of the Corporation addressed to
the underwriters and the sellers of Registrable Shares, covering such
matters as such underwriters and sellers may reasonably request, in which
letter(s) such accountants shall state, without limiting the generality of
the foregoing, that they are independent certified public accountants
within the meaning of the Securities Act and that in their opinion the
financial statements and other financial data of the Corporation included
in the registration statement, the prospectus(es), or any amendment or
supplement thereto, comply in all material respects with the applicable
accounting requirements of the Securities Act.
6. Registration Expenses.
6.1 Corporation's Expenses. All expenses incident to the Corporation's
performance of or compliance with this Agreement, including without
limitation all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses, messenger
and delivery expenses, and fees and disbursements of counsel for the
Corporation and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the
Corporation (all such expenses being herein called "Registration
Expenses"), will be borne by the Corporation.
-7-
6.2 Holder's Expenses. Notwithstanding anything to the contrary
contained herein, each holder of Registrable Shares will pay all attorney
fees and disbursements for counsel they retain in connection with the
registration of Registrable Shares, except that the Corporation will
reimburse the holders of Registrable Shares for the reasonable fees and
disbursements of one counsel chosen by the holders of at least 51% of such
Registrable Shares in connection with a Demand Registration.
7. Indemnification.
7.1 By the Corporation. The Corporation agrees to indemnify, to the
extent permitted by law, each holder of Registrable Shares, its officers
and directors and each person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages, liabilities and
expenses (including without limitation, attorney's fees) caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus, or any
amendment thereof or supplement thereto, or any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the
Corporation by such holder expressly for use therein or by such holder's
failure to deliver a copy of the registration statement or prospectus or
any amendments or supplements thereto after the Corporation has furnished
such holder with a sufficient number of copies of the same. In connection
with an underwritten offering, the Corporation will indemnify such
underwriters, their officers and directors and each person who controls
such underwriters (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the holders
of Registrable Shares. The payments required by this Section 7.1 will be
made periodically during the course of the investigation or defense, as and
when bills are received or expenses incurred.
7.2 By Each Holder. In connection with any registration statement in
which a holder of Registrable Shares is participating, each such holder
will furnish to the Corporation in writing such information and affidavits
as the Corporation reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by law,
will indemnify the Corporation, its directors and officers and each person
who controls the Corporation (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact contained in
the registration statement, prospectus or preliminary prospectus, or any
amendment thereof or supplement thereto, or any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the extent that
such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such holder; provided that the
obligation to indemnify will be several, not joint and several, among such
holders of Registrable Shares and the liability of each such holder of
Registrable Shares will be in proportion to and limited to the net amount
received by such holder from the sale of Registrable Shares pursuant to
such registration statement.
-8-
7.3 Procedure. Any person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense
is assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
7.4 Survival. The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made
by or on behalf of the indemnified party or any officer, director or
controlling person of such indemnified party and will survive the transfer
of securities. The Corporation also agrees to make such provisions as are
reasonably requested by any indemnified party for contribution to such
party in the event the Corporation's indemnification is unavailable for any
reason.
8. Compliance with Rule 144. In the event that the Corporation (a)
registers a class of securities under Section 12 of the Exchange Act or (b)
commences to file reports under Section 13 or l5(d) of the Exchange Act, then at
the request of any holder who proposes to sell securities in compliance with
Rule 144 of the Commission, the Corporation will (i) forthwith furnish to such
holder a written statement of compliance with the filing requirements of the
Commission as set forth in Rule 144, as such rules may be amended from time to
time and (ii) make available to the public and such holders such information as
will enable the holders to make sales pursuant to Rule 144.
9. Participation in Underwritten Registrations. No person may participate
in any registration hereunder which is underwritten unless such person (a)
agrees to sell its securities on the basis provided in any underwriting
arrangements approved by such person or persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements.
10. Miscellaneous.
10.1 No Inconsistent Agreements. The Corporation will not hereafter
enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Shares
in this Agreement.
10.2 Adjustments Affecting Registrable Shares. The Corporation will
not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Shares to include such
-9-
Registrable Shares in a registration undertaken pursuant to this Agreement
or which would adversely affect the marketability of such Registrable
Shares in any such registration, including, without limitation, effecting a
stock split or combination of shares.
10.3 Other Registration Rights. Except as provided in this Agreement,
the Corporation will not hereafter grant to any person or persons the right
to request the Corporation to register any equity securities of the
Corporation, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of at least 51% of the Registrable Shares. The Corporation will not
include in any Demand Registration any securities which are not Registrable
Shares (for the purposes of Section 2) unless and until all Registrable
Shares requested to be registered have first been so included.
10.4 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto will bind and inure to the benefit of
the respective successors and assigns of the parties hereto, whether so
expressed or not. In addition, and whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit
of the Purchasers or holders of registrable Shares are also for the benefit
of, and enforceable by, any subsequent holders of such Registrable Shares.
10.5 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
10.6 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience of reference only and do not constitute a part
of and shall not be utilized in interpreting this Agreement.
10.7 Notices. Any notices required or permitted to be sent hereunder
shall be delivered personally or mailed, certified mail, return receipt
requested, or delivered by overnight courier service to the following
addresses, or such other address as any party hereto designates by written
notice to the Corporation, and shall be deemed to have been given upon
delivery, if delivered personally, three days after mailing, if mailed, or
one business day after delivery to the courier, if delivered by overnight
courier service:
If to the Corporation, to:
Blue Rhino Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxx, Chief Executive Officer
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with a copy to:
House Law Firm
P.O. Drawer 26015
Winston-Salem, North Carolina 27114-6015
Attention: Don R. House, Esq.
If to Purchasers, to:
Platinum Venture Partners I, L.P.
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
10.8 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement, and the performance of the
obligations imposed by this Agreement, shall be governed by the laws of the
State of Delaware applicable to contracts made and wholly to be performed
in that state.
10.9 Final Agreement. This Agreement, together with the Securities
Purchase Agreement and all other agreements entered into by the parties
hereto pursuant to the Securities Purchase Agreement, constitutes the
complete and final agreement of the parties concerning the matters referred
to herein, and supersedes all prior agreements and understandings.
10.10 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
10.11 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be used against any
party.
-11-
The parties hereto have executed this Registration Rights Agreement on the
date first set forth above.
Signatures
BLUE RHINO CORPORATION
By: /s/ XXXXX XXXX
-----------------------------------
Xxxxx Xxxx, Chief Executive Officer
PLATINUM VENTURE PARTNERS I, L.P.
By: PLATINUM VENTURE PARTNERS, INC.
By: /s/ XXXXXXX XXXXXX
------------------------------
Xxxxxxx Xxxxxx, Vice President
/s/ XXXXXX X. XXXXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXX X. XXXXXXXXXX
----------------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ XXXXX XXXXX
----------------------------------------
Xxxxx Xxxxx
/s/ XXXXX X. XXXXXX
----------------------------------------
Xxxxx X. Xxxxxx
/s/ XXXXXX X. STEEL & XXXXXXXX XXXXX
----------------------------------------
Xxxxxx X. Steel & Xxxxxxxx Xxxxx JTWROS
/s/ XXXXXX X. XXXXXXXXX
----------------------------------------
Xxxxxx X Xxxxxxxxx
/s/ XXX XXXXXX
----------------------------------------
Xxx Xxxxxx
/s/ XXX XXXXXXX
----------------------------------------
Xxx Xxxxxxx
/s/ XXXXXX X. XXXXXX
----------------------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXX XXXXXXX, XX.
----------------------------------------
Xxxxx Xxxxxxx, Xx.
/s/ XXXXX XXXXXXX, XX.
----------------------------------------
Xxxxx Xxxxxxx, Xx.
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XXXXXXX, INC.
By: /s/ XXXXX XXXXXXXX
-------------------------
Xxxxx Xxxxxxxx, Director
/s/ XXXXX XXXX XXXX
-----------------------------
Xxxxx Xxxx Xxxx
/s/ XXX XXXXXXX
-----------------------------
Xxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
-----------------------------
Xxxxxxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
-----------------------------
Xxxxxxx Xxxxxxx
/s/ XXXXXX XXXXX
-----------------------------
Xxxxxx Xxxxx
/s/ XXXXX XXXXXXX
-----------------------------
Xxxxx Xxxxxxx
/s/ XXXXX XXXXXXXXX
-----------------------------
Xxxxx Xxxxxxxxx
/s/ XXXXX XXXXXX
-----------------------------
Xxxxx Xxxxxx
/s/ XXXXXXXXX XXXXXXXXXX
-----------------------------
Xxxxxxxxx Xxxxxxxxxx
XXXX XXXXXX BANK CUSTODIAN FBO
XXXXXX XXXXX XXX #8417
By: /s/ XXXXX X. XXXXX
-------------------------
Xxxxx X. Xxxxx, Trust Officer, XXX
XXXXXXXX CAPITAL MANAGEMENT
By: /s/ XXXXX X. XXXXXXXX
-------------------------
Xxxxx X. Xxxxxxxx, Sole Proprietor
XXXXX X. XXXXXXXX TESTAMENTARY TRUST
By: /s/ XXXXX X. XXXXXXXX
-------------------------
Xxxxx X. Xxxxxxxx, Trustee
/s/ XXXXX XXXX
--------------
Xxxxx Xxxx
-13-
XXXXXXXX FAMILY DISCRETIONARY TRUST
By: /s/ XXXXX X. XXXXXXXXXX
---------------------------------------
Xxxxx X. Xxxxxxxxxx, Trustee
/s/ XXXXXX X. XXXXXXX & XXXXX
XXXXXXXXXX-XXXXXXX
--------------------------------------------
Xxxxxx X. Xxxxxxx & Xxxxx Xxxxxxxxxx-Xxxxxxx
JTWROS
-14-
Schedule 1
Investors
---------
Platinum Venture Partners I, L.P.
Xxxxxx X. Xxxxxxxxxx
Xxxxx Xxxxxxxxxx
Xxxxx Xxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Steel & Xxxxxxxx Xxxxx JTWROS
Xxxxxx X. Xxxxxxxxx
Xxx Xxxxxx
Xxx Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxx Xxxxxxx, Xx.
Xxxxx Xxxxxxx, Xx.
Xxxxxxx, Inc. (c/o Xxxxx Xxxxxxxx)
Xxxxx Xxxx Xxxx
Xxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxx
Xxxxxxxxx Xxxxxxxxxx
Xxxx Xxxxxx Bank Custodian FBO Xxxxxx Xxxxx XXX #8417
Xxxxxxxx Capital Management
Xxxxx X. Xxxxxxxx Testamentary Trust
Xxxxx Xxxx
Xxxxxxxx Family Discretionary Trust (c/o Xxxxx Xxxxxxxxxx)
Xxxxxx X. Xxxxxxx & Xxxxx Xxxxxxxxxx-Xxxxxxx JTWROS
SHAREHOLDERS' AGREEMENT
-----------------------
THIS SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of December 1,
1994, is by and between BLUE RHINO CORPORATION, a Delaware corporation (the
"Corporation"), the persons and entities identified on Schedule 1 attached
hereto (the "Investors"), and the persons identified on Schedule 2 attached
hereto (the "Management Stockholders").
RECITALS
--------
A. The Investors have agreed to purchase the Series A Preferred
Securities (as defined in Section 1 below) pursuant to that certain Series A
Securities Purchase Agreement dated as of an even date herewith (the "Securities
Purchase Agreement") provided that the parties hereto enter into this Agreement.
B. To induce the Investors to purchase the Series A Preferred Securities,
the Corporation and the Management Stockholders deem it desirable to enter into
this Agreement.
AGREEMENTS
----------
In consideration of the recitals and the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means the shares of Common Stock which have not been sold
to the public (i) pursuant to a registration statement declared effective by the
Commission, or (ii) pursuant to Rule 144 promulgated by the Commission under the
Securities Act. For the purposes of this Agreement, any Holder will be deemed to
own, in addition to any Common Shares such Holder actually owns, any Common
Shares which would then be directly or indirectly issuable upon the conversion
or exercise (whether nor not then convertible or exercisable) of any other
Securities owned by such Holder and such other Securities shall be deemed to
represent such Common Shares.
"Common Stock" means the Common Stock, par value $0.001 per share, of the
Corporation.
"Holder" is any holder (or deemed holder) of Securities who is a party to
this Agreement (or becomes a party hereto pursuant to Section 14 hereof) or is a
successor or assign or subsequent holder contemplated by Section 19 hereof.
"Management Securities" means, at any time, (i) Securities then held by
Management Stockholders, (ii) Securities that were on or after the date hereof
held by a Management Stockholder but are then held by (A) a successor or assign
of such Management Stockholder (other than an Investor) or (B) a subsequent
Holder (other than an Investor), and (iii) Securities that were issued as, or
upon conversion or exercise of other Securities issued as, a dividend or other
distribution with respect to or in replacement of other Management Securities
and are then held by (1) a Management Stockholder, (2) a successor or assign of
such Management Stockholder (other than an Investor) or (3) a subsequent Holder
(other than an Investor); provided, however, that Management Securities shall
not include any securities which have been sold to the public pursuant to a
registration statement declared effective by the Commission or pursuant to Rule
144 promulgated by the Commission under the Securities Act. For purposes of
this Agreement, the calculation of the number of Management Securities (to the
extent such Securities are not Common Shares) shall be determined on an as-
converted basis into Common Shares.
"New Securities" means (i) any capital stock of the Corporation or any
other securities or other obligations of the Corporation, including any equity
or equity like profit participation rights, whether now authorized or not, (ii)
any rights, options, or warrants to purchase any such capital stock or rights,
or to purchase any securities of any type whatsoever that are, or may become,
convertible into any such capital stock, and (iii) any securities of any type
whatsoever that are, or may become convertible into any such capital stock or
rights; provided, however that "New Securities" will not include (A) securities
offered to the public pursuant to a registration statement under the Securities
Act, (B) options or securities issued to, or securities issued upon exercise of
options issued to officers, directors or employees of the Corporation, (C)
securities issued upon conversion of the Series A Preferred Shares or the
Warrants, (D) securities issued pursuant to the Securities Purchase Agreement,
(E) securities issued in connection with the acquisition of another corporation
by the Corporation by merger, purchase of all or substantially all of such other
corporation's assets, or by other reorganization whereby the Corporation ends up
owning, directly or indirectly, greater than 50% of the voting power of such
corporation, and/or (F) Common Stock issued upon exercise of options
outstanding on the date hereof.
"Person" means a natural person, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or other entity, or a governmental entity or any department, agency
or political subdivision thereof.
"Platinum" means Platinum Venture Partners I, L.P., a Delaware limited
partnership.
"Qualified Public Offering" has the meaning ascribed to it in Section 4.7
of ARTICLE FOUR of the Certificate of Incorporation of the Corporation, as in
effect on the date hereof.
"Securities" means Common Shares or shares of capital stock or other
securities directly or indirectly exercisable for or convertible into Common
Shares; provided, however, that Securities shall not include any securities
which have been sold to the public pursuant to a registration statement declared
effective by the Commission or pursuant to Rule 144 promulgated by the
Commission under the Securities Act.
-2-
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Securities" means, at any time, (i) Series A Preferred
Shares, (ii) Common Shares issued upon conversion of Series A Preferred Shares,
(iii) Warrants, (iv) Common Shares issued upon exercise of the Warrants and (v)
Common Shares or other securities issued upon the conversion or in replacement
of other Series A Preferred Securities. For purposes of this Agreement, the
calculation of the number of Series A Preferred Securities shall be determined
on an as-converted (or as exercised) basis into Common Shares.
"Series A Preferred Shares" means those shares of Series A Convertible
Participating Preferred Stock, par value $0.01 per share, of the Corporation
duly issued and outstanding on the date hereof.
"Warrants" means the warrants to purchase Common Stock issued pursuant to
the Securities Purchase Agreement and any securities issued as a dividend or
other distribution with respect to or in replacement of the Warrants.
"Subsidiary" means, with respect to any corporation, any Person of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled by such corporation or one or more Subsidiaries of
such corporation or by such corporation and one or more Subsidiaries of such
corporation.
2. Disposition of Securities. No Holder of Management Securities will
transfer, sell, convey, exchange or otherwise dispose of (herein referred to as
a "disposition" or "to dispose of") such Management Securities, except in a
Qualified Public Offering or in compliance with Sections 3 and 4 or as permitted
by Section 5.
3. Right of First Refusal--Outstanding Management Securities.
(a) Subject to the limitations of Section 2 hereof, if any Holder of
Management Securities (the "Selling Management Holder") desires to dispose
of any Management Securities in compliance with this Section, such Selling
Management Holder will first give written notice (the "Management
Securities Offer Notice") to the Corporation which will, within five (5)
days of the date of receipt of such notice (the "Management Securities
Offer Date"), send or deliver a copy of the Management Securities Offer
Notice to each Holder of Series A Preferred Securities, to the effect that
such Selling Management Holder wishes to dispose of such Management
Securities (the "Offered Management Securities"), stating the price at and
other material terms upon which such Selling Management Holder wishes to
dispose of such Management Securities and offering to sell such Management
Securities, in whole or in part (the "Management Securities Offer"), first
to the Corporation, and then to the Holders of Series A Preferred
Securities, pursuant to this Section, at the price and on the other
material terms described in the Management Securities Offer Notice.
(b) The Corporation may accept the Management Securities Offer in
whole or indicate a desire to accept the Management Securities Offer in
part by giving written
-3-
notice thereof to the Selling Management Holder within fifteen (15) days
of the Management Securities Offer Date.
(c) In the event the Corporation does not accept the Management
Securities Offer in its entirety as provided in subsection (b) of this
Section, the Corporation will promptly notify in writing the Holders of the
Series A Preferred Securities, and such Holders may elect to purchase, pro
rata according to the number of Common Shares that would be held on an as-
converted basis by each such Holder that wishes to purchase such
securities, or in such other proportions as such Holders may agree upon,
the Offered Management Securities with respect to which the Management
Securities Offer has not then been accepted by the Corporation, by giving
written notice to the Corporation and the Selling Management Holder within
thirty (30) days of the Management Securities Offer Date. For example,
assuming (for the purpose of this example only) (i) a Management
Stockholder desires to dispose of 100 Management Securities, (ii) the
Corporation purchases 10 of such Management Securities pursuant to
paragraph (b) of this Section 3, (iii) Platinum is deemed to hold 40 of the
100 Common Shares that would be held (or deemed to be held) by each Holder
of Series A Preferred Securities and (iv) all Holders of Series A Preferred
Securities wish to purchase such Management Securities, then Platinum would
be entitled to purchase 36 of the remaining 90 Management Securities
pursuant to this Section 3 and the other Holders of Series A Preferred
Securities would be entitled to purchase 54 Management Securities pro rata.
Similarly, assuming (for the purpose of this example only) (i) a Management
Stockholder desires as above to dispose of 100 Management Securities, (ii)
the Corporation purchases as above 10 of said Management Securities
pursuant to paragraph (b) of this Section 3, (iii) the Holders of 50 of the
100 Common Shares that would be held (or deemed to be held) by the Holders
of Series A Preferred Securities wish to purchase such Management
Securities, and (iv) Platinum holds 10 of such 50 Common Shares, then
Platinum would be entitled to purchase 18 of the remaining 90 Management
Securities hereunder and the other Holders of Series A Preferred Securities
who wish to purchase such Management Securities would be entitled to
purchase 72 Management Securities pro rata.
(d) In the event that the Management Securities Offer has not been
accepted in its entirety by the Corporation, or the other Holders of the
Series A Preferred Securities, or both in accordance with this Section, the
Selling Management Holder may dispose of all, and the Corporation and the
other Holders of the Series A Preferred Securities shall not be entitled to
purchase any, of the Offered Management Securities, subject to the
provisions of Section 4, to one or more purchasers who each agree in
writing to be bound by the terms of this Agreement as a Management
Stockholder and a Holder of Management Securities, on substantially the
same terms stated in the Management Securities Offer Notice at any time up
to one hundred (100) days after the Management Securities Offer Date.
Thereafter, the provisions of this Section will again apply.
4. Take-along.
(a) After satisfying the requirements of Section 3, a Management
Stockholder (the "Disposing Management Stockholder") may sell or transfer
Management Securities
-4-
in a transaction other than a Qualified Public Offering only to a
transferee who purchases such Management Securities as part of a
transaction in which a pro rata portion (as hereinafter defined) of the
aggregate number of Securities being purchased by such transferee is being
purchased from each Holder of Series A Preferred Securities who chooses to
participate in such transaction. For purposes of the preceding sentence,
"pro rata portion" means, with respect to any Holder of Series A Preferred
Securities, the proportion equal to (a) the number of Common Shares held
(or deemed held) by such Holder of Series A Preferred Securities divided by
(b) the sum of (1) the number of Common Shares held (or deemed held) by all
Holders of Series A Preferred Securities who choose to participate in such
transaction and (2) the number of Common Shares held (or deemed held) by
the Disposing Management Stockholder. Before a Disposing Management
Stockholder accepts any offer for the sale of any Management Securities for
which this Section is to apply, such Disposing Management Stockholder shall
give written notice (the "Take-along Notice") to the Corporation (which
shall, within five (5) days of the date of receipt of such notice (the
"Take-along Notice Date"), send or deliver a copy of the Take-along Notice
to each Holder of Series A Preferred Securities), stating the material
terms of the offer. If a Holder of Series A Preferred Securities wishes to
participate in such sale, such Holder of Series A Preferred Securities will
give the Corporation and the Disposing Management Stockholder notice to
such effect within twenty (20) days of the Take-along Notice Date. For
example, assuming (for the purpose of this example only) (i) a Management
Stockholder who holds (or is deemed to hold) 60 Common Shares wishes to
dispose of 30 of such Common Shares, (ii) Platinum holds 40 of the 100
Common Shares held (or deemed held) by the Holders of participating Series
A Preferred Securities, (iii) the other participating Holders of Series A
Preferred Securities hold 60 of such 100 Common Shares, (iv), then Platinum
would be entitled to sell 7.5 Common Shares hereunder, the participating
Holders of Series A Preferred Securities would be entitled to sell 11.25
Common Shares hereunder, and the Management Stockholder would be entitled
to sell 11.25 Common Shares hereunder.
(b) In connection with any sale under this Section 4 in which
Holders of Series A Preferred Securities elect to participate, the total
consideration for any such transaction shall be allocated among the shares
being sold by the Disposing Management Stockholder and the Series A
Preferred Shares being sold such that an amount equal to the Liquidation
Value of the Series A Preferred Shares (as defined in the Corporation's
Certificate of Incorporation as in effect on the date hereof) being sold
shall first be paid with respect to such Series A Preferred Shares and any
remaining consideration shall be paid ratably for the Management Securities
being sold and the number of shares of Common Stock into which the Series A
Preferred Shares being sold are then convertible.
5. Permitted Transfers. Any Holder of Management Securities may transfer
such Management Securities without complying with Section 3 or Section 4, to
Permitted Transferees who consent in a writing delivered to the Corporation to
be bound by the terms of this Agreement as Management Stockholders. With respect
to any Holder of Management Securities, "Permitted Transferee" means the
Corporation, any other Management Stockholder, the spouse or lineal descendants
of such Holder, any trust for the benefit of such Holder or the benefit of the
spouse or lineal descendants of such Holder, any corporation or partnership in
which such Holder, the spouse and the lineal descendants of such Holder are the
direct and beneficial owners
-5-
of all of the equity interests (provided such Holder, spouse and lineal
descendants agree in writing to remain the direct and beneficial owners of all
such equity interests), and the personal representative of such Holder upon such
Holder's death for purposes of administration of such Holder's estate or upon
such Holder's incompetency for purposes of the protection and management of
the assets of such Holder.
6. Pledges. No Holder of Management Securities will pledge or otherwise
grant a security interest in any Management Securities.
7. Confidentiality. Each Holder agrees to at all times hold in confidence
and keep secret and inviolate all of the Corporation's confidential information,
including, without limitation, all unpublished matters relating to the business,
property, accounts, books, records, customers and contracts of the Corporation
which such Holder may or hereafter come to know; provided, however, that any
Holder may disclose any such information which has otherwise entered the public
domain or as to which such Holder has obtained knowledge from sources other than
the Corporation or the executive officers or directors of the Corporation
(provided that such source is not bound by a confidentiality agreement with the
Corporation) or which it is required to disclose to any governmental authority
by law or subpoena or judicial process or in connection with a registered public
offering under the Securities Act or a sale to the public pursuant to Rule 144
promulgated by the Commission under the Securities Act or in a private sale
which is permitted or not prohibited hereunder; provided further, however, that
Platinum may disclose summary financial information and descriptive information
pertaining to the Corporation to its limited partners in its routine reports.
8. Board of Directors.
(a) Each of the Holders agrees to take all action necessary including,
without limitation, the voting of its shares of stock of the Corporation,
the execution of written consents, the calling of special meetings, the
removal of directors, the filling of vacancies on the Board of Directors,
the waiving of notice and the attending of meetings, so as to cause (i) the
number of members of the Board of Directors to be nine and (ii) the Board
of Directors of the Corporation to be at all times comprised of the
following persons:
(A) the Chief Executive Officer of the Corporation, who is
Xxxxx Xxxx as of the date hereof;
(B) the President of the Corporation, who is Xxxxxxxx
Xxxxxxxx as of the date hereof;
(C) the Vice Chairman of the Corporation, who is Xxxxxx
Xxxxxxxxxx as of the date hereof;
(D) the Chief Financial Officer of the Corporation, who is
X. X. Xxxxxxxx, III, as of the date hereof (in the event that any two
or more of the offices in clauses (A), (B), (C) and (D) of this
Section 8(a) are filled by one person or are vacant, then such other
senior executive officer(s) of the Corporation as the Holders of
Common Shares may designate);
-6-
(E) four persons designated by the Holders of Series A
Preferred Securities, which four persons shall include two persons
designated by Platinum; and
(F) one person, who is not an employee or officer of the
Corporation or any of its Subsidiaries and who has significant
relevant industry experience, designated by a majority of the other
members of the Board of Directors.
(b) Notwithstanding the provisions of paragraph (a) of this Section,
the Holders of Series A Preferred Securities shall possess all of the
rights provided for in the Certificate of Incorporation of the Corporation,
as in effect on the date hereof, upon the occurrence of an Event of
Noncompliance (as defined therein) and the exercise of such rights shall
not violate the provisions of this Section.
(c) The Corporation shall hold quarterly meetings of the Board of
Directors.
9. Observation Rights. So long as Platinum or its nominee is a Holder of
Series A Preferred Securities:
(a) Platinum shall have the right to select, at any time and from
time to time, one representative (the "Representative") to attend and
observe each meeting of the Board of Directors and any other strategic
planning or similar type meeting of the Board of Directors or trade shows
or other similar events relating to the business of the Corporation and the
Corporation shall pay or cause to be paid on behalf of the Corporation the
reasonable out-of-pocket travel expenses incurred by such Representative in
connection with his or her attendance at such meetings or events;
(b) The Corporation shall give Platinum (i) at least 15 days' advance
notice of each regular meeting of the Board of Directors and such advance
notice as is reasonable under the circumstances to enable the
Representative to attend each special or emergency meeting of the Board of
Directors, (ii) on or prior to the date of each meeting of the Board of
Directors, all information given to the directors of the Corporation at or
in connection with such meeting, and (iii) as soon as available but in any
event not later than 45 days after each meeting of the Board of Directors,
copies of the minutes of such meeting. In the event that the Board of
Directors shall act by unanimous written consent in lieu of a meeting, the
Corporation shall give Platinum and the Representative a copy of such
written consent at least five business days prior to the earlier of the
adoption or effective date thereof, together with all information given to
the directors of the Corporation in connection with such action; provided,
however, that in the event immediate action is required to address an
emergency situation, the Corporation shall be in compliance with this
sentence if the Corporation shall send Platinum and the Representative a
copy of such written consent and information by telecopier at the same time
as such consent and information is sent to the members of the Board of
Directors for their review and signature.
-7-
(c) The Corporation shall comply with all provisions of its by-laws
relating to meetings of the Board of Directors, including, without
limitation, those relating to notice and to the time and date of meetings
and action by written consent; and
(d) The Representative shall have the right (but not the obligation)
to consult with and advise the management of the Corporation at any time or
from time to time, by telephone or in person, on such matters relating to
the operation of the Corporation as the Representative shall deem
appropriate (including, without limitation, matters regarding capital
expenditures, acquisitions and management compensation).
10. Compensation Committee. The Board of Directors and the Corporation
will maintain a "Compensation Committee" which will be comprised of one
director designated by Platinum and two directors designated by the Holders of
Common Shares (the "Compensation Committee"). The Compensation Committee shall
be responsible for and have authority to establish the compensation of the
executive officers of the Corporation with the approval of the committee member
who is designated by Platinum.
11. Board Reimbursements. The Corporation shall reimburse all Persons
serving as directors of the Corporation for their reasonable out-of-pocket
expenses in connection with attending meetings of the Board of Directors and all
committees thereof and all reasonable expenses otherwise incurred in fulfilling
their duties as directors.
12. Right of First Refusal.
(a) Each Holder or Series A Preferred Securities shall have the right
of first refusal to purchase his, her or its proportionate number, or any lesser
number, of any New Securities for which the Corporation has received a bona fide
offer from a prospective purchaser and which the Corporation proposes to sell
and issue to such purchaser. Each Holder of Series A Preferred Securities shall
have rights of over-allotment such that, if any Holder of Series A Preferred
Securities fails to exercise his, her or its rights hereunder to purchase his,
her or its proportionate number of New Securities, the Holders of Series A
Preferred Securities may purchase the non-purchasing Holder's portion on a pro
rata basis within ten days from the date on which they receive written notice
that such non-purchasing Holder has failed to exercise his, her or its right
hereunder to purchase his, her or its proportionate number. For purposes of this
Section, a Holder's "proportionate number" means the product obtained by
multiplying the number of New Securities proposed to be sold and issued by a
fraction, the numerator of which will be the number of Common Shares owned (or
deemed owned) by such Holder of Series A Preferred Securities and the
denominator of which will be the total number of Common Shares owned (or deemed
owned) by all Holders of Series A Preferred Securities. For purposes of this
Section, "pro rata" among the Holders of Series A Preferred Securities means in
proportion to the number of Common Shares owned (or deemed owned) by such
Holders of Series A Preferred Securities.
(b) In the event the Corporation receives a bona fide offer for the
purchase of New Securities from a prospective purchaser and the Corporation
proposes to sell and issue such New Securities, the Corporation will submit to
each Holder of Series A
-8-
Preferred Securities written notice identifying the prospective purchaser
and describing the New Securities and the price and terms upon which the
Corporation would issue and sell the same, and setting forth the total
number of New Securities to be issued and sold and such Holder's
proportionate number. Each such Holder of Series A Preferred Securities
will have fifteen (15) days from the date of receipt of any notice to agree
to purchase his, her or its proportionate number or any lesser number of
such New Securities, for the price and upon the terms specified in the
notice by giving written notice to the Corporation and stating therein the
quantity of New Securities to be purchased. If two or more types of New
Securities are to be issued or New Securities are to be issued together
with other types of securities, including, without limitation, debt
securities, in a single transaction or related transactions, the rights to
purchase New Securities granted to Holders of Series A Preferred Securities
under this Section must be exercised to purchase all types of New
Securities and such other securities in the same proportion as such New
Securities and other securities are to be issued by the Corporation.
(c) In the event the Holders of Series A Preferred Securities fail to
exercise the right of first refusal within said 15-day period and after the
expiration of the l0-day period for the exercise of over-allotment rights
pursuant to subsection (a) above, with respect to all the New Securities,
the Corporation will have 90 days thereafter to sell or enter into a
binding and unconditional agreement (pursuant to which the sale of New
Securities covered thereby will be, and is, consummated within 90 days from
the date of said agreement) to sell the New Securities as to which such
Holders' right was not exercised, to the prospective purchaser identified
in, and at the price and upon the terms specified in, the Corporation's
notice. In the event the Corporation has not sold such New Securities
within said 90-day period (or sold and issued such new Securities in
accordance with the foregoing within 90 days from the date of said
agreement), the Corporation will not thereafter issue or sell any New
Securities to a prospective purchaser without first offering such New
Securities to the Holders of Series A Preferred Securities in the manner
provided above.
13. Execution. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and such counterparts together will constitute one instrument.
14. Subsequent Management Stockholders.
(a) The Corporation will not issue or sell any Securities to any
employee or officer of the Corporation who, after giving effect to such
issuance or sale, owns, directly or indirectly, one percent (1%) or more of
the outstanding Securities of the Corporation (on a fully diluted basis),
unless such employee or officer agrees in writing to be bound by the terms
of this Agreement as a Management Stockholder and a Holder of Management
Securities. Upon the delivery to the Corporation of such written consent,
such officer or employee shall be bound by and entitled to the benefits of
this Agreement in such capacity.
-9-
15. Legend. The Corporation will stamp or imprint each certificate or
other instrument representing Securities, throughout the term of this Agreement,
with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
PROVISIONS, INCLUDING, AMONG OTHERS, RESTRICTIONS ON VOTING AND
TRANSFER, SET FORTH IN A CERTAIN SHAREHOLDERS' AGREEMENT DATED AS OF
DECEMBER 1, 1994, A COPY OF WHICH IS AVAILABLE AT THE PRINCIPAL OFFICE
OF BLUE RHINO CORPORATION."
16. Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages will not be an adequate remedy for any breach of the
provisions of this Agreement and that a party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
or injunctive relief (without the necessity of posting a bond) in order to
enforce or prevent any violations of the provisions of this Agreement.
17. Notices. Any notices desired, required or permitted to be given
hereunder shall be delivered personally or mailed, certified or registered mail,
return receipt requested, or delivered by overnight courier service, to the
following addresses, or such other addresses as shall be given by notice
delivered hereunder, and shall be deemed to have been given upon delivery, if
delivered personally, five days after mailing, if mailed, or one business day
after delivery to the overnight courier service, if delivered by overnight
courier service:
If to the Corporation, to:
Blue Rhino Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxx, Chief Executive Officer
with a copy to:
House Law Firm
P.O. Drawer 26015
Winston-Salem, North Carolina 27114-6015
Attention: Don R. House, Esq.
If to the Holders of Management Securities; to the addresses set forth on
the stock record books of the Corporation.
If to the Holders of Series A Preferred Securities, to the addresses set
forth on the stock record books of the Corporation.
-10-
With a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
18. Amendments and Waivers. The provisions of this Agreement may be
amended upon the written agreement of the Corporation, the Holder or Holders of
two-thirds of the Series A Preferred Securities and the Holder or Holders of a
majority of the Management Securities. Any waiver, permit, consent or approval
of any kind or character on the part of any Holders of any provision or
condition of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in writing.
19. Successors and Assigns. All covenants and agreements in this Agreement
by or on behalf of any of the parties hereto will bind and inure to the benefit
of the respective successors and assigns of the parties hereto, and each
transferee of all or any portion of the Securities held by the parties hereto,
whether so expressed or not.
20. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
21. Governing Law. All questions concerning the construction, validity and
interpretation of, and the performance of the obligations imposed by, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware applicable to contracts made and wholly to be performed in
that state.
22. Termination of this Agreement. Except as otherwise provided herein,
this Agreement shall terminate upon the earlier of (a) the date on which less
than 10% of the Series A Preferred Securities at any time issued shall remain
outstanding or (b) the closing of a Qualified Public Offering.
23. References to Sections; Headings. References to Sections shall be
references to Sections in this Agreement, unless otherwise indicated. Section
headings are for reference only and shall not be given meaning in interpreting
this Agreement.
-11-
This Shareholders' Agreement was executed as of the date first set forth
above.
Signatures
CORPORATION:
BLUE RHINO CORPORATION
By: /s/ XXXXX XXXX
------------------
Xxxxx Xxxx, Chief Executive Officer
INVESTORS:
PLATINUM VENTURE PARTNERS I, L.P.
By: PLATINUM VENTURE PARTNERS, INC.
By: /s/ XXXXXXX XXXXXX
----------------------
Xxxxxxx Xxxxxx, Vice President
/s/ XXXXXX X. XXXXXXXXXX
------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXX X. XXXXXXXXXX
-----------------------
Xxxxx X. Xxxxxxxxxx
/s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx
/s/ XXXXX X. XXXXXX
-------------------
Xxxxx X. Xxxxxx
/s/ XXXXXX X. STEEL & XXXXXXXX XXXXX
------------------------------------
Xxxxxx X. Steel & Xxxxxxxx Xxxxx JTWROS
/s/ XXXXXX X. XXXXXXXXX
-----------------------
Xxxxxx X. Xxxxxxxxx
/s/ XXX XXXXXX
--------------
Xxx Xxxxxx
/s/ XXX XXXXXXX
---------------
Xxx Xxxxxxx
/s/ XXXXXX X. XXXXXX
--------------------
Xxxxxx X. Xxxxxx
/s/ XXXXX XXXXXXX, XX.
----------------------
Xxxxx Xxxxxxx, Xx.
-12-
/s/ XXXXX XXXXXXX, XX.
----------------------
Xxxxx Xxxxxxx, Xx.
XXXXXXX, INC.
By: /s/ XXXXX XXXXXXXX
----------------------
Xxxxx Xxxxxxxx, Director
/s/ XXXXX XXXX XXXX
-------------------
Xxxxx Xxxx Xxxx
/s/ XXX XXXXXXX
---------------
Xxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
-------------------
Xxxxxxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
-------------------
Xxxxxxx Xxxxxxx
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx
/s/ XXXXX XXXXXXX
-----------------
Xxxxx Xxxxxxx
/s/ XXXXX XXXXXXXXX
-------------------
Xxxxx Xxxxxxxxx
/s/ XXXXX XXXXXX
----------------
Xxxxx Xxxxxx
/s/ XXXXXXXXX XXXXXXXXXX
------------------------
Xxxxxxxxx Xxxxxxxxxx
XXXX XXXXXX BANK CUSTODIAN FBO
XXXXXX XXXXX XXX #8417
By: /s/ XXXXX X. XXXXX
----------------------
Xxxxx X. Xxxxx, Trust Officer, XXX
XXXXXXXX CAPITAL MANAGEMENT
By: /s/ XXXXX X. XXXXXXXX
-------------------------
Xxxxx X. Xxxxxxxx, Sole Proprietor
XXXXX X. XXXXXXXX TESTAMENTARY TRUST
By: /s/ XXXXX X. XXXXXXXX
-------------------------
-13-
Xxxxx X. Xxxxxxxx, Trustee
/s/ XXXXX XXXX
--------------
Xxxxx Xxxx
XXXXXXXX FAMILY DISCRETIONARY TRUST
By: /s/ XXXXX X. XXXXXXXXXX
---------------------------
Xxxxx X. Xxxxxxxxxx, Trustee
/s/ XXXXXX X. XXXXXXX & XXXXX XXXXXXXXXX-XXXXXXX
Xxxxxx X. Xxxxxxx & Xxxxx Xxxxxxxxxx-Xxxxxxx JTWROS
MANAGEMENT STOCKHOLDERS:
/s/ XXXXX X. XXXX
-----------------
Xxxxx X. Xxxx
/s/ XXXXXX X. XXXXXXXXXX
------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXX X. XXXX
------------------
Xxxxxx X. Xxxx
/s/ MAYO X. XXXXXXXXX
---------------------
Mayo X. XxXxxxxxx
/s/ XXXXXXX XXXXXX
------------------
Xxxxxxx Xxxxxx
/s/ XXXXXX XXXXXX
-----------------
Xxxxxx Xxxxxx
/s/ XXXXX XXXXXX
----------------
Xxxxx Xxxxxx
XXXXXX X. XXXX, TRUSTEE FOR SARKANDA
X. XXXXXXXXXXXX
By: /s/ XXXXXX X. XXXX
----------------------
Xxxxxx X. Xxxx, Trustee
XXXXXX X. XXXX, TRUSTEE FOR XXXXXXX
X. XXXXXXXXXXXX
By: /s/ XXXXXX X. XXXX
----------------------
Xxxxxx X. Xxxx, Trustee
-14-
/s/ XXXXXXXX XXXXXXXX
---------------------
Xxxxxxxx Xxxxxxxx
/s/ XXXXXXXX X. XXXXXXXXXX
--------------------------
Xxxxxxxx X. Xxxxxxxxxx
XXXXXX X. XXXXXXXXXX, TRUSTEE FOR
XXXXXX X. XXXXXXXXXX
By: /s/ XXXXXX X. XXXXXXXXXX
----------------------------
Xxxxxx X. Xxxxxxxxxx, Trustee
XXXXXXXX XXXXXXXX, TRUSTEE FOR
XXXXXXXXXX XXXXXXXXXX
By: /s/ XXXXXXXX XXXXXXXX
-------------------------
Xxxxxxxx Xxxxxxxx, Trustee
XXXXXXXX XXXXXXXX, TRUSTEE FOR
XXXXX XXXXXXX
By: /s/ XXXXXXXX XXXXXXXX
-------------------------
Xxxxxxxx Xxxxxxxx, Trustee
XXXXXX FAMILY LIMITED PARTNERSHIP
By: XXXXXX FAMILY COMPANY
By: /s/ XXX X. XXXXXX
---------------------
Xxx X. Xxxxxx, President
/s/ XXX XXXXXX
--------------
Xxx Xxxxxx
/s/ XXXXXXXX XXXXXXXX
---------------------
Xxxxxxxx Xxxxxxxx
/s/ XXXXX XXXXXXX
-----------------
Xxxxx Xxxxxxx
/s/ X.X. XXXXXXXX, III
----------------------
X.X. Xxxxxxxx, III
/s/ XXX XXXXXXX
---------------
Xxx Xxxxxxx
/s/ XXXX XXXX
-------------
Xxxx Xxxx
/s/ XXXXX XXXX
--------------
Xxxxx Xxxx
-15-
/s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx
-16-
Schedule I
Investors List/Allocations
Purchase Amount
Series A via loan or purchase
Investor Preferred Shares Warrants through 12/21/94
Platinum Venture Partners I, L.P. 2,965,539 847,297 $1,029,150.68
Attn: Xxxxxxx X. Xxxxxx
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxxx 5,880,236 1,680,067 $2,040,657.53
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxx Xxxxxxxxxx 2,187,048 419,047 $ 758,986.30
Duchossois Industries, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxx 1,466,664 419,047 $ 508,986.30
000 X. Xxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Xxxxx X. Xxxxxx 293,333 83,809 $ 101,797.26
0000 Xxxxxxx Xxxxxxx Xxxxx, 00X
Xxxxxx Xxxxx, XX 00000
Xxxxxx X. Steel &
Xxxxxxxx Xxxxx JTWROS 293,396 83,827 $ 101,819.18
000 X. 0xx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx 293,522 83,864 $ 101,863.01
0000 Xxxxxxxxxxx Xxxxx
Xxxxxx Xxxx Xxxx, XX 00000
Xxx Xxxxxx 292,953 41,905 $ 101,655.75
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Xxx Xxxxxxx 146,951 41,986 $ 50,997.26
X.X. Xxx 000
Xxxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxx 73,349 20,957 $ 25,454.79
000 0xxx Xxxxxx
Xxxxxxx Xxxxxxx, XX 00000
Xxxxx Xxxxxxx, Xx. 73,333 20,952 $ 25,449.32
000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Xxxxx Xxxxxxx, Xx. 73,333 20,952 $ 25,449.32
1510 Xxxxx Court
Wheaton, IL 60187
Gabriel, Inc. 1,466,664 419,047 $508,986.30
c/o Jimmy Liautaud
132 E. Delaware
Chicago, IL 60611
James Alan Booe 73,333 20,952 $ 25,449.32
3004 Lookout Court
Winston-Salem, NC 27106
Joe Wallace 58,414 0 $ 20,271.78
Industrial Advisory Group, Inc.
6127 Brookshire Drive
Pittsboro, IN 46167
Lennard Carlson 248,957 0 $ 86,397.26
5300 Newport Drive
Rolling Meadows, IL 6008
Richard Carlson 73,223 O $ 25,410.96
1447 Altgeld
Chicago, IL 60614
Baxter Kiger 58,313 O $ 20,236.71
1605 Beechwood Lane
Yadkinville, NC 27055
Peter Vitulli 58,212 O $ 20.201.64
1917 N. Mohawk
Chicago, IL 60614
Barry Sylvester 14,524.5 O $ 5,040.5
2728 W. Agatite Avenue
Chicago, IL 60625
James Barzyk 14,524.5 O $ 5,040.2
-2-
530 N. Park
La Grange Park, IL 60525
Alexander Danzberger 36,667 10,476 $12,724.66
370 Central Park West #514
New York, NY 10025
Cole Taylor Bank Custodian 288,154 0 $100,000
FBO Arthur Frigo IRA #8417
MBA Walton Inc.
6250 River Road, Suite 4030
Rosemont, IL 60018
Huizenga Capital Management 1,440,769 0 $500,000
c/o Peter Huizenga
2215 York Road, Suite 500
Oak Brook, IL 60521
Attn: Ron Kinney
Peter H. Huizenga Testamentary Trust 1,440,769 0 $100,000
c/o Peter Huizenga, sole trustee
2215 York Road, Suite 500
Oak Brook, IL 60521
Attn: Ron Kinney
Billy Prim 43,223 0 $15,000
104 Cambridge Park
Winston-Salem, N.C. 27104
Kimberly Family Discretionary Trust 720,384 0 $250,000
c/o Craig Duchossois, Trustee
845 Larch Avenue
Elmhurst, IL 60126
Edward A. Fortino &
Dayle Duchossois-Fortino JTWROS 720,384 0 $250,000
2218 N. Orchard
Chicago, IL 60614
-3-
Schedule 2
Management Stockholders
-----------------------
Billy D. Prim
Andrew J. Filipowski
Debbie W. Prim
Mayo M. McCormick
Jeannie Cannon
. Luanne Holden
. Chris Holden
Debbie W. Prim, Trustee for Sarkanda U. Westmoreland
Debbie W. Prim, Trustee for Anthony G. Westmoreland
Veronica Champney
Jennifer R. Filipowski
Andrew J. Filipowski, Trustee for Andrew E. Filipowski
Veronica Champney, Trustee for Alexandria Filipowski
Veronica Champney, Trustee for James Meadows
Angell Family Limited Partnership (c/o Don G. Angell)
Tom Austin
Jeremiah Callahan
Craig Erbland
S.H. Fogleman, III
Jim Mizelle
Doug Mele
Steve Rash
Baxter Kiger
