EXHIBIT 10.1(a)
NATIONSBANK, N.A.
LOAN AGREEMENT
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THIS LOAN AGREEMENT (this "Agreement") dated as of December 31, 1998 by and
between NATIONSBANK, N.A., a national banking association ("Bank") and the
Borrower described below:
R E C I T A L S:
WHEREAS, Bank and Borrower entered into that certain Loan Agreement dated
as of December 18, 1997, pursuant to which Bank extended certain loans to
Borrower, including a Revolving Line of Credit in the original principal amount
of $3,000,000, a Working Capital Line of Credit in the amount of $1,000,000, and
a Capital Expenditures Line of Credit in the amount of $1,000,000 (collectively,
the "1997 Loans"); and
WHEREAS, the Loan Agreement was modified by that certain Amendment to Loan
Agreement dated July 30, 1998, pursuant to which certain changes were made to
the Loan Agreement, including deletion of certain guaranties of the 1997 Loans
and the subordination requirements, and modification of certain financial
covenants; and
WHEREAS, Borrower has now requested Bank to extend certain loans to repay
and refinance the 1997 Loans and to increase the amounts thereof; and
WHEREAS, Bank has also been requested to extend credit to USA Leasing, LLC,
a Delaware limited liability company (the "Lessor"), which is affiliated through
certain common ownership with Borrower; and
WHEREAS, Bank has agreed to extend the aforesaid loans and extensions of
credit to Borrower and Lessor, subject to certain terms and conditions; and
WHEREAS, the parties hereto wish to set forth their agreement with respect
to the said loans and extensions of credit herein;
NOW, THEREFORE, in consideration of the Loans described below and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, Bank and Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms
defined herein, the following terms shall have the meaning set forth with
respect thereto:
A. Accounts Receivable. All of the Borrower's accounts, instruments,
contract rights, chattel paper, documents, and general intangibles arising from
the sale of goods and/or the rendition of services by the Borrower in the
ordinary course of business, and the proceeds thereof and all security and
guaranties therefor, whether now existing or hereafter created, and all
returned, reclaimed or repossessed goods, and all books and records pertaining
to the foregoing.
B. Affiliate. As to any Person, each of the Persons that directly
or indirectly, through one or more intermediaries, owns or controls, or is
controlled by or under common control with, such Person or any individual
related to such Person. For the purpose of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies, whether through the ownership of voting
securities, by contract or otherwise.
C. Borrower. Blue Rhino Corporation, a Delaware corporation.
D. Borrower's Address: 000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx-Xxxxx, XX 00000
E. Collateral. The property and interests in property securing
payment and performance of the Loans, as set forth in Section 3 hereof.
F. Current Ratio. The quotient of current assets divided by
current liabilities.
G. EBITDA. Earnings before interest expense, taxes, depreciation
and amortization.
H. Equipment. All machinery and equipment, including fixtures,
now owned or hereafter acquired by the Borrower.
I. Funded Debt. Debt incurred by borrowing money, specifically
excluding trade debt or accruals arising in the ordinary course of business, but
including, without limitation (i) purchase money indebtedness, (ii) the
principal portion of obligations under capital leases, and (iii) all obligations
guaranteeing or intended to guarantee any debt of any other entity (other than
the guarantee of obligations of the Lessor to the Bank), whether such obligation
is direct or indirect.
J. Hazardous Materials. All materials defined as hazardous wastes
or substances under any local, state or federal environmental laws, rules or
regulations, and petroleum, petroleum products, oil and asbestos.
K. Inventory. Means all non-obsolete inventory of Borrower of every
kind or character, wherever located, for which Borrower:
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(i) has full title, free and clear of any security interest,
liens and claims whatsoever; and
(ii) has the right to convey such inventory as security for the
Obligations; and
(iii) such inventory is in first class order, condition and
repair.
L. LIBOR. The London Interbank Offered Rate for thirty-day deposits,
adjusted for applicable reserves, deposit insurance assessments and other
regulatory costs, as determined by the Bank, from time to time.
M. Loans. Collectively, the loans described in Section 2 hereof and
any other existing or subsequent loan by Bank to the Borrower that is subject to
this Agreement.
N. Loan Documents. Loan Documents means this Loan Agreement and any
and all promissory notes executed by Borrower in favor of Bank and all other
documents, instruments, guarantees, certificates and agreements executed and/or
delivered by Borrower, any guarantor or third party in connection with any Loan.
O. Material Adverse Effect. Any material adverse effect on (i) the
business, assets, operations or financial or other condition of Borrower and
its subsidiaries, or the Lessee and its subsidiaries; (ii) the Borrower's
ability to pay the Obligations in accordance with the terms thereof, or (iii)
the Collateral or Bank's security interest in the Collateral or the priority of
such security interest. Without limiting the foregoing, any adverse effect on
the business, assets, operations or financial or other condition of Borrower and
its subsidiaries (if any) involving, individually or in the aggregate, a
liability of the Borrower or any of its subsidiaries in excess of applicable
insurance coverage by more than $100,000 shall be deemed to be a "Material
Adverse Effect" within the meaning of the applicable provisions of this
Agreement.
P. Notes. Collectively, the Revolver Note and the Acquisition Note,
as such terms are defined herein.
Q. Obligations. The Loans and all other loans, advances, indebted-
ness, liabilities, obligations, covenants and duties (including post-petition
interest on the foregoing, to the extent lawful) owing, arising, due or payable
from the Borrower to the Bank of any kind or nature, present or future, arising
under this Agreement or any of the other Loan Documents, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising.
The term includes, without limitation, all interest, charges, reasonable
expenses, reasonable fees, reasonable attorneys' fees and any other sums
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chargeable to the Borrower by the Bank under this Agreement or any of the other
Loan Documents.
R. Person. A corporation, an association, a joint venture, a
limited liability company, a partnership, an organization, a business, an
individual, a trust or a government or political subdivision thereof or any
government agency or any other legal entity.
S. Tangible Net Worth. The amount by which Borrower's total assets,
plus debt subordinated to prior payment of all debt to the Bank, exceeds
Borrower's total liabilities minus (i) goodwill, (ii) contract rights, (iii)
assets representing claims on (A) shareholders, directors, or officers or (B)
Affiliates, and (iv) other assets constituting intangible assets, including,
without limitation, any patents, trademarks, tradenames, copyrights or similar
intellectual property, all in accordance with GAAP.
Accounting Terms. All accounting terms not specifically defined or
specified herein shall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from time
to time, consistently applied. All financial computations made under this
Agreement for the purpose of determining compliance with the financial
requirements of this Agreement shall be made, and all financial information
required under this Agreement shall be prepared, in accordance with GAAP, as in
effect on the date hereof.
2. LOANS. Subject to the terms of this Agreement, Bank hereby agrees to
make loans to Borrower, as follows:
A. Revolving Line of Credit. (i) Subject to the terms hereof, Bank
agrees to extend a revolving line of credit (the "Revolver") to Borrower, in
the original principal amount of up to Seven Million Dollars ($7,000,000), for
the purpose of refinancing and increasing the Borrower's existing revolving line
of credit, and financing its short-term working capital needs, including but not
limited to payments under letters of credit issued for the benefit of Borrower.
The Revolver will be available during the period commencing on the date hereof
and continuing until December 31, 2000 (which date, as extended in accordance
with the terms hereof, shall be the "Maturity Date"). Borrower may from time to
time borrow, repay and re-borrow, subject to the Borrowing Base Agreement
attached hereto as Exhibit "A" and by reference made a part hereof, and the
Borrowing Base set forth therein (the "Borrowing Base"). Borrower shall execute
and deliver to Bank a promissory note (the "Revolver Note") in the principal
amount of $7,000,000, which Revolver Note shall bear interest and be payable in
accordance with the terms set forth hereinbelow. It is further provided that
the commitment of the Bank to continue to make the Revolver available to the
Borrower beyond the Maturity Date is subject to annual review by the Bank
(subject to and following receipt of the Borrower's annual report of audit as
provided hereinafter), and the Bank may, in its sole discretion,
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elect to renew the commitment for an additional year, whereupon the Maturity
Date shall be extended to the date that is one year after the then-current
Maturity Date.
(ii) Interest and Principal. Interest on the principal amount outstanding
under the Revolver from time to time shall accrue at the rate of thirty-day
LIBOR, plus two hundred basis points (2.00%) per annum, which accrued interest
shall be payable monthly in arrears. The principal of the Revolver Note shall
be repaid in full, if not sooner paid, on the Maturity Date, together with all
accrued but unpaid interest thereon.
(iii) Fees. Borrower shall pay to Bank a commitment fee in the amount of
one-quarter percent (1/4%) of the principal amount of the Revolver at the
closing thereof. Borrower shall also pay Bank, quarterly as invoiced by Bank,
an availability fee in the amount of one-quarter percent (1/4%) of the average
unused amount of the Revolver.
(iv) Collateral Security. Repayment in full of the Revolver shall be
secured by all Accounts Receivable (as such term is defined in the borrowing
base agreement attached hereto), and all Inventory and Equipment of Borrower,
now owned or hereafter acquired, including all proceeds thereof (the
"Collateral").
(v) Administration of Accounts. (a) Borrower agrees to submit to Bank,
within thirty (30) days after the end of each month during the term of the
Revolver, a summary aged trial balance of all accounts existing as of the last
day of such month, and all inventory, in form satisfactory to the Bank.
Borrower agrees to keep accurate and complete records of its accounts, and of
all payments and collections thereof, and of all inventory.
(b) Monthly, within thirty (30) days after the end of each monthly
period, Borrower shall submit a borrowing base certificate to Bank setting forth
the amount of Borrower's Eligible Accounts Receivable (as defined in the
Borrowing Base Agreement), Eligible Inventory and Equipment as of the last day
of such monthly period.
(c) Whether or not an Event of Default has occurred, Borrower shall
permit Bank, including any of its officers, agents or designees, to inspect and
verify the amount of or any other matter relating to the Borrower's accounts.
Borrower agrees to cooperate fully with Bank in such inspection and verification
process.
(d) Bank shall have the right at any time after the occurrence of an
Event of Default to notify any or all account debtors that Borrower's accounts
have been assigned to Bank and to collect the accounts in its name.
B. Acquisition Line. (i) Subject to the terms hereof, Bank agrees to
extend a non-revolving line of credit (the "Acquisition Line") to Borrower, in
the original principal amount of up to Five Million Dollars ($5,000,000), for
the purpose of providing a portion of the funds required to finance acquisitions
by Borrower. The proceeds of the
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Acquisition Line will be available to Borrower at the closing of any such
acquisition in such amounts as the Bank, in its discretion, may agree to be
advanced in connection with such acquisition. To evidence the Acquisition Line,
Borrower shall execute and deliver to Bank a promissory note (the "Acquisition
Note") in the principal amount of $5,000,000, which Acquisition Note shall bear
interest and be payable in accordance with the terms set forth hereinbelow.
(ii) Interest and Principal. Interest on the principal amount outstanding
under the Acquisition Line from time to time shall accrue at the rate of thirty-
day LIBOR, plus two hundred twenty-five basis points (2.25%) per annum, which
accrued interest shall be payable monthly in arrears. The principal of the
Acquisition Note, together with any accrued but unpaid interest thereon, shall
be repaid in full on the Maturity Date.
(iii) Fees. Borrower shall pay to Bank a commitment fee in the amount of
one-quarter percent (1/4%) of the principal amount of the Acquisition Line at
the closing thereof. Borrower shall also pay Bank, quarterly as invoiced by
Bank, an availability fee in the amount of one-quarter percent (1/4%) of the
average unused amount of the Acquisition Line.
(iv) Collateral Security. Repayment in full of the Acquisition Line shall
be secured by the Collateral described above.
C. Other Interest Rate Provisions Applicable to the Loans.
(a) The interest rate applicable to the Loans will vary, according to the
Borrower's compliance with certain financial ratios, as set forth in Exhibit B
attached hereto, as computed by the Borrower's certified public accountants, in
a manner reasonably acceptable to the Bank. The financial ratios shall be
calculated quarterly, as of the last day of each fiscal quarter of the Borrower,
and, if satisfied, shall apply to the Loans during the next succeeding quarter;
provided, however, that the first computation of the Borrower's ratios shall be
as of February 28, 1999, and shall apply during the third quarter of Borrower's
1999 fiscal year. At any time that the Borrower does not meet the requirements
of such financial ratios, however, the interest rate will be or revert to the
rates set forth hereinabove (subject, however, to the imposition of any default
interest rate provided in the notes, if an event of default has occurred). It
is further provided that the Borrower must be in compliance with all of the
terms and provisions of this Agreement to receive the rates set forth in Exhibit
B.
(b) Borrower shall also have the option to fix the interest rate on all or
any portion of the Loans, at any time, through the use of a Hedge Agreement
purchased from the Bank at the market rate for such products. For purposes
hereof, a "Hedge Agreement" means any agreement between Borrower and Bank, or
any affiliate of Bank, now existing or hereafter entered into, which provides
for an interest rate or commodity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross-currency swap,
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currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging Borrower's exposure to
fluctuations in interest rates, currency valuations or commodity prices.
Notwithstanding any other terms of this Agreement, any loan subject to a Hedge
Agreement shall be prepayable only in accordance with, and subject to any fees
imposed under, the terms of such Hedging Agreement.
3. COLLATERAL SECURITY. Payment and performance of the Notes and any
Hedge Agreement shall be secured by the Collateral for such Notes described
above, and the Borrower hereby grants, conveys, transfers and assigns to the
Bank a security interest in and lien upon all of such Collateral for such Notes
and Hedge Agreements. All Obligations of the Borrower to the Bank pursuant to
the Revolver Note and the Acquisition Note shall be cross-collateralized, such
that all Collateral for any such Note shall be deemed to secure all such Notes.
Borrower agrees and undertakes to execute and deliver to the Bank such
security agreements, pledge agreements, assignments, financing statements,
subordinations, certificates, waivers, estoppel agreements, and other
documentation, in form acceptable to the Bank, as may be requested by the Bank
in connection with the Collateral.
4. PROVISIONS CONCERNING LOAN TO LESSOR. Simultaneously with the making
of the Revolver and the Acquisition Line, Bank is also extending a line of
credit to the Lessor in the principal amount of up to Thirteen Million Dollars
($13,000,000) (the "Lease Line"). The Borrower has guaranteed up to the lesser
of eighty percent (80%) of the total obligations of the Lessee under the Lease
Line or $10,400,000 (the "Guarantee"). Notwithstanding the terms of this Loan
Agreement total amount of credit that will be available at any time to the
Borrower pursuant to this Loan Agreement shall be reduced by an amount equal to
the Borrower's contingent liability under the Guarantee, measured as the lesser
of (a) eighty percent (80%) of the total outstanding obligations of the Lessee
under the Lease Line at any time or (b) $10,400,000 (the "Credit Limit"), until
such time as the conditions set forth below have been fulfilled. During any
time that such limitation is in force, the Revolver shall be available to the
Borrower in an amount that is not less than $1,000,000, subject to the Borrowing
Base.
The Credit Limit shall be lifted at such time or times, and only as long
as, the following conditions are satisfied:
(a) The ratio of Funded Debt to EBITDA (for the preceding twelve months),
on a combined basis for Borrower and Lessor, shall be less than 3.0 to one. For
purposes of such ratio, EBITDA shall include cylinder lease revenue, but shall
exclude any gain or loss with respect to transactions between Borrower and
Lessor, and shall also be reduced by the amount of any dividends, distributions
(except for permitted tax distributions), or redemptions of equity by Borrower
and Lessor; and
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(b) The debt service coverage ratio, on a combined basis for
Borrower and Lessor, shall not be less than 1.3 to one. For purposes
hereof, "debt service coverage ratio" shall mean the quotient of
combined net income (excluding gain or loss on the sale of propane
cylinders) plus combined depreciation and amortization plus combined
interest expense, minus combined unfunded capital expenditures,
divided by combined current maturities of long-term debt actually paid
plus combined imputed principal (as defined herein) plus combined
interest expense. "Imputed principal" shall mean an amount equal to
an assumed amortization of the aggregate advances made to Borrower on
the Acquisition Line, and to Lessor on the Lease Line, calculated in
accordance with the following amortization schedules. For Borrower,
the assumed amortization shall be over a five-year period. For the
Lessor, the assumed amortization shall be over a ten-year period. In
each case, the Bank shall utilize a commercial-style amortization
schedule; that is, equal installment payments of principal, together
with accrued interest.
If, at any time when the Credit Limit has been lifted, Borrower and Lessor
fail to comply with the foregoing conditions, Borrower and Lessor shall make
such repayments of the loans as may be required by the Bank to restore
compliance with such conditions.
5. CONDITIONS PRECEDENT. The Bank's agreement to extend the Loans to the
Borrower is subject to the fulfillment, to the Bank's satisfaction, of all of
the following conditions:
A. Bank shall have received, on or before the date hereof (i) a copy of
the resolutions of the Board of Directors of the Borrower, certified on such
date by an officer of the Borrower, authorizing the execution and delivery of
this Agreement, the borrowings hereunder and the execution and delivery of the
Revolver Note, the Acquisition Note, the other Loan Documents and the
Collateral, and (ii) such additional documents and requirements as the Bank or
counsel for the Bank may reasonably request.
B. The Borrower shall have executed and delivered all documentation for
the Loans, as requested by the Bank, which shall be in form and content
reasonably acceptable to the Bank and its counsel.
C. The Borrower shall have provided to the Bank, in form satisfactory to
the Bank, all financial and other information requested by Bank as to its
business and affairs.
D. The Borrower shall have provided to the Bank, in form and content
satisfactory to the Bank and its counsel, satisfactory evidence that the
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, that it has been duly authorized to do
business as a foreign corporation
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in the State of North Carolina, and has the corporate and legal authority to own
its property and carry on its business as now being conducted.
E. All terms and conditions of the Bank's commitment letter to the
Borrower for the Loans have been satisfied and fulfilled, to the reasonable
satisfaction of the Bank.
F. No event has occurred or failed to occur that would have a Material
Adverse Effect on the financial condition of the Borrower as set forth in its
most recent annual financial statements and internally-prepared quarterly
financial statements submitted to Bank.
G. The Borrower shall have certified that the execution of the Loan
Documents shall not cause any default under any other contract or agreement to
which the Borrower is subject.
H. The Bank shall have entered into a Loan Agreement with the Lessor for
the Lease Line simultaneously herewith.
I. The Borrower shall have paid or provided for the payment of all costs
and expenses incurred in connection with the making of the Loans, including,
without limitation, the Bank's attorneys' fees and expenses.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank as follows:
A. Good Standing. Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, has been
duly authorized to do business as a foreign corporation in the State of North
Carolina, and has the power and authority to own its property and to carry on
its business in each jurisdiction in which Borrower does business.
B. Authority and Compliance. Borrower has full power and authority
to execute and deliver the Loan Documents and to incur and perform the
obligations provided for therein, all of which have been duly authorized by all
proper and necessary action of the appropriate governing body of Borrower,
respectively. No consent or approval of any public authority or other third
party is required as a condition to the validity of any Loan Document, and
Borrower, to the best of its knowledge after reasonable inquiry, is in
compliance with all laws and regulatory requirements to which it is subject.
C. Binding Agreement. This Agreement and the other Loan Documents
executed by Borrower constitute valid and legally binding obligations of
Borrower, enforceable in accordance with their terms, subject to bankruptcy,
insolvency,
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reorganization and similar laws and other laws generally affecting the
enforceability of creditors' rights and to general principles of equity.
D. Litigation. There is no proceeding involving Borrower pending or,
to the knowledge of Borrower, threatened before any court or governmental
authority, agency or arbitration authority, except as disclosed to Bank in
writing and acknowledged by Bank prior to the date of this Agreement.
E. No Conflicting Agreements. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to the
organization, power or authority of Borrower and no provision of any existing
agreement, mortgage, indenture or contract binding on Borrower or affecting its
property, which would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement and the other Loan
Documents.
F. Ownership of Assets. Borrower has good title to its assets, and
its assets are free and clear of liens, except those granted to Bank and as
disclosed to Bank in writing prior to the date of this Agreement.
G. Taxes. All material taxes and assessments due and payable by
Borrower have been paid or are being contested in good faith by appropriate
proceedings and Borrower has filed all material tax returns which it is required
to file.
H. Financial Statements. The financial statements of Borrower
heretofore delivered to Bank have been prepared in accordance with GAAP applied
on a consistent basis throughout the period involved and fairly present
Borrower's financial condition as of the date or dates thereof, and there has
been no material adverse change in Borrower's financial condition or operations
since November 30, 1998. To the best of its knowledge, all factual information
furnished by Borrower to Bank in connection with this Agreement and the other
Loan Documents is accurate and complete on the date as of which such
information is delivered to Bank.
I. Place of Business. Borrower's chief executive office is located
at: 000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000.
J. Environmental Matters. The conduct of Borrower's business
operations does not and will not violate any federal laws, rules or ordinances
for environmental protection, regulations of the Environmental Protection
Agency, any applicable local or state law, rule, regulation or rule of common
law or any judicial interpretation thereof relating primarily to the environment
or Hazardous Materials, and Borrower will not use or permit any other party to
use any Hazardous Materials at Borrower's places of business except such
materials as are incidental to Borrower's normal course of business, maintenance
and repairs and which are handled in compliance with all applicable
environmental laws. Borrower agrees to permit Bank, its agents,
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contractors and employees to enter and inspect any of Borrower's places of
business or any other property of Borrower at any reasonable times upon three
(3) days prior notice for the purposes of conducting an environmental
investigation and audit (including taking physical samples) to insure that
Borrower is complying with this covenant and Borrower shall reimburse Bank on
demand for the costs of any such environmental investigation and audit. Borrower
shall provide Bank, its agents, contractors, employees and representatives with
access to and copies of any and all data and documents relating to or dealing
with any Hazardous Materials used, generated, manufactured, stored or disposed
of by Borrower's business operations within five (5) days of the request
therefor.
K. Year 2000 Compliance. Borrower represents that it has (i)
initiated a review and assessment of all areas within its and each of its
subsidiaries' businesses and operations (including those affected by suppliers
and vendors) that could be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by Borrower or any of its
subsidiaries (or their suppliers and vendors) may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis and (iii) to date,
implemented that plan in accordance with that timetable. Borrower reasonably
believes that all computer applications (including those of its suppliers and
vendors) that are material to its or any of its subsidiaries' business and
operations will on a timely basis be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year 2000
compliant"), except to the extent that the Borrower reasonably believes a
failure to do so will not have a material adverse effect on its business,
financial condition, or ability to repay the Loans.
Borrower further represents that it will promptly notify the Bank in the
event Borrower discovers or determines that any computer application (including
those of its suppliers and vendors) that is material to its or any of its
subsidiaries' businesses and operations will not be Year 2000 compliant on a
timely basis, except to the extent that the Borrower believes such failure will
not have a material adverse effect on its business, financial condition or
ability to repay the Loans.
L. No Material Adverse Effect. To the best of the Borrower's
knowledge, neither this Agreement nor any of the Loan Documents, nor any
statements furnished to the Bank by or on behalf of the Borrower in connection
with the Loans or the Loan Documents, contain any untrue statement of a material
fact. To the best knowledge of the Borrower, there is no fact that the Borrower
has not disclosed to the Bank in writing that would have a Material Adverse
Effect.
M. Continuation of Representation and Warranties. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the date hereof and at and as of the date of any future
advance under any Loan (except insofar as such representations and warranties
relate expressly to an earlier date,
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and except for the representations and warranties in Section 6. D and H, which
shall be deemed to be made solely on the date of this Agreement).
7. AFFIRMATIVE COVENANTS. Until full payment and performance of all
Obligations of Borrower under the Loan Documents, Borrower will, unless Bank
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):
A. Financial Condition. Maintain Borrower's financial condition as
follows, determined in accordance with GAAP applied on a consistent basis
throughout the period involved except to the extent modified by the following
definitions:
(i) At July 31, 1999, Borrower shall achieve a Tangible Net Worth of
not less than $24,000,000;
(ii) Maintain a ratio of total liabilities to Tangible
Net Worth of not more than 1.25 to one as of the end of each of
Borrower's fiscal quarters;
(iii) Maintain a Current Ratio of not less than 1.5 to one at all
times;
(iv) Achieve EBITDA that is not less than:
(a) $407,000 for the three months ending January 31, 1999;
(b) $1,338,000 for the three months ending April 30, 1999;
(c) $5,197,000 for the three months ending July 31, 1999.
B. Financial Statements and Other Information. Maintain a system of
accounting satisfactory to Bank and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Bank's officers or
authorized representatives to visit and inspect Borrower's books of account and
other records at such reasonable times and as often as Bank may desire.
Borrower shall pay the reasonable fees and disbursements of any accountants or
other agents of Bank selected by Bank for the foregoing purposes one time each
year during the term of the Loans. Unless written notice of another location is
given to Bank, Borrower's books and records will be located at Borrower's chief
executive office set forth above. All financial statements called for below
shall be prepared in form and content acceptable to Bank and by independent
certified public accountants acceptable to Bank.
In addition, Borrower will:
(i) Furnish to Bank a report of audit of Borrower, prepared by a firm of
certified public accountants reasonably acceptable to Bank, for each fiscal year
of
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Borrower, within 120 days after the close of each such fiscal year, including
any management letter.
(ii) Furnish to Bank monthly financial statements (including a balance
sheet and profit and loss statement) of Borrower, which shall be prepared by
Borrower, for each month of each fiscal year of Borrower, within 30 days after
the close of each such month.
(iii) Furnish to Bank a compliance certificate for (and executed by an
authorized representative of) Borrower concurrently with and dated as of the
date of delivery of each of the financial statements as required in paragraphs i
and ii above, containing (a) a certification that the financial statements of
even date are true and correct and that the Borrower is not in default under the
terms of this Agreement, and (b) computations and conclusions, in such detail as
Bank may request, with respect to compliance with this Agreement, and the other
Loan Documents, including computations of all quantitative covenants. Such
compliance certificates shall be substantially in the form of Exhibit C attached
hereto.
(iv) Furnish to Bank promptly such additional information, reports and
statements respecting the business operations and financial condition of
Borrower, from time to time, as Bank may reasonably request.
C. Insurance. Except as otherwise provided herein, maintain
insurance with insurance companies reasonably acceptable to the Bank on such of
its properties, in such amounts and against such risks as is customarily
maintained by similar businesses operating in the same vicinity, specifically to
include fire and extended coverage insurance covering all assets, business
interruption insurance, and liability insurance, all to be with such companies
and in such amounts as are satisfactory to Bank. Satisfactory evidence of such
insurance will be supplied to Bank prior to funding under the Loans and 30 days
prior to each policy renewal. Bank acknowledges and agrees that Borrower is
self-insured for collision damage on all vehicles constituting equipment; that
it requires its lessees to maintain collision insurance on all vehicles
constituting inventory held for lease, which insurance names the Borrower as
loss payee; and that it is self-insured for workers compensation insurance.
Borrower agrees that it will notify Bank immediately if separate insurance
coverage is hereafter purchased by Borrower covering such risks, such insurance
to be subject to the terms of this section.
D. Existence and Compliance. Maintain its existence, good standing
and qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.
E. Adverse Conditions or Events. Promptly advise Bank in writing of
(i) any condition, event or act which comes to its attention that would or might
have a Material Adverse Effect on Borrower's financial condition or operations,
the Collateral,
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or Bank's rights under the Loan Documents, (ii) any litigation filed by or
against Borrower seeking in excess of $50,000 in damages, (iii) any event that
has occurred that would constitute an event of default under any Loan Documents
and (iv) any uninsured or partially uninsured loss through fire, theft,
liability or property damage in which the uninsured damages are in excess of an
aggregate of $100,000.00.
F. Taxes and Other Obligations. Pay all of its taxes, assessments
and other obligations, including, but not limited to taxes, costs or other
expenses arising out of this transaction, as the same become due and payable,
except to the extent the same are being contested in good faith by appropriate
proceedings in a diligent manner.
G. Maintenance. Maintain all of its tangible property in good
condition and repair, except for those properties deemed to be obsolete by the
Borrower, and make all necessary replacements thereof, and preserve and maintain
all licenses, trademarks, privileges, permits, franchises, certificates and the
like necessary for the operation of its business.
H. Notification of Environmental Claims. Borrower shall immediately
advise Bank in writing of (i) any and all enforcement, cleanup, remedial,
removal, or other governmental or regulatory actions instituted, completed or
threatened pursuant to any applicable federal, state, or local laws, ordinances
or regulations relating to any Hazardous Materials affecting Borrower's business
operations; and (ii) all claims made or threatened by any third party against
Borrower relating to damages, contribution, cost recovery, compensation, loss or
injury resulting from any Hazardous Materials. Borrower shall immediately
notify Bank of any remedial action taken by Borrower with respect to Borrower's
business operations.
8. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will not, without the
prior written consent of Bank (and without limiting any requirement of any other
Loan Documents):
A. Ownership and Management. Make or permit to be made any material
change in the ownership or executive management of the Borrower; provided,
however, that the Borrower shall not be prohibited by this covenant from
conducting any public offering of its capital stock.
B. Transfer of Assets or Control. Sell, lease, sell and leaseback,
assign or otherwise dispose of or transfer any assets, except in the normal
course of its business, or enter into any merger or consolidation, or transfer
control or ownership of the Borrower, or form or acquire any subsidiary, except
for a wholly-owned subsidiary which has executed a guaranty of the Loans, in
form satisfactory to the Bank. Notwithstanding the foregoing, however, Borrower
may sell all propane cylinders it now owns or hereafter acquires to the Lessor
in the ordinary course of business.
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C. Liens. Grant, suffer or permit any contractual or noncontractual
lien on or security interest in its assets, except in favor of Bank, or fail to
promptly pay when due all lawful claims, whether for labor, materials or
otherwise, except claims which the Borrower is diligently contesting in good
faith and has provided reserves that are adequate in the Bank's reasonable
judgment.
D. Extensions of Credit. Make any loan or advance to any individual,
partnership, corporation or other entity, except (i) as previously disclosed to
Bank in writing, and (ii) other loans, not in excess of an aggregate principal
amount of $500,000, in connection with acquisitions made by the Borrower.
E. Borrowings. Create, incur, assume or become liable in any manner
for any indebtedness (for borrowed money, deferred payment for the purchase of
assets, lease payments, as surety or guarantor for the debt for another, or
otherwise), other than to Bank, except for normal trade debts incurred and
capital leases entered into in the ordinary course of Borrower's business, and
except for existing indebtedness disclosed to Bank in writing and acknowledged
by Bank prior to the date of this Agreement. Borrower shall also be permitted
to incur indebtedness to Affiliates, shareholders or related companies
hereafter, as long as the incurrence of such indebtedness is disclosed to Bank
and all such indebtedness (except for trade debt incurred in the ordinary course
of business) is fully subordinated to Borrower's indebtedness to Bank, in form
satisfactory to Bank.
F. Dividends and Distributions. At any time Borrower is in default
under this Agreement, or would be in default following or as a result thereof,
make any distribution (other than dividends payable in capital stock of
Borrower) on any shares of any class of its capital stock, or apply any of its
property or assets to the purchase, redemption or other retirement of any shares
of any class of capital stock of Borrower, or in any way amend its capital
structure.
G. Character of Business. Change the general character of business
as conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently conducted.
9. DEFAULT. Borrower shall be in default under this Agreement and under
each of the other Loan Documents (an "Event of Default") if it shall default in
the payment of any amounts due and owing under the Loans, or either of them.
Borrower shall also be in default if it should fail to timely and properly
observe, keep or perform any term, covenant, agreement or condition in any Loan
Document or in any other loan agreement, promissory note, guaranty, security
agreement, deed of trust, assignment, pledge or other contract securing or
evidencing payment of any indebtedness of Borrower to Bank or any affiliate or
subsidiary of NationsBank Corporation, and such default shall continue uncured
for a period of thirty (30) days (such thirty-day cure period to apply to
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any such default, notwithstanding the absence of any such cure period in, or the
conflicting provisions of, any other Loan Document).
10. REMEDIES UPON DEFAULT. If an Event of Default shall occur, Bank shall
have all rights, powers and remedies available under each of the Loan Documents
as well as all rights and remedies available at law or in equity.
11. NOTICES. All notices, requests or demands which any party is required
or may desire to give to any other party under any provision of this Agreement
must be in writing delivered to the other party at the following address:
Borrower: Blue Rhino Corporation
000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx-Xxxxx, XX 00000
ATTN: Xxxx Xxxxxxxxx
Chief Financial Officer
Bank: NationsBank, N.A.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxx, Xx.
Senior Vice President
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by hand delivery, upon delivery;
B. If sent by mail, upon the earlier of the date of receipt or five
(5) days after deposit in the U.S. Mail, first class postage prepaid.
12. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in connection with Bank's
collection of, or attempts to collect, any Obligations due hereunder or under
the Notes.
13. MISCELLANEOUS. Borrower and Bank further covenant and agree as
follows, without limiting any requirement of any other Loan Document:
A. Cumulative Rights and No Waiver. Each and every right granted to
Bank under any Loan Document, or allowed it by law or equity shall be cumulative
of each other and may be exercised in addition to any and all other rights of
Bank, and no delay in exercising any right shall operate as a waiver thereof,
nor shall any single or partial exercise by Bank of any right preclude any other
or future exercise thereof or the exercise of any other right. Borrower
expressly waives any presentment, demand, protest
-16-
or other notice of any kind, including but not limited to notice of intent to
accelerate and notice of acceleration. No notice to or demand on Borrower in any
case shall, of itself, entitle Borrower to any other or future notice or demand
in similar or other circumstances.
B. Applicable Law. This Loan Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the laws of the State of North Carolina (excluding, however, any
principles of conflicts of laws) and applicable federal law.
C. Amendment. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by either party
therefrom, shall be effective unless the same shall be in writing and signed by
each party, and then shall be effective only in the specified instance and for
the purpose for which given. This Loan Agreement is binding upon Borrower, its
successors and assigns, and inures to the benefit of Bank, its successors and
assigns; however, no assignment or other transfer of Borrower's rights or
obligations hereunder shall be made or be effective without Bank's prior written
consent, nor shall it relieve Borrower of any obligations hereunder. There is
no third party beneficiary of this Loan Agreement.
D. Documents. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to Bank shall be in
form and content satisfactory to Bank and its counsel.
E. Partial Invalidity. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.
F. Indemnification. Borrower shall indemnify, defend and hold Bank
and its successors and assigns harmless from and against any and all claims,
demands, suits, losses, damages, assessments, fines, penalties, costs or other
expenses (including reasonable attorneys' fees and court costs) ("Indemnified
Damages") arising from or in any way related to any of the transactions
contemplated hereby, except Indemnified Damages occurring as a result of willful
or negligent conduct of the Bank, including but not limited to actual or
threatened damage to the environment, agency costs of investigation, personal
injury or death, or property damage, due to a release or alleged release of
Hazardous Materials, arising from Borrower's business operations, any other
property owned by Borrower or in the surface or ground water arising from
Borrower's business operations, or gaseous emissions arising from Borrower's
business operations or any other condition existing or arising from Borrower's
business operations resulting from the use or existence of Hazardous Materials,
whether such claim proves to be true or false. Borrower further agrees that its
indemnity obligations shall include, but are not
-17-
limited to, liability for damages resulting from the personal injury or death of
an employee of the Borrower, regardless of whether the Borrower has paid the
employee under the worker's compensation laws of any state or other similar
federal or state legislation for the protection of employees. The term "property
damage" as used in this paragraph includes, but is not limited to, damage to any
real or personal property of the Borrower, the Bank, and of any third parties.
The Borrower's obligations under this paragraph shall survive the repayment of
the Loans and foreclosure of the Collateral.
G. Survivability. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of the Loans and shall continue in full force and effect so long as the Loans
are outstanding or the obligation of the Bank to make any advances under the
Loans shall not have expired.
H. Updated Appraisals and Maintenance of Collateral Value. Bank may,
at its option, at Borrower's expense, obtain an appraisal of the Collateral
securing payment of the Loans. Without limitation, NationsBank Business Credit
Services may audit the Borrower's Accounts Receivable annually, with results
that are satisfactory to the Bank in its sole discretion. The reasonable costs
of each such appraisal or audit shall be payable by Borrower to Bank on demand.
If such appraisal shows the market value of the Collateral has declined,
Borrower agrees that, upon demand by Bank, it will immediately either pledge
additional collateral in form and substance satisfactory to Bank or make such
payments as shall be necessary to reduce the principal balance outstanding under
the Loan.
14. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO, INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW). THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE, INC., OR ANY SUCCESSOR THEREOF
("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY
OF THE BORROWER'S DOMICILE AT TIME OF
-18-
THE EXECUTION OF THIS AGREEMENT AND ADMINISTERED BY J.A.M.S., WHICH WILL APPOINT
AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR
(II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC.
91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE
BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR
(C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
15. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed under seal by their duly authorized representatives as of the
date first above written.
BORROWER:
--------
BLUE RHINO CORPORATION
ATTEST:
By: /s/Xxxxx X. Xxxx
------------------------------------
/s/Xxxx Xxxxxxxxx Title: Chairman, President and Chief
----------------- Executive Officer
Secretary
[Corporate Seal]
BANK:
----
NATIONSBANK, N.A.
By: /s/Xxxxxxx X. Xxxxx Xx.
----------------------------------
Title:Senior Vice President
-20-
