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THIRD FORBEARANCE AGREEMENT
THIS THIRD FORBEARANCE AGREEMENT (the "Third Forbearance") is entered
into as of May 1, 2001, by and among BLUE RHINO CORPORATION ("Borrower"), USA
LEASING, LLC ("USA"), RHINO SERVICES, LLC ("Services"), CPD ASSOCIATES, INC.
("CPD"), QUICKSHIP, INC. ("Quickship") UNIFLAME CORPORATION ("Uniflame" and,
collectively with USA, Services, CPD and Quickship, the "Guarantors") and BANK
OF AMERICA, N. A. ("Bank").
RECITALS
A. Bank has made revolving loans (the "Revolver") to Borrower pursuant
to the terms of: (a) that certain Second Amended and Restated Loan Agreement
between Bank and Borrower dated as of June 30, 2000 (as amended from time to
time, the "Loan Agreement") (unless otherwise defined herein, all capitalized
terms shall have the meaning ascribed to them in the Loan Agreement); and (b)
that certain promissory note (the "Revolver Note") executed by Borrower in favor
of Bank and dated as of June 30, 2000 in the original principal amount of up to
$38,000,000.
B. Bank also has made revolving seasonal loans (the "Overline") to
Borrower pursuant to the terms of: (a) the Loan Agreement; and (b) that certain
promissory note (the "Overline Note") executed by Borrower in favor of Bank and
dated as of June 30, 2000 in the original principal amount of up to $10,000,000.
C. Each of the Guarantors is a wholly-owned subsidiary of the Borrower
and has previously executed a guaranty agreement guaranteeing all obligations of
Borrower to Bank.
D. Pursuant to the terms of that certain letter agreement dated as of
October 24, 2000, among Borrower, Bank and the Guarantors (the "Forbearance
Letter"), Bank agreed to forbear through November 29, 2000, from exercising any
of its remedies which arose due to the existence of certain events of default
identified in the Forbearance Letter.
E. Pursuant to the terms of the Forbearance Letter, the maturity date
of the Overline Note was changed to November 30, 2000 (the "Overline Maturity
Date"), and Borrower failed to pay all amounts due under the Overline Note to
Bank on or before the Overline Maturity Date.
F. The failure to pay all amounts due on the Overline Note on or before
the Overline Maturity Date constitutes an Event of Default (the "Overline
Maturity Default") under the Loan Agreement.
G. Pursuant to the cross-default provisions of Section 8 of the Loan
Agreement and of the Revolver Note, the Overline Maturity Default also
constitutes an Event of Default under the Revolver Note and the other Loan
Documents (the "Revolver Cross-Default").
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H. Borrower also is in default under the Loan Agreement as a result of
its failure to maintain: (a) a maximum total liabilities to Tangible Net Worth
ratio of 2.75 to 1.0 from August 31, 2000, to October 30, 2000, as required by
Section 6.A.(i)(a) of the Loan Agreement; (b) a maximum Funded Debt to EBITDA of
3.75 to 1.0 from August 31, 2000, to October 30, 2000, as required by Section
6.A.(ii)(a) of the Loan Agreement; (c) a minimum Cash Flow Coverage Ratio of 1.2
to 1.0 for the fiscal quarter ending July 31, 2000, as required by Section
6.A.(iii) of the Loan Agreement; (d) a maximum total liabilities to Tangible Net
Worth ratio of 2.5 to 1.0 from October 31, 2000, to January 30, 2001, as
required by Section 6.A.(i)(b) of the Loan Agreement; (e) a maximum Funded Debt
to EBITDA of 3.5 to 1.0 from October 31, 2000, to January 30, 2001, as required
by Section 6.A.(ii)(b) of the Loan Agreement; and (f) a minimum Cash Flow
Coverage Ratio of 1.2 to 1.0 for the fiscal quarter ending October 31, 2000, as
required by Section 6.A.(iii) of the Loan Agreement (collectively, the "Existing
Covenant Defaults").
I. The Overline Maturity Default, the Revolver Cross-Default and the
Existing Covenant Defaults are referred to herein collectively as the
"Acknowledged Events of Default."
J. The Bank, the Borrower and the Guarantors previously entered into
that certain Forbearance and Modification Agreement dated as of January 31, 2001
(the "First Forbearance Agreement"), under which the Bank agreed to forbear
through February 28, 2001, from exercising any of its rights and remedies
arising from the existence of the Acknowledged Events of Default, and agreed to
continue honoring Borrower's requests for advances under the Revolver pursuant
to the terms of the Loan Documents.
K. The Bank, the Borrower and the Guarantors previously entered into
that certain Second Forbearance and Modification Agreement dated as of March 1,
2001 (the "Second Forbearance Agreement"), under which the Bank agreed to
forbear through April 30, 2001, from exercising any of its rights and remedies
arising from the existence of the Acknowledged Events of Default, and agreed to
continue honoring Borrower's requests for advances under the Revolver pursuant
to the terms of the Loan Documents.
L. Notwithstanding the existence of the Acknowledged Events of Default,
Borrower and the Guarantors have asked Bank: (a) to forbear through June 30,
2001 (the "Forbearance Termination Date"), from exercising any of its rights and
remedies arising from the existence of the Acknowledged Events of Default,
including but not limited to, its right to accelerate the indebtedness under the
Revolver Note; and (b) to continue honoring Borrower's requests for advances
under the Revolver pursuant to the terms of the Loan Documents, including,
without limitation, the Borrowing Base Agreement, as amended.
M. Bank has agreed to do so, but only upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by all parties, the parties hereto agree as follows:
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1. Estoppel and Acknowledgments. As of May 1, 2001, the outstanding
principal balance of the Revolver was no less than $37,477,889, and the
outstanding principal balance of the Overline was no less than $7,746,746, which
amounts constitute valid and subsisting obligations of Borrower to Bank that are
not subject to any credits, offsets, defenses, claims, counterclaims or
adjustments of any kind. Borrower acknowledges and affirms its obligations under
the Loan Documents. The Borrower and each of the Guarantors acknowledge the
existence of, and its receipt of notice of, the Acknowledged Events of Default.
2. Forbearance. Subject to the terms and conditions set forth herein,
Bank will forbear exercising any of its rights and remedies, including but not
limited to, its right to accelerate the maturity date of all amounts due under
the Revolver Note, which arise exclusively as a result of the Acknowledged
Events of Default; provided, however, that Bank shall be free to exercise any or
all of its rights and remedies at any time after a Forbearance Termination Event
(defined below).
3. Additional Draw Requests. Notwithstanding the existence of the
Acknowledged Events of Default, Bank will continue to honor draw requests made
by Borrower with respect to the Revolver, pursuant to the terms of the Loan
Documents and subject to the Borrowing Base Agreement, as amended. However, the
Borrower will not request, and the Bank does not have any obligation to honor,
any draw requests with respect to the Overline. Bank shall continue to have the
right to deny any draw request with respect to the Revolver, in accordance with
the terms of the Loan Documents, including, but not limited to, the Borrowing
Base Agreement, as amended. The Bank's obligation to fund any draw requests with
respect to the Revolver shall terminate automatically, without notice, upon the
occurrence of a Forbearance Termination Event (defined below).
4. Forbearance Termination Event. The Bank's obligation to forbear the
exercise of any of the rights and remedies under any of the Loan Documents (all
of which rights and remedies are hereby expressly reserved by Bank) shall
terminate automatically, without notice, upon the occurrence of a Forbearance
Termination Event. The term "Forbearance Termination Event" shall mean: (a) the
existence or occurrence of any default or Event of Default under any of the Loan
Documents other than the Acknowledged Events of Default; (b) a breach by
Borrower or any of the Guarantors of any term, condition, covenant,
representation or warranty of this Third Forbearance; or (c) the occurrence of
the Forbearance Termination Date.
5. Conditions Precedent. As conditions precedent to the effectiveness
of this Third Forbearance, on or before the date hereof:
(a) Bank shall have received an executed counterpart of
this Third Forbearance duly executed by Borrower and
each of the Guarantors;
(b) All fees, expenses and payments due prior to the date
hereof, under the Loan Documents, with the exception
of payment in full of the Overline, shall have been
paid in full by Borrower to Bank;
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(c) Borrower shall have paid to Bank all out-of-pocket
expenses incurred by Bank in connection with or
related to the negotiation, drafting and execution of
this Third Forbearance and the related documents or
the administration of the Loans, including without
limitation: (i) fees and expenses for the preparation
of any Loan Document, including, but not limited to
this Third Forbearance; (ii) appraisal fees; (iii)
environmental inspection and audit fees; and (iv) any
applicable taxes and recording fees; and
(d) Borrower shall have paid to Bank an extension fee in
the amount of $100,000.00.
6. Additional Fees and Expenses. Within five business days of demand
therefor, Borrower shall pay all post-closing fees and expenses incurred by Bank
in connection with this Third Forbearance and the related documents, including
without limitation, reasonable fees and expenses of counsel.
7. Loan Document. This Third Forbearance and any documents executed in
connection herewith shall be deemed a Loan Document.
8. Representations and Warranties of Borrower and Guarantors. Each of
the Borrower and the Guarantors hereby represents and warrants that: (a) it has
the requisite corporate power and authority to execute, deliver and perform this
Third Forbearance and any related documents; (b) it is duly authorized to, and
has been authorized by all necessary corporate action, to execute, deliver and
perform this Third Forbearance and any related documents; (c) the
representations and warranties contained in the Loan Documents are, subject to
the limitations set forth therein, true and correct in all material respects on
and as of the date hereof as though made on and as of such date (except for
those which expressly relate to an earlier date); (d) this Third Forbearance
does not violate any law, rule, regulation, contract or agreement otherwise
enforceable by or against it; and (e) other than the Acknowledged Events of
Default, no default or Event of Default exists under the Loan Documents on and
as of the date hereof.
9. Acknowledgment of Guarantors. Each of the Guarantors acknowledges
and consents to all of the terms and conditions of this Third Forbearance, and
each acknowledges, confirms and reaffirms its continuing obligations and
liability to Bank under each respective guaranty agreement. This Third
Forbearance and all documents executed in connection herewith do not operate to
reduce or discharge the Guarantors' obligations under its respective guaranty
agreement or any of the other Loan Documents.
10. Release. Each of Borrower and the Guarantors hereby releases Bank
and its officers, employees, representatives, agents, and directors from any and
all actions, causes of action, claims, demands, damages and liabilities of
whatever kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected.
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11. Liens. Borrower and each of the Guarantors hereby affirms the liens
and security interests created and granted in the Loan Documents. This Third
Forbearance shall in no manner adversely effect or impair such liens and
security interests.
12. No Other Changes. Except as expressly modified in this Third
Forbearance, the terms, provisions and conditions of the Loan Documents shall
remain unchanged and shall continue in full force and effect.
13. Counterparts. This Third Forbearance may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
Delivery of an executed counterpart of this Third Forbearance by telecopy shall
be effective as an original and shall constitute a representation that an
original shall be delivered to Bank.
14. Entirety. This Third Forbearance and the other Loan Documents
embody the entire agreement between the parties and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof.
Such documents represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties.
15. Further Assurances. Bank and each of Borrower and the Guarantors
agrees to execute and deliver, or to cause to be executed and delivered, all
such instruments as either of them may reasonably request to effectuate the
intent and purposes, and to carry out the terms, of this Third Forbearance.
16. Governing Law. THIS THIRD FORBEARANCE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
17. Successors and Assigns. This Third Forbearance shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding the foregoing, Borrower and the
Guarantors may not assign their respective rights and obligations under this
Third Forbearance without the prior written consent of Bank. Bank may assign its
rights and obligations or any portion thereof under this Third Forbearance
without the prior consent of any other party hereto.
[SIGNATURES ON FOLLOWING PAGES]
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This Agreement is executed as of the day and year first written above.
BLUE RHINO CORPORATION
ATTEST:
By: /s/ Xxxx Xxxxxxxxx
----------------------------
/s/ Xxxx Xxxxxxxx Name: Xxxx Xxxxxxxxx
------------------------------------ Title: Chief Financial Officer
Asst Secretary
(CORPORATE SEAL)
QUICKSHIP, INC.
ATTEST:
By: /s/ Xxxx Xxxxxxxx
----------------------------
/s/ Xxxx Xxxxxxxxx Name: Xxxx Xxxxxxxx
------------------------------------ Title: Chief Financial Officer
______ Secretary
(CORPORATE SEAL)
USA Leasing, LLC
By: /s/ Xxxxx X. Xxxx (SEAL)
---------------------------
Name: Xxxxx X. Xxxx
Title: Manager
RHINO SERVICES, LLC
By: /s/ Xxxxx X. Xxxx (SEAL)
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Name: Xxxxx X. Xxxx
Title: Manager
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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CPD ASSOCIATES, INC.
ATTEST:
By: /s/ Xxxx Xxxxxxxxx
---------------------------
/s/ Xxxx Xxxxxxxx Name: Xxxx Xxxxxxxxx
------------------------------------ Title: Vice President
______ Secretary
(CORPORATE SEAL)
UNIFLAME, INC.
ATTEST:
By: /s/ Xxxx Xxxxxxxx
---------------------------
/s/ Xxxx Xxxxxxxxx Name: Xxxx Xxxxxxxx
------------------------------------ Title: Vice President
______ Secretary
(CORPORATE SEAL)
BANK OF AMERICA, N. A.
ATTEST:
By: /s/ Xxxxx Xxxxxx
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/s/ Xxxxxx Xxxxxxxx Name: Xxxxx Xxxxxx
------------------------------------ Title: Senior Vice President
Asst Secretary
(BANK SEAL)
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