10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2003

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM       TO

COMMISSION FILE NUMBER: 0-24287

BLUE RHINO CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	56-1870472
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

104 CAMBRIDGE PLAZA DRIVE
WINSTON-SALEM, NORTH CAROLINA 27104
(Address of principal executive offices)

(336) 659-6900
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

     Yes [X]      No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class
Common stock, par value $.001 per share Outstanding at February 28, 2003
17,736,452 Shares

BLUE RHINO CORPORATION

INDEX

PART I: FINANCIAL INFORMATION
Item 1:	Financial Statements (unaudited):
		Condensed consolidated balance sheets as of January 31, 2003 and July 31, 2002.
		Condensed consolidated statements of operations for the three- and six-month periods ended January 31, 2003 and 2002.
		Condensed consolidated statements of cash flows for the six-month periods ended January 31, 2003 and 2002.
		Notes to condensed consolidated financial statements.
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 3:	Quantitative and Qualitative Disclosures about Market Risk.
Item 4:	Controls and Procedures.
PART II: OTHER INFORMATION
Item 2:	Changes in Securities and Use of Proceeds.
Item 4:	Submission of Matters to a Vote of Security Holders.
Item 5:	Other Information.
Item 6:	Exhibits and Reports on Form 8-K.
SIGNATURES
CERTIFICATIONS

1

PART I

FINANCIAL INFORMATION

Item 1: Condensed Consolidated Financial Statements

BLUE RHINO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
As of January 31, 2003 and July 31, 2002
(In thousands)

			January 31,			July 31,
			2003			2002
			(unaudited)
	ASSETS
Current assets:
	Cash and cash equivalents		$	2,354		$	1,563
	Accounts receivable, net			23,102			25,329
	Inventories			19,463			11,035
	Prepaid expenses and other current assets			10,342			3,081
		Total current assets		55,261			41,008
Cylinders, net				45,109			37,004
Property, plant and equipment, net				34,452			30,477
Intangibles, net				62,133			31,988
Other assets				1,260			2,896
		Total assets	$	198,215		$	143,373
		LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	24,516		$	19,969
	Current portion of long-term debt and capital lease obligations			5,784			2,013
	Accrued liabilities			5,808			3,770
		Total current liabilities		36,108			25,752
Long-term debt and capital lease obligations, less current maturities				42,342			39,259
		Total liabilities		78,450			65,011
Stockholders’ equity:
	Preferred stock, $0.001 par value, 20,000,000 shares authorized, no and 1,850,000 shares issued and outstanding at January 31, 2003 and July 31, 2002, respectively			—			2
	Common stock, $0.001 par value, 100,000,000 shares authorized, 17,722,288 and 12,058,542 shares issued and outstanding at January 31, 2003 and July 31, 2002, respectively			18			12
	Capital in excess of par			131,633			95,901
	Accumulated deficit			(15,423	)		(17,527	)
	Accumulated other comprehensive income (loss)			3,537			(26	)
		Total stockholders’ equity		119,765			78,362
		Total liabilities and stockholders’ equity	$	198,215		$	143,373

The accompanying notes are an integral part of these financial statements.

2

BLUE RHINO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended January 31, 2003 and 2002
(In thousands, except per share data)

			Three months ended						Six months ended
			January 31,						January 31,
			2003			2002			2003			2002
			(Unaudited)						(Unaudited)
Net revenues			$	58,054		$	38,759		$	112,870		$	75,305
Operating costs and expenses:
	Cost of sales			47,102			30,913			88,453			57,716
	Selling, general, and administrative			6,399			4,196			14,792			9,711
	Depreciation and amortization			2,267			1,955			4,425			3,792
		Total operating costs and expenses		55,768			37,064			107,670			71,219
		Income from operations		2,286			1,695			5,200			4,086
Interest and other expenses (income):
	Interest expense			1,380			1,498			2,636			3,152
	Loss on investee			—			340			455			677
	Other, net			(25	)		(65	)		(96	)		(251	)
		Income (loss) before income taxes		931			(78	)		2,205			508
Income taxes				15			13			30			26
		Net income (loss)	$	916		$	(91	)	$	2,175		$	482
Preferred dividends				—			641			71			1,107
		Income (loss) available to common stockholders	$	916		$	(732	)	$	2,104		$	(625	)
Earnings (loss) per common share:
	Basic		$	0.06		$	(0.06	)	$	0.14		$	(0.05	)
	Diluted		$	0.05		$	(0.06	)	$	0.11		$	(0.05	)
Shares used in per share calculations:
	Basic			16,114			12,182			15,123			12,159
	Diluted			19,587			12,182			18,676			12,159

The accompanying notes are an integral part of these financial statements.

3

BLUE RHINO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended January 31, 2003 and 2002
(In thousands)

				Six Months Ended
				January 31,
				2003			2002
				(unaudited)
Cash flows from operating activities:
	Net income			$	2,175		$	482
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation and amortization			4,425			3,792
		Loss on investee			455			677
		Accretion of the discount on notes			344			344
		Other non-cash expenses			511			175
		Changes in operating assets and liabilities, net of business acquisitions:
			Accounts receivable		2,858			6,925
			Inventories		(14,125	)		1,748
			Other current assets		(2,861	)		189
			Accounts payable and accrued liabilities		302			(6,555	)
			Net cash provided by (used in) operating activities		(5,916	)		7,777
Cash flows from investing activities:
	Business acquisitions				(5,867	)		(203	)
	Purchases of property, plant, and equipment				(4,650	)		(1,562	)
	Net advances to and investment in joint venture				(1,086	)		(1,524	)
	Purchases of cylinders held under operating leases, net				(370	)		(1,673	)
	(Issuance of) collections on notes receivable and advances to distributors				(2,376	)		20
			Net cash used in investing activities		(14,349	)		(4,942	)
Cash flows from financing activities:
	Proceeds from (payments on) credit facility, net				6,207			(1,256	)
	Proceeds from issuance of equity, net of expenses				17,435			213
	Payments on long-term debt and capital lease obligations				(1,646	)		(1,405	)
	Debt issuance costs				(940	)		—
			Net cash provided by (used in) financing activities		21,056			(2,448	)
Net increase in cash and cash equivalents					791			387
Cash and cash equivalents at beginning of period					1,563			1,044
			Cash and cash equivalents at end of period	$	2,354		$	1,431

The accompanying notes are an integral part of these financial statements.

4

BLUE RHINO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2003 (Unaudited)
(In thousands, except share and per share data)

1. Basis of Presentation

     The condensed consolidated financial statements of Blue Rhino Corporation (the “Company”) include the accounts of its wholly owned subsidiaries: Uniflame Corporation (“Uniflame”); QuickShip, Inc. (“QuickShip”); Rhino Services, L.L.C., CPD Associates, Inc.; USA Leasing, L.L.C.; Uniflame, LLC; Platinum Propane, L.L.C. (“Platinum”); Ark Holding Company LLC (“Ark”); and Blue Rhino Consumer Products, LLC. As a result of the Company’s acquisition of Platinum in November 2002, the Company increased its ownership interest in R4 Technical Center North Carolina, LLC (“R4 Tech”) on a consolidated basis by 1% to 50%. The Company consolidated the results of R4 Tech beginning in the second quarter of fiscal 2003 as a result of its increased ownership and financial control (Note 6). All material intercompany transactions and balances have been eliminated in consolidation.

     The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared by the Company in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and, accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of items of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three- and six-month periods ended January 31, 2003 are not necessarily indicative of the results that may be expected for the year ending July 31, 2003 or for any other period.

     The balance sheet at July 31, 2002 has been derived from the audited financial statements of the Company as of July 31, 2002 but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

     These financial statements should be read in conjunction with the audited consolidated financial statements of Blue Rhino Corporation as of and for the year ended July 31, 2002.

2. Derivative Instruments

     The Company accounts for derivative instruments in accordance with Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities. This statement specifies that all derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income (“OCI”) and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.

     The Company uses derivative instruments, which are designated as cash flow hedges, to manage exposure to interest rate fluctuations and wholesale propane price volatility. The Company’s objective for holding derivatives is to minimize risks by using the most effective methods to eliminate or reduce the impacts of these exposures.

     The net derivative income (loss) recorded in OCI will be reclassified into earnings over the term of the underlying cash flow hedges. The amount that will be reclassified into earnings will vary depending upon the movement of the underlying interest rates and propane prices. As interest rates and propane prices decrease, the charge to earnings will increase. Conversely, as interest rates and propane prices increase, the charge to earnings will decrease.

5

     A summary of changes in OCI for the three and six months ended January 31, 2003 and 2002 is presented below:

	Three months ended						Six months ended
	January 31,						January 31,
	2003			2002			2003			2002
Beginning balance deferred in OCI	$	915		$	(2,319	)	$	(26	)	$	(1,102	)
Net change associated with current period hedge transactions		3,008			(2,002	)		4,082			(3,660	)
Net amount reclassified into earnings during the period		(386	)		1,195			(519	)		1,636
Ending balance deferred in OCI	$	3,537		$	(3,126	)	$	3,537		$	(3,126	)

     Total comprehensive income for the three and six months ended January 31, 2003 was $3,538 and $5,738, respectively. Total comprehensive loss for the three and six months ended January 31, 2002 was ($898) and ($1,542), respectively.

3. Earnings Per Share

     The following table sets forth a reconciliation of the numerators and denominators in computing earnings per common share in accordance with Statement of Financial Accounting Standards No. 128.

		Three months ended					Six months ended
		January 31,					January 31,
		2003		2002			2003		2002
		(Unaudited)					(Unaudited)
Net income (loss)		$	916	$	(91	)	$	2,175	$	482
Less: Preferred stock dividends			—		641			71		1,107
Income (loss) applicable to common stockholders		$	916	$	(732	)	$	2,104	$	(625	)
Income (loss) applicable to common stockholders		$	916	$	(732	)	$	2,104	$	(625	)
Weighted average number of common shares outstanding (in thousands)			16,114		12,182			15,123		12,159
Basic earnings (loss) per common share		$	0.06	$	(0.06	)	$	0.14	$	(0.05	)
Income (loss) applicable to common stockholders		$	916	$	(732	)	$	2,104	$	(625	)
Weighted average number of common shares outstanding (in thousands)			16,114		12,182			15,123		12,159
Effect of potentially dilutive securities:
	Common stock options		1,972		—			1,873		—
	Common stock warrants		1,501		—			1,680		—
Weighted average number of common shares outstanding assuming dilution			19,587		12,182			18,676		12,159
Diluted earnings (loss) per common share		$	0.05	$	(0.06	)	$	0.11	$	(0.05	)

     Common stock options and common stock warrants listed below for the three and six months ended January 31, 2003 were not included in the computation of diluted earnings per share because the exercise prices are greater than the average market price of the Company’s common stock during those periods such that the effect would be anti-dilutive. Common stock options and common stock warrants listed below for the three months and six months ended January 31, 2002 have been excluded from the computation of diluted loss per share because they were anti-dilutive.

	Three months ended				Six months ended
	January 31,				January 31,
	2003		2002		2003		2002
	(Unaudited)				(Unaudited)
Common stock options		953,250		3,247,756		979,750		3,247,756
Common stock warrants		330,000		2,910,295		—		2,910,295

4. Credit Facility

     On November 20, 2002, the Company completed the syndication of a new and expanded bank credit facility (the “Credit Facility”). The Credit Facility consists of a $45,000 revolving line of credit and a $15,000 term loan, both for general corporate purposes, inclusive of payments made under letters of credit. The Credit Facility has a maturity date of November 30, 2005 and, as amended, requires the Company to utilize the approximately $14,900 in net proceeds from a private placement of common stock completed December 20, 2002 to repay the term loan or its subordinated debt, in such proportion as the Company elects, by May 26, 2003. Pending that repayment, $5,000 of the availability under the revolving line of credit has been reserved. Advances under the Credit Facility are collateralized by a lien on substantially all of the Company’s assets.

6

     Advances under the Credit Facility may be made as either base rate (“prime rate”) loans or London Interbank Offered Rate (“LIBOR”) loans at the Company’s election. Interest rates are based upon either the LIBOR or prime rate plus an applicable margin dependent upon a total leverage ratio. The applicable LIBOR margins range from 200 to 300 basis points, and the applicable prime rate margins range from 50 to 150 basis points. The Company incurred fees of approximately $1,000 in connection with the Credit Facility. The fees will be amortized over the life of the Credit Facility, through November 30, 2005. The Company incurred a charge of $96 in November 2002 resulting from unamortized fees related to its prior credit facility. On January 31, 2003 the Company had $31,250 (including a $14,000 balance on the term loan) in LIBOR loans outstanding at a weighted-average interest rate of 3.86% and $1,600 in prime rate loans outstanding at a weighted-average interest rate of 5.25%.

     Principal payments on the outstanding term loan began on December 31, 2002 and continue quarterly until September 30, 2005. The initial principal payments are $1,000 per calendar quarter beginning December 31, 2002, will increase to $1,250 per calendar quarter beginning December 31, 2003 and will further increase to $1,500 per calendar quarter beginning December 31, 2004. The Credit Facility includes a .50% commitment fee on the average daily unused amount for each fiscal quarter. The Credit Facility requires the Company to meet certain covenants, including minimum net worth and cash flow requirements, restricts the payment of cash dividends and permits early extinguishment of up to $15,000 of the Company’s subordinated debt. At January 31, 2003, the Company was in compliance with all covenants.

     The Credit Facility stipulates that, by May 31, 2003, the Company must enter into swap agreements with respect to interest rate exposure under the Credit Facility with durations covering the remaining term of the Credit Facility and with an aggregate notional principal amount equal to at least two-thirds of the outstanding principal amount of the term loan. The Company is currently party to an interest rate swap agreement with a notional amount of $10,000. Under the existing swap agreement, which expires in July 2003, the Company pays a fixed rate of 7.36% and receives a rate equivalent to the thirty-day LIBOR, adjusted quarterly.

5. Platinum Propane and Ark Acquisitions

     In November 2002, the Company acquired Platinum Propane, L.L.C. (“Platinum”) and Ark Holding Company LLC (“Ark”) and their respective subsidiaries, representing ten of the Company’s 46 distributors. Platinum’s five subsidiary distributors operate in Southern California, including Los Angeles and San Diego, Chicago, the Carolinas, Georgia and Florida. Ark’s five subsidiary distributors operate in New Jersey, Seattle, Kansas City, Denver and Salt Lake City. Collectively, the territories served by the acquired distributors have historically represented approximately 45% of the Company’s cylinder exchange revenues. The condensed consolidated statements of operations include the results of Platinum and Ark effective November 1, 2002.

     The aggregate purchase price for the two acquisitions was approximately $32,000. The consideration paid by the Company in the two acquisitions consisted of approximately 1.1 million restricted shares of common stock valued, based on the closing price of the Company’s common stock on the Nasdaq National Market on November 22, 2002, at approximately $19,000, $3,100 in assumed debt satisfied at closing, $4,900 in advances, and $5,000 in liabilities assumed. On a preliminary basis, approximately $28,200 of the purchase price was allocated to goodwill, $2,800 was allocated to current assets and $1,200 was allocated to equipment, vehicles and other assets.

     The following unaudited pro forma summary presents the financial information as if the acquisition of Platinum and Ark had occurred on August 1, 2001. These pro forma results have been prepared for comparative purposes and do not purport to be indicative of what would have occurred had the acquisition been made on August 1, 2001, nor are they indicative of future results. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	Three months ended					Six months ended
	January 31,					January 31,
	Actual		Pro forma			Pro forma			Pro forma
	2003		2002			2003			2002
Net revenues	$	58,054	$	38,348		$	110,542		$	74,496
Net income (loss)	$	916	$	(819	)	$	(975	)	$	(675	)
Net income (loss) available to common stockholders	$	916	$	(1,460	)	$	(1,046	)	$	(1,782	)
Basic earnings (loss) per common share	$	0.06	$	(0.11	)	$	(0.07	)	$	(0.13	)
Diluted earnings (loss) per common share	$	0.05	$	(0.11	)	$	(0.07	)	$	(0.13	)

7

6. Investment in Joint Venture

     As a result of the acquisition of Platinum, the Company increased its ownership interest in R4 Technical Center North Carolina, LLC (“R4 Tech”) on a consolidated basis by 1% to 50%. The Company consolidated the results of R4 Tech beginning in the second quarter of fiscal 2003 as a result of its increased ownership and financial control. R4 Tech was established in April 2000 to operate and manage an automated propane bottling and cylinder refurbishing plant. R4 Tech began operations in May 2000 and was accounted for under the equity method of accounting through the first quarter of fiscal 2003. During the first quarter of fiscal 2003, the Company recognized 100% of the loss of R4 Tech as a result of advances made without a corresponding advance from the other joint venture partners. The Company recognized a loss in the joint venture for the three months ended January 31, 2002 of $340 and a loss in the joint venture for the six months ended January 31, 2003 and 2002 of $455 and $677, respectively.

7. Common Stock

     On December 20, 2002, the Company completed a private placement of 1.0 million shares of its common stock at a purchase price of $15.79 per share to two institutional investors for gross proceeds of $15.8 million. In conjunction with the private placement, the Company issued Additional Investment Rights to the investors exercisable for, collectively, up to an additional 330,000 shares of its common stock at an exercise price of $15.79 per share. Each Additional Investment Right is exercisable by the holder for a period that began on the effective date of the related registration statement filed by the Company with the Securities and Exchange Commission with respect to the resale of the shares and ending initially 90 trading days thereafter and now reset to October 1, 2003.

8. Segment Information

     The Company has two reportable segments: cylinder exchange and products and other. The cylinder exchange segment relates to cylinder exchange transactions and lease income from cylinders and cylinder displays. The products and other segment includes the activities required to sell patio heaters, grills and other complementary propane products, fireplace accessories and garden products. In addition, financial information related to QuickShip, a retail shipping service company acquired in October 2000, is included within the products and other segment as it is not currently material on a stand-alone basis. For the three and six months ended January 31, 2003, QuickShip had a loss from operations of ($327) and ($778), respectively. For the three and six months ended January 31, 2002, QuickShip had a loss from operations of ($493) and ($942), respectively.

     The Company evaluates performance and allocates resources based on several factors, of which the primary financial measure is business segment operating income, defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (“EBITDA”). Management of the Company believes that EBITDA is a useful measure of operating performance at a segment level as it is an important indicator of the ability of each segment to provide cash flows to service debt and fund working capital requirements and eliminates the uneven effect between our segments of noncash depreciation of tangible assets and amortization of certain intangible assets. In addition, management uses EBITDA performance objectives at a segment level as the basis for determining incentive compensation. EBITDA as presented may not be comparable to similarly titled measures used by other entities. EBITDA should not be considered in isolation from, or as a substitute for, net income or cash flows from operating activities prepared in accordance with generally accepted accounting principles as an indicator of operating performance or as a measure of liquidity.

8

     The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and operational strategies. The Company’s selected segment information as of and for the three and six months ended January 31, 2003 and 2002 is as follows:

		Three Months Ended						Six Months Ended
		January 31,						January 31,
		2003			2002			2003			2002
Net revenues:
	Cylinder exchange	$	29,816		$	18,911		$	66,765		$	40,042
	Products and other		28,238			19,848			46,105			35,263
		$	58,054		$	38,759		$	112,870		$	75,305
Segment EBITDA:
	Cylinder exchange	$	3,464		$	2,524		$	9,015		$	5,451
	Products and other		1,089			1,126			610			2,427
		$	4,553		$	3,650		$	9,625		$	7,878
Depreciation & amortization			2,267			1,955			4,425			3,792
Interest expense			1,380			1,498			2,636			3,152
Loss on investee			—			340			455			677
Other, net			(25	)		(65	)		(96	)		(251	)
Income taxes			15			13			30			26
Net income (loss)		$	916		$	(91	)	$	2,175		$	482

		As of January 31,
		2003		2002
Total assets:
	Cylinder exchange	$	142,207	$	87,851
	Products and other		56,008		32,351
		$	198,215	$	120,202

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this section and elsewhere in this Quarterly Report on Form 10-Q are forward-looking in nature and relate to the Company’s plans, objectives, estimates, goals and future financial performance. The terms “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” “continue” and similar words or expressions are intended to identify forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and speak only as of the date of this report. The Company’s business is subject to numerous risks and uncertainties including: that its significant retail relationships are generally nonexclusive and terminable at will; that it relies on a limited number of distributors; its ability to manage growth; its ability to place Blue Rhino cylinder exchange at additional retail locations; its ability to protect its intellectual property and to strengthen its brand; its ability to maintain an adequate supply of cylinders that comply with applicable guidelines; its ability to mitigate the effects of high propane commodity prices; its ability to integrate its distributor acquisitions and manage its distributor operations; its ability to launch new products and services; the effect of safety guidelines on consumer demand for cylinder exchange; and the possibility of a war with Iraq and its effects on the Company’s ability to import an adequate product supply, consumer confidence and spending patterns, retailer inventory policies and the price of propane. These and other risks and uncertainties, including those detailed in the Company’s Registration Statement on Form S-3 dated January 7, 2003 and in its most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission under “Risk Factors” or “Business — Additional Factors that May Affect our Business or Future Results,” could cause actual results and experience to be materially different from those expressed or implied by any of these forward-looking statements. To the extent permitted by law, the Company makes no commitment to update any forward-looking statement or to disclose any facts, events, or circumstances after the date hereof that may affect the accuracy of any forward-looking statement.

Overview

     The following discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes of Blue Rhino Corporation and its wholly owned subsidiaries, Rhino Services, L.L.C., CPD Associates, Inc., USA Leasing, L.L.C., Uniflame Corporation, QuickShip, Inc., Uniflame, LLC, Platinum Propane, L.L.C. (“Platinum”), Ark Holding Company LLC (“Ark”) and Blue Rhino Consumer Products, LLC (collectively, the “Company,” “Blue Rhino,” “us” or “we”), and with our audited consolidated financial statements as of and for the fiscal year ended July 31, 2002, on file with the Securities and Exchange Commission. As a result of our acquisition of Platinum in November 2002, we increased our ownership interest in R4 Technical Center North Carolina, LLC (“R4 Tech”) on a consolidated basis by 1% to 50%. We consolidated the results of R4 Tech beginning in the second quarter of fiscal 2003 as a result of our increased ownership and financial control. The results of operations for the three- and six-month periods ended January 31, 2003 are not necessarily indicative of results that may be expected for the fiscal year ending July 31, 2003 or any other period, in part due to the seasonality of our business.

     Blue Rhino was founded in March 1994. We believe we have become the leading national provider of propane grill cylinder exchange and a leading provider of complementary propane and non-propane products to consumers through many of the world’s greatest retailers. Our branded propane grill cylinder exchange service is offered at more than 27,000 retail locations in 48 states and Puerto Rico, including leading home improvement centers, mass merchants, hardware, grocery and convenience stores. Our retail partners include Home Depot, Lowe’s, Wal*Mart, Sears, Kroger, Food Lion, Winn-Dixie, SuperAmerica, Circle K and ExxonMobil. Propane grill cylinder exchange provides consumers with a safe and convenient alternative to traditional propane tank refilling.

     Our cylinder exchange segment partners with retailers and, in many cases, independent distributors to provide consumers with a nationally-branded alternative to traditional grill cylinder refill. We dedicate our efforts and capital to brand development, value-added marketing, customer service, cylinders, displays, account growth, distributor network development and management information systems. Our distributors invest in the vehicles and other operational infrastructure necessary to operate cylinder exchange businesses. In November 2002, we acquired ten distributors whose territories have historically represented approximately forty-five percent of our revenues. We believe that our distributor network affords us the opportunity to service approximately 90% of the cylinder exchange markets in the United States.

     Our products and other segment includes the design and import of consumer products sold through mass retailers. The segment’s revenues are derived from products that use propane cylinders as their fuel source, principally patio heaters and grills, and non-propane products such as charcoal grills, fireplace accessories and garden products. The segment’s revenues have historically been strongest in the fall and winter months, which is counterseasonal to the strongest months for our cylinder exchange segment. QuickShip, Inc., a retail shipping services company that we acquired in October 2000, is included within the products and other segment as it is not currently significant on a stand-alone basis.

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Results of Operations

Comparison of the three months ended January 31, 2003 with the three months ended January 31, 2002

     Net revenues. Net revenues increased 49.8% to $58.1 million for the three months ended January 31, 2003 from $38.8 million for the three months ended January 31, 2002. Net revenues consisted of $29.8 million from the cylinder exchange segment and $28.3 million from the products and other segment. Cylinder exchange revenues increased 57.7%, with approximately one-fourth of the increase due to price increases to retailers, enabled by a higher mix of upgrade transactions, and approximately three-fourths of the increase due to an approximately 45% increase in the number of total cylinder transactions to 1.8 million units for the second quarter of fiscal 2003 from 1.2 million units for the second quarter of fiscal 2002. This increase reflects the positive trend toward consumer acceptance of cylinder exchange versus refill and the impact of National Fire Protection Association (“NFPA”) guidelines adopted by many states that mandate that all propane cylinders refilled after April 1, 2002 be fitted with an overfill prevention device (“OPD”). Product revenues increased 42.3% due principally to an increase in the number of grills sold as a major customer took delivery during the quarter, earlier than in the last fiscal year. We currently anticipate double-digit revenue growth for our cylinder exchange segment through the end of fiscal year 2004 and that the NFPA guidelines will continue to contribute to our cylinder exchange revenue growth through the end of fiscal 2005.

     Gross margin. Our overall gross margin decreased to 18.9% for the second quarter of fiscal 2003 from 20.2% for the second quarter of fiscal 2002. Gross margin percentage decreased 259 basis points in cylinder exchange to 24.9% for the three months ended January 31, 2003 from 27.5% for the three months ended January 31, 2002 due primarily to consolidating the operating loss of R4 Tech, increased fuel costs on unhedged volumes and an increase in the number of valves replaced, partially offset by price increases to retailers. The products and other segment gross margin decreased to 12.5% for the second quarter of fiscal 2003 from 13.4% for the second quarter of fiscal 2002 due primarily to a greater percentage of lower-margin products in the mix of products sold.

     Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses increased 52.5% to $6.4 million for the three months ended January 31, 2003 from $4.2 million for the three months ended January 31, 2002 and, as a percentage of net revenues, increased slightly to 11.0% for the second quarter of fiscal 2003 from 10.8% for the second quarter of fiscal 2002. SG&A expenses in the cylinder exchange segment increased 48.0% to $3.9 million for the second quarter of fiscal 2003 from $2.7 million for the second quarter of fiscal 2002 due primarily to increased personnel costs associated with managing distributor operations and increased professional fees. SG&A expenses in the products and other segment increased 60.4% to $2.5 million from $1.5 million in the same period in the prior year primarily due to start up and development costs related to the introduction of new products. We currently expect SG&A expenses for the second half of fiscal 2003 to decrease as a percentage of net revenues as compared to the first half.

     Depreciation and amortization. Depreciation and amortization increased to $2.3 million for the second quarter of fiscal 2003 from $2.0 million for the second quarter of fiscal 2002 due primarily to the increase in depreciation expense resulting from an increase in the number of cylinders and displays used in the cylinder exchange segment.

     Interest expense. Interest expense decreased to $1.4 million in the second quarter of fiscal 2003 from $1.5 million in the second quarter of fiscal 2002 due to both lower interest rates and reduced borrowings on our credit facility.

     Loss on investee. Loss on investee was $340,000 in the second quarter of fiscal 2002. This charge represented the loss related to our 49% ownership interest in R4 Tech, which has since increased to 50% as a result of our acquisition of Platinum. The increased ownership interest and financial control resulted in the consolidation of the financial statements of R4 Tech in the second quarter of fiscal 2003.

     Other, net. Other, net decreased to $25,000 in the second quarter of fiscal 2003 from $65,000 in the second quarter of fiscal 2002. Other income consists primarily of interest income from advances made to R4 Tech and independent distributors.

     Preferred dividends. Preferred dividends accrued on our outstanding shares of Series A convertible preferred stock were $641,000 for the three months ended January 31, 2002. All shares of Series A Convertible preferred stock were converted into common stock prior to the second quarter of fiscal 2003.

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Comparison of the six months ended January 31, 2003 with the six months ended January 31, 2002

     Net revenues. Net revenues increased 49.9% to $112.9 million for the six months ended January 31, 2003 from $75.3 million for the six months ended January 31, 2002. Net revenues consisted of $66.8 million from the cylinder exchange segment and $46.1 million from the products and other segment. Cylinder exchange revenues increased 66.7%, with approximately one-third of the increase due to price increases to retailers, enabled by a higher mix of upgrade transactions, and approximately two-thirds of the increase due to an approximately 46% increase in the number of total cylinder transactions to 4.1 million units for the first half of fiscal 2003 from 2.8 million units for the first half of fiscal 2002. Product revenues increased 30.7% due principally to an increase in the number of grills sold as a major customer took delivery earlier in this fiscal year.

     Gross margin. Our overall gross margin decreased to 21.6% for the first six months of fiscal 2003 from 23.4% for the first six months of fiscal 2002. Gross margin percentage decreased 159 basis points in cylinder exchange to 26.8% from 28.3% in the same period of the prior year due primarily to consolidating the operating loss of R4 Tech, increased fuel costs on unhedged volumes and an increase in the number of valves replaced, partially offset by price increases to retailers. The products segment gross margin decreased to 14.2% from 17.7% for the six months ended January 31, 2002 due primarily to a greater percentage of lower-margin products in the mix of products sold.

     Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses increased 52.3% to $14.8 million for the six months ended January 31, 2003 from $9.7 million for the six months ended January 31, 2002 and, as a percentage of net revenues, increased slightly to 13.1% for the first half of fiscal 2003 from 12.9% for the first half of fiscal 2002. SG&A expenses in the cylinder exchange segment increased 50.0% to $8.9 million for the first six months of fiscal 2003 from $5.9 million for the first six months of fiscal 2002 due primarily to increased personnel costs associated with managing distributor operations and increased professional fees. SG&A expenses in the products and other segment increased 55.9% to $5.9 million from $3.8 million in the same period in the prior year due primarily to special charges, consisting primarily of relocation expenses associated with consolidating many products segment employees based in Zion, Illinois with the cylinder exchange employee base in Winston-Salem, North Carolina and start-up and development costs related to the introduction of new products.

     Depreciation and amortization. Depreciation and amortization increased to $4.4 million in the six months ended January 31, 2003 from $3.8 million in the six months ended January 31, 2002 due primarily to the increase in depreciation expense resulting from an increase in the number of cylinders and displays used in the cylinder exchange segment.

     Interest expense. Interest expense decreased to $2.6 million in the six months ended January 31, 2003 from $3.2 million in the six months ended January 31, 2002 due to both lower interest rates and reduced borrowings on our credit facility.

     Loss on investee. Loss on investee decreased to $455,000 in the six months ended January 31, 2003 from $677,000 in the six months ended January 31, 2002. This charge represented the loss related to our 49% ownership interest in R4 Tech, which has since increased to 50% as a result of our acquisition of Platinum. The increased ownership interest and financial control resulted in the consolidation of the financial statements of R4 Tech in the second quarter of fiscal 2003.

     Other, net. Other, net decreased to $96,000 in the six months ended January 31, 2003 from $251,000 in the six months ended January 31, 2002. Other income consists primarily of interest income from advances made to R4 Tech and independent distributors.

     Preferred dividends. Preferred dividends accrued on our outstanding shares of Series A convertible preferred stock decreased to $71,000 for the six months ended January 31, 2003 from $1.1 million for the six months ended January 31, 2002 due to the conversion of the Series A Convertible preferred stock to common stock in March, April, May and September 2002.

Liquidity and Capital Resources

     Our primary sources of funds have been the incurrence of debt, the issuance of stock and cash flow from operations.

     Net cash used in operations was $5.9 million for the six months ended January 31, 2003 and net cash provided by operations was $7.8 million for the six months ended January 31, 2002. The decrease in cash provided by operations for the first half of fiscal 2003 over the first half of fiscal 2002 was primarily due to significant increases in inventory in both the cylinder exchange and the products and other segments partially offset by the increase in net income. The inventory increase in the cylinder exchange segment was primarily to prepare for the anticipated rise in demand associated with the grilling season and the increase in inventory in the products and other segment was primarily associated with the launch of new products. As a result of the acquisitions of Platinum and Ark and

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the consolidation of R4 Tech resulting from the acquisition of Platinum (Note 5 of Notes to Condensed Consolidated Financial Statements), the operations of R4 Tech, Platinum and Ark affected working capital in the second quarter of fiscal 2003 and were reflected in net cash used in operating activities.

     Net cash used in investing activities was $14.3 million for the six months ended January 31, 2003 and $4.9 million for the six months ended January 31, 2002. The primary components of cash used in investing activities for both periods included investments in property, plant and equipment and advances to R4 Tech and, in the case of the six months ended January 31, 2003, acquisitions and advances to independent distributors. During the six months ended January 31, 2003 and January 31, 2002, we provided net advances of $1.1 million and $1.5 million, respectively, to R4 Tech. As a result of the acquisitions of Platinum and Ark and the consolidation of R4 Tech resulting from the acquisition of Platinum (Note 5 of Notes to Condensed Consolidated Financial Statements), advances to R4 Tech, Platinum and Ark in the second quarter of fiscal 2003 were not reflected in net cash used in investing activities.

     Net cash provided by financing activities was $21.1 million for the six months ended January 31, 2003, while cash used in financing activities was $2.4 million for the six months ended January 31, 2002. Cash provided by financing activities for the six months ended January 31, 2003 included $14.9 million in net proceeds from the sale of common stock, net proceeds from our credit facility and net proceeds from exercises of warrants and stock options. Cash used in financing activities for the six months ended January 31, 2002 included net payments on our credit facility and payments on long-term debt and capital lease obligations.

     In November 2002, we completed the syndication of a new and expanded bank credit facility (the “Credit Facility”). The Credit Facility consists of a $45 million revolving line of credit and a $15 million term loan, both for general corporate purposes, inclusive of payments made under letters of credit. The Credit Facility has a maturity date of November 30, 2005 and, as amended, requires us to utilize the approximately $14.9 million in net proceeds from a private placement of common stock completed December 20, 2002 to repay the term loan or our subordinated debt, in such proportion as we elect, by May 26, 2003. Pending that repayment, $5.0 million of the availability under the revolving line of credit has been reserved. Advances under the Credit Facility are collateralized by a lien on substantially all of our assets.

     Advances under the Credit Facility may be made as either base rate (“prime rate”) loans or London Interbank Offered Rate (“LIBOR”) loans at our election. Applicable interest rates are based upon either the LIBOR or prime rate plus an applicable margin dependent upon a total leverage ratio. The applicable LIBOR margins range from 200 to 300 basis points, and the applicable prime rate margins range from 50 to 150 basis points. We incurred fees of approximately $1.0 million in connection with the Credit Facility. The fees will be amortized over the life of the agreement through November 30, 2005. We incurred a charge of $96,000 in November 2002 resulting from unamortized fees related to our prior credit facility. On January 31, 2003 we had $31.3 million (including a $14 million balance on the term loan) in LIBOR loans outstanding at a weighted-average interest rate of 3.86% and $1.6 million in prime rate loans outstanding at a weighted-average interest rate of 5.25%.

     Principal payments on the outstanding term loan began on December 31, 2002 and continue quarterly until September 30, 2005. The initial principal payments are $1 million per calendar quarter beginning December 31, 2002, will increase to $1.25 million per calendar quarter beginning December 31, 2003 and will further increase to $1.5 million per calendar quarter beginning December 31, 2004. The Credit Facility includes a .50% commitment fee on the average daily unused amount for each fiscal quarter. The Credit Facility requires us to meet certain covenants, including minimum net worth and cash flow requirements, restricts the payment of cash dividends and permits early extinguishment of up to $15 million in our subordinated debt. At January 31, 2003, we were in compliance with all covenants.

     The Credit Facility stipulates that, by May 31, 2003, we must enter into swap agreements with respect to interest rate exposure under the Credit Facility with durations covering the remaining term of the Credit Facility and with an aggregate notional principal amount equal to at least two-thirds of the outstanding principal amount of the term loan. We are currently party to an interest rate swap agreement with a notional amount of $10 million. Under the existing swap agreement, which expires in July 2003, we pay a fixed rate of 7.36% and receive a rate equivalent to the thirty-day LIBOR, adjusted quarterly.

     On June 15, 2001, we completed a $15 million private placement of subordinated debt to an institutional investor. The agreement requires us to meet certain cash flow and other covenants and contains restrictions on capital expenditures and the payment of cash dividends. At January 31, 2003, we were in compliance with all covenants. The debenture bears interest at the annual rate of 13%, payable quarterly. The principal balance matures on August 31, 2006. In conjunction with the subordinated debt, we issued a warrant to the investor to purchase 1,372,071 shares of common stock, with an exercise price of $3.8685 per share (subject to adjustment for organic changes in our common stock and for certain future issuances below the then-existing exercise price). The warrant was converted by the investor into 1,070,179 shares of common stock effective January 6, 2003.

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     In November 2002, we acquired Platinum and Ark and their respective subsidiaries, representing ten of our distributors. Collectively, the territories served by the acquired distributors have historically represented approximately 45% of our cylinder exchange revenues. The aggregate purchase price for the two acquisitions was approximately $32 million. The consideration paid by Blue Rhino in the acquisitions consisted of approximately 1.1 million restricted shares of common stock valued, based on the closing price of our common stock on the Nasdaq National Market on November 22, 2002, at approximately $19 million, $3.1 million in assumed debt satisfied at closing, $4.9 million in advances, and $5.0 million in liabilities assumed. On a preliminary basis, approximately $28.2 million of the purchase price was allocated to goodwill, $2.8 million was allocated to current assets and $1.2 million was allocated to equipment, vehicles and other assets.

     On December 20, 2002, we completed a private placement of 1.0 million shares of our common stock at a purchase price of $15.79 per share to two institutional investors for gross proceeds of $15.8 million. We have initially utilized the proceeds to pay down the revolving line of credit under the Credit Facility and currently intend to use the resulting increased availability under the revolving line to repay $5 million in subordinated debt in our third fiscal quarter and the remaining portion of the subordinated debt before the end of fiscal 2003. In conjunction with the private placement, we issued Additional Investment Rights to the investors exercisable for, collectively, up to an additional 330,000 shares of our common stock at an exercise price of $15.79 per share. Each Additional Investment Right is exercisable by the holder for a period that began on the effective date of the related registration statement filed by us with the Securities and Exchange Commission with respect to the resale of the shares and ending initially 90 trading days thereafter and now reset to October 1, 2003.

     In March 2003, pursuant to a negotiated settlement agreement, we dismissed our lawsuit against PricewaterhouseCoopers alleging violations of professional standards and failure to comply with contractual obligations during its engagement as our auditor. The net proceeds to us in the settlement to be recognized in our fiscal third quarter, after attorneys’ fees and other third quarter litigation expenses, are approximately $2.5 million. In accordance with the terms of the Credit Facility, approximately $1.0 million of the net proceeds will be applied against the term loan as a reduction. The specific terms of the settlement are confidential.

     We currently have capital commitments outstanding of approximately $2.5 million relating to machinery and equipment associated with new cylinder refilling and refurbishing facilities in Los Angeles, Chicago and Denver. These commitments must be satisfied by the end of calendar year 2003. We currently anticipate that our total capital expenditures for fiscal 2003, excluding acquisitions, will be approximately $21.0 million, and will relate primarily to cylinders, cylinder displays, computer technology and distribution infrastructure. Our capital expenditure and working capital requirements in the foreseeable future will change depending on many factors including, but not limited to, the rate of our expansion, our operating results and any other adjustments in our operating plan made in response to competition, acquisition opportunities or unexpected events. We believe that our existing borrowing capacity under the Credit Facility, together with cash provided by operations, will be sufficient to meet our capital expenditure and working capital requirements, including the repayment required by our Credit Facility, through fiscal 2003. Moreover, if we experience an unexpected change in demand for our cylinder exchange service or our products, we may need additional funds to meet our capital requirements and, in that event, we may seek additional debt or equity financing. We cannot be sure that any additional equity or debt financing will be available on favorable terms or on terms that are not dilutive to our stockholders.

Related Party Transactions

     Blue Rhino Corporation, QuickShip, Inc. and Uniflame, LLC lease their respective facilities from Rhino Real Estate, LLC, a company affiliated with Billy D. Prim, our Chairman and Chief Executive Officer, and Andrew J. Filipowski, our Vice Chairman. The leases expire on December 31, 2003, April 30, 2003 and October 31, 2007, respectively. Blue Rhino’s rent expense for the three and six months ended January 31, 2003 was $83,000 and $163,000, respectively, and QuickShip’s rent expense for the three and six months ended January 31, 2003 was $4,000 and $11,000, respectively. Blue Rhino’s rent expense for the three and six months ended January 31, 2002 was $55,000 and $108,000, respectively, and QuickShip’s rent expense for the three and six months ended January 31, 2002 was $5,000 and $10,000, respectively. Uniflame’s lease became effective November 1, 2002 and its rent expense for the three months ended January 31, 2003 was $24,000. Management has received an independent third-party determination to the effect that the Blue Rhino and Uniflame leases are fair and within typical market conditions and believes that the terms of all of these leases are comparable to those that could have been obtained from unrelated third parties.

     Uniflame Corporation leases its facility from H & M Enterprises, LLC, a company affiliated with Mac McQuilkin, the president of Uniflame. The lease terminates on March 31, 2005. Uniflame’s rent expense for three and six months ended January 31, 2003 was $79,000 and $157,000, respectively. Uniflame’s rent expense for three and six months ended January 31, 2002 was $82,000 and

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$159,000, respectively. Management believes that the terms of these leases are comparable to those that could have been obtained from unrelated third parties.

     Platinum leased an office facility and storage tank in Booneville, NC through the expiration date of January 31, 2003 from Billy D. Prim, our Chairman and Chief Executive Officer. Platinum’s lease expense was $6,000 for the three months ended January 31, 2003. Management has received an independent third-party determination to the effect that this lease is fair and within typical market conditions and believes that the terms of the lease are comparable to those that could have been obtained from an unrelated third party.

     During the three and six months ended January 31, 2003, Blue Rhino paid fees for software development and Internet hosting services provided by divine, inc. in the amount of $99,000 and $236,000, respectively. Blue Rhino did not pay fees to divine, inc. in the first six months of fiscal 2002. Andrew J. Filipowski is the Chairman of divine, inc. and our Vice Chairman. Management believes that the terms of these services were comparable to those that could have been obtained from an unrelated third party.

Seasonality

     We have experienced and currently expect to continue to experience seasonal fluctuations in our revenues and operating income. Our revenues and operating income have been highest in the spring and summer, which includes the majority of the grilling season, and lowest in the fall and winter. Our cylinder exchange segment, which generally enjoys higher margins than our products and other segment, experiences higher revenues and operating income in the spring and summer. Conversely, our products and other segment experiences higher revenues and operating income in the fall and winter. Sustained periods of poor weather, particularly in the spring and summer, can negatively impact our revenues. Accordingly, our results of operations in any quarter will not necessarily be indicative of the results that we may achieve for a full fiscal year or any future quarter.

Inflation

     We do not believe that inflation has had a material adverse effect on our revenues, cost of sales or our results of operations. There can be no assurance that our business will not be materially adversely affected by inflation in the future.

Price of Propane

     During the fiscal year ended July 31, 2001, there were dramatic increases in fuel costs and propane reached unusually high levels. During the fourth quarter of fiscal 2001 and continuing through the first quarter of fiscal 2002, propane prices returned to a range more consistent with historical levels but, during the winter months of fiscal 2003, again reached unusually high levels. On March 1, 2001, we initiated a propane price hedging strategy that reduced, and we currently believe will continue to reduce, our gross margin risk resulting from fluctuations in the price of propane. Our strategy is designed to reduce exposure to the fuel cost component of a significant portion of our expected total cylinder exchange volume, approximately 65% for calendar year 2003. If propane costs rise, our gross margins and results of operations would be negatively affected due to additional costs on unhedged volumes (both within and, if applicable, in excess of our expected volumes) that we may not be able to recover fully through an increase in our price to retailers.

Off-Balance Sheet Arrangements

     We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.

Impact of New Accounting Pronouncements

     In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 143, Accounting for Asset Retirement Obligations. The Statement requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. As required by SFAS No. 143, we have adopted this new accounting standard for fiscal year 2003. The adoption of SFAS No. 143 did not have a material impact on our consolidated results of operations or financial position.

     In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This Statement establishes a single accounting model for the impairment or disposal of long-lived assets. As required by SFAS No. 144, we have adopted this new accounting standard for fiscal year 2003. The adoption of SFAS No. 144 did not have a material impact on our consolidated results of operations or financial position.

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     In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This statement eliminates an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions and establishes that gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria for treatment as extraordinary. We have adopted this standard for fiscal year 2003. The adoption of SFAS No. 145 did not have a material impact on our consolidated results of operations or financial position.

     In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. SFAS No. 146 also establishes that fair value is the objective for initial measurement of the liability. We have adopted this standard for fiscal year 2003. The adoption of SFAS No. 146 did not have a material impact on our consolidated results of operations or financial position.

     In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial Institutions-An Amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9. SFAS No. 147 is an industry specific standard and is not applicable to us; therefore, it will not have an impact on our consolidated results of operations or financial position.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to SFAS No. 123’s fair value method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure provisions in SFAS No. 123 and Accounting Principles Board Opinion No. 28, Interim Financial Reporting, to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. We will adopt the interim financial reporting for interim periods beginning after December 15, 2002. We do not currently believe that adoption of SFAS No. 148 will have a significant impact on our consolidated results of operations or financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to market risk related to changes in interest rates on borrowings under our Credit Facility, which are based upon either the LIBOR or prime rate plus an applicable margin dependent upon a total leverage ratio. To quantify our exposure to interest rate risk, a 100 basis point increase in interest rates would have increased interest expense for the six months ended January 31, 2003 and 2002 by approximately $101,000 and $141,000, respectively. Actual changes in interest expense may differ materially from those based on hypothetical assumptions used in computing this exposure.

     We use derivative financial instruments to manage exposure to fluctuations in interest rates on our Credit Facility (Note 2 of Notes to Condensed Consolidated Financial Statements). These derivative financial instruments, which are generally swap agreements, are not entered into for trading purposes. A swap agreement is a contract to exchange a floating rate for a fixed rate without the exchange of the underlying notional amount. In fiscal 2000, we entered into an interest rate swap agreement with a notional amount of $10 million as a hedge of our variable interest rate debt represented by the Credit Facility. Under the swap agreement, which expires in July 2003, we pay a fixed rate of 7.36% and receive a rate equivalent to the thirty-day LIBOR, adjusted quarterly. At January 31, 2003, we had $31,250,000 in LIBOR-based loans outstanding at a weighted-average interest rate of 3.86% and the interest rate swap was an effective cash flow hedge.

     We are exposed to commodity price risk related to changes in the price of propane. If propane prices rise, our gross margins and results of operations would be negatively affected due to additional costs that may not be fully recovered through an increase in our price to retailers. Assuming that propane prices are not hedged and any increase cannot be recovered through an increase in our price, a $.01 increase in the price per gallon of propane would reduce the gross margin in our cylinder exchange segment by approximately .3% or 30 basis points. Actual changes in cylinder exchange margins may differ materially from that based on the hypothetical assumptions used in computing this exposure. We have entered into a series of monthly option contracts that are designed to reduce exposure to the propane cost component of a significant portion of our total projected cylinder exchange volume (Note 2 of Notes to Condensed Consolidated Financial Statements). These monthly option contracts are not entered into for trading purposes.

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     We invest our cash and cash equivalents in investment grade, highly liquid investments consisting of money market instruments, bank certificates of deposit and overnight investments in commercial paper. All of our transactions are conducted and accounts are denominated in U.S. dollars, and, as such, we do not currently have exposure to foreign currency risk.

Item 4. Controls and Procedures

     Within 90 days prior to the date of this report, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in accordance with Rule 13a-14 under the Exchange Act. The Chief Executive Officer and the Chief Financial Officer concluded that, as of the date of evaluation, our disclosure controls and procedures were effective to enable us to record, process, summarize and report in a timely manner the information that we are required to disclose in our Exchange Act reports.

     There have been no significant changes in our internal controls or in other factors that could significantly affect these internal controls subsequent to their most recent evaluation.

PART II — OTHER INFORMATION

     Item 2. Changes in Securities and Use of Proceeds

     On November 20, 2002, we completed the syndication of a new and expanded $60 million secured loan facility for general corporate purposes. The new facility restricts our ability to pay cash dividends on our common stock.

     Effective November 22, 2002, we issued an aggregate of 1,104,196 shares of our common stock to the members of Platinum Propane, L.L.C. (“Platinum”) and Ark Holding Company LLC (“Ark”) in connection with our acquisitions of Platinum and Ark by reverse merger. We issued the shares in reliance on Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder based on representations received from the members of Platinum and Ark with regard to their status as accredited investors and the nature of the arms’-length, negotiated transactions not involving general solicitation or advertising.

     Effective December 5, 2002, we issued 6,460 shares of our common stock upon the conversion of a warrant to purchase 11,864 shares of our common stock at an exercise price of $8.48 per share by a single warrant holder that we believe to be an accredited investor. We issued the shares in reliance on Section 3(a)(9) of the Securities Act as securities exchanged with an existing security holder exclusively where no commission or other remuneration is paid or given, directly or indirectly, for soliciting such exchange.

     In addition, effective December 5, 2002, we issued 6,460 shares of our common stock upon the conversion of a warrant to purchase 11,864 shares of our common stock at an exercise price of $8.48 per share by a single warrant holder that we believe to be an accredited investor. We issued the shares in reliance on Section 3(a)(9) of the Securities Act as securities exchanged with an existing security holder exclusively where no commission or other remuneration is paid or given, directly or indirectly, for soliciting such exchange.

     Effective December 20, 2002, we issued 1,000,000 shares of our common stock at a purchase price of $15.79 per share, and Additional Investment Rights to purchase an aggregate of 330,000 additional shares of our common stock at an exercise price of $15.79 per share, to two institutional investors. We issued the shares and the Additional Investment Rights in reliance on Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder based on representations received from the purchasers with regard to their status as accredited investors and the nature of the arms’-length, negotiated transaction not involving general solicitation or advertising. We have filed a registration statement on Form S-3 covering the resale by such purchasers of such shares of common stock, including the shares of common stock underlying the Additional Investment Rights, and such registration statement has been declared effective by the Securities and Exchange Commission.

     Effective January 6, 2003, we issued 1,070,179 shares of our common stock upon the conversion of a warrant to purchase 1,372,071 shares of our common stock at an exercise price of $3.8685 per share by a single warrant holder that we believe to be an accredited investor. We issued the shares in reliance on Section 3(a)(9) of the Securities Act as securities exchanged with an existing security holder exclusively where no commission or other remuneration is paid or given, directly or indirectly, for soliciting such exchange.

17

Item 4. Submission of Matters to a Vote of Security Holders:

     On December 17, 2002, we held our 2002 annual meeting of stockholders in Bermuda Run, North Carolina. The following three proposals were submitted to a vote of the stockholders:

1.	The election of Richard A. Brenner, Robert J. Lunn and John H. Muehlstein to serve three-year terms on our board of directors;
2.	The amendment to our 1998 Stock Incentive Plan to increase the number of shares of common stock reserved for distribution thereunder from 3,200,000 to 4,700,000.
3.	The ratification of the appointment of Ernst & Young LLP as the Company’s independent accountants for the fiscal year ending July 31, 2003.

All of these proposals were approved.

     The results of the stockholder voting were as follows:

						Total
		For		Withheld		Votes
1.	Election of Directors
	Richard A. Brenner		12,800,498		301,430		13,101,928
	Robert J. Lunn		12,787,023		314,905		13,101,928
	John H. Muehlstein		12,642,942		458,986		13,101,928

								Broker
		For		Against		Abstain		Non-votes		Total
2.	Amendment to the 1998 Stock Incentive Plan		7,045,939		2,382,950		139,063		3,533,976		13,101,928
3.	Ratification of Appointment of Accountants		12,814,786		280,870		6,272		0		13,101,928

Item 5. Other Information

     In March 2003, pursuant to a negotiated settlement agreement, we dismissed our lawsuit against PricewaterhouseCoopers alleging violations of professional standards and failure to comply with contractual obligations during its engagement as our auditor. The net proceeds to us in the settlement to be recognized in our fiscal third quarter, after attorneys’ fees and other third quarter litigation expenses, are approximately $2.5 million. The specific terms of the settlement are confidential.

Item 6. Exhibits And Reports On Form 8-K

     (a)  Exhibits:

2.1	Merger Agreement among the Company, Platinum Acquisition, LLC and Platinum Propane, L.L.C., incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed November 27, 2002.
2.2	Merger Agreement among the Company, Ark Acquisition, LLC and Ark Holding Company LLC, incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed November 27, 2002.
4.1	Revolving Credit Note of the Company dated November 20, 2002 in favor of Bank of America, N.A. in the amount of $11,250,000.

18

4.2	Revolving Credit Note of the Company dated November 20, 2002 in favor of SunTrust Bank in the amount of $7,500,000.
4.3	Revolving Credit Note of the Company dated November 20, 2002 in favor of RBC Centura Bank in the amount of $7,500,000.
4.4	Revolving Credit Note of the Company dated November 20, 2002 in favor of Wachovia Bank, National Association in the amount of $11,250,000.
4.5	Revolving Credit Note of the Company dated November 20, 2002 in favor of LaSalle Bank National Association in the amount of $7,500,000.
4.6	Term Note of the Company dated November 20, 2002 in favor of Bank of America, N.A. in the amount of $3,750,000.
4.7	Term Note of the Company dated November 20, 2002 in favor of SunTrust Bank in the amount of $2,500,000.
4.8	Term Note of the Company dated November 20, 2002 in favor of RBC Centura Bank in the amount of $2,500,000.
4.9	Term Note of the Company dated November 20, 2002 in favor of Wachovia Bank, National Association in the amount of $3,750,000.
4.10	Term Note of the Company dated November 20, 2002 in favor of LaSalle Bank National Association in the amount of $2,500,000.
4.11	Amended and Restated Senior Subordinated Debenture dated November 20, 2002 of the Company in the amount of $15,000,000 payable to Allied Capital Corporation.
10.1(a)	Credit Agreement dated as of November 20, 2002 among the Company, as the Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wachovia Bank, National Association, as Syndication Agent and the Other Lenders Party Thereto.
10.1(b)	First Amendment to Credit Agreement dated as of February 25, 2003 among the Company, as the Borrower, the Lenders referred to in the Credit Agreement dated as of November 20, 2002 and Bank of America, N.A., as Administrative Agent for the Lenders.
10.2	Guaranty Agreement dated November 20, 2002, by and among certain Subsidiaries of the Company as Guarantors, in favor of Bank of America, N.A., as Administrative Agent.
10.3	Collateral Agreement dated November 20, 2002, by and among the Company and certain of its Subsidiaries as Grantors in favor of Bank of America, N.A., as Administrative Agent.
10.4	Patent Security Agreement dated November 20, 2002 by the Company, CPD Associates, Inc. and Uniflame Corporation in favor of Bank of America, N.A., as Administrative Agent.
10.5	Trademark Security Agreement dated November 20, 2002 by the Company, CPD Associates, Inc. and Uniflame Corporation in favor of Bank of America, N.A., as Administrative Agent.
10.6	First Amendment to Investment Agreement dated November 20, 2002 by and among the Company, USA Leasing, L.L.C., Rhino Services, L.L.C., CPD Associates, Inc., QuickShip, Inc., Uniflame Corporation, Blue Rhino Consumer Products, LLC, Uniflame, LLC and Allied Capital Corporation.

19

10.7	Securities Purchase Agreement dated as of December 20, 2002 among the Company and the purchasers identified on the signature pages thereto.
10.8	Form of Additional Investment Right dated December 20, 2002 and issued to the purchasers identified on the signature pages to the Securities Purchase Agreement dated as of December 20, 2002.
10.9	Letter Agreement among the Company and the purchasers identified on the signature pages to the Securities Purchase Agreement dated as of December 20, 2002.
10.10	Blue Rhino Corporation Amended and Restated Stock Option Plan for Non-Employee Directors, as amended and restated through February 21, 2003.
99.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
99.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

(b)  Reports on Form 8-K filed in the quarter ended January 31, 2003:

Form	Item	Date Filed	Reporting Purpose
8-K	Item 5	11/21/02	To report the completion of the syndication of a new and expanded $60 million secured loan facility.
8-K	Item 2	11/27/02	To report the acquisition of Platinum Propane, L.L.C. and Ark Holding Company LLC and their respective subsidiaries.
8-K	Item 5	12/23/02	To report the completion of the private placement of 1,000,000 shares of our common stock and Additional Investment Rights to purchase up to an additional 330,000 shares of our common stock at a purchase price of $15.79 per share to two institutional investors for gross proceeds of $15,790,000.

20

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Blue Rhino Corporation
Date:	March 17, 2003	By:	/s/ Billy D. Prim
			Chairman and Chief Executive Officer
Date:	March 17, 2003	By:	/s/ Mark Castaneda
			Chief Financial Officer

21

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Billy D. Prim, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Blue Rhino Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 17, 2003

/s/ Billy D. Prim

Billy D. Prim
Chairman and Chief Executive Officer

22

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Mark Castaneda, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Blue Rhino Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; and

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 17, 2003

/s/ Mark Castaneda

Mark Castaneda
Chief Financial Officer

23 EX-4.1 3 g81245exv4w1.txt EX-4.1 REVOLVING CREDIT NOTE/BANK OF AMERICA EXHIBIT 4.1 REVOLVING CREDIT NOTE $11,250,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to BANK OF AMERICA, N.A. or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Credit Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. Except as otherwise provided in Section 2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Revolving Credit Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: Mark Castaneda --------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer 2 REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

3 EX-4.2 4 g81245exv4w2.txt EX-4.2 REVOLVING CREDIT NOTE/SUNTRUST EXHIBIT 4.2 REVOLVING CREDIT NOTE $7,500,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to SUNTRUST BANK or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Credit Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement.. Except as otherwise provided in Section 2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Revolving Credit Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/ Mark Castaneda -------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer 2 REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

3 EX-4.3 5 g81245exv4w3.txt EX-4.3 REVOLVING CREDIT NOTE/RBC CENTURA EXHIBIT 4.3 REVOLVING CREDIT NOTE $7,500,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to RBC CENTURA BANK or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Credit Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Revolving Credit Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/ Mark Castaneda -------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer 2 REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

3 EX-4.4 6 g81245exv4w4.txt EX-4.4 REVOLVING CREDIT NOTE/WACHOVIA BANK EXHIBIT 4.4 REVOLVING CREDIT NOTE $11,250,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to WACHOVIA BANK, NATIONAL ASSOCIATION or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Credit Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. Except as otherwise provided in Section 2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Revolving Credit Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/ Mark Castaneda -------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer 2 REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

3 EX-4.5 7 g81245exv4w5.txt EX-4.5 REVOLVING CREDIT NOTE/LASALLE BANK EXHIBIT 4.5 REVOLVING CREDIT NOTE $7,500,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to LASALLE BANK NATIONAL ASSOCIATION or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Credit Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. Except as otherwise provided in Section 2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Revolving Credit Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/Mark Castaneda -------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer 2 REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

3 EX-4.6 8 g81245exv4w6.txt EX-4.6 TERM NOTE/BANK OF AMERICA EXHIBIT 4.6 TERM NOTE $3,750,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to BANK OF AMERICA, N.A. or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Term Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Term Loan from the date of such Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Term Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Term Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/ Mark Castaneda -------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer TERM LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

EX-4.7 9 g81245exv4w7.txt EX-4.7 TERM NOTE/SUNTRUST EXHIBIT 4.7 TERM NOTE $2,500,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to SUNTRUST BANK or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Term Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Term Loan from the date of such Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Term Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Term Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/ Mark Castaneda --------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer TERM LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

EX-4.8 10 g81245exv4w8.txt EX-4.8 TERM NOTE/RBC CENTURA EXHIBIT 4.8 TERM NOTE $2,500,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to RBC CENTURA BANK or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Term Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Term Loan from the date of such Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Term Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Term Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/Mark Castaneda -------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer TERM LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

EX-4.9 11 g81245exv4w9.txt EX-4.9 TERM NOTE/WACHOVIA BANK EXHIBIT 4.9 TERM NOTE $3,750,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to WACHOVIA BANK, NATIONAL ASSOCIATION or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Term Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Term Loan from the date of such Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Term Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Term Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/ Mark Castaneda -------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer TERM LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

EX-4.10 12 g81245exv4w10.txt EX-4.10 TERM NOTE/LASALLE BANK EXHIBIT 4.10 TERM NOTE $2,500,000.00 November 20, 2002 FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to LASALLE BANK NATIONAL ASSOCIATION or registered assigns (the "Lender"), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Term Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender. The Borrower promises to pay interest on the unpaid principal amount of each Term Loan from the date of such Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Term Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender -in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Term Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. BLUE RHINO CORPORATION By: /s/ Mark Castaneda --------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer TERM LOANS AND PAYMENTS WITH RESPECT THERETO

AMOUNT OF PRINCIPAL OR OUTSTANDING END OF INTEREST PRINCIPAL TYPE OF AMOUNT OF INTEREST PAID THIS BALANCE NOTATION DATE LOAN MADE LOAN MADE PERIOD DATE THIS DATE MADE BY - ------------------------------------------------------------------------------------------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- -------- ---- ------- ------- ------ --------- ---------- --------

EX-4.11 13 g81245exv4w11.txt EX-4.11 AMENDED AND RESTATED SENIOR DEBENTURE EXHIBIT 4.11 THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE SECURITIES LAWS. THIS DEBENTURE MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OF THE DEBENTURE UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE ISSUER HEREOF IS SATISFIED THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER. THIS DEBENTURE IS SUBJECT TO THE TERMS OF SUBORDINATION SET FORTH IN SECTION 4 HEREOF. AMENDED AND RESTATED SENIOR SUBORDINATED DEBENTURE THIS AMENDED AND RESTATED SENIOR SUBORDINATED DEBENTURE (the "AMENDED AND RESTATED DEBENTURE") is made as of this 20th day of November, 2002 by and among: (i) BLUE RHINO CORPORATION, a Delaware corporation (the "COMPANY"), (ii) USA LEASING, L.L.C., a Delaware limited liability company, RHINO SERVICES, L.L.C., a Delaware limited liability company, CPD ASSOCIATES, INC., a North Carolina corporation, QUICKSHIP, INC., a Delaware corporation, UNIFLAME CORPORATION, a Delaware corporation, BLUE RHINO CONSUMER PRODUCTS, LLC, a Delaware limited liability company and UNIFLAME, LLC, a Delaware limited liability company (collectively with the Company, the "BORROWERS"), (iii) ALLIED CAPITAL CORPORATION, a Maryland corporation (the "HOLDER"). RECITALS A. Pursuant to an Investment Agreement dated as of June 15, 2001 (the "EXISTING INVESTMENT AGREEMENT") by and among the Borrowers and the Holder, the Holder purchased senior subordinated debentures (the "ORIGINAL DEBENTURES") in the aggregate principal amount of $15,000,000. B. The Existing Investment Agreement is being amended as of November 20, 2002 by the First Amendment to Investment Agreement (the "FIRST AMENDMENT") (the Existing Investment Agreement, as amended by the First Amendment and as may be further amended from time to time, is herein referred to as the "INVESTMENT AGREEMENT"). C. In connection with the First Amendment, the Borrowers and the Holder have agreed to amend certain terms and conditions of the Investment Agreement and to amend and restate the Original Debentures. Now, therefore, in consideration of the foregoing and other good and valuable consideration, the parties agree that the Original Debenture shall be amended, restated, and consolidated in its entirety by this Amended and Restated Debenture. AMENDED AND RESTATED SENIOR SUBORDINATED DEBENTURE $15,000,000 June 15, 2001 FOR VALUE RECEIVED, the undersigned, (i) BLUE RHINO CORPORATION a Delaware corporation (the "COMPANY"), (ii) USA LEASING, L.L.C., a Delaware limited liability company, RHINO SERVICES, L.L.C., a Delaware limited liability company, CPD ASSOCIATES, INC., a North Carolina corporation, QUICKSHIP, INC., a Delaware corporation, UNIFLAME CORPORATION, a Delaware corporation, BLUE RHINO CONSUMER PRODUCTS, LLC, a Delaware limited liability company and UNIFLAME, LLC, a Delaware limited liability company (collectively with the Company, the "BORROWERS") jointly and severally promise to pay to the order of ALLIED CAPITAL CORPORATION, a Maryland corporation (the "HOLDER"), the principal sum of FIFTEEN MILLION DOLLARS ($15,000,000), together with interest thereon as set forth below, at its offices or such other place as the Holder may designate in writing. 1. Investment Agreement. This Amended and Restated Senior Subordinated Debenture (the "DEBENTURE") amends and restates the Senior Subordinated Debenture executed and delivered by the Borrowers at the Closing in connection with an investment (the "INVESTMENT") made by the Holder in the Borrowers, pursuant to the terms and conditions of an Investment Agreement by and among the Borrowers and the Holder, dated of even date herewith (, as amended the "INVESTMENT AGREEMENT"). This Debenture is subject to the terms and conditions of the Investment Agreement. A copy of the Investment Agreement may be examined during normal business hours at the offices of the Company. Any capitalized term used herein and not otherwise defined herein shall have the meaning assigned to it in the Investment Agreement. 2. Interest Rate Provisions. 2.1 Interest. Except as provided in Section 4.2.2 hereof, from the date hereof and thereafter until the repayment of this Debenture in full, interest shall accrue on the principal balance of this Debenture outstanding from time to time at the fixed rate of 13% per annum. 2.2 Default Interest Rate. If (i) the Borrowers shall default in the payment when due of the principal of or interest on this Debenture or any other amount becoming due hereunder, by acceleration or otherwise, or under any other Loan Document to which any Borrower is a party or (ii) any other Default or Event of Default exists under Section .12 of the Investment Agreement, in each case whether or not such default is declared, the interest rate on this Debenture shall each increase to 17% per annum. 2.3 Calculation of Interest. Interest shall be calculated on the basis of a 360-day year assuming 12 equal 30 day months and shall be computed for each payment period on the principal balance for the actual number of days outstanding. 2 3. Payment Provisions. The following payment provisions are subject to Section hereof. 3.1 Interest Payments. Commencing on August 1, 2001, and continuing on each succeeding November 1, February 1, May 1 and August 1 thereafter, up to and including the Maturity Date (each such date, a "PAYMENT DATE"), the Borrowers shall pay in cash to the Holder quarterly installments of interest only (in arrears) on the then outstanding principal balance under this Debenture. 3.2 Principal Payments and Payment at Maturity. On the Maturity Date, the entire then outstanding principal balance of this Debenture, together with all accrued but unpaid interest, and all other sums owed hereunder shall be due and payable in full in cash without further notice or demand. 3.3 Prepayments; Application of Payments. (a) The Borrowers may prepay the then outstanding principal amount of this Debenture in whole or in part at any time, so long as if such prepayment occurs prior to the date of the third anniversary hereof, the Borrowers pay to the Holder a prepayment premium (the "PREPAYMENT PREMIUM") as defined in and calculated in accordance with Section 2.6 of the Investment Agreement along with such prepayment. The Prepayment Premium shall be due whether this Debenture is due upon voluntary or mandatory prepayment of this Debenture in whole or in party. No Prepayment Premium shall be due or payable with respect to any prepayment that occurs after June 15, 2004. (b) Each prepayment with respect to this Debenture shall be made in increments of $500,000 and shall be applied in the following order of priority: (i) first, to any Prepayment Premium due pursuant to Section 2.6 of the Investment Agreement; (ii) second, to accrued, but unpaid, interest at the applicable rate; and (iii) finally, to the then outstanding principal balance of the Debenture. 3.4 Mandatory Prepayment of the Debenture. (a) Election Requiring Borrowers to Prepay Debenture. Upon a Change of Control, the Holder shall have the right (but not the obligation) to require the Borrowers to (a) prepay this Debenture for an amount equal to the then outstanding principal balance, all accrued but unpaid interest thereon and all Prepayment Premiums and (b) pay all of the other Obligations in full (the "MANDATORY PREPAYMENT PRICE"), which amount shall be calculated on the date of the prepayment and be payable in cash on such date. (b) Procedure for Mandatory Prepayment. At least 30 days but no more than 60 days prior to a Change of Control, the Company shall provide written notice ("Notice of Transfer") to the Holder setting forth the event constituting the Change of Control and the date of such event. Upon receipt of the Notice of Transfer, the Holder shall have 30 days during which it may elect to require the Borrowers to prepay this Debenture. If the Holder elects to require the Borrowers to prepay this Debenture, it shall provide written notice ("Notice of 3 Prepayment") to the Borrowers of its election to do so within the 30-day period after its receipt of the Notice of Transfer. The Borrowers shall pay the Mandatory Prepayment Price on the date of the Change of Control. 4. Subordination. The indebtedness represented by this Debenture is subordinate to the Senior Debt of the Borrowers in accordance with the terms hereof. 4.1 Definitions. Capitalized terms used but not otherwise defined herein shall have the following meanings: Collection Action shall mean, with respect to the Junior Debt (a) to sue for, take or receive from or on behalf of any Borrower or any guarantor of the Junior Debt, by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by any Borrower or any such guarantor with respect to the Junior Debt, (b) to initiate or participate with others in any suit, action or Proceeding against any Borrower or any such guarantor (including any right to sue the Borrower or to file or participate in the filing of any involuntary bankruptcy petition against such Borrower) to (i) enforce payment of or to collect the whole or any part of the Junior Debt or (ii) commence judicial enforcement of any of the rights and remedies under the Junior Debt Documents or applicable law with respect to the Junior Debt, (c) to exercise any put option or to cause any Borrower or any such guarantor to honor any redemption or mandatory prepayment obligation with respect to the Junior Debt or the Warrants or any capital stock of the Company obtained upon exercise of the Warrants or (d) to take any action to realize upon any collateral securing the Junior Debt (if any) or to exercise any other right or remedy with respect to such collateral. Junior Debt shall mean all of the obligations of the Borrowers to Holder evidenced by this Debenture and all other amounts now or hereafter owed by the Borrowers to Holder under any of the Junior Debt Documents. Junior Debt Documents shall mean this Debenture, the Investment Agreement, Warrants and any guaranty with respect to the Junior Debt and all other documents, agreements and instruments executed and delivered in connection therewith. Junior Default shall mean a default in the payment of the Junior Debt or in the performance of any term, covenant or condition contained in the Junior Debt Documents or any other occurrence permitting Holder to accelerate the payment of all or any portion of the Junior Debt. Junior Default Notice shall mean a written notice from Holder or the Company to holders of Senior Debt pursuant to which such holders are notified of the occurrence of a Junior Default, which notice incorporates a reasonably detailed description of such Junior Default. Reorganization Subordinated Securities shall mean any notes, other del securities, or equity securities issued in a Proceeding in substitution of all or any portion of the 4 Junior Debt, in each case that are subordinated in right of payment, performance or otherwise to the Senior Debt (or any notes or other securities issued in substitution c all or any portion of the Senior Debt) to at least the same extent that the Junior Debt is subordinated to the Senior Debt pursuant to the terms hereof. Proceeding shall mean any voluntary or involuntary insolvency, bankruptcy receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a person or entity. Senior Acceleration shall mean acceleration of the indebtedness due under the Senior Debt Documents. Senior Credit Facility means that certain Credit Agreement, by and among the Company, Bank of America, N.A., as Administrative Agent Swing Line Lender and Letter of Credit Issuer, and the other lenders party thereto, dated as of November 20, 2002, as the same may be amended, supplemented or otherwise modified from time to time and any agreement or agreements renewing, replacing, restating or refinancing all or any of the debt or commitments thereunder or any notes or agreements otherwise evidencing any Senior Debt, but only in each case to the extent the Indebtedness thereunder continues to constitute Senior Debt as provided in the definition thereof. Senior Covenant Default shall mean any default or event of default with respect to the financial covenants or the negative covenants in the Senior Credit Facility, which default or event of default entitles the holders of Senior Debt to accelerate the maturity of the Senior Debt. Senior Debt means all of the following: (a) the aggregate principal indebtedness advanced from time to time under the Senior Credit Facility up to a maximum aggregate principal amount that shall not exceed $60,000,000 (as reduced by all payments and prepayments of principal outstanding under term loans made under such Senior Credit Facility and by the permanent reduction of the revolving credit facilities established under such Senior Credit Facility, (b) all interest accrued and accruing on the aggregate principal outstanding under the Senior Credit Facility from time to time (including, without limitation, any interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Credit Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding); (c) all other reasonable fees or monetary obligations owed under the Senior Credit Facility; and (d) all reasonable costs incurred by the Senior Lenders under the Senior Credit Facility in commencing or pursuing any enforcement action(s) with respect to the amounts described in clauses (a) through (c), including attorneys' fees and disbursements. "Senior Debt" shall also include all amendments, modifications, renewals, replacements, restatements and refinancings of the foregoing, in whole or in pa provided such amendments, modifications, renewals, replacements, restatements refinancings do not (i) increase the interest rate or default rate payable on any component 5 thereof by more than 2% over the interest rate or default rate, respectively, that is applicable thereto on the date hereof, (ii) extend the final maturity of the Senior Debt beyond August 1, 2006, (iii) provide for any annual principal amortization payment in excess of the Permitted Annual Amortization Amount, (iv) include additional financial covenants or amend any of the financial covenants set forth in the Senior Credit Facility to render such covenants more restrictive, other than additional financial covenant identical to those set forth in Section 6.12 of the Investment Agreement that are no more than 15% more restrictive as such financial covenants or (v) amend any provisions set forth in the Senior Credit Facility which expressly permit the prepayment of the Junior Debt to render such provisions more restrictive. Senior Debt Documents shall mean the Senior Credit Facility and all other documents, agreements and instruments evidencing or pertaining to all or any portion of the Senior Debt. Senior Default shall mean any Senior Payment Default or Senior Covenant Default. Senior Default Notice shall mean a written notice from the holders of Senior Debt to Holder pursuant to which Holder is notified of the occurrence of a Senior Default, which notice incorporates a reasonably detailed description of such Senior Default. Senior Payment Default shall mean any failure by the Borrowers to make any required payment of interest or principal, or any other monetary payment, under the Senior Debt Documents, which failure continues beyond the expiration of any applicable cure period provided by the terms of the Senior Debt Documents, including, without limitation, any default in payment of Senior Debt after acceleration thereof. Warrant means, collectively, the warrants to purchase 1,372,071 shares of Common Stock of the Company (as adjusted in accordance with the terms thereof), issued in accordance with the Investment Agreement. 4.2 Subordination. 4.2.1 Subordination of Junior Debt to Senior Debt. Each of the Borrowers covenants and agrees, and Holder by its acceptance of this Debenture (whether upon original issue or upon transfer or assignment) likewise covenants and agrees, that (a) the payment of any and all of the Junior Debt shall be subordinate and subject in right of payment, to the extent and in the manner hereinafter set forth, to the prior payment in full in cash of the Senior Debt and (b) the existing and hereafter acquired liens and security interests of any holder of Senior Debt in any collateral securing all or any portion of the Senior Debt shall be senior, regardless of the time or method of perfection, to all existing and hereafter acquired liens security interests, if any, of Holder (or any agent therefor) in the collateral, if any, securing all or any portion of the Junior Debt. The Company shall provide to Holder notice of each holder of Senior Debt upon the incurrence of Senior Debt from such holder, which notice shall include the name, address and phone number of such holder, and Holder shall promptly acknowledge in writing receipt of 6 such notice. Each holder of Senior Debt, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the provisions contained herein. This Section 4 shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders or, or continue to hold Senior Debt, and such provisions are made for the benefit of the holders of the Senior Debt, and such holders are made obligees hereunder and any one or more of them may enforce such provisions. 4.2.2 Proceedings. (a) Payments. In the event of any Proceeding involving any Borrower, (i) all Senior Debt first shall be paid in full in cash before any payment of or with respect to the Junior Debt from such Borrower shall be made (other than a distribution of Reorganization Subordinated Securities which Holder is hereby specifically authorized to receive and retain); (ii) any payment or distribution, whether in cash, property or securities which, but for the terms hereof, otherwise would be payable or deliverable in respect of the Junior Debt from such Borrower (other than a distribution of Reorganization Subordinated Securities which Holder is hereby specifically authorized to receive and retain), shall be paid or delivered directly to holders of Senior Debt (pro rata to such holders) (to be held and/or applied thereby in accordance with the terms of the Senior Debt Documents) until all Senior Debt is paid in full, in cash, and Holder irrevocably authorizes, empowers and directs all receivers, trustees, liquidators custodians, conservators and others having authority in the premises to effect all such payments and distributions, and Holder also irrevocably authorizes, empowers and directs holders of Senior Debt to demand, sue for, collect and receive every such payment or distribution; and (iii) Holder agrees to execute and deliver to each holder of Senior Debt of which Holder has notice or its representative all such further instruments confirming the authorization referred to in the foregoing clause (ii). (b) Voting and Other Matters. At any meeting of creditors or in the event of any Proceeding involving any Borrower, Holder shall retain the right to vote, file a proof of claim and otherwise act with respect to the Junior Debt (including the right to vote to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition, or extension), provided that Holder shall not initiate or prosecute any claim or action in such Proceeding challenging the enforceability of the Senior Debt, this Section 4, or any liens and security interests securing the Senior Debt. In the event Holder fails to execute, verify, deliver and file any proofs of claim in respect of the Junior Debt in connection with any such Proceeding prior to 15 days before the expiration of the time to file any such proof or fails to vote any such claim in any such Proceeding prior to 5 days before the expiration of the time to vote any such claim, Holder hereby irrevocably authorizes, empowers and appoints the holders of Senior Debt its agent and attorney-in-fact to execute, verify, deliver and file such proofs of claim and vote such claim in any such Proceeding; provided the holders of Senior Debt shall have no obligation to exercise any such authority with respect to Holder's claim. In the event that the holders of Senior Debt vote any claim in accordance with the authority granted hereby Holder shall not be entitled to change or withdraw such vote. (c) Reinstatement. The Senior Debt shall continue to be treated as Senior Debt and the provisions hereof shall continue to govern the relative rights and priorities of 7 holders of Senior Debt and Holder even if all or part of the Senior Debt or the security interests securing the Senior Debt are subordinated, set aside, avoided or disallowed in connection with any such Proceeding. This Section 4 shall be reinstated if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any holder of Senior Debt or any representative of such holder. 4.2.3 Payment Upon Senior Default. (a) Commencement of Payment Blockage. Subject to Section 4.2.3(b), the Borrowers may not make and Holder may not receive any payment with respect to this Debenture or any other Junior Debt Document (whether as a result of a Collection Action or otherwise) if, at the time of such payment: (i) A Senior Payment Default exists and such Senior Payment Default shall not have been cured or waived in accordance with the terms of the Senior Debt Documents; (ii) The Company and Holder shall have received a Senior Default Notice from the holders of Senior Debt stating that a Senior Covenant Default exists; or (iii) the holders of Senior Debt have accelerated such Senior Debt. (b) Termination of Payment Blockage. The Borrowers may resume payments (and may make any payments missed due to the application of Section 4.2.3(a)) in respect of the Junior Debt or any judgment with respect thereto: (i) In the case of a Senior Payment Default referred to in Section 4.2.3(a)(i), upon a cure or waiver thereof in accordance with the terms of the Senior Debt Documents; (ii) In the case of a Senior Covenant Default referred to in Section 4.2.3(a)(ii), upon the earlier to occur of (x) the cure or waiver of all Senior Covenant Defaults referenced in the applicable Senior Default Notice in accordance with the terms of the Senior Debt Documents, or (y) the expiration of a period of 180 days from the date such Senior Default Notice was received by Holder; or (iii) In the case of acceleration of the Senior Debt, upon the earlier to occur of (y) the indefeasible satisfaction in full of the Senior Debt and the termination of all lending commitments under the Senior Debt Documents, and (z) any modification of the Senior Debt Documents by which the acceleration is rescinded and the indebtedness is reinstated and no longer immediately due and payable in full. 8 (c) Limitation on Payment Blockages. Notwithstanding any provision of this Section 4.2.3 to the contrary: (i) The Borrowers shall not be prohibited from making and Holder shall not be prohibited from receiving, payments under Section 4.2.3(a)(ii) (x) on more than one occasion within any period of 365 consecutive days and (y) on more than an aggregate of four occasions so long as this Debenture is outstanding; and (ii) No Senior Covenant Default existing on the date a Senior Default Notice is given pursuant to Section 4.2.3 shall be used as a basis for any subsequent Senior Default Notice unless such default has been cured or waived for a period of at least 90 days. (d) Non-Applicability to Proceeding. The provisions of this Section 4.2.3 shall not apply to any payment with respect to which Section 4.2.2 would be applicable. 4.2.4 Payments Otherwise Permitted. The failure of the Borrowers to make any payment with respect to the Junior Debt by reason of the operation of Section 4.2.3 shall not be construed as preventing the occurrence of a Junior Default under the applicable Junior Debt Documents. Nothing contained in this Section 4.2 or elsewhere herein or in the Junior Debt Documents shall prevent the Borrowers at any time, except during the pendency of any Proceeding referred to in Section 4.2.2 or under the conditions referred to in Section 4.2.3 from making payments or prevent Holder from receiving payments or exercising any remedy available to Holder under the Junior Debt documents at any time on account of the principal, interest or other charges with respect to the Junior Debt. 4.2.5 Restriction on Collection Action by Holder. Upon any event of default under the Junior Debt Documents, and after fifteen days prior written notice to holders of Senior Debt of which Holder has notice, Holder may accelerate the Junior Debt. Notwithstanding any such acceleration or any default under the Junior Debt Documents, until the Senior Debt is indefeasibly paid in full in cash and all lending commitments under the Senior Debt Documents have been terminated, Holder shall not, without the prior written consent of the holders of a majority in principal amount of the Senior Debt, take any Collection Action with respect to the Junior Debt, except as permitted in the following sentence or Section 4.2.2 hereof Upon the earliest to occur of: (a) the passage of 180 days from the delivery of a Junior Debt Notice to the holders of Senior Debt of which Holder has notice if any Junior Default described therein shall not have been cured or waived within such period; or (b) acceleration of the Senior Debt; or (c) the occurrence of any Proceeding with respect to any Borrower or its assets; or 9 (d) the commencement by any holder of the Senior Debt of any judicial or non judicial action or proceeding against any Borrower or any guarantor of the Senior Debt to (i) enforce payment of or to collect the whole or any part of the Senior Debt, (ii) enforce any of the rights and remedies available to any holder of the Senior Debt with respect to the Senior Debt or any collateral securing the Senior Debt, or (iii) realize upon any of the collateral securing the Senior Debt or exercise any other right or remedy with respect to such collateral; or (e) the occurrence of any Senior Default or Junior Default arising from the merger, sale, liquidation, dissolution, or change of control of any Borrower, Holder may, upon ten days prior written notice to the holders of Senior Debt of which Holder has notice, take any Collection Action. Such ten day notice may be given during the 180 day period described in clause (a) above. Notwithstanding the foregoing, Holder may vote, file proofs of claim and otherwise act with respect to the Junior Debt in any Proceeding involving any Borrower or its assets to the extent otherwise permitted by Section 4.2.2. Any amount received by Holder as a result of any Collection Action with respect to the Junior Debt prior to the indefeasible satisfaction of the Senior Debt in full in cash and termination of all lending commitments under the Senior Debt Documents will be paid to the holders of Senior Debt (pro rata to such holders) to the extent required by the provisions of Section 4.2.8 hereof. 4.2.6 Prepayments. Except as expressly permitted under Section 8.14(b) of the Senior Credit Facility (or as expressly permitted by any replacements thereof), which are expressly permitted hereby, the Borrowers shall not be entitled to make, or Holder be entitled to demand, take, receive, or retain, any prepayments of interest or principal on account of any of the Junior Debt prior to the indefeasible payment in full in cash of the Senior Debt and the termination of all lending commitments under the Senior Debt Documents. Payments received by Holder after acceleration of the Junior Debt or the commencement of a Collection Action otherwise permitted hereby shall not constitute a prohibited prepayment under this Section 4.2.6. 4.2.7 Amendment of Junior Debt Documents. Until the Senior Debt is paid in full in cash and notwithstanding anything contained in the Junior Debt Documents, the Senior Credit Facility or any of the other Senior Debt Documents to the contrary, Holder shall not, without the prior written consent of the holders of a majority in principal amount of the Senior Debt, agree to any amendment, modification or supplement to the Junior Debt Documents the effect of which is to (i) increase the maximum principal amount of the Junior Debt or rate of interest on any of the Junior Debt, (ii) change any date upon which payments of principal or interest on the Junior Debt are due to an earlier date, (iii) add or make more restrictive any event of default or any covenant with respect to the Junior Debt, (iv) change any redemption or prepayment provisions of the Junior Debt to an earlier date or add any additional events requiring such redemption or prepayment, (v) alter the subordination provisions with respect to the Junior Debt, including, without limitation, subordinating the Junior Debt to any other debt, (vi) take any liens or security interests in assets of any Borrower or any other assets securing the Senior Debt (other than such liens or security interests, if any, that exist in favor of Holder as of the date hereof and are otherwise permitted by the Senior Debt Documents ), (viii) change or amend any other term of the Junior Debt Documents if such change or amendment would result in a Senior 10 Default or (ix) permit the exercise of the put rights of Holder under Section 3.2 of the Investor Rights Agreement prior to the fifth anniversary of the date thereof. 4.2.8 Incorrect Payments and Proceeds of Collection Action. If the Holder receives, prior to the indefeasible satisfaction of the Senior Debt in full in cash and termination of all lending commitments under the Senior Debt Documents, any payment or distribution on account of the Junior Debt not permitted hereby (whether received as a result of a Collection Action or otherwise), such payment or distribution shall be held in trust by Holder for the benefit of all holders of Senior Debt and shall be promptly paid over to the holders of Senior Debt (pro rata to such holders), or their designated representatives, for application (in accordance with the Senior Debt Documents) to the payment of the Senior Debt then remaining unpaid, until indefeasible satisfaction of the Senior Debt in full in cash and termination of all lending commitments under the Senior Debt Documents. 4.2.9 Sale Transfer, etc. Holder shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion of the Junior Debt or any Junior Debt Document (a) without giving prior written notice of such action to the holders of Senior Debt, and (b) unless prior to the consummation of any such action, the transferee thereof shall execute and deliver to the holders of Senior Debt of which the transferee or Holder has notice an agreement providing for the continued subordination and forbearance of the Junior Debt to the Senior Debt as provided herein and for the continued effectiveness of all of the rights of the holders of the Senior Debt arising hereunder. Notwithstanding the failure to execute or deliver any such agreement, the subordination effected hereby shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion of the Junior Debt, and the terms hereof shall be binding upon the successors and assigns of Holder. 4.3 Modifications to Senior Debt. The holders of Senior Debt may at any time and from time to time without the consent of or notice to Holder, without incurring liability to Holder and without impairing or releasing the obligations of Holder hereunder, change the manner or place of payment or extend the time of payment of or renew or alter any of the terms of the Senior Debt, or amend in any manner any agreement, note, guaranty or other instrument evidencing or securing or otherwise relating to the Senior Debt; provided that the Junior Debt shall not be subordinated in accordance herewith to indebtedness or obligations to the extent such indebtedness or obligations do not constitute "Senior Debt" under the definition set forth in Section 4.1 hereof. 4.4 Continued Effectiveness. The terms hereof, the subordination effected hereby, and the rights and the obligations of Holder, the Borrowers, any holders of the Senior Debt arising hereunder shall not be affected, modified or impaired in any manner or to any extent by the validity or enforceability of any of the Senior Debt Documents or the Junior Debt Documents, or any exercise or non-exercise of any right, power or remedy under or in respect of the Senior Debt or the Senior Debt Documents or the Junior Debt or the Junior Debt Documents. The Holder and each other holder of Junior Debt hereby acknowledges that the provisions hereof are intended to be enforceable at all times, whether before the commencement of, after the commencement of, in connection with or premised on the occurrence of a Proceeding. 11 4.5 No Contest by Holder. Holder agrees that it will not at any time contest the validity, perfection, priority or enforceability of the Senior Debt, the Senior Debt Documents or the liens and security interests of any holders of the Senior Debt in any collateral securing the Senior Debt. 4.6 Representations and Warranties. The original Holder of this Debenture hereby represents and warrants to the holders of Senior Debt as follows: 4.6.1 Existence and Power. Holder is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland. 4.6.2 Authority. Holder has the power and authority to enter into, execute, deliver and carry out the terms hereof, all of which have been duly authorized by all proper and necessary action and are not prohibited by its organizational documents. 4.6.3 Binding Agreements. This Debenture constitutes the valid and legally binding obligation of Holder enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by equitable principles. 4.6.4 Conflicting Agreements; Litigation. No provisions of any mortgage, indenture, contract, agreement, statute, rule, regulation, judgment, decree or order binding on Holder conflicts with, or requires any consent which has not already been obtained under, or would in any way prevent the execution, delivery or performance of the terms hereof by Holder. The execution, delivery and carrying out of the terms hereof will not constitute a default under, or result in the creation or imposition of, or obligation to create, any lien or security interest in the property of Holder pursuant to the terms of any such mortgage, indenture, contract or agreement. No pending or, to the best of Holder's knowledge, threatened, litigation, arbitration or other proceedings if adversely determined would in any way prevent the performance of the terms hereof by Holder. 4.6.5 No Divestiture. Holder is the sole owner, beneficially and of record, of this Debenture and the Junior Debt. 4.6.6 Default under Junior Note. No Junior Default exists under or with respect to this Debenture or any of the other Junior Debt Documents. 4.7 Junior Default Notice. The Company shall provide the holders of Senior Debt with a Junior Default Notice upon the occurrence of each Junior Default, and shall notify such holders in the event such Junior Default is cured or waived. 4.8 Cumulative Rights, No Waivers. Each and every right, remedy and power granted to any holder of the Senior Debt hereunder shall be cumulative and in addition to any other rights remedy or power specifically granted herein or the Senior Debt Documents or now or hereafter existing in equity, at law, by virtue of statute or otherwise, and may be exercised by any holder of Senior Debt, from time to time, concurrently or independently and as often and in such 12 order as such holder may deem expedient. Any failure or delay on the part of the holder of Senior Debt in exercising any such right, remedy or power, or abandonment or discontinuance of steps to enforce the same, shall not operate as a waiver thereof or affect the rights of such holder thereafter to exercise the same, and any single or partial exercise of any such right, remedy or power shall not preclude any other or further exercise thereof or the exercise of any other right, remedy or power, and no such failure, delay, abandonment or single or partial exercise of the rights of such holder hereunder shall be deemed to establish a custom or course of dealing or performance among the parties hereto. 4.9 Modification. Any modification or waiver of any provision hereof, or any consent to any departure by Holder therefrom, shall not be effective in any event unless the same is in writing and signed by the holders of a majority in principal amount of the outstanding Senior Debt, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given. Any notice or demand given to Holder by any holder of Senior Debt in any circumstances not specifically required by such holder hereunder shall not entitle Holder to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder. 4.10 Additional Documents and Actions. Holder at any time, and from time to time, after the execution and delivery hereof, promptly will execute and deliver such further documents and do such further acts and things as the holders of Senior Debt reasonably may request that may be necessary in order to effect fully the purposes hereof. 4.11 Notices. Unless otherwise specifically provided herein, any notice or other communication required or permitted to be given shall be in writing addressed to the respective party at the address provided by such party to the Company and may be personally served, telecopied or sent by overnight courier service or certified or registered United States mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if transmitted on a Business Day before 4:00 p.m. (Eastern time) or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, two Business Days after delivery to such courier properly addressed; or (d) if by United States mail, four Business Days after deposit in the United States mall, postage prepaid and properly addressed. 4.12 Defines Rights of Creditors; Obligations Unconditional. The provisions of this Section 4 are solely for the purpose of defining the relative rights of Holder and the holders of Senior Debt and shall not be deemed to create any rights or priorities in favor of any other Person, including, without limitation, the Borrowers. As between the Borrowers and Holder, nothing contained herein shall impair the unconditional and absolute obligation of the Borrowers to Holder to pay the Junior Debt as such Junior Debt shall become due and payable in accordance with the Junior Debt Documents. 4.13 Subrogation. After the indefeasible payment in full in cash of the Senior Debt and the termination of all lending commitments under the Senior Debt Documents, and prior to repayment in full of the Junior Debt, Holder shall be subrogated to the rights of the holders of Senior Debt to the extent that distributions otherwise payable to Holder have been 13 applied to the Senior Debt in accordance with the provisions of this Section 4. For purposes of such subrogation, no payments or distributions to the holders of Senior Debt of any cash, property or securities to which Holder would be entitled except for the provisions of this Section 4, and no payments pursuant to the provisions of this Section 4 to the holders of Senior Debt by Holder, shall, as among the Borrowers, their creditors (other than the holders of Senior Debt), any guarantors of the Senior Debt or Junior Debt, and Holder be deemed to be a payment of distribution by the Borrowers or such guarantor to or on account of the Senior Debt. The holders of Senior Debt shall have no obligation or duty to protect Holder's rights of subrogation arising pursuant to this Section 4 or under any applicable law, nor shall such holders be liable for any loss to, or impairment of, any subrogation rights held by the Holder 4.14 Conflict. In the event of any conflict between any term, covenant or condition of this Section 4 and any term, covenant or condition of any of the Junior Debt Documents, the provisions of this Section 4 shall control and govern. 4.15 WAIVER OF JURY TRIAL. HOLDER, THE BORROWERS AND THE HOLDERS OF SENIOR DEBT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECTION 4. EACH OF HOLDER, THE BORROWERS AND THE HOLDERS OF SENIOR DEBT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS SECTION 4 AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF HOLDER, BORROWER AND HOLDERS OF SENIOR DEBT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS. 4.16 Reliance. Upon any payment or distribution of assets of the Company or any guarantor of the Junior Debt or Senior Debt in connection with any Proceeding with respect thereto, Holder shall be entitled to rely upon any order or decree by any court of competent jurisdiction in which such Proceeding is pending, delivered to Holder, purporting to enforce or interpret this Section 4 for the purpose of ascertaining the holders of Senior Debt entitled to participate in such payment or distribution in accordance with this Section 4, the amount thereof, and all other matters related thereto. Holder shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment to it, unless and until Holder shall have received written notice thereof in accordance with this Section 4 from the Company or the holders of Senior Debt, and prior to the receipt of any such written notice Holder shall be entitled to assume conclusively that no such facts exist, without, however limiting the rights of the holders of Senior Debt to recover from Holder, or the obligation of Holder to turn over to the holders of Senior Debt, any payment or distribution made to Holder to which Holder is not entitled in accordance with this Section 4. 5. Assignment. This Debenture and the obligations hereunder may not be assigned by the Borrowers without the prior written consent of the Holder. 14 6. Default and Remedies. The occurrence of an Event of Default under the Investment Agreement shall constitute a default hereunder and shall entitle the Holder to exercise the rights and remedies specified in the Investment Agreement, as well as those available at law or in equity. 7. Waivers. Each of the Borrowers hereby waives presentment, demand, protest, or further notice of any kind (except such notices as may be specifically required by the express terms of the Investment Agreement). 8. Controlling Law. This Debenture and all matters related hereto shall be governed, construed and interpreted strictly in accordance with the laws of the State of Maryland, without regard to its principles of conflicts of law. 9. No Usury. This Debenture is subject to the express condition that at no time shall the Borrowers be obligated or required to pay interest hereunder at a rate which could subject the Holder to either civil or criminal liability as a result of being in excess of the maximum rate which the Borrowers are permitted by law to contract or agree to pay. If, by the terms of this Debenture, the Borrowers are at any time required or obligated to pay interest at a rate in excess of such maximum rate, the rate of interest under this Debenture shall be deemed to be immediately reduced to such maximum rate and interest payable hereunder shall be computed at such maximum rate and the portion of all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of this Debenture. 10. No Novation. All of the terms, covenants and conditions of the Original Debenture shall continue, except as specifically amended and restated hereby. This Amended and Restated Debenture does not extinguish the outstanding indebtedness and is not intended to be a substitution or novation of the original indebtedness or instruments evidencing the same, all of which shall continue in full force and effect except as specifically amended and restated hereby or by instruments executed concurrently herewith. [Signatures on next page] 15 IN WITNESS WHEREOF, the undersigned has caused this Amended and Restated Debenture to be executed and its seal affixed on the day and year first above written. BLUE RHINO CORPORATION By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Executive Vice President USA LEASING, L.L.C. By: Blue Rhino Corporation, as Manager By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Office RHINO SERVICES, L.L.C. By: Blue Rhino Corporation, as Manager By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Office CPD ASSOCIATES, INC. By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Vice President QUICKSHIP, INC. By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Asst. Secretary/Treasurer UNIFLAME CORPORATION By: /s/ Kurt Gehsmann (SEAL) ---------------------------- Name: Kurt Gehsmann Title: Vice President 16 BLUE RHINO CONSUMER PRODUCTS, LLC By: Blue Rhino Corporation, as Manager By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Office UNIFLAME, LLC By: Blue Rhino Corporation, as Manager By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Office 17 EX-10.1.A 14 g81245exv10w1wa.txt EX-10.1.A CREDIT AGREEMENT DATED AS OF 11/20/2002 EXHIBIT 10.1(a) - ------------------------------------------------------------------------------- CREDIT AGREEMENT Dated as of November 20, 2002 Among BLUE RHINO CORPORATION, as the Borrower, BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, WACHOVIA BANK, NATIONAL ASSOCIATION, as Syndication Agent, and The Other Lenders Party Hereto BANC OF AMERICA SECURITIES LLC, as Sole Lead Arranger and Sole Book Manager - ------------------------------------------------------------------------------- TABLE OF CONTENTS

Section Page ------- ---- ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS............................................................1 1.01 Defined Terms...............................................................................1 1.02 Other Interpretive Provisions..............................................................26 1.03 Accounting Terms...........................................................................27 1.04 Rounding...................................................................................27 1.05 References to Agreements and Laws..........................................................27 1.06 Times of Day...............................................................................27 1.07 Letter of Credit Amounts...................................................................27 1.08 Borrowing Base.............................................................................28 ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS......................................................28 2.01 Revolving Credit Loans.....................................................................28 2.02 Term Loan..................................................................................29 2.03 Conversions and Continuations of Revolving Credit Loans and Term Loan......................30 2.04 Letters of Credit..........................................................................31 2.05 Swing Line Loans...........................................................................38 2.06 Prepayments................................................................................41 2.07 Voluntary Termination or Reduction of Revolving Credit Commitments.........................45 2.08 Repayment of Loans.........................................................................45 ARTICLE III. GENERAL LOAN PROVISIONS....................................................................46 3.01 Interest...................................................................................46 3.02 Fees.......................................................................................46 3.03 Computation of Interest and Fees...........................................................47 3.04 Evidence of Debt...........................................................................47 3.05 Payments Generally.........................................................................48 3.06 Security...................................................................................50 ARTICLE IV. TAXES, YIELD PROTECTION AND ILLEGALITY.....................................................50 4.01 Taxes......................................................................................50 4.02 Illegality.................................................................................51 4.03 Inability to Determine Rates...............................................................52 4.04 Increased Cost and Reduced Return; Capital Adequacy........................................52 4.05 Funding Losses.............................................................................52 4.06 Matters Applicable to all Requests for Compensation........................................53 4.07 Survival...................................................................................53 ARTICLE V. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS..................................................53 5.01 Conditions of Initial Credit Extension.....................................................53 5.02 Conditions to all Credit Extensions........................................................56 5.03 Post-Closing Condition.....................................................................56

i ARTICLE VI. REPRESENTATIONS AND WARRANTIES.............................................................56 6.01 Existence, Qualification and Power; Compliance with Laws...................................57 6.02 Authorization; No Contravention............................................................57 6.03 Governmental Authorization; Other Consents.................................................57 6.04 Binding Effect.............................................................................57 6.05 Financial Statements; No Material Adverse Effect...........................................58 6.06 Litigation.................................................................................58 6.07 No Default.................................................................................58 6.08 Ownership of Property; Liens...............................................................58 6.09 Environmental Compliance...................................................................59 6.10 Insurance..................................................................................60 6.11 Taxes......................................................................................60 6.12 ERISA Compliance...........................................................................60 6.13 Subsidiaries...............................................................................61 6.14 Margin Regulations; Investment Company Act; Public Utility Holding Company Act................................................................................61 6.15 Disclosure.................................................................................62 6.16 Compliance with Laws.......................................................................62 6.17 Intellectual Property; Licenses, Etc.......................................................62 6.18 Employee Relations.........................................................................63 6.19 Burdensome Provisions......................................................................63 6.20 Survival of Representations and Warranties, Etc............................................63 ARTICLE VII. AFFIRMATIVE COVENANTS......................................................................63 7.01 Financial Statements.......................................................................63 7.02 Certificates; Other Information............................................................64 7.03 Notices....................................................................................65 7.04 Payment of Obligations.....................................................................66 7.05 Preservation of Existence, Etc.............................................................66 7.06 Maintenance of Properties..................................................................66 7.07 Maintenance of Insurance...................................................................67 7.08 Compliance with Laws.......................................................................67 7.09 Environmental Laws.........................................................................67 7.10 Compliance with ERISA......................................................................68 7.11 Compliance With Agreements.................................................................68 7.12 Books and Records..........................................................................68 7.13 Inspection Rights..........................................................................68 7.14 Use of Proceeds............................................................................69 7.15 Additional Subsidiaries....................................................................69 7.16 Swap Contracts.............................................................................70 7.17 Further Assurances.........................................................................70 ARTICLE VIII. NEGATIVE COVENANTS.........................................................................70 8.01 Liens......................................................................................70 8.02 Investments................................................................................71 8.03 Indebtedness...............................................................................72 ii 8.04 Fundamental Changes........................................................................74 8.05 Dispositions...............................................................................75 8.06 Restricted Payments........................................................................76 8.07 Limitations on Exchange and Issuance of Capital Stock......................................76 8.08 Change in Nature of Business...............................................................77 8.09 Accounting Changes; Organizational Documents...............................................77 8.10 Transactions with Affiliates...............................................................77 8.11 Burdensome Agreements......................................................................77 8.12 Use of Proceeds............................................................................77 8.13 Impairment of Security Interests...........................................................77 8.14 Amendments, Payments and Prepayments of Subordinated Indebtedness..........................78 8.15 Financial Covenants........................................................................78 ARTICLE IX. EVENTS OF DEFAULT AND REMEDIES.............................................................79 9.01 Events of Default..........................................................................79 9.02 Remedies Upon Event of Default.............................................................82 9.03 Application of Funds.......................................................................82 ARTICLE X. ADMINISTRATIVE AGENT.......................................................................83 10.01 Appointment and Authorization of Administrative Agent......................................83 10.02 Delegation of Duties.......................................................................84 10.03 Liability of Administrative Agent..........................................................84 10.04 Reliance by Administrative Agent...........................................................84 10.05 Notice of Default..........................................................................85 10.06 Credit Decision; Disclosure of Information by Administrative Agent.........................85 10.07 Indemnification of Administrative Agent....................................................86 10.08 Administrative Agent in its Individual Capacity............................................86 10.09 Successor Administrative Agent.............................................................86 10.10 Administrative Agent May File Proofs of Claim..............................................87 10.11 Collateral and Guaranty Matters............................................................88 ARTICLE XI. MISCELLANEOUS..............................................................................88 11.01 Amendments, Etc............................................................................88 11.02 Notices and Other Communications; Facsimile Copies.........................................90 11.03 No Waiver; Cumulative Remedies.............................................................91 11.04 Attorney Costs, Expenses and Taxes.........................................................91 11.05 Indemnification by the Borrower............................................................91 11.06 Payments Set Aside.........................................................................92 11.07 Successors and Assigns.....................................................................93 11.08 Confidentiality............................................................................96 11.09 Set-off....................................................................................96 11.10 Interest Rate Limitation...................................................................97 11.11 Counterparts...............................................................................97 11.12 Integration................................................................................97 11.13 Survival of Representations and Warranties.................................................97 11.14 Severability...............................................................................97 iii 11.15 Tax Forms..................................................................................98 11.16 Governing Law..............................................................................99 11.17 Waiver of Right to Trial by Jury..........................................................100 SCHEDULES 2.01 Commitments and Commitment Percentages 6.01 Jurisdictions of Organization and Qualification 6.06 Litigation 6.09 Environmental Matters 6.13 Subsidiaries and Other Equity Investments 6.19 Burdensome Provisions 8.01 Existing Liens 8.02 Existing Investments 8.03 Existing Indebtedness 8.10 Transactions with Affiliates 11.02 Administrative Agent's Office, Certain Addresses for Notices EXHIBITS FORM OF A Loan Notice B Swing Line Loan Notice C Note D Compliance Certificate E Assignment and Assumption F Guaranty Agreement G Collateral Agreement H Opinion Matters I Joinder Agreement J Borrowing Base Certificate iv CREDIT AGREEMENT This CREDIT AGREEMENT ("Agreement") is entered into as of November 20, 2002, among BLUE RHINO CORPORATION, a Delaware corporation (the "Borrower"), each lender from time to time party hereto (collectively, the "Lenders" and individually, a "Lender"), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer. The Borrower has requested that the Lenders provide a revolving credit facility and a term loan facility, and the Lenders are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS 1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below: "Account Debtor" means any Person who is or who may become obligated to the Borrower or any of its Subsidiaries under or on account of an Account. "Accounts" means all "accounts" (as defined in the UCC) of the Borrower or any of its Subsidiaries, including without limitation all present or future accounts receivable, all rights to payment for goods sold or leased or to be sold or leased or for services rendered or to be rendered, whether or not earned by performance, all rights in any merchandise or goods which any of the same may represent, all notes receivable, book debts, notes, bills, drafts, acceptances, choses in action, contract rights, instruments and documents and all sums of money due or to become due thereon and all proceeds thereof and all rights, title, security interests and guarantees with respect to each of the foregoing. "Additional Equity Offering" means the planned offering of common stock of the Borrower; provided that such offering occurs on or before May 31, 2003. "Administrative Agent" means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent. "Administrative Agent's Office" means the Administrative Agent's address and, as appropriate, account as set forth on Schedule 11.02, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders. "Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "Affiliate" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent. "Agent-Related Persons" means the Administrative Agent, together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, the Arranger), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Aggregate Commitments" means the Commitments of all the Lenders. "Agreement" means this Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time. "Applicable Rate" means the following percentages per annum, based upon the Consolidated Total Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 7.02(b):

- ------------------------------------------------------------------------------------------------------- APPLICABLE RATE - ------------------------------------------------------------------------------------------------------- Eurodollar Rate + and - ------------------------------------------------------------------------------------------------------- 1 Less than or equal to 0.75:1 0.375% 2.00% 0.50% 2 Greater than 0.75:1 but less than or 0.500% 2.25% 0.75% 3 Greater than 1.25:1 but less than or 0.500% 2.50% 1.00% 4 Greater than 1.75:1 but less than or 0.500% 2.75% 1.25% 5 Greater than 2.25:1 0.500% 3.00% 1.50% - -------------------------------------------------------------------------------------------------------

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Total Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 7.02(b); provided, that if a Compliance Certificate is not delivered when due in accordance with such Section 7.02(b), then Pricing Level 4 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered. For the period from the Closing Date to the first Business Day immediately following the date of 2 delivery of a Compliance Certificate for the period ended October 31, 2002, the Applicable Rate shall be (a) 2.75% for the Eurodollar Rate and the Letter of Credit Fee, (b) 1.25% for the Base Rate, and 0.50% for the Commitment Fee. "Arranger" means Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager. "Assignment and Assumption" means an Assignment and Assumption substantially in the form of Exhibit E. "Attorney Costs" means and includes all reasonable fees, expenses and disbursements of any law firm or other external counsel and, without duplication, the allocated cost of internal legal services and all expenses and disbursements of internal counsel. "Attributable Indebtedness" means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease. "Audited Financial Statements" means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the Fiscal Year ended July 31, 2002, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such Fiscal Year of the Borrower and its Subsidiaries, including the notes thereto. "Availability Period" means the period from and including the Closing Date to the earliest of (a) the Revolving Credit Maturity Date, (b) the date of termination of the Revolving Credit Commitments pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender to make Revolving Credit Loans and of the obligation of the of the L/C Issuer to make L/C Credit Extensions pursuant to Section 9.02. "Bank of America" means Bank of America, N.A., a national banking association, and its successors. "Base Rate" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." The "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Loan that bears interest based on the Base Rate. "Borrower" has the meaning set forth in the introductory paragraph hereto. 3 "Borrowing" means a Revolving Credit Borrowing, a Swing Line Borrowing or a Term Loan Borrowing, as the context may require. "Borrowing Base" means, as of any date of determination and subject to Section 1.08 and the following sentence: the sum of: (a) 80% of Eligible Accounts, (b) 50% of Eligible Inventory, (c) 50% of Cylinder Inventory and (d) 50% of Eligible Equipment. Subject to any adjustments or corrections described in Section 1.08, the Borrowing Base at any relevant time will be based on the most recent Borrowing Base Certificate received by Administrative Agent pursuant to Section 5.01 (a) or Section 7.02(c); provided that, if the Borrower fails to deliver any Borrowing Base Certificate pursuant to Section 7.02(c) (i) on or before the date it is due, the Borrower may not obtain any Loan or L/C Credit Extension until such Borrowing Base Certificate is received by Administrative Agent, or (ii) within 15 days after the date it is due, the Borrowing Base will thereafter be $0.00 until such Borrowing Base Certificate is received by Administrative Agent. "Borrowing Base Certificate" means a certificate in substantially the form of Exhibit J, properly completed and signed by a Responsible Officer of the Borrower, and accompanied by a reasonably detailed summary with listings and agings of all Collateral, all in form and detail satisfactory to Administrative Agent. "Borrowing Limit" means, as of any date of determination, the lesser of (a) the Borrowing Base less the Outstanding Amount of the Term Loan and (b) the Revolving Credit Commitments. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent's Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market. "Cash Collateralize" has the meaning set forth in Section 2.04(g). "Change of Control" means, with respect to any Person, an event or series of events by which: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35% or more of the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or 4 (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or (c) the Borrower shall cease to own 100% of the capital stock of each of the Guarantors; or (d) shall cause a "change of control," as defined in the Senior Subordinated Debt Documents; provided, that a Permitted Reorganization shall not constitute a Change of Control. "Closing Date" means, the first date all the conditions precedent in Section 5.01 are satisfied or waived in accordance with Section 5.01 (or, in the case of Section 5.01(c), waived by the Person entitled to receive the applicable payment). "Code" means the Internal Revenue Code of 1986. "Collateral" means the collateral security for all or a portion of the Obligations pledged or granted pursuant to the Security Documents. "Collateral Agreement" means that certain Collateral Agreement dated as of the date hereof, by each of the Loan Parties in favor of the Administrative Agent on behalf of the Lenders, substantially in the form of Exhibit G. "Commitment" means, as to each Lender, the sum of such Lender's Revolving Credit Commitment and Term Loan Commitment, in an aggregate principal amount at any one time outstanding not to exceed the amounts set forth opposite such Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. "Compliance Certificate" means a certificate substantially in the form of Exhibit D. "Consolidated EBITDA" means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the 5 following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations and capital leases, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings and net payments (if any) pursuant to hedging obligations), (ii) the provision for federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for such period, (iii) the amount of depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization -of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents and accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of the Borrower and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in determining such Consolidated Net Income and (iv) other expenses of the Borrower and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period and minus (b) all non-cash items increasing Consolidated Net Income for such period (other than items that were accrued in the ordinary course of business). "Consolidated EBITDAR" means, for any period, the sum of Consolidated EBITDA plus Consolidated Rental Expense for such period. "Consolidated Fixed Charges" means, for any period, the sum of the following determined on a consolidated basis, for the Borrower and its Subsidiaries in accordance with GAAP: (a) Consolidated Interest Charges paid in cash, (b) dividends paid in cash by the Borrower, (c) scheduled principal payments with respect to Indebtedness and (d) Consolidated Rental Expense. "Consolidated Fixed Charge Coverage Ratio" means, as of any date of determination, the ratio of (a) the sum of (i) Consolidated EBITDAR for the period of the four prior Fiscal Quarters ending on such date less (ii) Maintenance Capital Expenditures made during such period less (iii) cash income taxes (federal, state, local and foreign) paid by the Borrower and its Subsidiaries during such period to (b) Consolidated Fixed Charges for such period. "Consolidated Funded Indebtedness" means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the sum of (without duplication) (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all direct obligations arising under letters of credit (including standby and commercial), bankers' acceptances, bank guaranties, surety bonds and similar instruments, (c) all obligations in respect of the deferred purchase price of property or services (other than accrued liabilities and all trade accounts payable in the ordinary course of business), including, without limitation, all purchase money Indebtedness, (d) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations, (e) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (d) above of Persons other than the Borrower or any Subsidiary, 6 and (g) all Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Borrower or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary. "Consolidated Interest Charges" means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, commissions, fees, charges and related expenses of the Borrower and its Subsidiaries in connection with borrowed money (including capitalized interest) (whether paid, accrued or scheduled to be paid), in connection with the deferred purchase price of assets, or in connection with letters of credit and bankers' acceptance financings in each case to the extent treated as interest in accordance with GAAP, (b) the portion of rent expense of the Borrower and its Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP and (c) the amount of net settlement obligations of the Borrower and its Subsidiaries under any Swap Contract respecting interest rate management and relating to the spread between the fixed interest rate under such Swap Contract and the floating interest rate hedged thereby. "Consolidated Net Income" means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the net income of the Borrower and its Subsidiaries (excluding extraordinary gains and extraordinary losses) for that period. "Consolidated Rental Expense" shall mean, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the operating lease expense of the Borrower and its Subsidiaries determined in accordance with GAAP for leases with an initial term greater than one year, as disclosed in the notes to the consolidated financial statements of the Borrower and its Subsidiaries. "Consolidated Senior Indebtedness" means, as of any date of determination, all Consolidated Funded Indebtedness of the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) on such date less any outstanding Subordinated Indebtedness, including, without limitation, the Senior Subordinated Debt. "Consolidated Senior Leverage Ratio" means, as of any date of determination, the ratio of (a) Consolidated Senior Indebtedness to (b) Consolidated EBITDA for the period of four Fiscal Quarters most recently ended for which the Borrower has delivered financial statements pursuant to Section 7.01(a) or Section 7.01(b). "Consolidated Net Worth" means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, Shareholders' Equity of the Borrower and its Subsidiaries on that date. "Consolidated Total Leverage Ratio" means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the 7 period of the four Fiscal Quarters most recently ended for which the Borrower has delivered financial statements pursuant to Section 7.01(a) or Section 7.01(b). "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Control" has the meaning set forth in the definition of "Affiliate." "Credit Extension" means each of the following: (a) a Borrowing and (b) an L/C Credit Extension. "Cylinder Inventory" means, subject to modification by the Administrative Agent pursuant to Section 1.08, the net book value of all non-obsolete cylinder Inventory (excluding Valve Inventory) of any Loan Party which is owned or under lease to third party lessees on terms and conditions satisfactory to the Administrative Agent. "Debtor Relief Laws" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. "Default" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default. "Default Rate" means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by applicable Laws. "Defaulting Lender" means any Lender that (a) has failed to fund any portion of the Revolving Credit Loans, the Term Loan, participations in L/C Obligations or participations in Swing Line Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding. "Disposition" or "Dispose" means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. "Disposition Proceeds" has the meaning set forth in Section 2.06(e). 8 "Dollar" and "$" mean lawful money of the United States. "Domestic Subsidiary" means any Subsidiary that is organized under the laws of any political subdivision of the United States. "Eligible Assignee" has the meaning set forth in Section 11.07(g). "Eligible Accounts" means, subject to modification by the Administrative Agent pursuant to Section 1.08, the face value of all Accounts which are bona fide existing obligations of the named Account Debtor arising from the sale and delivery of merchandise or the rendering of services to such Account Debtor in the ordinary course of a Loan Party's business and are actually owing to such Loan Party and to the best knowledge of the Loan Parties, are not contingent for any reason, and such Loan Party has lawful and absolute Title to such Account and the unqualified right to assign and grant a security interest therein to the Administrative Agent, and shall not include: (a) any Account which is more than sixty (60) days past due; (b) any Account which is due from an Account Debtor more than 30% or more of whose Accounts are not eligible pursuant to clause (a); (c) any Account for which there exists a right of set off, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) and for which no defense or counterclaim has been asserted; (d) any Account which represents an obligation of any local, state or federal governmental agency or entity (other than Accounts not exceeding $250,000 in the aggregate from the Army and Air Force Exchange Service as Account Debtor which such Accounts shall not be excluded from Eligible Accounts pursuant to this clause (d)); (e) any Account which arises out of a contract or order which, by its terms, forbids or makes void or unenforceable any assignment of or granting of a security interest in such Account by such Loan Party to the Administrative Agent; (f) any Account arising from a "sale on approval," "sale or return," "consignment," or subject to any other repurchase or return agreement; (g) any Account which represents an obligation of a customer which is not a resident of the United States or its territories unless such account is supported by a letter of credit in form and substance satisfactory to the Administrative Agent; (h) any Account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, parent or Subsidiary of a Loan Party, including, without limitation, R4 Technical Center; (i) any unapplied credits over 61 days old; 9 (j) any Account that is evidenced by chattel paper or an instrument of any kind, unless such chattel paper or instrument is duly endorsed to and is in the possession of the Administrative Agent, or with respect to electronic chattel paper, is under the "control" (as defined in the UCC) of the Administrative Agent; (k) any Account that is subject to any Lien or security interest whatsoever, other than the Administrative Agent's first priority perfected security interest; (l) any Account for which the Account Debtor is insolvent or the subject of any bankruptcy or insolvency proceeding of any kind (other than Accounts not exceeding $1,000,000 in the aggregate from Kmart, Inc. as Account Debtor which such Accounts shall not be excluded from Eligible Accounts pursuant to this clause (l)); and (m) any Account for which the Account Debtor is located in any state which requires that the counterparty to such Account, in order to sue any Person in such state's courts, either (i) qualify to do business in such state or (ii) file a report with the taxation department of such state, and such Loan Party has either not qualified as a foreign corporation authorized to transact business in such state, or has not filed appropriate reports with the taxation division for the then current year and the Account Debtor is not otherwise amenable to suit in another convenient jurisdiction or the creditworthiness of the Account Debtor is not otherwise approved by the Administrative Agent. "Eligible Equipment" means, subject to modification by the Administrative Agent pursuant to Section 1.08, the net book value of all equipment and machinery owned by the Loan Parties (excluding leasehold improvements, computer equipment, truck graphics, computer software and laptops) valued after appropriate reduction for depreciation determined in accordance with GAAP and as reflected on the most recent financial statements of the Borrower and its Subsidiaries delivered pursuant to Section 7.01(a) or Section 7.01(b); provided that (a) such equipment and machinery is located in the United States, (b) such equipment and machinery is not subject to any Lien (other than (i) Liens in favor of the Administrative Agent and (ii) Liens resulting from the lease of equipment owned by any Loan Party to R4 Technical Center), and (c) the Administrative Agent has a first priority perfected security interest in such equipment and machinery pursuant to the requirements of the Security Documents. "Eligible Inventory" means, subject to modification by the Administrative Agent pursuant to Section 1.08, the net book value of all Inventory (other than Cylinder Inventory and Valve Inventory) of any Loan Party which satisfies and continues to satisfy each of the following requirements: (a) Any warranty or representation contained in this Agreement or any of the other Loan Documents applicable either to Inventory in general or to any specific Inventory remains true and correct in all material respects with respect to such Inventory; (b) The Inventory is in the possession of a Loan Party; (c) If such Inventory is located in a public warehouse or at a leased location, the Administrative Agent shall have received a bailee letter or landlord agreement, in form and 10 substance satisfactory to the Administrative Agent, as the case may be, on or prior to the date such bailee letter or landlord agreement is required to be delivered pursuant to the terms of the Collateral Agreement; (d) Such Inventory consists of finished goods; (e) Such Inventory is not under consignment to or from any Person; (f) Such Inventory is of good and merchantable quality, free from defects which would materially and adversely affect the market value thereof, (g) Such Inventory is not obsolete or currently unfit for use or sale in the ordinary course of the business of the Borrower; and (h) Such Inventory is not subject to any Lien, except for the Administrative Agent's Lien, and the Administrative Agent has a first priority perfected Lien in such Inventory. "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment 11 as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. "Eurodollar Base Rate" has the meaning set forth in the definition of Eurodollar Rate. "Eurodollar Rate" means for any Interest Period with respect to any Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent pursuant to the following formula: Eurodollar Rate = Eurodollar Base Rate ------------------------------------ 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Base Rate" means, for such Interest Period: (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers' Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (b) if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers' Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a, term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (c) if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America's London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the first day of such Interest Period. 12 "Eurodollar Rate Loan" means a Loan that bears interest at a rate based on the Eurodollar Rate. "Eurodollar Reserve Percentage" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage. "Event of Default" has the meaning set forth in Section 9.01. "Existing Facility" means the credit facilities described in the Second Amended and Restated Loan Agreement dated as of June 30, 2000 by and between the Borrower and Bank of America, as amended, restated, supplemented or otherwise modified as of the date hereof. "Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent. "Fee Letter" means the letter agreement, dated July 12, 2002, among the Borrower, the Administrative Agent and the Arranger. "Fiscal Year" means the Borrower's Fiscal Year, which is the period of twelve consecutive calendar months ending on July 31. "Fiscal Quarter" means each of the four periods of three consecutive calendar months which make up each Fiscal Year. "Foreign Lender" has the meaning set forth in Section 11.15(a)(i). "Foreign Subsidiary" means any Subsidiary that is not a Domestic Subsidiary. "FRB" means the Board of Governors of the Federal Reserve System of the United States. "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute 13 of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied. "Governmental Approvals" means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Granting Lender" has the meaning set forth in Section 11.07(h). "Guarantee" means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term "Guarantee" as a verb has a corresponding meaning. "Guarantors" means, collectively, all existing and future domestic Subsidiaries of the Borrower (other than the Non-Material Subsidiaries). "Guaranty Agreement" means the Guaranty Agreement dated as of the date hereof by the Guarantors in favor of the Administrative Agent on behalf of the Lenders, substantially in the form of Exhibit F. "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, 14 infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Indebtedness" means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers' acceptances, bank guaranties, surety bonds and similar instruments; (c) net obligations of such Person under any Swap Contract; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than accrued liabilities and trade accounts payable in the ordinary course of business); (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or, being purchased by such Person (including indebtedness arising under conditional sales or other Title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) capital leases and Synthetic Lease Obligations; (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of capital stock in such Person or any other Person; and (h) all Guarantees of such Person in respect of any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. "Indemnified Liabilities" has the meaning set forth in Section 11.05. "Indemnitees" has the meaning set forth in Section 11.05. "Insurance and Condemnation Proceeds" has the meaning set forth in Section 2.06(e). "Interest Payment Date" means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, 15 that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each calendar quarter and the Maturity Date. "Interest Period" means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Loan Notice; provided that: (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (c) no Interest Period shall extend beyond the Revolving Credit Maturity Date or the Term Loan Maturity Date, as applicable; and (d) after giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than- eight Interest Periods in effect with respect to Eurodollar Rate Loans. "Inventory" means all "inventory" (as now or hereafter defined in the UCC) of any Loan Party, including all accessions thereto, documents therefor and any products made or processed therefrom and all substances, if any, commingled therewith or added thereto. "Investment" means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment. "IP Rights" has the meaning set forth in Section 6.17. "IRS" means the United States Internal Revenue Service. 16 "Joinder Agreement" means each joinder agreement executed in favor of the Administrative Agent, for the ratable benefit of itself and the Lenders, pursuant to requirements of Section 7.15 substantially in the form of Exhibit I. "Laws" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. "L/C Advance" means, with respect to each Lender, such Lender's funding of its participation in any L/C Borrowing in accordance with its Revolving Credit Commitment Percentage. "L/C Borrowing" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit Borrowing. "L/C Credit Extension" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof. "L/C Issuer" means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder. "L/C Obligations" means, as at any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit lulus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. "Lender" has the meaning set forth in the introductory paragraph hereto and, as the context requires, includes the L/C Issuer and the Swing Line Lender. "Lending Office" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent. "Letter of Credit" means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit. "Letter of Credit Application" means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer. "Letter of Credit Expiration Date" means the day that is seven days prior to the Revolving Credit Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day). 17 "Letter of Credit Sublimit" means an amount equal to the lesser of (a) $15,000,000 and (b) the Revolving Credit Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Credit Commitments. "Lien" means any deed of trust, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other Title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing). "Loans" means the collective reference to the Revolving Credit Loans, the Term Loan and Swing Line Loans and "Loan" means any of such Loans. "Loan Documents" means this Agreement, each Note, each Security Document, and the Fee Letter and the Guaranty Agreement. "Loan Notice" means a notice of (a) a Revolving Credit Borrowing, (b) a Term Loan Borrowing, (c) a conversion of Loans from one Type to the other, or (d) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A. "Loan Parties" means, collectively, the Borrower and each Guarantor. "Maintenance Capital Expenditures" means, for any period, an amount equal to: (a) depreciation expense for the Borrower and its Subsidiaries, on a consolidated basis, during such period, multiplied by, (b) 0.50. "Material Adverse Effect" means (a) material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party. "Multiemployer Plan" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions. "Net Cash Proceeds" means: (a) with respect to any incurrence of any Indebtedness by the Borrower or any Subsidiary, the aggregate amount of all cash received by the Borrower or any Subsidiary in respect of such Indebtedness, net of all reasonable fees, discounts, commissions and expenses incurred by the Borrower or such Subsidiary in connection therewith. 18 (b) with respect to the sale of any asset by the Borrower or any Subsidiary, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such sale (including any cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by such asset and that is required to be repaid in connection with the sale thereof (other than Indebtedness under the Loan Documents), (B) the out-of-pocket expenses incurred by the Borrower or any Subsidiary in connection with such sale and (C) income taxes reasonably estimated to be actually payable within two years of the date of the relevant asset sale as a result of any gain recognized in connection therewith; (c) with respect to the sale of any capital stock or other equity interest by the Borrower or any Subsidiary, the excess of (i) the sum of the cash and cash equivalents received in connection with such sale over (ii) the underwriting discounts and commissions, and other out-of-pocket expenses, incurred by the Borrower or such Subsidiary in connection with such sale; and (d) with respect to any payment under an insurance policy or in connection with a condemnation proceeding, the amount of cash proceeds received by the Borrower or any Subsidiary from an insurance company or Governmental Authority, as applicable, net of all expenses of collection. "Non-Propane Products Divestiture" means one or more sales by UniFlame Corporation and/or QuickShip, Inc., wholly-owned Subsidiaries of the Borrower, of certain assets relating to their respective non-propane fueled products lines of business. "Non-Material Subsidiaries" means the collective reference to (a) QuickShip, Inc. and Rhino Services, LLC and (b) any Subsidiary formed after the Closing Date, which such Subsidiary is not engaged in any business operations and does not possess assets in excess of $10,000. "Note" means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit C. "Obligations" means (a) all advances to, and debts, liabilities, fees, commissions, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding and (b) all existing or future payment and other obligations owing by the Borrower under any Swap Contract (which such Swap Contract is permitted hereunder) entered into with any Person that is a Lender or an Affiliate thereof at the time such Swap Contract is entered into. 19 "Organization Documents" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity. "Outstanding Amount" means (a) with respect to Revolving Credit Loans, the Term Loan and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Credit Loans, the Term Loan and Swing Line Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date. "Participant" has the meaning set forth in Section 11.07(d). "PBGC" means the Pension Benefit Guaranty Corporation. "Pension Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years. "Permitted Distributorship Acquisition" means the proposed purchase by the Borrower and its Subsidiaries of approximately 10 of its independent distributors for a total consideration of approximately $22,700,000 (plus an amount of assumed liabilities and accruals not to exceed $10,000,000 in the aggregate), of which approximately $19,000,000 will be made in the form of common stock of the Borrower. "Permitted Acquisition" means any Investment permitted pursuant to Section 8.02(f) or Section 8.02(g). "Permitted Liens" means the Liens permitted pursuant to Section 8.01. "Permitted Reorganization" means any one or more (or any combination) of the following transactions: (a) a merger, consolidation or any analogous reorganization or transaction of a Loan Party with a Proposed Loan Party provided that the Proposed Loan Party is the surviving entity in the case of a merger or (b) a sale, lease, transfer or other disposition of any 20 assets by a Loan Party to another Loan Party and/or a Proposed Loan Party; provided that in each case: (i) each Loan Party or Proposed Loan Party is Solvent and will be Solvent immediately after giving effect to any such transaction, (ii) no Default or Event of Default exists or will exist immediately after giving effect to any such transaction, (iii) no Loan Party that survives the Permitted Reorganization shall be released from this Agreement or the other Loan Documents; (iv) immediately following the Permitted Reorganization, the Proposed Loan Parties and the Loan Parties surviving the Permitted Reorganization shall own all of the assets that were owned by the Loan Parties immediately preceding the Permitted Reorganization (except for Dispositions otherwise expressly permitted under this Agreement), and (v) the Borrower, its Subsidiaries and each Proposed Loan Party shall have complied with applicable provisions of Section 8.04(c). For purposes of this definition of "Permitted Reorganization," any party formed specifically to effect the Permitted Reorganization shall be deemed "Solvent." "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate. "Proposed Loan Party" means, with respect to any Permitted Reorganization, (a) a Wholly-Owned Subsidiary of a Loan Party that joins this Agreement and the other Loan Documents as a Borrower or Guarantor on the effective date of such Permitted Reorganization or (b) with the consent of the Lenders, which consent shall not be unreasonably withheld, a Person that joins this Agreement and the other Loan Documents as a Borrower on the effective date of such Permitted Reorganization and agrees to be substituted for Blue Rhino Corporation as the Borrower under this Agreement and a Wholly-Owned Subsidiary of such Person that joins this Agreement and other Loan Documents as a Borrower or a Guarantor on the effective date of such Permitted Reorganization. "R4 Technical Center" means R4 Technical Center - North Carolina, LLC, a Delaware limited liability company. "Register" has the meaning set forth in Section 11.07(c). "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived. "Request for Credit Extension" means (a) with respect to a Borrowing, conversion or continuation of Revolving Credit Loans or the Term Loan, a Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice. "Required Lenders" means, as of any date of determination, Lenders holding more than 66-2/3% of the sum of (a) the Revolving Credit Commitments (or the Revolving Credit Outstandings if the Revolving Credit Commitments have been terminated (with the aggregate amount of each Lender's risk participation and funded participation in L/C Obligations and 21 Swing Line Loans being deemed "held" by such Lender for purposes of this definition)) and (b) the Term Loans; provided that (i) the Commitment of, and the portion of the Revolving Credit Outstandings or the Term Loan, as applicable, held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders and (ii) "Required Lenders" shall at all time be comprised of at least three (3) Lenders. "Responsible Officer" means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other equity interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other equity interest or of any option, warrant or other right to acquire any such capital stock or other equity interest. "Revolving Credit Borrowing" means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01. "Revolving Credit Commitment" means, as to each Lender, its obligation to (a) to make Revolving Credit Loans in accordance with the provisions of Section 2.01(a), (b) to purchase participations in L/C Obligations and (c) to purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amounts set forth opposite such Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. "Revolving Credit Commitments" means the aggregate Revolving Credit Commitment of all Lenders. On the Closing Date the Revolving Credit Commitments shall be $45,000,000. "Revolving Credit Commitment Percentage" means, as to each Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Revolving Credit Commitment of such Lender at such time and the denominator of which is the amount of the Revolving Credit Commitments at such time; provided that if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 9.02, then the Revolving Credit Commitment Percentage of each Lender shall be determined based on the Revolving Credit Commitment Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof. The initial Revolving Credit Commitment Percentage of each Lender is set forth opposite the name of 22 such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable. "Revolving Credit Loan" has the meaning set forth in Section 2.01(a). "Revolving Credit Maturity Date" means November 10, 2005. "Revolving Credit Outstandings" means the aggregate Outstanding Amount of all Revolving Credit Loans, Swing Line Loans and L/C Obligations. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Security Documents" means the Collateral Agreement and any documents creating a Lien for the benefit of the Administrative Agent executed by any Loan Party after the Closing Date, including all filings, financing statements and other documents delivered in connection therewith. "Senior Subordinated Debt" means the obligations of the Borrower and others in the initial principal amount of $15,000,000 incurred pursuant to the Senior Subordinated Debt Documents, as such documents may be amended, restated, supplemented or otherwise modified in a manner consistent with the terms hereof. "Senior Subordinated Debt Documents" means the collective reference to (a) the Investment Agreement and the Senior Subordinated Debenture, each dated as of June 15, 2001 by and among the Borrower, certain Subsidiaries of the Borrower and Allied Capital Corporation, and (b) each other "Loan Document" (as defined in the Investment Agreement), in each case, as amended, restated, supplemented or otherwise modified pursuant to the terms hereof. "Shareholders' Equity" means, as of any date of determination, consolidated shareholders' equity of the Borrower and its Subsidiaries as of that date determined in accordance with GAAP. "Solvent" means, as to the Borrower and its Subsidiaries on a particular date, that any such Person (a) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is able to pay its debts as they mature, (b) owns property having a value, both at fair valuation and at present fair saleable value, greater than the amount required to pay its probable liabilities (including contingencies), and (c) does not believe that it will incur debts or liabilities beyond its ability to pay such debts or liabilities as they mature. "Subordinated Indebtedness" means the collective reference to the Senior Subordinated Debt and any other Indebtedness of the Borrower or any Subsidiary subordinated in right and time of payment to the Obligations and containing such other terms and conditions (including, without limitation, subordination terms), in each case as are satisfactory to the Required Lenders. 23 "Subsidiary" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower. "Swap Contract" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement. "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender). "Swing Line" means the revolving credit facility made available by the Swing Line Lender pursuant to Section 2.05. "Swing Line Borrowing" means a borrowing of a Swing Line Loan pursuant to Section 2.05. "Swing Line Lender" means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder. "Swing Line Loan" has the meaning set forth in Section 2.05(a). 24 "Swing Line Loan Notice" means a notice of a Swing Line Borrowing pursuant to Section 2.05(b), which, if in writing, shall be substantially in the form of Exhibit B. "Swing Line Sublimit" means an amount equal to the lesser of (a) $5,000,000 and (b) the Revolving Credit Commitments. The Swing Line Sublimit is part of, and not in addition to, the Revolving Credit Commitments. "Synthetic Lease Obligation" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). "Term Loan" shall have the meaning assigned to such term in Section 2.02. "Term Loan Borrowing" means a borrowing consisting of simultaneous Term Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.02. "Term Loan Commitment" means, as to each Lender, its obligation to make its portion of the Term Loan in accordance with the provisions of Section 2.02(a) in an aggregate principal amount at any one time outstanding not to exceed the amounts set forth opposite such Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. "Term Loan Commitments" means the aggregate Term Loan Commitment of all Lenders. On the Closing Date the Term Loan Commitments shall be $15,000,000. "Term Loan Maturity Date" means September 30, 2005. "Term Loan Percentage" means, as to each Lender (a) prior to making the Term Loan, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Term Loan Commitment of such Lender at such time and the denominator of which is the amount of the Term Loan Commitments at such time and (b) after the making of the Term Loan, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the outstanding principal balance of the Term Loan of such Lender and the denominator of which is the aggregate outstanding principal balance of the Term Loan of all the Lenders. The initial Term Loan Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable. "Threshold Amount" means $1,000,000. "Type" means, with respect to a Revolving Credit Loan or Term Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan. 25 "UCC" means, subject to Section 1.04, the Uniform Commercial Code in effect in the State of North Carolina, as amended or modified from time to time. "Unfunded Pension Liability" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." mean the United States of America. "Unreimbursed Amount" has the meaning set forth in Section 2.04(c)(i). "Valve Inventory" means Inventory of any Loan Party in the form of cylinder valves which are subject to the proprietary intellectual property or other rights (including, without limitation, all TS2 valves) of such Loan Party. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity or 100% of the ordinary voting power or 100% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by such Person or one or more wholly owned subsidiaries of such Person or by such Person and one or more wholly owned subsidiaries of such Person. 1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) (i) The words "herein," "hereto," "hereof" and "hereunder" and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof. (ii) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears. (iii) The term "including" is by way of example and not limitation. (iv) The term "documents" includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form. (c) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including;" the words "to" and "until" each mean "to but excluding;" and the word "through" means "to and including." 26 (d) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document. 1.03 ACCOUNTING TERMS. (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. (b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. 1.04 ROUNDING. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement and any determination of the Borrowing Base shall be calculated by dividing the appropriate component by the other component or, with respect to the Borrowing Base, multiplying such component by the advance rate percentage, carrying the result to one place more than the number of places by which such ratio or percentage is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). 1.05 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law. 1.06 TIMES OF DAY. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable). 1.07 LETTER OF CREDIT AMOUNTS. Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of 27 Credit or the Letter of Credit Application therefor, whether or not such maximum face amount is in effect at such time. 1.08 BORROWING BASE. The Borrowing Base shall be determined and computed to avoid duplication or multiple inclusion of any item of Collateral. The Administrative Agent may make such adjustments or corrections to any Borrowing Base Certificate as the Administrative Agent may determine in good faith is necessary or appropriate to determine and compute the Borrowing Base in accordance with the intent of this Agreement, and any such determination will be binding on the Borrower. ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS 2.01 REVOLVING CREDIT LOANS. (a) Revolving Credit Commitment. Subject to the terms and conditions set forth herein, each Lender severally agrees to make revolving loans (each such loan, a "Revolving Credit Loan") to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender's Revolving Credit Commitment; provided, however, that after giving effect to any Revolving Credit Borrowing, (i) the Revolving Credit Outstandings shall not exceed the Borrowing Limit, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender's Revolving Credit Commitment Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender's Revolving Credit Commitment Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender's Revolving Credit Commitment. Within the limits of each Lender's Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.06, and reborrow under this Section 2.01. Revolving Credit Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein. (b) Borrowing Procedures. (i) Each Revolving Credit Borrowing shall be made upon the Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to the requested date of any Revolving Credit Borrowing of Eurodollar Rate Loans, and (B) on the requested date of any Revolving Credit Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.01(b) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Revolving Credit Borrowing of Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole multiple of $500,000 in excess thereof. Except as provided in Section 2.04(c) and Section 2.05(c), each Revolving Credit Borrowing of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (A) the requested date of the Revolving Credit Borrowing (which shall be a Business Day), (B) the principal amount of Revolving Credit Loans to be borrowed, (C) the 28 Type of Revolving Credit Loans to be borrowed, and (D) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Revolving Credit Loan in a Loan Notice, then the applicable Revolving Credit Loans shall be made as Base Rate Loans. If the Revolving Credit Borrower requests a Borrowing of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. (ii) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Revolving Credit Commitment Percentage of the applicable Revolving Credit Loans. Each Lender shall make the amount of its Revolving Credit Loan available to the Administrative Agent in immediately available funds at the Administrative Agent's Office not later than 2:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 5.02 (and, if such Revolving Credit Borrowing is the initial Credit Extension, Section 5.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (A) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (B) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided, however, that if, on the date the Loan Notice with respect to such Revolving Credit Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Revolving Credit Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings and second, to the Borrower as provided above. (iii) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Revolving Credit Loans bearing interest based upon the Eurodollar Rate upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. At any time that Revolving Credit Loans bearing interest based upon the Base Rate are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America's prime rate used in determining the Base Rate promptly following the public announcement of such change. (iv) During the existence of a Default, no Loans may be requested as Eurodollar Rate Loans without the consent of the Required Lenders. 2.02 TERM LOAN. (a) Term Commitment. Subject to the terms and conditions set forth herein, each Lender severally agrees to make available to the Borrower on the Closing Date such Lender's Term Loan Percentage of a term loan (the "Term Loan"; each component thereof may be referred to herein ass a "Term Loan") in an aggregate principal amount equal to the Term Loan Commitments. The Term Loan may consist of Base Rate Loans or Eurodollar Rate Loans, or a combination thereof, as the Borrower may request. Amounts repaid on the Term Loan may not be reborrowed. 29 (b) Borrowing Procedures. (i) The Borrower shall give irrevocable notice to the Administrative Agent, which may be given by telephone, not later than 11:00 a.m. (or such later time as the Administrative Agent and the Borrower shall agree) (A) on the Closing Date, with respect to the portion of the Term Loan initially consisting of a Base Rate Loan, or (B) on the third Business Day prior to the Closing Date, with respect to the portion of the Term Loan initially consisting of one or more Eurodollar Rate Loans. Each Term Loan Borrowing consisting of Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole multiple of $500,000 in excess thereof. Each portion of the Term Loan consisting of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Such Loan Notice shall be irrevocable and shall specify (A) that the funding of the Term Loan is requested, (B) whether the funding of the Term Loan shall be comprised of Base Rate Loans, Eurodollar Rate Loans or a combination thereof, and (C) if applicable, the duration of the Interest Period with respect thereto. If the Borrower shall fail to deliver such Loan Notice to the Administrative Agent by 11:00 a.m. on the third Business Day prior to the Closing Date, then the full amount of the Term Loan shall be disbursed on the Closing Date as a Base Rate Loan. If the Borrower fails to specify a Type of Loan in a Loan Notice, then the Term Loan shall be made as a Base Rate Loan. If the Borrower requests that the Term Loan or a portion thereof consist of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. Each telephonic notice by the Borrower pursuant to this Section 2.02(b) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. (ii) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Term Loan Percentage of the Term Loan. Each Lender shall make the amount of the Term Loan to be made by such Lender available to the Administrative Agent in immediately available funds at the Administrative Agent's Office not later than 2:00 p.m. on the Closing Date. Upon satisfaction of the applicable conditions set forth in Section 5.01 and Section 5.02, the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (A) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (B) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower. (iii) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for the portion of the Term Loan bearing interest based upon Eurodollar Rate Loans upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. At any time that any portion of the Term Loan bearing interest based upon Base Rate is outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America's prime rate used in determining the Base Rate promptly following the `public announcement of such change. 2.03 CONVERSIONS AND CONTINUATIONS OF REVOLVING CREDIT LOANS AND TERM LOAN. 30 (a) The Borrower shall have the option to convert Loans (other than Swing Line Loans) from one Type to the other and to continue Eurodollar Rate Loans. Each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the requested date of any conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.03(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole multiple of $500,000 in excess thereof. Each conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a conversion of Revolving Credit Loans or a Term Loan, as applicable, from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the conversion or continuation (which shall be a Business Day), (iii) the principal amount of Loans to be converted or continued, (iv) the Type of Loans to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to give a timely notice requesting a conversion or continuation of Eurodollar Rate Loans, then the applicable Eurodollar Rate Loans shall be converted to Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a conversion to or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. (b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender. If no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, no Loans may be converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders. 2.04 LETTERS OF CREDIT. (a) Letter of Credit Commitment. (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.04, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower, and to amend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the Letters of Credit; and (B) the Lenders severally agree to participate 31 in Letters of Credit issued for the account of the Borrower; provided that the L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit if as of the date of such L/C Credit Extension, (x) the Revolving Credit Outstandings would exceed the Borrowing Limit, (y) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender's Revolving Credit Commitment Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender's Revolving Credit Commitment Percentage of the Outstanding Amount of all Swing Line Loans would exceed such Lender's Revolving Credit Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. (ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it; (B) subject to Section 2.04(b)(iii), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last renewal, unless the Required Lenders have approved such expiry date; (C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date; (D) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer; or (E) such Letter of Credit is in an initial amount less than $75,000, in the case of a commercial Letter of Credit, or $250,000, in the case of a standby Letter of Credit. (iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. 32 (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender's Revolving Credit Commitment Percentage times the amount of such Letter of Credit. (iii) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an "Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal Letter of Credit must permit the L/C Issuer to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "Nonrenewal Notice Date") in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) 33 the L/C Issuer to permit the renewal of such Letter of Credit at any, time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such renewal if (A) the L/C Issuer has determined that it would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.04(a)(ii) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is two Business Days before the Nonrenewal Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such renewal or (2) from the Administrative Agent, any Lender or the Borrower that one. or more of the applicable conditions specified in Section 5.02 is not then satisfied. (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment. (c) Drawings and Reimbursements; Funding of Participations. (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an "Honor Date"), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the "Unreimbursed Amount"), and the amount of such Lender's Revolving Credit Commitment Percentage thereof. In such event, the Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.01 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Revolving Credit Commitments and the conditions set forth in Section 5.02 (other than the delivery of a Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.04(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.04(c)(i) make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent's Office in an amount equal to its Revolving Credit Commitment Percentage of the Unreimbursed Amount not later than 2:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.04(c)(iii), each Lender that so makes funds available shall be deemed to have made a Revolving Credit Loan bearing interest at the Base Rate to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer. (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in 34 Section 5.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender's payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.04. (iv) Until each Lender funds its Revolving Credit Loan or L/C Advance pursuant to this Section 2.04(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender's Revolving Credit Commitment Percentage of such amount shall be solely for the account of the L/C Issuer. (v) Each Lender's obligation to make Revolving Credit Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.04(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender's obligation to make Revolving Credit Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 5.02 (other than delivery by the Borrower of a Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein. (vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error. (d) Repayment of Participations. (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender's L/C Advance in respect of such payment in accordance with Section 2.04(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Revolving Credit Commitment Percentage thereof (appropriately adjusted, in the case of interest 35 payments, to reflect the period of time during which such Lender's L/C Advance was outstanding) in the same funds as those received by the Administrative Agent. (ii) If any payment received by the Administrative Agent for, the account of the L/C Issuer pursuant to Section 2.04(c)(i) is required to be returned under any of the circumstances described in Section 11.06 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Revolving Credit Commitment Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following: (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto; (ii) the existence of any claim, counterclaim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit; (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower. The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered `to it and, in the event of any claim of noncompliance with 36 the Borrower's instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid. (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, any Agent-Related Person nor any of the respective correspondents, participants or assignees of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.04(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer's willful misconduct or gross negligence or the L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. (g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C Borrowing or the Letter of Credit Expiration Date, as the case may be). For purposes hereof, "Cash Collateralize" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented to by the 37 Lenders).. Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. (h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued, (i) the rules of the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance (including the ICC decision published by the Commission on Banking Technique and Practice on April 6, 1998 regarding the European single currency (euro)) shall apply to each commercial Letter of Credit. (i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Revolving Credit Commitment Percentage, letter of credit fees (the "Letter of Credit Fees") for each Letter of Credit equal to the Applicable Rate times the daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit). The Letter of Credit Fees shall be computed on a quarterly basis in arrears. The Letter of Credit Fees shall be due and payable on the first Business Day after the end of each calendar quarter, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there is any change in the Applicable Rate during any quarter, the daily maximum amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit in the amounts and at the times specified in the Fee Letter. In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable. (k) (k) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control. 2.05 SWING LINE LOANS. (a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing Line Lender agrees to make loans (each such loan, a "Swing Line Loan") to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to 38 exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Revolving Credit Commitment Percentage of the Outstanding Amount of Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender's Revolving Credit Commitment; provided, however, that after giving effect to any Swing Line Loan, (i) the Revolving Credit Outstandings shall not exceed the Borrowing Limit, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender's Revolving Credit Commitment Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender's Revolving Credit Commitment Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender's Revolving Credit Commitment, and provided, further, that the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.05, prepay under Section 2.06, and reborrow under this Section 2.05. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender's Revolving Credit Commitment Percentage times the amount of such Swing Line Loan. (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Borrower's irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the proviso to the first sentence of Section 2.05(a), or (B) that one or more of the applicable conditions specified in Article V is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower at its office by crediting the account of the Borrower on the books of the Swing Line Lender in immediately available funds. (c) Refinancing of Swing Line Loans. (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender 39 to so request on its behalf), that each Lender make a Revolving Credit Loan bearing interest at the Base Rate in an amount equal to such Lender's Revolving Credit Commitment Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.01, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Revolving Credit Commitments and the conditions set forth in Section 5.02. The Swing Line Lender shall furnish the Borrower with a copy of the applicable Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Revolving Credit Commitment Percentage of the amount specified in such Loan Notice available to the Administrative Agent in immediately available funds for the account of the Swing Line Lender at the Administrative Agent's Office not later than 2:00 p.m. on the day specified in such Loan Notice, whereupon, subject to Section 2.05(c)(ii), each Lender that so makes funds available shall be deemed to have made a Revolving Credit Loan bearing interest at the Base Rate to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender. (ii) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in accordance with Section 2.05(c)(i), the request for Revolving Credit Loans bearing interest at the Base Rate submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender's payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.05c)(i) shall be deemed payment in respect of such participation. (iii) If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.05(c) by the time specified in Section 2.05(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error. Each Lender's obligation to make Revolving Credit Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.05(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender's obligation to make Revolving Credit Loans pursuant to this Section 2.05(c) is subject to the conditions set forth in Section 5.02. No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein. 40 (d) Repayment of Participations. (i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Revolving Credit Commitment Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's risk participation was funded) in the same funds as those received by the Swing Line Lender. (ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 11.06 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Revolving Credit Commitment Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender funds its Revolving Credit Loan bearing interest at the Base Rate or risk participation pursuant to this Section 2.05 to refinance such Lender's Revolving Credit Commitment Percentage of any Swing Line Loan, interest in respect of such Revolving Credit Commitment Percentage shall be solely for the account of the Swing Line Lender. (f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender. 2.06 PREPAYMENTS. (a) Voluntary Prepayments of Revolving Credit Loans. The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Credit Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole multiple of $500,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Revolving Credit Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender's Revolving Credit Commitment Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional 41 amounts required pursuant to Section 4.05. Each such prepayment shall be applied to the Revolving Credit Loans of the Lenders in accordance with their respective Revolving Credit Commitment Percentages. (b) Voluntary Prepayments of Swing Line Loans. The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. (c) Voluntary Prepayments of Term Loan. The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay the Term Loan in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole multiple of $500,000 in excess thereof, and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender's Term Loan Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 4.05. Each such prepayment shall be applied to the outstanding principal installments of the Term Loan in inverse order of maturity thereof (and shall be applied to the Term Loan of the Lenders in accordance with their respective Term Loan Percentages). (d) Mandatory Prepayments of Revolving Credit Loans. (i) If for any reason the Revolving Credit Outstandings at any time exceed the Borrowing Limit then in effect, the Borrower shall immediately prepay Revolving Credit Loans and/or Swing Line Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to the lesser of (A) the Revolving Credit Outstandings and (B) the amount of such excess; provided that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.06(d) unless after the prepayment in full of the Revolving Credit Loans and Swing Line Loans the Revolving Credit Outstandings exceed the Borrowing Limit then in effect. 42 (ii) In the event proceeds ("Excess Proceeds") remain after the prepayment of Term Loans pursuant to Section 2.06(e), the amount of such Excess Proceeds shall be used on the date of the required prepayment under Section 2.06(e) to prepay the outstanding principal amount of the Revolving Credit Loans without a corresponding reduction of the Revolving Credit Commitment. (e) Mandatory Prepayments of Term Loan. (i) Debt Proceeds. The Borrower shall make mandatory principal prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from any incurrence of Indebtedness permitted pursuant to Section 8.03(h) or otherwise permitted by the Required Lenders, by the Borrower or any of its Subsidiaries. Such prepayment shall be made within three (3) Business Days after the date of receipt of Net Cash Proceeds of any such transaction. (ii) Equity Proceeds. The Borrower shall make mandatory principal prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from any offering of equity securities by the Borrower or any of its Subsidiaries (other than solely as a result of (A) offerings of equity securities made in connection with any employee stock option, incentive plans or stock purchase plan or made in connection with compensation or incentive plans for directors and officers, in each case entered into in the ordinary course of business and (B) the exercise of warrants existing on the Closing Date and set forth on Schedule 6.13). Any such prepayments shall be made within three (3) Business Days after the date of receipt of Net Cash Proceeds of any such transaction. Notwithstanding any of the foregoing to the contrary, the Borrower may apply the Net Cash Proceeds of the Additional Equity Offering to prepay the Senior Subordinated Debt pursuant to Section 8.14 (the amount of such prepayment in-full, the "Prepayment Amount"); provided that (1) no Default or Event of Default is continuing or would result from such prepayment, (2) an amount of such Net Cash Proceeds equal to $50,000,000 less the Prepayment Amount shall be applied to repay outstanding Revolving Credit Loans pursuant to Section 2.06(d)(ii) as if such proceeds were "Excess Proceeds" and (3) any such Net Cash Proceeds in excess of $50,000,000 shall be applied in accordance with Section 2.06(e)(v). (iii) Asset Sale Proceeds. (A) No later than one hundred eighty (180) days following the Borrower's receipt thereof, the Borrower shall make mandatory principal prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from the Disposition or series of related Dispositions of assets by the Borrower or any of its Subsidiaries (other than the Non-Propane Products Divestiture) permitted pursuant to Section 8.05(Q) or (h) (the "Disposition Proceeds"); provided that (I) subject to the following clause (II), any prepayment required pursuant to this Section 2.06(e)(iii) with respect to any Disposition Proceeds of less than $200,000 (any such amounts, the "Deferred Proceeds") may be deferred until such time as the aggregate amount of all such Deferred Proceeds that have not previously been reinvested or applied to prepay any Term Loans equals or exceeds $200,000 and (II) upon and during the continuance of an Event of Default and upon notice from the Administrative Agent, all Disposition Proceeds, received by the Borrower and its Subsidiaries shall be applied to make 43 prepayments of the Term Loan, such prepayments to be made within three (3) Business Days after the Borrower's receipt of such Disposition Proceeds. Notwithstanding any of the foregoing to the contrary, the Borrower may apply the Net Cash Proceeds of the Non-Propane Products Divestiture to prepay the Senior Subordinated Debt pursuant to Section 8.14; provided that (1) no Default or Event of Default is continuing or would result from such prepayment, and (2) any such Net Cash Proceeds in excess of the amount necessary to prepay the Senior Subordinated shall be applied to repay outstanding Revolving Credit Loans pursuant to Section 2.06(d)(ii) as if such proceeds were "Excess Proceeds". (B) he Borrower shall make mandatory principal prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from any award, judgment or other recovery (including, without limitation, any settlement) received in connection with the action by the Borrower, as plaintiff, against PricewaterhouseCoopers, L.L.P., as defendant, pending in the General Court of Justice, Superior Division, Forsyth County, North Carolina (Case No. 99 CVS 9706), by the Borrower or any of its Subsidiaries. Such prepayment shall be made within three (3) Business Days after the date of receipt of Net Cash Proceeds of any such award, judgment or other recovery. (iv) Insurance and Condemnation Proceeds. No later than one hundred eighty (180) days following the date of receipt by the Borrower or any of its Subsidiaries of any Net Cash Proceeds under any of the insurance policies maintained pursuant to Section 7.07 or from any condemnation proceeding (the "Insurance and Condemnation Proceeds") which have not been reinvested as of such date in similar replacement assets, the Borrower shall make mandatory principal prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below in amounts equal to one hundred percent (100%) of the aggregate amount of such Insurance and Condemnation Proceeds received by the Borrower or any of its Subsidiaries. Notwithstanding any of the foregoing to the contrary, upon and during the continuance of an Event of Default and upon notice from the Administrative Agent, all Insurance and Condemnation Proceeds, received by the Borrower and its Subsidiaries shall be applied to make prepayments of the Term Loan, such prepayments to be made within three (3) Business Days after the Borrower's receipt of such Insurance and Condemnation Proceeds. (v) Notice; Manner of Payment. Upon the occurrence of any event triggering the prepayment requirement under Section 2.06(e)(i) through and including Section 2.06(e)(iv), the Borrower shall promptly give written notice to the Administrative Agent and upon receipt of such notice, the Administrative Agent shall promptly so notify the Lenders. Each prepayment under this Section 2.06(e) shall be applied as follows: first, to reduce in inverse order of maturity the remaining scheduled principal installments of the Term Loan pursuant to Section 2.08(c) and second, to the extent of any excess, to repay the Revolving Credit Loans pursuant to Section 2.06(d)(ii) to prepay the outstanding principal amount of the Revolving Credit Loans without a corresponding reduction of the Revolving Credit Commitment. (vi) Prepayments of Term Loan. Amounts prepaid under the Term Loan pursuant to this Section 2.06(e) may not be reborrowed and will constitute a permanent reduction 44 in the Term Loan Commitment. Each prepayment shall be accompanied by any amount required to be paid pursuant to Section 4.05 hereof. 2.07 VOLUNTARY TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The Borrower may, upon notice to the Administrative Agent, terminate the Revolving Credit Commitments, or from time to time permanently reduce the Revolving Credit Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $2,000,000 or any whole multiple of $500,000 in excess thereof, (iii) the Borrower shall not terminate or reduce the Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Revolving Credit Outstandings would exceed the Borrowing Limit, and (iv) if, after giving effect to any reduction of the Revolving Credit Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Revolving Credit Commitments, such Sublimit shall be automatically reduced by the amount of such excess. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Revolving Credit Commitments. Any reduction of the Revolving Credit Commitments shall be applied to the Revolving Credit Commitment of each Lender according to its Revolving Credit Commitment Percentage. All Commitment Fees accrued until the effective date of any termination of the Revolving Credit Commitments shall be paid on the effective date of such termination. 2.08 REPAYMENT OF LOANS. (a) Repayment of Revolving Credit Loans. The Borrower shall repay to the Lenders on the Revolving Credit Maturity Date the aggregate principal amount of Revolving Credit Loans outstanding on such date. (b) Repayment of Swing Line Loans. The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date five Business Days after such Loan is made and (ii) the Revolving Credit Maturity Date. (c) Repayment of Term Loan. The Borrower shall repay the outstanding principal amount of the Term Loan in consecutive quarterly installments commencing December 31, 2002 as follows (as such installments may hereafter be adjusted as a result of prepayments made pursuant to Section 2.06(e)), in each case unless accelerated sooner pursuant to Section 9.02: - ------------------------------------------------------------------------------- YEAR PAYMENT DATE PRINCIPAL INSTALLMENT ($) - ------------------------------------------------------------------------------- 2002 December 31, 2002 1,000,000 - ------------------------------------------------------------------------------- 2003 March 31, 2003 1,000,000 ----------------------------------------------------------------- June 30, 2003 1,000,000 ----------------------------------------------------------------- September 30, 2003 1,000,000 ----------------------------------------------------------------- December 31, 2003 1,250,000 - ------------------------------------------------------------------------------- 45 - ------------------------------------------------------------------------------- YEAR PAYMENT DATE PRINCIPAL INSTALLMENT ($) - ------------------------------------------------------------------------------- 2004 March 31, 2004 1,250,000 ----------------------------------------------------------------- June 30, 2004 1,250,000 ----------------------------------------------------------------- September 30, 2004 1,250,000 ----------------------------------------------------------------- December 31, 2004 1,500,000 ---------------------------------------------------------------------------- 2005 March 31, 2005 1,500,000 ----------------------------------------------------------------- June 30, 2005 1,500,000 ----------------------------------------------------------------- September 30, 2005 1,500,000 ---------------------------------------------------------------------------- If not sooner paid, the Term Loan shall be paid in full, together with accrued interest thereon, on the Term Loan Maturity Date. ARTICLE III. GENERAL LOAN PROVISIONS 3.01 INTEREST. (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan (other than Swing Line Loans) shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate. (b) If any amount payable by the Borrower under any Loan Document is not paid when due (without regard to. any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Furthermore, upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand. (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. 3.02 FEES. In addition to certain fees described in subsections (i) and (j) of Section 2.04: 46 (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Revolving Credit Commitment Percentage, a commitment fee (the "Commitment Fee") equal to the Applicable Rate times the actual daily amount by which the Revolving Credit Commitments exceed the sum of (i) the Outstanding Amount of Revolving Credit Loans and (ii) the Outstanding Amount of L/C Obligations. The Commitment Fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article V is not met, and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter, commencing with the first such date to occur after the Closing Date, and on the Revolving Credit Maturity Date. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. (b) Other Fees. (i) The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times separately agreed upon. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever. (ii) The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever. 3.03 COMPUTATION OF INTEREST AND FEES. All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 3.05(a), bear interest for one day. 3.04 EVIDENCE OF DEBT. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made 47 through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender's Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto. (b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. 3.05 PAYMENTS GENERALLY. (a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Revolving Credit Commitment Percentage or Term Loan Percentage, as applicable (or other applicable share as provided herein), of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. (b) If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. (c) Unless the Borrower or any Lender has notified the Administrative Agent, prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then: (i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and 48 (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the "Compensation Period") at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder. A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error. (d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article III, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article V are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest. (e) The obligations of the Lenders hereunder to make Loans and to fund participations in Letters of Credit and Swing Line Loans are several and not joint. The failure of any Lender to make any Loan or to fund any such participation on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or purchase its participation. (f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. SHARING OF PAYMENTS. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it, any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations or Swing Line Loans held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter 49 recovered from the purchasing Lender under any of the circumstances described in Section 11.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (i) the amount of such paying Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 11.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the, portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. 3.06 SECURITY. The Obligations shall be secured as provided in the Security Documents. ARTICLE IV. TAXES, YIELD PROTECTION AND ILLEGALITY 4.01 TAXES. (a) Any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its overall net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Administrative 50 Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes"). (c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent or to such Lender, as the case may be, at the time interest is paid, such additional amount that the Administrative Agent or such Lender specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that the Administrative Agent or such Lender would have received if such Taxes or Other Taxes had not been imposed. (d) The Borrower agrees to indemnify the Administrative Agent and each Lender for, from and against (i) the full amount of Taxes and Other Taxes. (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender, (ii) amounts payable under Section 4.01(c) and (iii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor. 4.02 ILLEGALITY. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender, to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender. 51 4.03 INABILITY TO DETERMINE RATES. If the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Revolving Credit Borrowing of Base Rate Loans in the amount specified therein. 4.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY. (a) If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender's compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 4.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements utilized in the determination of the Eurodollar Rate), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction. (b) If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender's desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction; provided that no compensation shall be payable pursuant to this clause (b) if the applicable Lender fails to demand compensation for such increased costs within one-hundred eighty (180) days following the date on which such Lender has actual knowledge of the event resulting in such increase. 4.05 FUNDING LOSSES. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of: 52 (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 11.16; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 4.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded. 4.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION. A certificate of the Administrative Agent or any Lender claiming compensation under this Article IV and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods. 4.07 SURVIVAL. All of the Borrower's obligations under this Article IV shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder. ARTICLE V. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 5.01 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent: (a) Loan Documents, Certificates and Opinions. The Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and its legal counsel: (i) executed counterparts of this Agreement, the Security Documents, the Guaranty Agreement and any other applicable Loan Documents, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower; 53 (ii) a Note executed by the Borrower in favor of each Lender requesting a Note; (iii) a certificate of Responsible Officers of each Loan Party certifying as to the incumbency and genuineness of the signature of each officer of each Loan Party executing Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (A) the articles or certificate of incorporation or formation of each Loan Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation, (B) the bylaws or other governing document of each Loan Party as in effect on the date of such certifications, (C) resolutions duly adopted by the board of directors or other governing body of each Loan Party authorizing the borrowings contemplated hereunder and the execution, delivery and performance of the Loan Documents to which it is a party, and (D) certificates as of a recent date of the good standing of each Loan Party under the laws of its jurisdiction of organization and, to the extent requested by the Administrative Agent, each other jurisdiction where each Loan Party is qualified to do business and a certificate of the relevant taxing authorities of such jurisdictions certifying that such Loan Party has filed required tax returns and owes no delinquent taxes; (iv) a certificate signed by a Responsible Officer of the Borrower certifying (A) that either (1) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (2) stating that no such consents, licenses or approvals are so required, (B) that the conditions specified in Section 5.02(a) and Section 5.02(b) have been satisfied, (C) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect; and (D) a calculation of the Consolidated Total Leverage Ratio as of the last day of the Fiscal Quarter of the Borrower most recently ended prior to the Closing Date; (v) a certificate signed by a Responsible Officer certifying that (A) the Borrower and each of its Subsidiaries (excluding QuickShip, Inc.) are each Solvent, (B) the Borrower's payables are current and not past due, (C) attached thereto are calculations evidencing compliance on a pro forma basis with the covenants contained in Section 8.15, and (D) the financial projections previously delivered to the Administrative Agent represent the good faith estimates (utilizing reasonable assumptions) of the financial condition and operations of the Borrower and its Subsidiaries; (vi) a Borrowing Base Certificate as of the most recent month end; (vii) a favorable opinion of Womble Carlyle Sandridge & Rice, counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to the matters set forth in Exhibit H and such other matters concerning the Loan Parties and the Loan Documents as the Required Lenders may reasonably request; 54 (viii) such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required Lenders reasonably may require. (b) Collateral. (i) Filings and Recordings. All filings and recordations that are necessary to perfect the security interests of the Lenders in the collateral described in the Security Documents shall have been received by the Administrative Agent and the Administrative Agent shall have received evidence satisfactory to the Administrative Agent that upon such filings and recordations such security interests constitute valid and perfected first priority Liens therein. (ii) Pledged Collateral. The Administrative Agent shall have received (A) original stock certificates or other certificates evidencing the capital stock or other ownership interests pledged pursuant to the Collateral Agreement, together with an undated stock power for each such certificate duly executed in blank by the registered owner thereof and (B) each original promissory note pledged pursuant to the Collateral Agreement. (iii) Lien Search. The Administrative Agent shall have received the results of a Lien search (including a search as to judgments, pending litigation and tax matters) made against the Loan Parties under the UCC (or applicable judicial docket) as in effect in any state in which any of its assets are located, indicating among other things that its assets are free and clear of any Lien except for Permitted Liens. (iv) Hazard and Liability Insurance. The Administrative Agent shall have received certificates of insurance, evidence of payment of all insurance premiums for the current policy year of each, and, if requested by the Administrative Agent, copies (certified by a Responsible Officer) of insurance policies in the form required under the Loan Documents and otherwise in form and substance reasonably satisfactory to the Administrative Agent. (c) Payment of Fees. Any fees required to be paid on or before the Closing Date shall have been paid. (d) Attorneys Fees. Unless waived by the Administrative Agent, the Borrower shall have paid all Attorney Costs of the Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent). (e) Existing Facility. The Existing Facility shall be repaid in full and terminated and all collateral security therefor shall be released, and the Administrative Agent shall have received a pay-off letter in form and substance satisfactory to it evidencing such repayment, termination, reconveyance and release. (f) Other Documents. All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be 55 satisfactory in form and substance to the Administrative Agent. The Administrative Agent shall have received copies of all other documents, certificates and instruments reasonably requested thereby, with respect to the transactions contemplated by this Agreement. 5.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender to honor any Request for Credit Extension is subject to the following conditions precedent: (a) The representations and warranties of the Borrower and each other Loan Party contained in Article VI, or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith that are subject to materiality or Material Adverse Effect qualifications, shall be true and correct in all respects and the. representations and warranties of the Borrower and each other Loan Party contained in Article VI or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith that are not subject to materiality or Material Adverse Effect qualifications, shall be true and correct in all material respects, in each case on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 5.02, the representations and warranties contained in subsections (a) and (b) of Section 6.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 7.01. (b) No Default or Event of Default shall exist, or would result from such proposed Credit Extension. (c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof. (d) The Administrative Agent shall have received each additional document, instrument, legal opinion or other item reasonably requested by it. Each Request for Credit Extension submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Section 5.02(a) and Section 5.02(b) have been satisfied on and as of the date of the applicable Credit Extension. 5.03 POST-CLOSING CONDITION. The Borrower shall deliver to the Administrative Agent within 45 days from the Closing Date, the results of a Lien search (including a search as to judgments, pending litigation and tax matters) made against the Loan Parties under the UCC (or applicable judicial docket) as in effect in any state in which any of its assets are located, indicating among other things that its assets are free and clear of any Lien except for Permitted Liens. ARTICLE VI. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Administrative Agent and the Lenders that: 56 6.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan Party (a) is a corporation, partnership or limited liability company duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business as now being conducted and hereafter proposed to be conducted except where the absence of any such license, authorization, consent or approval would not reasonably be expected to have a Material Adverse Effect and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except where the failure to so qualify would not reasonably be expected to have a Material Adverse Effect, and (d) is in compliance with all Laws, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. The jurisdictions in which the Borrower and its Subsidiaries are organized and qualified to do business as of the Closing Date are described on Schedule 6.01. 6.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien (other than a Permitted Lien) under, (i) any Contractual Obligation to which such Person is a party which such conflict, breach or contravention would reasonably be expected to have a Material Adverse Effect or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject, which would reasonably be expected to have a Material Adverse Effect; or (c) violate any Law which would reasonably be expected to have a Material Adverse Effect. 6.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document. Each of the Borrower and its Subsidiaries (a) has all Governmental Approvals required by any applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to the best of its knowledge, threatened attack by direct or collateral proceeding, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, (b) is in compliance with each Governmental Approval applicable to it and in compliance with all other applicable Laws relating to it or any of its respective properties, in each case except where the absence of-such Governmental Approval would not reasonably be expected to have a Material Adverse Effect and (c) has timely filed all material reports, documents and other materials required to be filed by it under all applicable Laws with any Governmental Authority and has retained all material records and documents required to be retained by it under applicable Law. 6.04 BINDING EFFECT. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is 57 party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms. 6.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all indebtedness and other liabilities, direct or contingent required to be shown in accordance with GAAP, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, commitments and Indebtedness. (b) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect. (c) As of the Closing Date and after giving effect to each Credit Extension made hereunder, the Borrower and each of its Subsidiaries (other than QuikShip, Inc.) will be Solvent. 6.06 LITIGATION. Except as set forth on Schedule 6.06, there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect. 6.07 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default or an Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document. 6.08 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each Subsidiary has good record and marketable Title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, and sufficient Title or rights to use all of its personal property and assets, including, but not limited to, those reflected on the balance sheets of the Borrower and its Subsidiaries delivered pursuant to Section 7.01, except those which have been disposed of by the Borrower or its Subsidiaries subsequent to such date which dispositions have been in the ordinary course of business or as otherwise expressly permitted hereunder. The property of the Borrower and its Subsidiaries is subject to no Liens, other than Permitted Liens. 58 6.09 ENVIRONMENTAL COMPLIANCE. (a) Except as set forth' on Schedule 6.09 ("Disclosed Environmental Matters"), the properties owned, leased or operated by the Borrower and its Subsidiaries now or in the past do not contain, and to their knowledge have not previously contained, any Hazardous Materials in amounts or concentrations which (i) constitute or constituted a violation of applicable Environmental Laws which would reasonably be expected to have a Material Adverse Effect or (ii) could give rise to liability under applicable Environmental Laws, which would reasonably be expected to have a Material Adverse Effect; (b) The Borrower, each Subsidiary and such properties and all operations conducted in connection therewith are in compliance in all material respects, and have been in compliance in all material respects, with all applicable Environmental Laws, and there is no contamination at, under or about such properties or such operations which could interfere with the continued operation of such properties or impair the fair saleable value thereof, in each case, which would reasonably be expected to have a Material Adverse Effect; (c) Except for Disclosed Environmental Matters, neither the Borrower nor any Subsidiary thereof has received any notice of violation, alleged violation, non-compliance, liability or potential `liability regarding environmental matters, Hazardous Materials, or compliance with Environmental Laws, in each case, which would reasonably be expected to have a Material Adverse Effect, nor does the Borrower or any Subsidiary thereof have knowledge or reason to believe that any such notice will be received or is being threatened; (d) Hazardous Materials have not been transported or disposed of to or from the properties owned, leased or operated by the Borrower and its Subsidiaries in violation of, or in a manner or to a location which could give rise to liability under, Environmental Laws which would reasonably be expected to have a Material Adverse Effect, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of such properties in violation. of, or in a manner that could give rise to liability under, any applicable Environmental Laws, which would reasonably be expected to have a Material Adverse Effect; (e) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower or any Subsidiary thereof is or will be named as a potentially responsible party with respect to such properties or operations conducted in connection therewith which would reasonably be expected to have a Material Adverse Effect, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to Borrower, any Subsidiary or such properties or such operations, which would reasonably be expected to have a Material Adverse Effect; and (f) There has been no release, or to the best of the Borrower's knowledge, threat of release, of Hazardous Materials at or from properties owned, leased or operated by the Borrower or any Subsidiary, now or in the past, in violation of or in amounts or in a manner that could give 59 rise to liability under Environmental Laws which would reasonably be expected to have a Material Adverse Effect. 6.10 INSURANCE. The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies that are not Affiliates of the Borrower and are reasonably acceptable to the Administrative Agent and the Required Lenders, in such amounts (after giving effect to any self-insurance in an amount not to exceed (a) $500,000 per each occurrence and (b) $3,000,000 in the aggregate), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates. 6.11 TAXES. The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. Such returns accurately reflect in all material respects all liability for taxes of the Borrower and its Subsidiaries for the periods covered thereby. There is no ongoing audit or examination or, to the knowledge of the Borrower, other investigation by any Governmental Authority of the tax liability of the Borrower and its Subsidiaries which would reasonably be expected to have a Material Adverse Effect. No Governmental Authority has asserted any Lien or other claim against the Borrower or any Subsidiary thereof with respect to unpaid taxes which has not been discharged or resolved, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. The charges, accruals and reserves on the books of the Borrower and any of its Subsidiaries in respect of Federal, state, local and other taxes for all Fiscal Years and portions thereof since the organization of the Borrower and any of its Subsidiaries are in the judgment of the Borrower adequate, and the Borrower does not anticipate any additional taxes or assessments for any of such years. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect. 6.12 ERISA COMPLIANCE. (a) As of the Closing Date, neither the Borrower nor any ERISA Affiliate sponsors, maintains or makes contributions to, or has ever sponsored, maintained, or made contributions to or has any obligation under a defined benefit plan (as such term is defined in Section 3(35) of ERISA) or any Plan which is subject to the minimum funding requirements of Section 412 of the Code or the requirements of Title IV of ERISA. (b) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate have made all required 60 contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (c) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect. (d) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA; and (vi) neither the Borrower nor any ERISA Affiliate has engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Code. 6.13 SUBSIDIARIES. As of the Closing Date, the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 6.13, and has no equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 6.13. As of the Closing Date, the capitalization of the Borrower and its Subsidiaries consists of the number of shares, authorized, issued and outstanding, of such classes and series, with or without par value, described on Schedule 6.13. All outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof, and not subject to any preemptive or similar rights. The shareholders of the Subsidiaries of the Borrower and the number of shares owned by each as of the Closing Date are described on Schedule 6.13. As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or permit the issuance of capital stock of the Borrower or its Subsidiaries, except as described on Schedule 6.13. 6.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) Neither the Borrower nor any of its Subsidiaries is engaged, principally or as one of its important activities, in the business of "purchasing" or "carrying" any "margin stock" (as each such term is defined or used in Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of any of the Loans or Letters of Credit will be used for purchasing or carrying margin stock or for any purpose which 61 violates, or which would be inconsistent with, the provisions of Regulation T, U or X issued by the FRB. (b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an "investment company" under the Investment Company Act of 1940. 6.15 DISCLOSURE. The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. 6.16 COMPLIANCE WITH LAWS. Each of the Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 6.17 INTELLECTUAL PROPERTY; LICENSES, ETC. The Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, "IP Rights") that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any Subsidiary infringes upon any rights held by any other Person which would reasonably be expected to have a Material Adverse Effect. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights which would reasonably be expected to have a Material Adverse Effect, and neither the Borrower nor any Subsidiary thereof is liable to any Person for infringement under applicable Law with respect to any such rights as a result of its business operations, which would reasonably be expected to have a Material Adverse Effect. 62 6.18 EMPLOYEE RELATIONS. Each of the Borrower and its Subsidiaries has a stable work force in place and is not, as of the Closing Date, party to any collective bargaining agreement nor has any labor union been recognized as the representative of its employees. The Borrower knows of no pending, threatened or contemplated strikes, work stoppage or other collective labor disputes involving its employees or those of its Subsidiaries. 6.19 BURDENSOME PROVISIONS. Neither the Borrower nor any Subsidiary thereof is a party to any indenture, agreement, lease or other instrument, or subject to any corporate or partnership restriction, Governmental Approval or applicable Law which is so unusual or burdensome as in the foreseeable future could be reasonably expected to have a Material Adverse Effect. The Borrower and its Subsidiaries do not presently anticipate that future expenditures needed to meet the provisions of any statutes, orders, rules or regulations of a Governmental Authority will be so burdensome as to have a Material Adverse Effect. Except as set forth on Schedule 6.19, no Subsidiary is party to any agreement or instrument or otherwise subject to any restriction or encumbrance that restricts or limits its ability to make dividend payments or other distributions in respect of its capital stock to the Borrower or any Subsidiary or to transfer any of its assets or properties to the Borrower or any other Subsidiary in each case other than existing under or by reason of the Loan Documents or applicable Law. 6.20 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All representations and warranties set forth in this Article VII and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder. ARTICLE VII. AFFIRMATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall, and shall (except in the case of the covenants set forth in Section 7.01, Section 7.02, Section 7.03 and Section 7.11) cause each Subsidiary to: 7.01 FINANCIAL STATEMENTS. Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders: (a) as soon as available, but in any event within 90 days after the end of each Fiscal Year of the Borrower, a consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report 63 and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any "going concern" or like qualification or exception or any qualification or exception as, to the scope of such audit; and (b) as soon as available, but in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower, a consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Quarter, and the related consolidated and consolidating statements of income or operations and cash flows for such Fiscal Quarter and for the portion of the Borrower's Fiscal Year then ended, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter of the previous Fiscal Year and the corresponding portion of the previous Fiscal Year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes. As to any information contained in materials furnished pursuant to Section 7.02(e), the Borrower shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in subsections (a) and (b) above at the times specified therein. 7.02 CERTIFICATES; OTHER INFORMATION. Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders: (a) concurrently with the delivery of the financial statements referred to in Section 7.01(a), a report of its independent certified public accountants stating that in the course of its audit (without any obligation to conduct any other independent investigation) no knowledge was obtained of any Default with the terms, covenants, provisions or conditions of Section 8.15 in so far as they relate to accounting matters or, if any such Default shall exist, stating the nature and status of such event; (b) concurrently with the delivery of the financial statements referred to in Section 7.01(a) and Section 7.01(b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower; (c) (i) on the 15th of each fiscal month (or if the 15th is not a Business Day, on the next succeeding Business Day), a duly completed Borrowing Base Certificate signed by a Responsible Officer of the Borrower as of the end of the fiscal month most recently ended prior to such date and (ii) on the last Business Day of each fiscal month, a duly completed Borrowing Base Certificate signed by a Responsible Officer of the Borrower as of the 15th of such fiscal month; (d) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of 64 directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them; (e) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto; (f) concurrently with the delivery of any notice, document or other communication to the holder or holders of the Senior Subordinated Debt, a copy of such notice, document, or other communication; and (g) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request. Documents required to be delivered pursuant to Section 7.01(a) or Section 7.01(b) or Section 7.02(e) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower's website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such documents are posted on the Borrower's behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates and Borrowing Base Certificates required by Section 7.02(b) and Section 7.02(c) to the Administrative Agent and each of the Lenders. Except for such Compliance Certificates and Borrowing Base Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. 7.03 NOTICES. Promptly notify the Administrative Agent and each Lender: 65 (a) of (i) the occurrence of any Default or Event of Default or (ii) the occurrence or existence of any event or circumstance that would reasonably be expected to become a Default or Event of Default; (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws; (c) of the occurrence of any ERISA Event; (d) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary; and (e) of any of the events described in Section 2.06(e). Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 7.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached. 7.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. 7.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 8.04 or Section 8.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. 7.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and 66 condition, ordinary wear and tear excepted, (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities. 7.07 MAINTENANCE OF INSURANCE. In addition to the specific insurance requirements of the Security Documents, maintain with financially sound and reputable insurance companies that are not Affiliates of the Borrower and are reasonably acceptable to the Administrative Agent and the Required Lenders, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance in an amount not to exceed (a) $500,000 per each occurrence and (b) $3,000,000 in the aggregate) as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days' prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance and deliver to the Administrative Agent upon its request a detailed list of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby. 7.08 COMPLIANCE WITH LAWS. Comply in all respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted, and maintain in full force and effect all Governmental Approvals applicable to it or to its business or property except where the failure to maintain would reasonably be expected to result in a Material Adverse Effect. 7.09 ENVIRONMENTAL LAWS. In addition to and without limiting the generality of Section 7.08, (a) comply with, and exercise reasonable efforts to ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply with and maintain, and exercise reasonable efforts to ensure that all tenants and subtenants, if any, obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws where the failure to do so would reasonably be expected to have a Material Adverse Effect, (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all lawful orders and directives of any Governmental Authority regarding Environmental Laws where the failure to do so would reasonably be expected to have a Material Adverse Effect, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the presence of Hazardous Materials, or the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of the Borrower or any such Subsidiary, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, - investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing 67 directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor. 7.10 COMPLIANCE WITH ERISA. In addition to and without limiting the generality of Section 7.08, (a) except where the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) comply with all material applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (ii) not take any action or fail to take action the result of which could be a liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited transaction that could result in any civil penalty under ERISA or tax under the Code and (iv) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code and (b) furnish to the Administrative Agent upon the Administrative Agent's request such additional information about any Employee Benefit Plan as may be reasonably requested by the Administrative Agent. 7.11 COMPLIANCE WITH AGREEMENTS. Comply in all respects with each term, condition and provision of all leases, agreements and other instruments entered into in the conduct of its business including, without limitation, any Contractual Obligation the failure to comply with which could reasonably be expected to have a Material Adverse Effect; provided, that the Borrower or any such Subsidiary may contest any such lease, agreement or other instrument in good faith through applicable proceedings so long as adequate reserves are maintained in accordance with GAAP. 7.12 BOOKS AND RECORDS. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be, and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be. 7.13 INSPECTION RIGHTS. (a) Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower, and (b) up to two times per fiscal year, permit representatives and independent contractors of the Administrative Agent to perform audits and examinations of the Collateral (including, without limitation, legal due diligence concerning the Collateral as is deemed reasonably necessary or desirable by the Administrative Agent), all at the expense of the Borrower and at such reasonable times during normal business hours, upon reasonable advance notice to the Borrower; provided, however, in each case, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and as often as may be reasonably desired, without advance notice. 68 7.14 USE OF PROCEEDS. Use the proceeds of the Credit Extensions (a) for working capital, capital expenditures and other general corporate purposes, (b) to refinance the Existing Facility, (c) to repay or prepay the Senior Subordinated Debt and (d) for the other purposes described herein, and not in contravention of any Law or of any Loan Document. 7.15 ADDITIONAL SUBSIDIARIES. (a) Additional Domestic Subsidiaries. Notify the Administrative Agent at the time that any Person becomes a Domestic Subsidiary, and promptly thereafter (and in any event within 30 days), cause such Person to (a) become a Guarantor by executing and delivering to the Administrative Agent a counterpart of the Guaranty Agreement or such other document as the Administrative Agent shall deem appropriate for such purpose, (b) deliver to the Administrative Agent a duly executed Joinder Agreement and comply with the terms of each Security Document, (c) deliver to the Administrative Agent documents of the types referred to in clauses (iii) and (iv) of Section 5.01(a) and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clauses (a) and (b)) and (d) deliver to the Administrative Agent such other documents and closing certificates as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent. (b) Additional Foreign Subsidiaries. Notify the Administrative Agent at the time that any Person becomes a Foreign Subsidiary, and promptly thereafter (and in any event within 30 days), cause (a) the applicable Loan Party to deliver to the Administrative Agent a supplement to the Security Documents pledging sixty-five percent (65%) of the total outstanding ownership interest or capital stock of such new Foreign Subsidiary and a consent thereto executed by such new Foreign Subsidiary (including, without limitation, if applicable, original stock certificates (or the equivalent thereof pursuant to the Applicable Laws and practices of any relevant foreign jurisdiction) evidencing the capital stock of such new Foreign Subsidiary, together with an appropriate undated stock power for each certificate duly executed in blank by the registered owner thereof), (b) such Person to deliver to the Administrative Agent documents of the types referred to in clauses (iii) and (iv) of Section 5.01(a) and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clauses (a) and (b)), and (c) such Person to deliver to the Administrative Agent such other documents and closing certificates as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent. provided that this Section 7.15 shall not apply to any Non-Material Subsidiary until the earlier to occur of (x) the date on which such Non-Material Subsidiary (other than QuickShip, Inc. and Rhino Services, LLC) shall engage in any business operations or possess assets in excess of $10,000 and (y) with respect to (I) any Non-Material Subsidiary existing on the Closing Date, the date that is 180 days thereafter and (II) any other Non-Material Subsidiary the date that is one year after the formation thereof. 69 7.16 SWAP CONTRACTS. No later than May 31, 2003, enter into Swap Contracts with respect to interest rate exposure under this Agreement with durations covering the remaining term of this Agreement and an aggregate notional principal amount thereunder equal to at least two thirds of the outstanding principal amount of the Term Loan and with a Lender or other counterparty reasonably satisfactory to the Administrative Agent and otherwise in form and substance reasonably satisfactory to the Administrative Agent. 7.17 FURTHER ASSURANCES. Make, execute and deliver all such additional and further acts, things, deeds and instruments as the Administrative Agent or the Required Lenders. (through the Administrative Agent) may reasonably require to document and consummate the transactions contemplated hereby and to vest completely in and insure the Administrative Agent and the Lenders their respective rights under this Agreement, the Notes, the Letters of Credit and the other Loan Documents. ARTICLE VIII. NEGATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly: 8.01 LIENS. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following: (a) Liens pursuant to any Loan Document; (b) Liens existing on the date hereof and listed on Schedule 8.01 and any renewals or extensions thereof, provided that the property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 8.03(c); (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; (d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person; (e) pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA; (f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or 70 litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business; (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; (h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 9.01(h) or securing appeal or other surety bonds related to such judgments; (i) Liens securing Indebtedness permitted under Section 8.03(f) and Section 8.03(g); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition; and (j) Liens arising solely by virtue of any contractual or statutory or common law provisions relating to banker's liens, rights to set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Loan Party or any Subsidiary in excess of those set forth by regulations promulgated by the Board of Governors of the Federal Reserve System, (ii) such deposit account is not intended by the Loan Party or such Subsidiary to provide collateral to the depositary institution and (iii) such deposit account is subject to a control agreement pursuant to the terms of the Security Documents; 8.02 INVESTMENTS. Make any Investments, except: (a) Investments held by the Borrower or such Subsidiary in the form of cash equivalents or short-term marketable securities; (b) advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed $500,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes; (c) Investments of the Borrower in any Guarantor and Investments of any Subsidiary in the Borrower or in another Subsidiary; (d) Investments- consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; (e) Guarantees permitted by Section 8.03; 71 (f) the Permitted Distributorship Acquisition; provided that both before and after giving effect to such acquisition (i) no Default or Event of Default has occurred and is continuing and (ii) the Borrower shall have demonstrated pro forma_ compliance with the financial covenants set forth in Section 8.15 and with the Borrowing Base; (g) Investments in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of capital stock, assets or any combination thereof) of any other Person; provided that (i) the entity to be acquired is a going concern, (ii) the entity to be acquired shall engage in a business or the assets to be acquired shall be used in a business described in Section 8.08, (iii) the Borrower shall have delivered to the Administrative Agent on or before the closing date of the acquisition a description of the acquisition, (iv) the Borrower shall have certified on or before the closing date of the acquisition, in writing and in a form acceptable to the Administrative Agent and the Lenders, that the acquisition has been approved by the board of directors or equivalent governing body of the entity to be acquired, (v) no Default or Event of Default shall- have occurred and be continuing both before and after giving effect to the acquisition, (vi) the Borrower shall have complied with Section 7.15, (vii) the Borrower shall have delivered to the Administrative Agent a Compliance Certificate dated as of the closing date of the acquisition demonstrating, in form and substance reasonably satisfactory thereto, the pro forma compliance with each covenant contained in Section 8.16 and (viii) the Borrower shall have obtained the prior written consent of the Administrative Agent and the Required Lenders prior to the consummation of such acquisition if (A) the aggregate purchase price of such acquisition or series of related acquisitions (including, without limitation, all cash payments, Indebtedness and other obligations assumed, earn out payments, seller financing, deferred payments or equity issued) exceeds $2,000,000 or (B) the aggregate purchase price of all acquisitions (including, without limitation, all cash payments, Indebtedness and other obligations assumed, earn out payments, seller financing, deferred payments or equity issued) consummated during the term of this Agreement (including, without limitation, such acquisition) exceeds $10,000,000; (h) Investments in Proposed Loan Parties or Wholly-Owned Subsidiaries of a Loan Party that join this Agreement and the other Loan Documents as a Borrower or become Guarantors on or prior to the date of such Investment; (i) Investments constituting capital expenditures permitted under this Agreement; (j) Investments in the R4 Technical Center; provided that any such Investments made during the term of this Agreement shall not exceed $1,000,000 in the aggregate; (k) Investments existing on the date hereof and listed on Schedule 8.02; (l) Investments in any Swap Contract permitted pursuant to Section 8.03(e); and (m) other Investments (other than the additional Investments in the R4 Technical Center which is exclusively provided for under Section 8.02(j)) not exceeding $1,000,000 in the aggregate in any Fiscal Year of the Borrower. 8.03 INDEBTEDNESS. Create, incur, assume or suffer to exist any Indebtedness, except: 72 (a) Indebtedness under the Loan Documents; (b) the Senior Subordinated Debt; (c) Indebtedness outstanding on the date hereof and listed on Schedule 8.03 and any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) any refinancing, refunding, renewal or extension of any Subordinated Indebtedness shall be (A) on subordination terms at least as favorable to the Lenders as the subordination terms of the Subordinated Indebtedness being refinanced, refunded or extended, (B) no more restrictive on the applicable Loan Party than the Subordinated Indebtedness being refinanced, refunded, renewed or extended and (C) in an amount not less than the amount outstanding at the time of such refinancing, refunding, renewal or extension; (d) Guarantees of the Borrower or any Subsidiary in respect of Indebtedness otherwise permitted hereunder; (e) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract; provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a "market view;" and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; (f) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 8.01(i); provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $1,000,000; (g) Indebtedness assumed in connection with an acquisition permitted pursuant to Section 8.02(f) and (g) on terms and conditions, including, without limitation, all collateral security therefor, acceptable to the Administrative Agent; (h) (i) unsecured Indebtedness in an aggregate principal amount not to exceed $1,000,000 at any time outstanding and (ii) other Subordinated Indebtedness in an aggregate outstanding principal amount not to exceed $1,000,000; provided that, in each case, the Borrower shall have complied with the requirements of Section 2.06(e); (i) Indebtedness of any Loan Party or a Subsidiary of a Loan Party to another Loan Party so long as (i) after such transaction, the Person providing the Indebtedness will be Solvent and (ii) no Default or Event of Default then exists or will exist after such transaction; 73 (j) Indebtedness of the Borrower or its Subsidiaries in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of business; (k) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within five (5) Business Days of its incurrence; (l) Indebtedness in respect of taxes, assessments, governmental charges or levies, claims of customs authorities and claims for labor, worker's compensation, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 7.04; (m) Indebtedness in respect of judgments or awards permitted under Section 8.01(h); and (n) endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business. 8.04 FUNDAMENTAL CHANGES. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom: (a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging with another Subsidiary, the Guarantor shall be the continuing or surviving Person or the survivor complies with all relevant requirements of Section 7.15 and becomes a Guarantor; (b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a Guarantor which has satisfied all relevant requirements of Section 7.15; (c) any Subsidiary may merge with any other Person in connection with any Permitted Acquisition, provided that the Subsidiary shall be the continuing or surviving Person or the survivor complies with all relevant requirements of Section 7.15 and becomes a Guarantor; and (d) the Borrower, its Subsidiaries and any Proposed Loan Parties may consummate the Permitted Reorganization so long as the following conditions are satisfied on or before the effective date of the Permitted Reorganization: (i) the Borrower shall have delivered to the Administrative Agent a written description of the Permitted Reorganization, including, without limitation, an organizational 74 chart and list of each Loan Party and Proposed Loan Party after given effect to the Permitted Reorganization; (ii) after giving effect to the Permitted Reorganization, the Loan Parties will be the same as the obligors under the Senior Subordinated Debt; and (iii) the Borrower shall have delivered to the Administrative Agent the items set forth in Section 7.15 for each Proposed Loan Party which is not a Loan Party prior to the Permitted Reorganization, including, without limitation, legal opinions, UCC financing statements and such other documents as are required to ensure the continued priority, perfection and enforceability of the Loan Documents. 8.05 DISPOSITIONS. Except for the Permitted Reorganization, make any Disposition or enter into any agreement to make any Disposition, except: (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business; (b) Dispositions of Inventory in the ordinary course of business; (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property; (d) Dispositions of property by the Borrower or any Subsidiary to the Borrower or to a Guarantor which has satisfied any relevant requirements of Section 7.15; provided that if the transferor of such property is a Guarantor, the transferee thereof must either be the Borrower or a Guarantor; (e) Dispositions permitted by Section 8.04; (f) The Non-Propane Products Divestiture; provided that both before and after giving effect to such Disposition (i) no Default or Event of Default has occurred and is continuing and (ii) the Borrower shall have demonstrated pro forma compliance with the financial covenants set forth in Section 8.16 and with the Borrowing Base; (g) Dispositions by the Borrower or any Subsidiary thereof, of assets acquired in connection with any Permitted Acquisition that the Borrower or such Subsidiary intended to sell at the time of such Permitted Acquisition; provided (i) such assets were identified in writing to the Administrative Agent at the time of such Permitted Acquisition and (ii) the aggregate fair market value of such assets does not exceed fifteen percent (15%) of the aggregate purchase price paid in connection with such Permitted Acquisition (including, without limitation, all cash payments, Indebtedness and other obligations assumed, earn-out payments, seller financing, deferred payments or equity issued) and (iii) the Borrower shall have complied with the requirements of Section 2.06(e). 75 (h) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this Section 8.05; provided that (i) at the time of such Disposition, no Default shall exist or would result from such Disposition, (ii) the aggregate book value of all property Disposed of in reliance on this clause (h) in any fiscal year shall not exceed $1,000,000, and (iii) the Borrower shall have complied with the requirements of Section 2.06(e). provided, however, that any Disposition pursuant to clauses (a) through (g) shall be for fair market value. 8.06 RESTRICTED PAYMENTS. Except for the Permitted Reorganization, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that as long as no Default or Event of Default is continuing or would result therefrom: (a) each Subsidiary may make Restricted Payments to the Borrower and to a Guarantor (and, in the case of a Restricted Payment by a non-Wholly-Owned Subsidiary, to the Borrower and any Subsidiary and to each other owner of capital stock or other equity interests of such Subsidiary on a pro rata basis based on their relative ownership interests); and (b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common equity interests of such Person. Notwithstanding anything in this Section 8.06 to the contrary, (i) the Borrower may redeem or repurchase its common stock from officers, employees and directors of any Loan Party (or their estates) upon the termination of employment of any such Person or from service providers pursuant to equity incentive agreement or arrangements upon termination of their services to the Borrower pursuant to agreements entered into to evidence grants or awards or other compensation under any stock option plan, stock purchase plan, management incentive plan, consulting agreement or other contract or arrangement approved by the Board of Directors of the Borrower; provided than (A) no Default or Event of Default is then in existence or would otherwise arise therefrom, and (B) the aggregate amount of all cash paid in respect of all such shares so redeemed or repurchased does not exceed $1,000,000 in any Fiscal Year of the Borrower or $3,000,000 in the aggregate during the term of this Agreement, and (ii) so long as no Default or Event of Default is then in existence or would otherwise arise therefrom, the Loan Parties may make cash Restricted Payments to the Borrower, if the Borrower promptly uses such proceeds for the purposes described in clause (i) above. 8.07 LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK. Except for the Permitted Reorganization, issue, sell or otherwise dispose of any class or series of capital stock that, by its terms or by the terms of any security into which it is convertible or exchangeable, is, or upon the happening of an event or passage of time would be, (a) convertible or exchangeable into Indebtedness or (b) required to be redeemed or repurchased, including at the option of the holder, in whole or in part, or has, or upon the happening of an event or passage of time would have, a redemption or similar payment due. 76 8.08 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto, including, without limitation, the distribution and sale of propane fueled products of any type. 8.09 ACCOUNTING CHANGES; ORGANIZATIONAL DOCUMENTS. (a) Except pursuant to a Permitted Reorganization, change its Fiscal Year end, or make any change in its accounting treatment and reporting practices except as required or permitted by GAAP or (b) amend, modify or change its Organization Documents in any manner directly and materially adverse to the rights or interests of the Lenders. 8.10 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 8.10, enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm's length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to transactions between or among the Borrower and any of its Wholly-Owned Subsidiaries or between and among any Wholly-Owned Subsidiaries. 8.11 BURDENSOME AGREEMENTS. Enter into any material Contractual Obligation (other than this Agreement or any other Loan Document) that (a) directly and materially restricts the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower under the Loan Documents or (iii) of the Borrower or any Subsidiary to grant Liens on property of such Person under the Loan Documents; provided, however, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 8.03(f) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; (b) contains covenants more restrictive than the provisions of Articles VII and VIII; or (c) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person. 8.12 USE OF PROCEEDS. Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose. 8.13 IMPAIRMENT OF SECURITY INTERESTS. Take or omit to take any action, which might or would have the result of materially impairing the security interests in favor of the Administrative Agent with respect to the Collateral or grant to any Person (other than the Administrative Agent for the benefit of itself and the Lenders pursuant to the Security Documents) any interest whatsoever in the Collateral, except for Liens permitted under Section 8.01 and Dispositions permitted under Section 8.05. 77 8.14 AMENDMENTS, PAYMENTS AND PREPAYMENTS OF SUBORDINATED INDEBTEDNESS. (a) Amend or modify (or permit the modification or amendment of) any of the terms or provisions of any documents or agreements evidencing (i) the Senior Subordinated Debt (including, without limitation, the Senior Subordinated Debt Documents) which such amendment or modification would have the effect of (A) increasing the maximum principal amount of the Senior Subordinated Debt or the rate of interest on any of the Senior Subordinated Debt, (B) change any date upon which payments of principal or interest on the Senior Subordinated Debt is due to an earlier date, (C) add or make more restrictive any event of default or any covenant with respect to the Senior Subordinated Debt other than as provided in this Agreement or as currently provided in the Senior Subordinated Debt Documents, (D) change any redemption or prepayment provisions of the Senior Subordinated Debt to an earlier date or add any additional events requiring such redemption or prepayment, (E) alter the subordination provision with respect to the Senior Subordinated Debt, including, without limitation, subordinating the Senior Subordinated Debt to any other Indebtedness, (F) take any Liens or security interest in assets of any Loan Party or any other assets securing the Obligations, (G) change or amend any other term of the Senior Subordinated Debt Documents if such change or amendment would result in a Default or Event of Default or (H) permit the exercise of the put rights of holder under Section 3.2 of the Investor Rights Agreement dated as of June 15, 2001 between the Borrower and Allied Capital Corporation prior to the fifth anniversary of the date thereof, in each case, without the consent of the Administrative Agent and the Required Lenders, or (ii) any other Subordinated Indebtedness in any manner which would result in any such terms or provisions being more restrictive to the Borrower or any Subsidiary, as determined by the Administrative Agent in its reasonable judgment other than as provided in this Agreement or as currently provided in the Senior Subordinated Debt Documents; or (b) Purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for, the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of any Subordinated Indebtedness, except for (i) regularly scheduled payments of interest in respect thereof required pursuant to the instruments evidencing such Subordinated Indebtedness, (ii) prepayments, redemption or acquisition for value of the Senior Subordinated Debt permitted pursuant to Section 2.06(e) and (iii) other prepayments, redemption or acquisition for value of the Senior Subordinated Debt; provided that, for purposes of clause (iii), both before and after giving effect to such prepayment, redemption or acquisition for value (A) no Default or Event of Default has occurred and is continuing, and (B) the Borrower shall have demonstrated pro forma compliance with the financial covenants set forth in Section 8.15 and with the Borrowing Base. 8.15 FINANCIAL COVENANTS. (a) Consolidated Net Worth. Permit Consolidated Net Worth as of the end of any Fiscal Quarter to be less than the sum of (a) $70,000,000, plus (b) an amount equal to 75% of the 78 Consolidated Net Income earned in each full Fiscal Quarter ending after July 31, 2002 (with no deduction for a net loss in any such Fiscal Quarter), plus (c) an amount equal to 100% of the aggregate increases in Shareholders' Equity of the Borrower and its Subsidiaries after the date hereof by reason of the issuance and sale of capital stock or other equity interests of the Borrower or any Subsidiary (other than issuances to the Borrower or a wholly-owned Subsidiary), including upon any conversion of debt securities of the Borrower into such capital stock or other equity interests, minus (d) the total amount of goodwill write-off from the dissolution or winding up of QuickShip, Inc., in an amount not to exceed $7,000,000. (b) Consolidated Total Leverage Ratio. As of any Fiscal Quarter end during any period set forth below, permit the Consolidated Total Leverage Ratio for the four consecutive Fiscal Quarter period ending on such date to be greater than the corresponding ratio set forth below: Maximum Consolidated Four Fiscal Quarters Ending Total Leverage Ratio ------------------------------------------------------------------------ Closing Date through April 30, 2003 2.50 to 1.00 July 31, 2003 and each Fiscal Quarter thereafter 2.00 to 1.00 (c) Consolidated Senior Leverage Ratio. As of any Fiscal Quarter end, permit the Consolidated Senior Leverage Ratio for the four consecutive Fiscal Quarter period ending on such date to be greater than 2.00 to 1.00. (d) Consolidated Fixed Charge Coverage Ratio. As of any Fiscal Quarter end, permit the Consolidated Fixed Charge Coverage Ratio for the four consecutive Fiscal Quarter period ending on such date to be less than 1.25 to 1.00. ARTICLE IX. EVENTS OF DEFAULT AND REMEDIES 9.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of Default: (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within three (3) days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any Commitment Fee or other fee due hereunder, or (iii) within five (5) days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 7.01, Section 7.02(a), (b) or (c), Section 7.03, Section 7.05, Section 7.10, Section 7.11 or Section 7.13 or Article VIII; or (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after the earlier to occur 79 of (i) obtaining knowledge thereof by any Loan Party and (ii) written notice thereof to the Borrower by the Administrative Agent; or (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, any other Loan Document, or in any document delivered in connection herewith or therewith that is subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any respect when made or deemed made or any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, any other Loan Document, or in any document delivered in connection herewith or therewith that is not subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any material respect when made or deemed made; or (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any material agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap' Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or (iii) The Borrower or any of its Subsidiaries shall default in the payment when due, or in the performance or observance, of any obligation or condition of any Contractual Obligation the result of which could reasonably be expected to have a Material Adverse Effect, unless, but only as long as, the existence of any such default is being contested by the Borrower or any such Subsidiary in good faith by appropriate proceedings and adequate reserves in respect 80 thereof have been established on the books of the Borrower or such Subsidiary to the extent required by GAAP; or (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or (h) Judgments. There is entered against the Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or (i) Environmental. The Borrower or any of its Subsidiaries shall be subject to Environmental Liability and such liability is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect. (j) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or (k) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; 81 or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or (l) Change of Control. There occurs any Change of Control with respect to the Borrower. 9.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions: (a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable Law; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender. 9.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in Section 9.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 9.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order: First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article IV) payable to the Administrative Agent in its capacity as such; Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney 82 Costs and amounts payable under Article IV), ratably among them in proportion to the amounts described in this clause Second payable to them; Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and L/C Borrowings and any termination payments due in respect of a Swap Contract with any Lender or the Administrative Agent, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them; Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law. Subject to Section 2.04(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above. ARTICLE X. ADMINISTRATIVE AGENT 10.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. (a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. 83 (b) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article X with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term "Administrative Agent" as used in this Article X and in the definition of "Agent-Related Person" included the L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the L/C Issuer. 10.02 DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. 10.03 LIABILITY OF ADMINISTRATIVE AGENT. No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof. 10.04 RELIANCE BY ADMINISTRATIVE AGENT. (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such 84 action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders. (b) For purposes of determining compliance with the conditions specified in Section 5.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto. 10.05 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default and stating that such notice is a "notice of default." The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default as may be directed by the Required Lenders in accordance with Article IX; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable or in the best interest of the Lenders. 10.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it ,will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, 85 the Administrative Agent shall not have any duty .or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person. 10.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party to do so), pro rata, and hold harmless each Agent-Related Person for, from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Agent-Related Person's own gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive termination of the Aggregate Commitments, the payment of all other Obligations and the resignation of the Administrative Agent. 10.08 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not the Administrative Agent or the L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent or the L/C Issuer, and the terms "Lender" and "Lenders" include Bank of America in its individual capacity. 10.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as L/C Issuer and Swing Line Lender. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by the Borrower at all times other than during the 86 existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent, L/C, Issuer and Swing Line Lender and the respective terms "Administrative Agent", "L/C Issuer" and "Swing Line Lender" shall mean such successor administrative agent and Letter of Credit issuer and Swing Line Lender, the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated and the retiring L/C Issuer's and Swing Line Lender's rights, powers and duties as such shall be terminated, without any other or further act or deed on the part of such retiring L/C Issuer or Swing Line Lender or any other Lender, other than the obligation of the successor L/C Issuer to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or to make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect-to such Letters of Credit. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article X and Section 11.04 and Section 11.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders. appoint a successor agent as provided for above. 10.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 2.04(i) and Section 2.04(i), Section 3.02 and Section 11.04) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; 87 and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 3.02 and Section 11.04. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. 10.11 COLLATERAL AND GUARANTY MATTERS. The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion (a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) subject to Section 11.01, if approved, authorized or ratified in writing by the Required Lenders; (b) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 8.01(i); and (c) to release any Guarantor from its obligations under the Guaranty Agreement if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty Agreement pursuant to this Section 10.11. ARTICLE XI. MISCELLANEOUS 11.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall: 88 (a) waive any condition set forth in Section 5.01(a) without the written consent of each Lender; (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.02) without the written consent of such Lender; (c) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them), hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; (d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 11.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of "Default Rate" or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder; (e) change Section 3.06 or Section 9.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; (f) change any provision of this Section or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or (g) release any Guarantor from the Guaranty Agreement or all or a material portion of the Collateral or release any Security Document (other than asset sales permitted pursuant to Section 8.05 and as otherwise specifically permitted or contemplated in this Agreement or the applicable Security Document) without the written consent of each Lender; and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other. Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not 89 be increased or extended without the consent of such Lender. 11.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES. (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows: (i) if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and (ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier,, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Administrative Agent, the L/C Issuer and the Swing Line Lender pursuant to Article II shall not be effective until actually received by such Person. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder. (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 7.02, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. 90 (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender for, from and against all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 11.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all costs and expenses incurred in connection with the development, preparation, negotiation, execution, filing, recording and insurance of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse the Administrative Agent and each Lender for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, Title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 11.04 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the termination of the Aggregate Commitments and repayment of all other Obligations. 11.05 INDEMNIFICATION BY THE BORROWER. Whether or not the transactions contemplated hereby are consummated, the Borrower shall indemnify and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the "Indemnitees") for, from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature 91 whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (c) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by the Borrower, any Subsidiary or any other Loan Party, or any Environmental Liability related in any way to the Borrower, any Subsidiary or any other Loan Party, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnitee have any liability for any indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). All amounts due under this Section 11.05 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations. 11.06 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. 92 11.07 SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section 11.07 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this Section) with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to rights in respect of Swing Line Loans; (iii) any assignment of a Commitment must be approved by the Administrative Agent, the L/C Issuer and the Swing Line Lender unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue 93 to be entitled to the benefits of Section 4.01, Section 4.04, Section 4.05, Section 11.04 and Section 11.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section. (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at-any reasonable time and from time to time upon reasonable prior notice. (d) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender's participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.01 that directly affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Section 4.01, Section 4.04 and Section 4.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.09 as though it were a Lender, provided such Participant agrees to be subject to Section 3.06 as though it were a Lender. (e) A Participant shall not be entitled to receive any greater payment under Section 4.01 or 4.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 4.01 unless the Borrower is 94 notified of the participation sold to such Participant and such Participant agrees, for the benefit of .the Borrower, to comply with Section 11.15 as though it were a Lender. (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank without the consent of either the Borrower or the Administrative Agent; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (g) As used herein, the following terms have the following meanings: "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, the L/C Issuer or the Swing Line Lender, and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Borrower or any of the Borrower's Affiliates or Subsidiaries. "Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. (h) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days' notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days' notice to the Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights and obligations of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Revolving Credit Loans bearing interest at the Base Rate or fund risk participations in Unreimbursed Amounts pursuant to Section 2.04(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Revolving Credit Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.05(c). 95 11.08 CONFIDENTIALITY. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Loan Parties; (g) with the consent of the Borrower; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower; or (i) to the National Association of Insurance Commissioners or any other similar organization. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement, the -other Loan Documents, the Commitments, and the Credit Extensions. For the purposes of this Section, "Information" means all information received from any Loan Party relating to any Loan Party or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party; provided that, in the case of information received from a Loan Party after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information of a similar type. 11.09 SET-OFF. In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrower or any other Loan Party, any such notice being waived by the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness. Each 96 Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. 11.10 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder. 11.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.12 INTEGRATION. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 11.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. 11.14 SEVERABILITY. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the 97 illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 11.15 TAX FORMS. (a) (i) Each Lender that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, U.S. withholding tax, including any exemption pursuant to Section 881(c) of the Code. Thereafter and from time to time, each such Foreign Lender shall (A) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement, (B) promptly notify the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (C) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Foreign Lender. (ii) ach Foreign Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Lender under any of the Loan Documents (for example, in the case of a typical participation by such Lender), shall deliver to the Administrative Agent on the date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable exercise of its discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth above, to establish the portion of any such sums paid or payable with respect to which such Lender acts for its own account that is not subject to U.S. withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any successor thereto), together with any information such Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Code, to establish that such Lender is not acting for its own account with respect to a portion of any such sums payable to such Lender. 98 (iii) The Borrower shall not be required to pay any additional amount to any Foreign Lender under Section 4.01 (A) with respect to any Taxes required to be deducted or withheld on the basis of the information, certificates or statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this Section 11.15(a) or (B) if such Lender shall have failed to satisfy the foregoing provisions of this Section 11.15(a); provided that if such Lender shall have satisfied the requirement of this Section 11.15(a) on the date such Lender became a Lender or ceased to act for its own account with respect to any payment under any of the Loan Documents, nothing in this Section 11.15(a) shall, relieve the Borrower of its obligation to pay any amounts pursuant to Section 4.01 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender or other Person for the account of which such Lender receives any sums payable under any of the Loan Documents is not subject to withholding or is subject to withholding at a reduced rate. (iv) The Administrative Agent may, without reduction, withhold any Taxes required to be deducted and withheld from any payment under any of the Loan Documents with respect to which the Borrower is not required to pay additional amounts under this Section 11.15(a). (b) Upon the request of the Administrative Agent, each Lender that is a "United States person" within the meaning of Section 7701(a)(30) of the Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9. If such Lender fails to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable back-up withholding tax imposed by the Code, without reduction. (c) If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the termination of the Aggregate Commitments, repayment of all other Obligations hereunder and the resignation of the Administrative Agent. 11.16 GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA SITTING IN CHARLOTTE OR OF THE 99 UNITED STATES FOR THE WESTERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR, OTHER DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 11.17 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. [Signature Pages Follow] 100 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. BLUE RHINO CORPORATION By: /s/ Mark Castaneda ----------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer 101 BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Michael Brashler -------------------- Name: Michael Brashler Title: Vice President and Senior Agency Officer 102 BANK OF AMERICA, N.A., as Lender, L/C Issuer and Swing Line Lender By: /s/ J. Thomas Johnson, Jr. ------------------------------- Name: J. Thomas Johnson, Jr. Title: Senior Vice President 103 WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ Mark Evans -------------- Name: Mark Evans Title: Senior Vice President 104 SUNTRUST BANK, as a Lender By: /s/ C. Gray Key --------------- Name: C. Gray Key Title: Director 105 RBC CENTURA BANK, as a Lender By: /s/ Michael H. Trainor ---------------------- Name: Michael H. Trainor Title: Vice President 106 LASALLE BANK NATIONAL ASSOCIATION, as a Lender By: /s/ Amy B. Yore --------------- Name: Amy B. Yore Title: Commercial Banking Officer 107 EX-10.1.B 15 g81245exv10w1wb.txt EX-10.1.B FIRST AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.1(b) CONFORMED COPY FIRST AMENDMENT TO CREDIT AGREEMENT This FIRST AMENDMENT TO THE CREDIT AGREEMENT dated as of February 25, 2003 (the "Amendment"), is entered into by and among BLUE RHINO CORPORATION, a Delaware corporation (the "Borrower"), the Lenders referred to in the Credit Agreement referred to below (the "Lenders") and BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (the "Administrative Agent"). Statement of Purpose WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to that certain Credit Agreement dated as of November 20, 2002 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), pursuant to which the Lenders have extended certain credit facilities to the Borrower; WHEREAS, the Borrower, the Administrative Agent and the Lenders have entered into that certain Consent and Waiver to Credit Agreement dated as of January 22, 2003 (the "Consent"), pursuant to which the parties agreed, among other things, to (i) extend the deadline by which the Borrower must apply the Net Cash Proceeds in the amount of $14,955,500 from the completed Additional Equity Offering (such amount, the "Prepayment Amount") to repay the Senior Subordinated Debt or the Term Loan to February 25, 2003, and (ii) reserve $10,000,000 of availability under the Revolving Credit Commitment for the repayment of the Senior Subordinated Debt or the Term Loan; WHEREAS, the Borrower has requested that the Lenders and the Administrative Agent agree to amend the Credit Agreement to, among other things, (i) consent to the extension of the deadline by which the Borrower must apply the Prepayment Amount to May 26, 2003, (ii) reduce the amount of the Revolving Credit Commitment currently reserved for the repayment of the Senior Subordinated Debt or the Term Loan to $5,000,000 and (iii) change the due dates for delivery of the Borrowing Base Certificate; and WHEREAS, the Lenders and the Administrative Agent are, on the terms and conditions stated below, willing to grant the requests of the Borrower. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions. All capitalized, undefined terms used in this Agreement shall have the meanings assigned thereto in the Credit Agreement. SECTION 2. Amendments. Pursuant to Section 11.01 of the Credit Agreement and subject to the satisfaction of the conditions specified in Section 5 below (but effective as of the date hereof), the Credit Agreement is hereby amended as follows: (a) Section 1.01 of the Credit Agreement (Defined Terms) is hereby amended by deleting the definition of "Borrowing Base" in its entirety and replacing it with the following: "Borrowing Base" means, as of any date of determination and subject to Section 1.08 and the following sentence, the sum of (a) 80% of Eligible Accounts, (b) 50% of Eligible Inventory, (c) 50% of Cylinder Inventory, (d) 50% of Eligible Equipment and (e) 40% of Eligible In-Transit Inventory. Subject to any adjustments or corrections described in Section 1.08, the Borrowing Base at any relevant time will be based on the most recent Borrowing Base Certificate received by Administrative Agent pursuant to Section 5.01(a) or Section 7.02(c); provided that, if the Borrower fails to deliver any Borrowing Base Certificate pursuant to Section 7.02(c) (i) on or before the date it is due, the Borrower may not obtain any Loan or L/C Credit Extension until such Borrowing Base Certificate is received by Administrative Agent, or (ii) within 15 days after the date it is due, the Borrowing Base will thereafter be $0.00 until such Borrowing Base Certificate is received by Administrative Agent. (b) Section 1.01 of the Credit Agreement (Defined Terms) is hereby further amended by inserting the following definition of "Eligible In-Transit Inventory" in proper alphabetical order: "Eligible In-Transit Inventory" means, subject to modification by the Administrative Agent pursuant to Section 1.08, the net book value of all Inventory (other than Eligible Inventory, Cylinder Inventory and Valve Inventory) of any Loan Party currently in transit to a Loan Party from a third party supplier thereof; provided that (a) the full purchase price for such Inventory has been paid or is subject to an irrevocable commercial Letter of Credit issued hereunder, (b) such Inventory has been placed with a third party carrier and is subject to a negotiable bill of lading all originals of which have been indorsed to the Administrative Agent as consignee and are in the possession of the Administrative Agent or its designated agent, (c) the Administrative Agent has received all agency agreements and other documentation reasonably requested thereby in connection with the delivery of such Inventory and such negotiable bill of lading and (d) the aggregate net book value of all such Inventory included for purposes of calculating the Borrowing Base shall not exceed $10,000,000 (before application of any advance rate for such Eligible In-Transit Inventory). (c) Section 7.02 of the Credit Agreement (Certificates; Other Information) is hereby amended by deleting clause (c) in its entirety and replacing it with the following: "(c) (i) on the 20th of each fiscal month (or if the 20th is not a Business Day, on the next succeeding Business Day), a duly completed Borrowing Base Certificate signed by a Responsible Officer of the Borrower as of the end of the fiscal month most recently ended prior to such date and (ii) on the 25th of each fiscal month (or if the 25th is not a Business Day, the next succeeding Business 2 Day), a duly completed Borrowing Base Certificate signed by a Responsible Officer of the Borrower as of the 15th of such fiscal month;" SECTION 3. Consents. Pursuant to Section 11.01 of the Credit Agreement and subject to the satisfaction of the conditions specified in Section 5 below (but effective as of the date hereof) the Borrower, the Administrative Agent and the Lenders hereby consent to the following: (a) Notwithstanding anything to the contrary contained in Section 2.06(e) of the Credit Agreement or in the Consent, $5,000,000 of availability under the Revolving Credit Commitment (the "Reserve Amount") is hereby reserved for the purpose of repaying the Senior Subordinated Debt and/or the Term Loan on or before May 26, 2003. The Reserve Amount shall be a replacement of, and not in addition to, the $10,000,000 reserve established pursuant to the Consent. The Borrower may apply the Prepayment Amount to repay the Senior Subordinated Debt and/or the Term Loan at such times and in such relative proportion as the Borrower elects in its sole discretion; provided that (i) the full amount of the Prepayment Amount shall be used to make such repayment by May 26, 2003 and (ii) the Reserve Amount shall only be available to be drawn to fund the last $5,000,000 of the Prepayment Amount. Section 2.06(e)(ii) of the Credit Agreement shall be interpreted and construed consistent with this Section 3(a) as it relates to the application of the Net Cash Proceeds of the Additional Equity Offering. The Borrower agrees and acknowledges that failure to apply the full Prepayment Amount to repay the Senior Subordinated Debt and/or the Term Loan, on or before May 26, 2003 shall constitute an immediate Default and Event of Default. (b) The date upon which the Borrower shall have delivered to the Administrative Agent a fully executed blocked account agreement, in form and substance satisfactory to the Administrative Agent, for each deposit account of any Loan Party held at Peoples Savings Bank (or otherwise complied with the terms of Section 4.06 of the Collateral Agreement with respect to such deposit accounts) is hereby extended to March 15, 2003. SECTION 4. Waiver. Pursuant to Section 11.01 of the Credit Agreement and subject to the satisfaction of the conditions specified in Section 5 below (but effective as of the date hereof), the Administrative Agent and the Lenders hereby waive any Default or Event of Default that may have occurred under Section 5 of the Consent as a result of the Borrower's failure to deliver to the Administrative Agent a fully executed blocked account agreement for each deposit account held by any Loan Party at Peoples Savings Bank by February 15, 2003. SECTION 5. Conditions of Effectiveness. This Amendment shall be effective as of the date hereof if, and only if, the Administrative Agent shall receive (a) counterparts of this Amendment executed by the Borrower, the Required Lenders and the Administrative Agent, (b) an amendment fee from the Borrower in an amount equal to $73,750, such fee to be distributed pro rata to the Lenders signatory hereto, and (c) all additional fees separately agreed to by the Borrower and the Administrative Agent. SECTION 6. Expenses. The Borrower agrees to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and 3 administration of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, all fees and expenses of Kennedy Covington Lobdell & Hickman, L.L.P., as legal counsel to the Administrative Agent). SECTION 7. Limited Waiver and Amendment. The Credit Agreement and each other Loan Document shall continue to be, and shall remain, in full force and effect. Except as expressly provided in this Amendment, this Amendment shall not be deemed or otherwise construed (i) to be a waiver of, or consent to or a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document; (ii) to prejudice any other right or remedies that the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the Loan Documents, as such documents may be amended, restated or otherwise modified from time to time; (iii) to be a commitment or any other undertaking or expression of any willingness to engage in any further discussion with the Borrower or any other person, firm or corporation with respect to any waiver, amendment, modification or any other change to the Credit Agreement or the Loan Documents or any rights or remedies arising in favor of the Lenders under or with respect to any such documents; or (iv) to be a waiver of, or consent to or a modification or amendment of, any other term or condition of any other agreement by and among the Borrower and the Lenders. SECTION 8. Representations and Warranties. By its execution hereof, the Borrower hereby certifies that each of the representations and warranties set forth in the Credit Agreement and the other Loan Documents is true and correct as of the date hereof (other than representations and warranties which speak as of a specific date pursuant to the Credit Agreement, which representations and warranties shall have been true and correct as of such specific dates) as if fully set forth herein, and that as of the date hereof and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing. SECTION 9. Integration. The Credit Agreement, as amended and modified by this Amendment, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof supersedes all prior written and oral agreements on such subject matter. SECTION 10. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. SECTION 11. Governing Law. This Amendment shall be governed by, construed and enforced in accordance with the laws of the State of North Carolina, without reference to the conflicts or choice of law principles thereof. SECTION 12. Fax Transmission. A facsimile, telecopy or other reproduction of this Amendment may be executed by one or more parties hereto, and an executed copy of this Amendment may be delivered by one or more parties hereto by facsimile or similar instantaneous electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all 4 purposes. At the request of any party hereto, all parties hereto agree to execute an original of this Amendment as well as any facsimile, telecopy or other reproduction hereof. [Signature Pages Follow] 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. BLUE RHINO CORPORATION By: /s/ Mark Castaneda ------------------------------------ Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Dianne L. Douglas ---------------------------------- Name: Dianne L. Douglas Title: Vice President BANK OF AMERICA, N.A., as Lender, L/C Issuer and Swing Line Lender By: /s/ J. Thomas Johnson, Jr. ----------------------------------- Name: J. Thomas Johnson, Jr. Title: Senior Vice President WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ Mark Evans -------------------------------- Name: Mark Evans Title: Senior Vice President SUNTRUST BANK, as a Lender By: /s/ C. Gray Key ----------------------------- Name: C. Gray Key Title: Director RBC CENTURA BANK, as a Lender By: /s/ Michael H. Trainor ------------------------------- Name: Michael H. Trainor Title: Vice President LASALLE BANK NATIONAL ASSOCIATION, as a Lender By: /s/ Amy B. Yore -------------------------------- Name: Amy B. Yore Title: Assistant Vice President EX-10.2 16 g81245exv10w2.txt EX-10.2 GUARANTY AGREEMENT EXHIBIT 10.2 - -------------------------------------------------------------------------------- GUARANTY AGREEMENT dated as of November 20, 2002 by and among Certain Subsidiaries of BLUE RHINO CORPORATION, as Guarantors, in favor of BANK OF AMERICA, N.A., as Administrative Agent - -------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE I DEFINED TERMS..................................................1 1.01 Defined Terms..................................................1 1.02 Other Definitional Provisions..................................2 ARTICLE II REPRESENTATIONS AND WARRANTIES.................................2 2.01 Existence, Qualification and Power, Compliance with Laws.......2 2.02 Authorization; No Contravention................................2 2.03 Binding Effect.................................................2 ARTICLE III UNCONDITIONAL GUARANTY.........................................3 3.01 Guaranty.......................................................3 3.02 Nature of Guaranty.............................................3 3.03 Waivers........................................................4 3.04 Modification of Loan Documents Etc.............................5 3.05 Demand by the Administrative Agent.............................6 3.06 Remedies.......................................................6 3.07 Benefits of Guaranty...........................................6 3.08 Agreements for Contribution....................................6 3.09 Termination; Reinstatement.....................................7 3.10 Payments.......................................................8 ARTICLE IV MISCELLANEOUS..................................................8 4.01 Amendments in Writing..........................................8 4.02 Notices........................................................8 4.03 No Waiver by Course of Conduct, Cumulative Remedies............8 4.04 Enforcement Expenses, Indemnification..........................9 4.05 Governing Law; Consent to Jurisdiction.........................9 4.06 Waiver of Jury Trial..........................................10 4.07 Successors and Assigns........................................10 4.08 Set-Off.......................................................10 4.09 Counterparts..................................................10 4.10 Severability..................................................10 4.11 Section Heading...............................................11 4.12 Integration...................................................11 4.13 Acknowledgements..............................................11 GUARANTY AGREEMENT THIS GUARANTY AGREEMENT (this "Guaranty" or this "Agreement"), dated as of November 20, 2002, by and among the parties listed on the signature pages hereto and any Additional Guarantor (as defined below) who may become party to this Agreement (such parties and Additional Guarantors, collectively, the "Guarantors"), in favor of BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the "Administrative Agent") for the ratable benefit of the banks and other financial institutions (the "Lenders") from time to time parties to the Credit Agreement, dated as of November 20, 2002 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and among BLUE RHINO CORPORATION, a Delaware corporation, as borrower (the "Borrower"), the Lenders, and the Administrative Agent. STATEMENT OF PURPOSE Pursuant to the Credit Agreement, the Lenders have agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein. The Guarantors and the Borrower are part of a related corporate structure and therefore extensions of credit to the Borrower will directly benefit the Guarantor through increased working capital to the entire corporate structure. It is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Guarantors shall have executed and delivered this Guaranty to the Administrative Agent, for the ratable benefit of itself and the Lenders. In consideration of the mutual covenants and agreements herein contained, and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, the Guarantors hereby agree with the Administrative Agent, for the ratable benefit of itself and the Lenders, as follows: ARTICLE I DEFINED TERMS 1.01 DEFINED TERMS. The following terms when used in this Guaranty shall have the meanings assigned to them below: "Applicable Insolvency Laws" means all Laws governing bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent, transfers or conveyances or other similar laws (including, without limitation, 11 U.S.C. Sections 547, 548 and 550 and other "avoidance" provisions of Title 11 of the United States Code). "Obligations" means with respect to (a) a Borrower, the meaning assigned thereto in the Credit Agreement and (b) a Guarantor, the obligations of such Guarantor hereunder. 1.02 OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Guaranty shall refer to this Agreement as a whole and not to any particular provision of this Guaranty, and Section references are to this Guaranty unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Guarantor, shall refer to such Guarantor's Collateral or the relevant part thereof. ARTICLE II REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Extensions of Credit to the Borrower thereunder, Guarantor hereby represents and warrants to the Administrative Agent and each Lender that: 2.01 EXISTENCE, QUALIFICATION AND POWER, COMPLIANCE WITH LAWS. Each Guarantor (a) is a corporation, partnership or limited liability company duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business as now being conducted and hereafter proposed to be conducted except where the absence of any such license, authorization, consent or approval would not reasonably be expected to have a Material Adverse Effect and (ii) execute, deliver and perform its obligations under this Agreement, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license except where the failure to so qualify, be licensed or be in good standing, would not reasonably be expected to have a Material Adverse Effect, and (d) is in compliance with all Laws, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. 2.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Guarantor of this Agreement, has been duly authorized by all necessary corporate or other organizational action, and does not and will not (a) contravene the terms of any of such Guarantor's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien (other than a Permitted Lien), under (i) any Contractual Obligation to which such Guarantor is a party which such conflict, breach or contravention would reasonably be expected to have a Material Adverse Effect or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Guarantor or its property is subject which would reasonably be expected to have a Material Adverse Effect; or (c) violate any Law which would reasonably be expected to have a Material Adverse Effect. 2.03 BINDING EFFECT. This Agreement has been duly executed and delivered by each Guarantor. This Agreement constitutes a legal, valid and binding obligation of each Guarantor, enforceable against each Guarantor in accordance with its terms. 2 ARTICLE III UNCONDITIONAL GUARANTY 3.01 GUARANTY. Each Guarantor hereby, jointly and severally with the other Guarantors, unconditionally guarantees to the Administrative Agent for the ratable benefit of itself and the Lenders, and their respective permitted successors, endorsees, transferees and assigns, the prompt payment and performance of all Obligations of the Borrower (such unconditional guaranty, the "Guaranty"), whether primary or secondary (whether by way of endorsement or otherwise), whether now existing or hereafter arising, whether or not from time to time reduced or extinguished (except by payment thereof) or hereafter increased or incurred, whether enforceable or unenforceable as against the Borrower, whether or not discharged, stayed or otherwise affected by any Applicable Insolvency Law or proceeding thereunder, whether created directly with the Administrative Agent or any Lender or acquired by the Administrative Agent or any Lender through assignment or endorsement, whether matured or unmatured, whether joint or several, as and when the same become due and payable (whether at maturity or earlier, by reason of acceleration, mandatory repayment or otherwise), in accordance with the terms of any such instruments evidencing any such obligations, including all renewals, extensions or modifications thereof; provided, that notwithstanding anything to the contrary contained herein, it is the intention of each Guarantor and the Lenders that, in any proceeding involving the bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution or insolvency or any similar proceeding with respect to any Guarantor or its assets, the amount of such Guarantor's Obligations shall be in, but not in excess of, the maximum .amount thereof not subject to avoidance or recovery by operation of Applicable Insolvency Laws after giving effect to Section 3.08. To that end, but only in the event and to the extent that after giving effect to Section 3.08 such Guarantor's Obligations or any payment made pursuant to - such Guarantor's Obligations would, but for the operation of the foregoing proviso, be subject to avoidance or recovery in any such proceeding under Applicable Insolvency Laws after giving effect to Section 3.08, the amount of such Guarantor's Obligations shall be limited to the largest amount which, after giving effect thereto, would not, under Applicable Insolvency Laws, render such Guarantor's Obligations unenforceable or avoidable or otherwise subject to recovery under Applicable Insolvency Laws. To the extent any payment actually made pursuant to the Obligations of any Guarantor exceeds the limitation of the foregoing proviso and is otherwise subject to avoidance and recovery in any such proceeding under Applicable Insolvency Laws, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment exceeds such limitation and such Obligations as limited by the foregoing proviso shall in all events remain in full force and effect and be fully enforceable against such Guarantor. The foregoing proviso is intended solely to preserve the rights of the Administrative Agent hereunder against such Guarantor in such proceeding to the maximum extent permitted by Applicable Insolvency Laws and neither such Guarantor, the Borrower, any other Guarantor nor any other Person shall have any right or claim under such proviso that would not otherwise be available under Applicable Insolvency Laws in such proceeding. 3.02 NATURE OF GUARANTY. (a) Each Guarantor agrees that this Guaranty is a continuing, unconditional guaranty of payment and performance and not of collection, and that its obligations under this Guaranty shall be primary, absolute and unconditional, irrespective of, and unaffected by: 3 (i) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, the Credit Agreement or any other Loan Document or any other agreement, document or instrument to which the Borrower or any Subsidiary thereof is or may become a party; (ii) the absence of any action to enforce this Guaranty, the Credit Agreement or any other Loan Document or the waiver or consent by the Administrative Agent or any Lender with respect to any of the provisions of this Guaranty, the Credit Agreement or any other Loan Document; \ (iii) the existence, value or condition of, or failure to perfect its Lien against, any security for or other guaranty of the Obligations or any action, or the absence of any action, by the Administrative Agent or any Lender in respect of such security or guaranty (including, without limitation, the release of any such security or guaranty); or (iv) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; it being agreed by each Guarantor that, subject to the proviso in Section 3.01, its obligations under this Guaranty shall not be discharged except pursuant to the terms of Section 3.09. (b) Each Guarantor represents, warrants and agrees that its obligations under this Guaranty are not and shall not be subject to any counterclaims, offsets or defenses of any kind against the Administrative Agent, the Lenders or the Borrower whether now existing or which may arise in the future. (c) Each Guarantor hereby agrees and acknowledges that the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guaranty contained in this, and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Guaranty. 3.03 WAIVERS. To the extent permitted by law, each Guarantor expressly waives all of the following rights and defenses (and agrees not to take advantage of or assert any such right or defense): (a) any rights it may now or in the future have under any statute (including, without limitation, North Carolina General Statutes Section 26-7, et seq. or similar law), or at law or in equity, or otherwise, to compel the Administrative Agent or any Lender to proceed in respect of the Obligations against the Borrower or any other party or against any security for or other guaranty of the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Guarantor; (b) any defense based upon the failure of the Administrative Agent or any Lender to commence an action in respect of the Obligations against the Borrower, such Guarantor, any other guarantor or any other party or any security for the payment and performance of the Obligations; (c) any right to insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets or redemption laws, or exemption, whether now or at any time hereafter in force, which may delay, prevent or 4 otherwise affect the performance by such Guarantor of its Obligations, or the enforcement by the Administrative Agent or the Lenders of this Guaranty; (d) any right of diligence, presentment, demand, protest and notice (except as specifically required herein) of whatever kind or nature with respect to any of the Obligations and waives, to the extent permitted by law, the benefit of all provisions of law which are or might be in conflict with the terms of this Guaranty; and (e) any and all right to notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon, or acceptance of, this Guaranty. Each Guarantor agrees that any notice or directive given at any time to the Administrative Agent or any Lender which is inconsistent with the foregoing waivers shall be null and void and may be ignored by the Administrative Agent or such Lender, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this Guaranty, unless the Administrative Agent and the Required Lenders have specifically agreed otherwise in writing. The foregoing waivers and agreements are of the essence of the transaction contemplated by the Loan Documents and, but for this Guaranty and such waivers, the Administrative Agent and Lenders would decline to enter into the Credit Agreement. 3.04 MODIFICATION OF LOAN DOCUMENTS ETC. Neither the Administrative Agent nor any Lender shall incur any liability to any Guarantor as a result of any of the following, and none of the following shall impair or release this Guaranty or any of the Obligations of any Guarantor under this Guaranty: (a) any change or extension of the manner, place or terms of payment of, or renew or alter all or any portion of, the Obligations; (b) any action under or in respect of the Loan Documents in the exercise of any remedy, power or privilege contained therein or available to it at law, in equity or otherwise, or waive or refrain from exercising any such remedies, powers or privileges; (c) any amendment or modification, in any manner whatsoever, the Loan Documents; (d) any extension or waiver of the time for performance by any Guarantor, any other guarantor, the Borrower or any other Person of, or compliance with, any term, covenant or agreement on its part to be performed or observed under a Loan Document, or waive such performance or compliance or consent to a failure of, or departure from, such performance or compliance; (e) the taking and holding security or collateral for the payment of the Obligations or the sale, exchange, release, disposal of, or other dealing with, any property pledged, mortgaged or conveyed, or in which the Administrative Agent or the Lenders have been granted a Lien, to secure any Indebtedness of any Guarantor, any other guarantor or the Borrower to the Administrative Agent or the Lenders; (f) the. release anyone who may be liable in any manner for the payment of any amounts owed by any Guarantor, any other guarantor or the Borrower to the Administrative Agent or any Lender; 5 (g) any modification or termination the terms of any intercreditor or subordination agreement pursuant to which claims of other creditors of any Guarantor, any other guarantor or the Borrower, are subordinated to the claims of the Administrative Agent or any Lender; or (h) any application of any sums by whomever paid or however realized to any Obligations owing by any Guarantor, any other guarantor or the Borrower to the Administrative Agent or any Lender in such manner as the Administrative Agent or any Lender shall determine in its reasonable discretion. . 3.05 DEMAND BY THE ADMINISTRATIVE AGENT. In addition to the terms set forth in this Article III and in no manner imposing any limitation on such terms, if all or any portion of the then outstanding Obligations under the Credit Agreement are declared to be immediately due and payable, then the Guarantors shall, upon demand in writing therefor by the Administrative Agent to the Guarantors, pay all or such portion of the corresponding Obligations due hereunder then declared due and payable. Notwithstanding the foregoing, each Guarantor agrees that, in the event of the dissolution or insolvency of the Borrower or any Guarantor, or the inability or failure of the Borrower or any Guarantor to pay debts as they become due, or an assignment by the Borrower or any Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of the Borrower or any Guarantor under bankruptcy, insolvency or similar laws, and if such event shall occur at a time when any of the Obligations may not then be due and payable, each Guarantor will pay to the Administrative Agent, for the ratable benefit of the Lenders and their respective successors, indorsees, transferees and assigns, forthwith the full amount which would be payable hereunder by each Guarantor if all such Obligations were then due and payable. 3.06 REMEDIES. Upon the occurrence and during the continuance of any Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, enforce against the Guarantors their respective obligations and liabilities hereunder and exercise such other rights and remedies as may be available to the Administrative Agent hereunder, under the Loan Documents or otherwise. 3.07 BENEFITS OF GUARANTY. The provisions of this Guaranty are for the benefit of the Administrative Agent and the Lenders and their respective permitted successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between the Borrower, the Administrative Agent and the Lenders, the Obligations. In the event all or any part of the Obligations are transferred, endorsed or assigned by the Administrative Agent or any Lender to any Person or Persons as permitted under the Credit Agreement, any reference to an "Administrative Agent", or "Lender" herein shall be deemed to refer equally to such Person or Persons. 3.08 AGREEMENTS FOR CONTRIBUTION. (a) To the extent any Guarantor is required, by reason of its Obligations hereunder, to pay to any Lender an amount greater than the amount of value (as determined in accordance with Applicable Insolvency Laws) actually made available to or for the benefit of such Guarantor on account of the Credit Agreement, this Agreement or any other Loan Document, such Guarantor shall have an enforceable right of contribution against the Borrower and the remaining Guarantors, and the Borrower and the remaining Guarantors shall be jointly and severally liable, for repayment of the full amount of such excess payment. Subject only to the subordination 6 provided in the following subsection (a), such Guarantor further shall be subrogated to any and all rights of the Lenders against the Borrower and the remaining Guarantors to the extent of such excess payment. (b) To the extent that any Guarantor would, but for the operation of this Section 3.08 and by reason of its Obligations hereunder or its obligations to other Guarantors under this Section 3.08, be rendered insolvent for any purpose under Applicable Insolvency Laws, each of the Guarantors hereby, agrees to indemnify such Guarantor and commits to make a contribution to such Guarantor's capital in an amount at least equal to the amount necessary to prevent such Guarantor from having been rendered insolvent by reason of the incurrence of any such obligations. (c) To the extent that any Guarantor would, but for the operation of this Section 3.08 be rendered insolvent under any Applicable Insolvency Law by reason of its incurring of obligations to any other Guarantor under the foregoing subsections (a) and (b) above, such Guarantor shall, in turn have rights of contribution and indemnity, to the full extent provided in the foregoing subsections (a) and (b) above, against the Borrower and the remaining Guarantors, such that all Obligations of all of the Guarantors hereunder and under this Section 3.08 shall be allocated in a manner such that no Guarantor shall be rendered insolvent for any purpose under Applicable Insolvency Law by reason of its incurrence of such obligations. (d) Notwithstanding any payment or payments by any of the Guarantors hereunder, or any set-off or application of funds of any of the Guarantors by the Administrative Agent or any Lender, or the receipt of any amounts by the Administrative Agent or any Lender with respect to any of the Obligations, none of the Guarantors shall be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Borrower or the other Guarantors or against any collateral security held by the Administrative Agent or any Lender for the payment of the Obligations nor shall any of the Guarantors seek any reimbursement from the Borrower or any of the other Guarantors in respect of payments made by such Guarantor in connection with the Obligations, until all amounts owing to the Administrative Agent and the Lenders on account of the Obligations are paid in full and the Commitments, are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly endorsed by such Guarantor to the Administrative Agent, if required) to be applied against the Obligations, whether matured or unmatured, in such order as set forth in the Credit Agreement. 3.09 TERMINATION; REINSTATEMENT. (a) Subject to clause (c) below, this Guaranty shall remain in full force and effect until all the Obligations and all the Obligations of the Guarantors shall have been paid in full and the Commitments terminated. (b) No payment made by the Borrower, any Guarantors, or any other Person received or collected by the Administrative Agent or any Lender from and Borrower, any Guarantor, or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such 7 Guarantor in respect of the Obligations of the Guarantors or any payment received or collected from such Guarantor in respect of the Obligations of the Guarantors), remain liable for the Obligations of the Guarantors up to the maximum liability of such Guarantor hereunder until the Obligations and all the Obligations of the Guarantors shall have been paid in full and the Commitments terminated. (c) Each Guarantor agrees that, if any payment made by the Borrower or any other Person applied to the Obligations is at any time annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid or the proceeds of any collateral are required to be refunded by the Administrative Agent or any Lender to the Borrower, its estate, trustee, receiver or any other party, including, without limitation, any Guarantor, under any applicable Law or equitable cause, then, to the extent of such payment or repayment, each Guarantor's liability hereunder (and any Lien securing such liability) shall be and remain in full force and effect, as fully as if such payment had never been made, and, if prior thereto, this Guaranty shall have been canceled or surrendered (and if any Lien or collateral securing such Guarantor's liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such Lien) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of such Guarantor in respect of the amount of such payment (or any Lien securing such obligation). 3.10 PAYMENTS. Payment by the Guarantors shall be made to the Administrative Agent, to be credited and applied upon the Obligations, in immediately available Dollars to an account designated by the Administrative Agent or at the address referenced herein for the giving of notice to the Administrative Agent or at any other address that may be specified in writing from time to time by the Administrative Agent. ARTICLE IV MISCELLANEOUS 4.01 AMENDMENTS IN WRITING. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 11.01 of the Credit Agreement. 4.02 NOTICES. All notices, requests and demands to or upon the Administrative Agent or any Guarantor hereunder shall be made to the address of the Borrower and effected in the manner provided for in Section 11.02 of the Credit Agreement. 4.03 NO WAIVER BY COURSE OF CONDUCT, CUMULATIVE REMEDIES. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 4.01), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, 8 may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 4.04 ENFORCEMENT EXPENSES, INDEMNIFICATION. (a) Each Guarantor agrees to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Lender and of counsel to the Administrative Agent. (b) Each Guarantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. (c) Each Guarantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from any and all liabilities, obligations, losses, damages, penalties, costs and expenses in connection with actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 11.05 of the Credit Agreement. (d) The agreements in this Section 4.04 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents. 4.05 GOVERNING LAW; CONSENT TO JURISDICTION. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA SITTING IN CHARLOTTE OR OF THE UNITED STATES FOR THE WESTERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR AND THE ADMINISTRATIVE AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GRANTOR AND THE ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH GRANTOR AND THE ADMINISTRATIVE AGENT WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 9 4.06 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 4.07 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of each Guarantor, the Administrative Agent and the Lenders and their successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. 4.08 SET-OFF. Each Guarantor hereby irrevocably authorizes the Administrative Agent and each Lender at any time and from time to time pursuant to Section 11.09 of the Credit Agreement, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or such Lender to or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Administrative Agent or such Lender may elect, against and on account of the obligations and liabilities of such Grantor to the Administrative Agent or such Lender hereunder and claims of every nature and description of the Administrative Agent or such Lender against such Grantor, in any currency, whether arising hereunder, under the Credit Agreement, any other Loan Document or otherwise, as the Administrative Agent or such Lender may elect, whether or not the Administrative Agent or any Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Administrative Agent and each Lender shall notify such Guarantor promptly of any such set-off and the application made by the Administrative Agent or such Lender of the proceeds thereof; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each Lender under this Section 4.07 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such Lender may have. 4.09 COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 4.10 SEVERABILITY. Any provision of this Agreement or any other Loan Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be 10 ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. 4.11 SECTION HEADING. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 4.12 INTEGRATION. This Agreement and the other Loan Documents represent the agreement of the Guarantors, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents. 4.13 ACKNOWLEDGEMENTS. Each Guarantor hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party; (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Guarantors, on the one hand, and the Administrative Agent and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Guarantors and the Lenders. [Signature Pages to Follow] 11 IN WITNESS WHEREOF, the parties hereto have caused this Guaranty Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above. BLUE RHINO CONSUMER PRODUCTS, LLC, as Guarantor By: /s/ Mark Castaneda --------------------------------------------- Name: Mark Castaneda Title: Manager USA LEASING, L.L.C., AS GUARANTOR Blue Rhino Corporation, Manager By: /s/ Mark Castaneda --------------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer UNIFLAME, LLC, as Guarantor By: /s/ Mark Castaneda --------------------------------------------- Name: Mark Castaneda Title: Manager CPD ASSOCIATES, INC., as Guarantor By: /s/ Mark Castaneda --------------------------------------------- Name: Mark Castaneda Title: Vice President UNIFLAME CORPORATION, as Guarantor By: /s/ Kurt Gehsmann --------------------------------------------- Name: Kurt Gehsmann Title: Vice President 12 EX-10.3 17 g81245exv10w3.txt EX-10.3 COLLATERAL AGREEMENT EXHIBIT 10.3 - ------------------------------------------------------------------------------- COLLATERAL AGREEMENT dated as of November 20, 2002 by and among BLUE RHINO CORPORATION, and certain of its Subsidiaries as Grantors, in favor of BANK OF AMERICA, N.A., as Administrative Agent - ------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE I. DEFINED TERMS.........................................................................................1 1.01 Terms Defined in the Uniform Commercial Code....................................................1 1.02 Defined Terms...................................................................................1 1.03 Other Definitional Provisions...................................................................5 ARTICLE II. SECURITY INTEREST....................................................................................5 2.01 Grant of Security Interest......................................................................5 2.02 Grantors Remain Liable..........................................................................6 ARTICLE III. REPRESENTATIONS AND WARRANTIES......................................................................6 3.01 Existence; Qualification and Power; Compliance with Laws........................................6 3.02 Authorization of Agreement; No Conflict.........................................................7 3.03 Governmental Authorization; Other Consents......................................................7 3.04 Binding Effect..................................................................................7 3.05 Perfected First Priority Liens..................................................................8 3.06 Title, No Other Liens...........................................................................8 3.07 State of Organization; Location of Inventory, Equipment and Fixtures; other Information.....................................................................................8 3.08 Accounts........................................................................................9 3.09 Chattel Paper...................................................................................9 3.10 3.10 Commercial Tort Claims.....................................................................9 3.11 Deposit Accounts................................................................................9 3.12 Intellectual Property...........................................................................9 3.13 Inventory.......................................................................................9 3.14 Investment Property; Partnership/LLC Interests.................................................10 3.15 Farm Products..................................................................................10 ARTICLE IV. COVENANTS...........................................................................................10 4.01 Maintenance of Perfected Security Interest; Further Information................................10 4.02 Maintenance of Insurance.......................................................................10 4.03 Changes in Locations; Changes in Name or Structure.............................................11 4.04 Required Notifications.........................................................................11 4.05 4.05 Delivery Covenants........................................................................12 4.06 Control Covenants..............................................................................12 4.07 Filing Covenants...............................................................................13 4.08 Accounts.......................................................................................13 4.09 Intellectual Property..........................................................................14 4.10 Investment Property; Partnership/LLC Interests.................................................14 4.11 Equipment......................................................................................14 4.12 Vehicles.......................................................................................14 4.13 Further Assurances.............................................................................14 ARTICLE V. REMEDIAL PROVISIONS..................................................................................14 5.01 General Remedies...............................................................................14 5.02 Specific Remedies..............................................................................14 5.03 Registration Rights............................................................................14 i 5.04 Application of Proceeds........................................................................14 5.05 Waiver, Deficiency.............................................................................14 ARTICLE VI. THE ADMINISTRATIVE AGENT............................................................................14 6.01 Administrative Agent's Appointment as Attorney-In-Fact.........................................14 6.02 Duty of Administrative Agent...................................................................14 6.03 Authority of Administrative Agent..............................................................14 ARTICLE VII. MISCELLANEOUS......................................................................................14 7.01 Amendments in Writing..........................................................................14 7.02 Notices........................................................................................14 7.03 No Waiver by Course of Conduct, Cumulative Remedies............................................14 7.04 Enforcement Expenses, Indemnification..........................................................14 7.05 Governing Law; Consent to Jurisdiction.........................................................14 7.06 Waiver of Jury Trial...........................................................................14 7.07 Successors and Assigns.........................................................................14 7.08 Set-Off........................................................................................14 7.09 Counterparts...................................................................................14 7.10 Severability...................................................................................14 7.11 Section Heading................................................................................14 7.12 Integration....................................................................................14 7.13 Acknowledgements...............................................................................14 7.14 Additional Grantors............................................................................14 7.15 Releases.......................................................................................14 ii EXHIBITS: Exhibit A Form of Perfection Certificate SCHEDULES: Schedule 3.07 Jurisdiction of Organization; Taxpayer Identification Number; Registered Organization Number; Mailing Address; Chief Executive Office and other Locations Schedule 3.10 Commercial Tort Claims Schedule 3.09 Chattel Paper Schedule 3.11 Deposit Accounts Schedule 3.12 Intellectual Property Schedule 3.14 Investment Property and Partnership/LLC Interests iii COLLATERAL AGREEMENT THIS COLLATERAL AGREEMENT (this "Agreement"), dated as of November 20, 2002, by and among BLUE RHINO CORPORATION, a Delaware corporation (the "Borrower"), certain of its Subsidiaries as identified on the signature pages hereto and any Additional Grantor (as defined below) who may become party to this Agreement (such Subsidiaries and Additional Grantors, collectively, with the Borrower, the "Grantors"), in favor of BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the "Administrative Agent") for the ratable benefit of the banks and other financial institutions (the "Lenders") from time to time parties to the Credit Agreement, dated as of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and among the Borrower, the Lenders, and the Administrative Agent. Pursuant to the Credit Agreement, the Lenders have agreed to make Credit Extensions to the Borrower upon the terms and subject to the conditions set forth therein. It is a condition precedent to the obligation of the Lenders to make their respective Credit Extensions to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent, for the ratable benefit of itself and the Lenders. To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Credit Extensions to the Borrowers thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of itself and the Lenders, as follows: ARTICLE I. DEFINED TERMS 1.01 TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE. (a) The following terms when used in this Agreement shall have the meanings assigned to them in the UCC (as defined in Section 1.02 below) as in effect from time to time: "Account", "Account Debtor", "Authenticate", "Certificated Security", "Chattel Paper"; "Commercial Tort Claim", "Deposit Account", "Documents", "Electronic Chattel Paper", "Equipment", "Fixture", "General Intangible", "Instrument", "Inventory", "Investment Property", "Issuer", "Letter of Credit Rights", "Proceeds", "Record", "Securities Entitlement", "Securities Intermediary", "Security Account", "Supporting Obligation", "Tangible Chattel Paper", and "Uncertificated Security". (b) Terms defined in the UCC and not otherwise defined herein or in the Credit Agreement shall have the meaning assigned in the UCC as in effect from time to time. 1.02 DEFINED TERMS. The following terms when used in this Agreement shall have the meanings assigned to them below: "Additional Grantor" means each Subsidiary of the Borrower which hereafter becomes a Grantor pursuant to Section 7.14 hereof and Section 7.15 of the Credit Agreement. "Agreement" means this Collateral Agreement, as amended, restated, supplemented or otherwise modified from time to time. "Applicable Insolvency Laws" means all Laws governing bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws (including, without limitation, 11 U.S.C. Sections 547, 548 and 550 and other "avoidance" provisions of Title 11 of the United States Code). "Assignment of Claims Act" means the Assignment of Claims Act of 1940 (41 U.S.C. Section 15, 31 U.S.C. Section 3737, and 31 U.S.C. Section 3727), including all amendments thereto and regulations promulgated thereunder. "Collateral" shall have the meaning assigned thereto in Section 2.01. "Collateral Account" means any collateral account established by the Administrative Agent as provided in Section 5.02. "Control" means the manner in which "control" is achieved under the UCC with respect, with respect to any Collateral for which the UCC specifies a method of achieving "control". "Controlled Depository" shall have the meaning assigned thereto in Section 4.06. "Copyrights" means collectively, all of the following of any Grantor: (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations and copyright applications anywhere in the world, including, without limitation, those listed on Schedule 3.12 hereto, (b) all reissues, extensions, continuations (in whole or in part) and renewals of any of the foregoing, (c) all income, royalties, damages and payments now or hereafter due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation, damages or payments for past or future infringements of any of the foregoing, (d) the right to sue for past, present and future infringements of any of the foregoing and (e) all rights corresponding to any of the foregoing throughout the world. "Copyright Licenses" means any written agreement naming any Grantor as licensor or licensee, including, without limitation, those listed in Schedule 3.12, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "Effective Endorsement and Assignment" means, with respect to any specific type of Collateral, all such endorsements, assignments and other instruments of transfer reasonable requested by the Administrative Agent with respect to the Security Interest granted in such Collateral, and in each case, in form and substance satisfactory to the Administrative Agent. "Exempted Deposit Account" means any operating Deposit Account created in the ordinary course of business; provided that (a) no more than $50,000 in the aggregate is deposited in all such Deposit Accounts at any time and (b) the applicable Grantor provides written notice to the Administrative Agent within thirty (30) days of the creation of any such Deposit Account. 2 "Exempted Short Term Investment" means, any Investment permitted pursuant to Section 8.02(a) of the Credit Agreement; provided that (a) such Investment matures within seven (7) days and (b) the aggregate amount of all such Investments outstanding at any time does not exceed $100,000. "Government Contract" means a contract between any Grantor and an agency, department or instrumentality of the United States or any state, municipal or local Governmental Authority located in the United States. "Guarantors" means the collective reference to each Person executing a Guaranty Agreement. "Guaranty Agreement" shall have the meaning assigned thereto in the Credit Agreement. "Intellectual Property" means collectively, all of the following of any Grantor: (a) all systems software, applications software and internet rights, including, without limitation, screen displays and formats, internet domain names, web sites (including web links), program structures, sequence and organization, all documentation for such software, including, without limitation, user manuals, flowcharts, programmer's notes, functional specifications, and operations manuals, all formulas, processes, ideas and know-how embodied in any of the foregoing, and all program materials, flowcharts, notes and outlines created in connection with any of the foregoing, whether or not patentable or, copyrightable, (b) concepts, discoveries, improvements and ideas, (c) any useful information relating to the items described in clause (a) or (b), including know-how, technology, engineering drawings, reports, design information, trade secrets, practices, laboratory notebooks, specifications, test procedures, maintenance manuals, research, development, manufacturing, marketing, merchandising, selling, purchasing and accounting, (d) Patents and Patent Licenses, Copyrights and Copyright Licenses, Trademarks and Trademark Licenses, and (e) other licenses to use any of the items described in the foregoing clauses (a), (b), (c) and (d) or any other similar items of such Grantor necessary for the conduct of its business. "Obligations" means with respect to the Borrower, the meaning assigned thereto in the Credit Agreement and with respect to each Guarantor, the obligations of such Guarantor under the Guaranty Agreement executed by such Guarantor. "Partnership/LLC Interests" means, with respect to any Grantor, the entire partnership, membership interest or limited liability company interest, as applicable, of such Grantor in each partnership, limited partnership or limited liability company owned thereby, including, without limitation, such Grantor's capital account, its interest as a partner or member, as applicable, in the net cash flow, net profit and net loss, and items of income, gain, loss, deduction and credit of any such partnership, limited partnership or limited liability company, as applicable, such Grantor's interest in all distributions made or to be made by any such partnership, limited partnership or limited liability company, as applicable, to such Grantor and all of the other economic rights, titles and interests of such Grantor as a partner or member, as applicable, of any such partnership, limited partnership or limited liability company, as applicable, whether set forth in the partnership agreement or membership agreement, as applicable, of such partnership, 3 limited partnership or, limited liability company, as applicable, by separate agreement or otherwise. "Patents" means collectively, all of the following of any Grantor: (a) all patents, rights and interests in patents, patentable inventions and patent applications anywhere in the world, including, without limitation, those listed on Schedule 3.12 hereto, (b) all reissues, extensions, continuations (in whole or in part) and renewals of any of the foregoing, (c) all income, royalties, damages or payments now or hereafter due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation, damages or payments for past or future infringements of any of the foregoing, (d) the right to sue for past, present and future infringements of any of the foregoing and (e) all rights corresponding to any of the foregoing throughout the world. "Patent License" means all agreements now or hereafter in existence, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 3.12 hereto. "Perfection Certificate" means the perfection certificate dated as of even date herewith, substantially in the form of Exhibit A attached hereto, and otherwise in form and substance satisfactory to the Administrative Agent, and duly certified by an officer, partner or member, as applicable, of each Grantor. "Permitted Liens" shall have the meaning assigned thereto in the Credit Agreement. "Securities Act" means the Securities Act of 1933, including all amendments thereto and regulations promulgated thereunder. "Security Interests" means the security interests granted pursuant to Article II, as well as all other security interests created or assigned as additional security for the Obligations pursuant to the provisions of the Credit Agreement. "Subsidiary Issuer" means any Issuer of Investment Property or any Partnership/LLC Interests, which such Issuer is a direct or indirect Subsidiary of the Borrower. "Trademarks" means collectively, all of the following of any Grantor: (a) all trademarks, rights and interests in trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations and recordings thereof, and all applications in connection therewith anywhere in the world, including, without limitation, those, listed on Schedule 3.12 hereto, (b) all reissues, extensions, continuations (in whole or in part) and renewals of any of the foregoing, (c) all income, royalties, damages and payments now or hereafter due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation, damages or payments for past or future infringements of any of the foregoing, (d) the right to sue for past, present and future infringements of any of the foregoing and (e) all rights corresponding to any of the foregoing throughout the world. 4 "Trademark License" means any agreement now or hereafter in existence, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 3.12. "UCC" means the Uniform Commercial Code as in effect in the State of North Carolina, as amended or modified from time to time. "Vehicles" means all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title under the laws of any state and all tires all other appurtenances to any of the foregoing. 1.03 OTHER DEFINITIONAL PROVISIONS. Terms defined in the Credit Agreement and not otherwise defined herein shall have the meaning assigned thereto in the Credit Agreement. The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor's Collateral or the relevant part thereof. ARTICLE II. SECURITY INTEREST 2.01 GRANT OF SECURITY INTEREST. Each Grantor hereby grants, pledges and collaterally assigns to the Administrative Agent, for the ratable benefit of itself and the Lenders, a security interest in, all of such Grantor's right, title and interest in the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest, and wherever located or deemed located (collectively, the "Collateral"), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations: (a) all Accounts; (b) all Chattel Paper; (c) all Commercial Tort Claims identified on Schedule 3.10; (d) all Deposit Accounts; (e) all Documents; (f) all Equipment; (g) all Fixtures; (h) all General Intangibles; 5 (i) all Instruments; (j) all Intellectual Property; (k) all Inventory; (l) all Investment Property; (m) all Letter of Credit Rights; (n) all Vehicles; (o) all other personal property not otherwise described above; (p) all books and records pertaining to the Collateral; and (q) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and Supporting Obligations (as now or hereafter defined in the UCC) given by any Person with respect to any of the foregoing. provided that any Security Interest on any capital stock or other ownership interests issued by any Foreign Subsidiary shall be limited to 65% of all issued and outstanding shares of all classes of capital stock or other ownership interests of such Foreign Subsidiary. 2.02 GRANTORS REMAIN LIABLE. Anything herein to the contrary notwithstanding: (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Administrative Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, (c) neither the Administrative Agent nor any Lender shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Administrative Agent or any Lender be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder, and (d) neither the Administrative Agent nor any Lender shall have any liability in contract or tort for any Grantor's acts or omissions. ARTICLE III. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Credit Extensions to the Borrower thereunder, each Grantor hereby represents and warrants to the Administrative Agent and each Lender that: 3.01 EXISTENCE; QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Grantor (a) is a corporation, partnership or limited liability company duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, 6 authorizations, consents and approvals to (i) own its assets and carry on its business as now being conducted and hereafter proposed to be conducted except where the absence of any such license, authorization, consent or approval would not reasonably be expected to have a Material Adverse Effect and (ii) execute, deliver and perform its obligations under this Agreement, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license except where the failure to so qualify, be licensed or be in good standing, would not reasonably be expected to have a Material Adverse Effect, and (d) is in compliance with all Laws except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. 3.02 AUTHORIZATION OF AGREEMENT; NO CONFLICT. The execution, delivery and performance by each Grantor of this Agreement have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Grantor's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under (other than the Security Interests and Permitted Liens), (i) any Contractual Obligation to which such Grantor is a party which such conflict, breach or contravention would not reasonably be expected to have a Material Adverse Effect or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Grantor or its property is subject which would reasonably be expected to have a Material Adverse Effect; or (c) violate any Law which would reasonably be expected to have a Material Adverse Effect. 3.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Grantor of this Agreement, except (a) as may be required by Laws affecting the offering and sale of securities generally, (b) filings with the United States Copyright Office and/or the United States Patent and Trademark Office and (c) filings under the UCC and/or the Assignment of Claims Act. Each of the Grantors (x) has all Governmental Approvals required by any applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to the best of its knowledge, threatened attack by direct or collateral proceeding, except where the absence of such Governmental Approval would not reasonably be expected to have a Material Adverse Effect, (y) is in compliance with each Governmental Approval applicable to it and in compliance with all other applicable Laws relating to it or any of its respective properties, in each case except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect and (z) has timely filed all material reports, documents and other materials required to be filed by it under all applicable Laws with any Governmental Authority and has retained all material records and documents required to be retained by it under applicable Law. 3.04 BINDING EFFECT. This Agreement has been duly executed and delivered by each Grantor. This Agreement constitutes a legal, valid and binding obligation of each Grantor, enforceable against each Grantor in accordance with its terms. 7 3.05 PERFECTED FIRST PRIORITY LIENS. Each financing statement naming any Grantor as a debtor is in appropriate form for filing in the appropriate filing offices of the states specified on Schedule 3.07. The Security Interests granted pursuant to this Agreement (a) constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of itself and the Lenders, as collateral security for the Obligations, enforceable in accordance with the terms hereof, against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for Permitted Liens. 3.06 TITLE, NO OTHER LIENS. Except for the Security Interests and leases of Cylinder Inventory to third party distributors, each Grantor owns each item of the Collateral free and clear of any and all Liens or claims other than Permitted Liens. No financing statement under the UCC of any state which names a Grantor as debtor or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of itself and the Lenders, pursuant to this Agreement or in connection with Permitted Liens. No Collateral is in the possession or Control of any Person asserting any claim thereto or security interest therein, except that (a) the Administrative Agent or its designee may have possession or Control of Collateral as contemplated hereby, (b) a depositary bank may have Control of a Deposit Account owned by a Grantor at such depositary bank and a Securities Intermediary may have Control over a Securities Account owned by a Grantor at such Securities Intermediary, in each case subject to the terms of any Deposit Account Control Agreement or Securities Control Agreement, as applicable, in favor of the Administrative Agent, and (c) a bailee, consignee, third party distributors (pursuant to leases of Cylinder Inventory) or other Person may have possession of the Collateral as contemplated by, and so long as, the applicable Grantors have complied to the satisfaction of the Administrative Agent with the applicable provisions of Section 4.06. 3.07 STATE OF ORGANIZATION; LOCATION OF INVENTORY, EQUIPMENT AND FIXTURES; OTHER INFORMATION. (a) Each Grantor was organized and remains organized under the laws of the state identified on Schedule 3.07 under such Grantor's name. The taxpayer identification number and Registered Organization number of each Grantor is set forth on Schedule 3.07 under such Grantor's name. (b) All Collateral consisting of Inventory, Equipment and Fixtures (whether now owned of hereafter acquired) is (or will be) located at the locations identified on Schedule 3.07 (as such Schedule 3.07 may be updated from time to time), except as otherwise permitted hereunder. Upon the request of the Administrative Agent (a) no more than once per year if no Default or Event of Default has occurred and is continuing and (b) at any time during the occurrence and continuation of a Default or Event of Default, the Borrower shall promptly furnish a list of all addresses where Inventory is located as of the date of such request. (c) The mailing address, chief place of business, chief executive office and office where each Grantor keeps its books and records relating to the Accounts, Documents, General Intangibles, Instruments and Investment Property in which it has any interest is located at the locations specified on Schedule 3.07 under such Grantor's name. No Grantor has any other 8 places of business except those separately set forth on Schedule 3.07 under such Grantor's name. No Grantor does business nor has done business during the past five years under any trade name or fictitious business name except as disclosed on Schedule 3.07 under such Grantor's name. Except as disclosed on Schedule 3.07 under such Grantors name, no Grantor has acquired assets from any Person, other than assets acquired in the ordinary course of such Grantor's business, during the past five years. 3.08 ACCOUNTS. Each existing Account constitutes, and each hereafter arising Account will constitute, the legally valid and binding obligation of the applicable Account Debtor. The amount represented by each Grantor to Administrative Agent as owing by each Account Debtor is, or will be, the correct amount actually and unconditionally owing, except for customary discounts and allowances where applicable. No Account Debtor has any defense, set-off, claim or counterclaim against any Grantor that can be asserted against Administrative Agent, whether in any proceeding to enforce Administrative Agent's rights in the Collateral or otherwise except defenses, setoffs, claims or counterclaims that are not, in the aggregate, material to the value of the Accounts. None of the Accounts is, nor will any hereafter arising Account be, evidenced by a promissory note or other Instrument other than a check. None of the Accounts arises from a Government Contract. 3.09 CHATTEL PAPER. Except as set forth on Schedule 3.09, as of the date hereof, no Grantor holds any Chattel Paper in the ordinary course of its business. 3.10 3.10 COMMERCIAL TORT CLAIMS. As of the date hereof, all Commercial Tort Claims owned by any Grantor are listed on Schedule 3.10. 3.11 DEPOSIT ACCOUNTS. As of the date hereof, all Deposit Accounts (including, without limitation, cash management accounts that are Deposit Accounts) owned by any Grantor are listed on Schedule 3.11. 3.12 INTELLECTUAL PROPERTY. (a) All United States Copyright registrations, Copyright applications, issued Patents, Trademark registrations and Trademark applications owned by any Grantor in its own name on the date hereof is listed on Schedule 3.12. (b) Except as set forth in Schedule 3.12 on the date hereof, none of the Intellectual Property owned by any Grantor is the subject of any written licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor, except as could not reasonably be expected to have a Material Adverse Effect. 3.13 INVENTORY. Collateral consisting of Inventory is of good and merchantable quality, free from any material defects. To the knowledge of each Grantor, none of such Inventory is subject to any licensing, Patent, Trademark, trade name or Copyright with any Person that restricts in any material respect any Grantor's ability to manufacture and/or sell such Inventory. The completion of the manufacturing process of such Inventory by a Person other than the applicable Grantor would be permitted under any contract to which such Grantor is a party or to which the Inventory is subject. 9 3.14 INVESTMENT PROPERTY; PARTNERSHIP/LLC INTERESTS. (a) As of the date hereof, all Investment Property (including, without limitation, Securities Accounts and cash management accounts that are Investment Property) and all Partnership/LLC Interests owned by any Grantor is listed on Schedule 3.14. (b) All Investment Property and all Partnership/LLC Interests issued by any Subsidiary Issuer to any Grantor (i) have been duly and validly issued and, if applicable, are fully paid and nonassessable, (ii) are beneficially owned as of record by such Grantor and (ii) constitute all the issued and outstanding shares of all classes of the capital stock of such Subsidiary Issuer issued to such Grantor. 3.15 FARM PRODUCTS. None of the Collateral constitutes, or is the Proceeds of, Farm Products. ARTICLE IV. COVENANTS Until the Obligations shall have been paid in full and the Commitments terminated, unless consent has been obtained in the manner provided for in Section 7.01, each Grantor covenants and agrees that: 4.01 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER INFORMATION. (a) Each Grantor shall maintain the Security Interest created by this Agreement as a perfected Security Interest having at least the priority described in Section 3.04 and shall defend such Security Interest against the claims and demands of all Persons whomsoever. (b) Each Grantor will furnish to the Administrative Agent and the Lenders from time to time statements and schedules further identifying and describing the assets and property of such Grantor and such other reports in connection therewith as the Administrative Agent may reasonably request, all in reasonable detail. 4.02 MAINTENANCE OF INSURANCE. (a) Each Grantor will maintain, with financially sound and reputable companies, insurance policies (i) insuring the Collateral against loss by fire, explosion, theft, fraud and such other casualties, including business interruption, as may be reasonably satisfactory to the Administrative Agent in amounts and with deductibles at least as favorable as those generally maintained by businesses of similar size engaged in similar activities (after giving effect to any self-insurance in an amount not to exceed (a) $500,000 per each occurrence and (b) $3,000,000 in the aggregate) and (ii) insuring such Grantor and the Administrative Agent, for the ratable benefit of the Lenders, against liability for hazards, risks and liability to persons and property relating to the Collateral, in amounts and with deductibles at least as favorable as those generally maintained by businesses of similar size engaged in similar activities, such policies to be in such form and having such coverage as may be reasonably satisfactory to the Administrative Agent and the Lenders (after giving effect to any self-insurance in an amount not to exceed (a) $500,000 per each occurrence and (b) $3,000,000 in the aggregate). 10 (b) All such insurance shall (i) name the Administrative Agent for the ratable benefit of itself and the Lenders as loss payee (to the extent covering risk of loss or damage to tangible property) and as an additional insured as its interests may appear (to the extent covering any other risk), (ii) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least thirty (30) days after receipt by the Administrative Agent of written notice thereof and (iii) be reasonably satisfactory in all other respects to the Administrative Agent. (c) Upon the request of the Administrative Agent, each Grantor shall deliver to the Administrative Agent and the Lenders periodic reports from a reputable insurance broker with respect to the insurance referred to in this Section 4.02. 4.03 CHANGES IN LOCATIONS; CHANGES IN NAME OR STRUCTURE. No Grantor will, except upon thirty (30) days' prior written notice to the Administrative Agent and delivery to the Administrative Agent of (a) all additional financing statements (executed if necessary for any particular filing jurisdiction) and other instruments and documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the Security Interests and (b) if applicable, a written supplement to the Schedules of this Agreement: (i) permit any Deposit Account (other than any Exempted Deposit Account so long as no Default or Event of Default has occurred and is continuing) to be held by or at a depositary bank other than the depositary bank that held such Deposit Account as of the date hereof as set forth on Schedule 3.11; (ii) permit any of the Inventory (other than Cylinder Inventory, Inventory acquired pursuant to an acquisition permitted pursuant to Section 8.02(a) of the Credit Agreement and any Inventory excluded from the Borrowing Base, so long as no Default or Event of Default has occurred and is continuing), Equipment or Fixtures to be kept at a location other than those listed on Schedule 3.07, except as otherwise permitted hereunder; (iii) permit any Investment Property (other than Certificated Securities delivered to the Administrative Agent pursuant to Section 4.05 and, so long as no Default or Event of Default has occurred and is continuing, any Exempted Short Term Investment) to be held by or at a Securities Intermediary the Securities Intermediary that held such Investment Property as of the date hereof as set forth on Schedule 3.14; (iv) change its jurisdiction of organization or the location of its chief executive office from that identified on Schedule 3.07; or (v) change its name, identity or corporate or organizational structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Agreement would become misleading. 4.04 REQUIRED NOTIFICATIONS. Each Grantor shall promptly notify the Administrative Agent, in writing, of: (a) any Lien (other than the Security Interests or Permitted Liens) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder, (b) the occurrence of any other event which could reasonably be expected to have a Material Adverse Effect on the aggregate value of the Collateral or on the 11 Security Interests, (c) any Collateral which, to the knowledge of such Grantor, constitutes a Government Contract, and (d) the acquisition or ownership by such Grantor of any (i) Commercial Tort Claim, (ii) Deposit Account, (iii) Investment Property after the date hereof. 4.05 4.05 DELIVERY COVENANTS. Each Grantor will deliver and pledge to the Administrative Agent, for the ratable benefit of itself and the Lenders, all Certificated Securities, Partnership/LLC Interests evidenced by a certificate, negotiable Documents, Instruments, and Tangible Chattel Paper owned or held by such Grantor, in each case, together with an Effective Endorsement and Assignment and all Supporting Obligations, as applicable. 4.06 CONTROL COVENANTS. (a) Each Grantor shall instruct (and otherwise use its reasonable efforts) to cause (i) each depositary bank holding a Deposit Account (other than any Exempted Deposit Account so long as no Default or Event of Default has occurred and is continuing) owned by such Grantor and (ii) each Securities Intermediary holding any Investment Property (other than a Short Term Investment, so long as no Default or Event of Default has occurred and is continuing) owned by such Grantor, to execute and deliver a control agreement, sufficient to provide the Administrative Agent with Control of such Deposit Account and otherwise in form and substance satisfactory to the Administrative Agent (any such depositary bank executing and delivering any such control agreement, a "Controlled Depositary", and any such Securities Intermediary executing and delivering any such control agreement, a "Controlled Intermediary"). In the event any such depositary bank or Securities Intermediary refuses to execute and deliver such control agreement, the Administrative Agent, in its sole discretion, may require the applicable Deposit Account and Investment Property to be transferred to the Administrative Agent or a Controlled Depositary or Controlled Intermediary, as applicable. (b) Each Grantor will take such actions and deliver all such agreements as are requested by the Administrative Agent to provide the Administrative Agent with Control of all Letter of Credit Rights and Electronic Chattel Paper owned or held by such Grantor, including, without limitation, with respect to any such Electronic Chattel Paper, by having the Administrative Agent identified as the assignee of the Record(s) pertaining to the single authoritative copy thereof. (c) Each Grantor shall, with respect to any Collateral (other than Collateral specifically subject to the provisions of Section 4.06(a) and Section 4.06(b)) in the possession or control of any consignee, warehouseman, bailee, processor, or any other third party (other than Cylinder Inventory and related display and sales racks in the possession or control of or consigned to Home Depot Inc., Lowe's Companies, Inc., Sears, Roebuck and Co. (including, without limitation, Orchard Supply), Wal-Mart Stores, Inc. (including, without limitation, Sam's Club) or KMart Corporation or a carrier transporting Inventory in the ordinary course of business) exceeding in value $10,000 at any one location (such Collateral exceeding such amount, the "Excess Collateral"), notify in writing such Person of the Security Interests created hereby, use its reasonable efforts to obtain such Person's written agreement in writing to hold all such Collateral for the Administrative Agent's account subject to the Administrative Agent's instructions, and cause such Person to issue and deliver to the Administrative Agent warehouse receipts, bills of lading or any similar documents relating to such Collateral to the Administrative 12 Agent's together with an Effective Endorsement and Assignment; provided that if such Grantor is not able to obtain such agreement and cause the delivery of such items, the Administrative Agent, in its sole discretion, may require such Collateral or Excess Collateral, as applicable, to be moved to another location specified thereby. Further, upon the request of the Administrative Agent, each Grantor shall perfect and protect such Grantor's ownership interests in all Inventory (other than Cylinder Inventory and other Inventory that is excluded from the Borrowing Base so long as no Default or Event of Default has occurred or is continuing) stored with a consignee against creditors of the consignee by filing and maintaining financing statements against the consignee reflecting the consignment arrangement filed in all appropriate filing offices, providing any written notices required to notify any prior creditors of the consignee of the consignment arrangement, and taking such other actions as may be appropriate to perfect and protect such Grantor's interests in such inventory under Section 2-326, Section 9-103, Section 9 324 and Section 9-505 of the UCC or otherwise. All such financing statements filed pursuant to this Section 4.06(c) shall be assigned, on the face thereof, to the Administrative Agent, for the ratable benefit of itself and the other Lenders. 4.07 FILING COVENANTS. Pursuant to Section 9-509 of the UCC and any other applicable Law, each Grantor authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent determines appropriate to perfect the Security Interests of the Administrative Agent under this Agreement and any financing or continuation statements under the UCC (or other applicable Law) in effect in any jurisdiction with respect to the Security Interests. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of Collateral that describes such property in any other manner as the Administrative Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the Security Interest in the Collateral granted herein, including, without limitation, describing such property as "all assets" or "all personal property." Further, a photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. Grantor hereby authorizes, ratifies and confirms all financing statements and other filing or recording documents or instruments filed by Administrative Agent prior to the date of this Agreement. 4.08 ACCOUNTS. (a) Other than in the ordinary course of business consistent with its past practice, no Grantor will (i) grant any extension of the time of payment of any Account, (ii) compromise or settle any Account for less than the full amount thereof, (iii) release, wholly or partially, any Account Debtor, (iv) allow any credit or discount whatsoever on any Account or (v) amend, supplement or modify any Account in any manner that could, adversely affect the value thereof. (b) Each Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of any material Account. 13 (c) The Administrative Agent shall have the right to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications. At any time and from time to time, upon the Administrative Agent's request and at the expense of the relevant Grantor, such Grantor shall cause independent public accountants or others satisfactory to the Administrative Agent -to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts. 4.09 INTELLECTUAL PROPERTY. (a) Except as could not reasonably be expected to have a Material Adverse Effect, each Grantor (either itself or through licensees) (i) will continue to use each registered Trademark (owned by such Grantor) and Trademark for which an application (owned by such Grantor) is pending, to the extent reasonably necessary to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) will maintain products and services offered under such Trademark at a level substantially consistent with the quality of such products and services as of the date hereof, (iii) will not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark could reasonably be expected to become invalidated or impaired in any way, (iv) will not do any act, or knowingly omit to do any act, whereby any issued Patent owned by such Grantor would reasonably be expected to become forfeited, abandoned or dedicated to the public, (v) will not (and will not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any registered Copyright owned by such Grantor or Copyright for which an application is pending (owned by such Grantor) could reasonably be expected to become invalidated or otherwise impaired and (vi) will not (either itself or through licensees) do any act whereby any material portion of the Copyrights may fall into the public domain. (b) Each Grantor will notify the Administrative Agent and the Lenders promptly if it knows, or has reason to know, that any application or registration relating to any Intellectual Property owned by such Grantor may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor's ownership of, or the validity of, any Intellectual Property owned by such Grantor or such Grantor's right to register the same or to own and maintain the same, except where any such forfeiture, abandonment, public dedication or adverse determination or development would not reasonably be expected to have a Material Adverse Effect. (c) Whenever such Grantor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, such Grantor shall report such filing to the Administrative Agent within five (5) Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the 14 Administrative Agent's and the Lenders' security interest in any material Copyright, Patent or Trademark and the goodwill and General Intangibles of such Grantor relating thereto or represented thereby. (d) Each Grantor will take all reasonable and necessary steps, at such Grantor's sole cost and expense, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material Intellectual Property, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability. (e) In the event that any material Intellectual Property owned by a Grantor is infringed, misappropriated or diluted by a third party, the applicable Grantor shall (i) at such Grantor's sole cost and expense, take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Administrative Agent after it learns of such infringement, misappropriation or dilution. 4.10 INVESTMENT PROPERTY; PARTNERSHIP/LLC INTERESTS. (a) Without the prior written consent of the Administrative Agent, no Grantor will (i) vote to enable, or take any other action to permit, any Issuer to issue any Investment Property or Partnership/LLC Interests, except for such those additional Investment Property or Partnership/LLC Interests that will be subject to the Security Interest granted herein in favor of the Administrative Agent (subject to the limitation thereon set forth in the proviso at the end of Section 2.01), or (ii) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any Investment Property or Partnership/LLC Interests or Proceeds thereof. The Grantors will defend the right, title and interest of the Administrative Agent in and to any Investment Property and Partnership/LLC Interests against the claims and demands of all Persons whomsoever. (b) If any Grantor shall become entitled to receive or shall receive (i) any Certificated Securities (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the ownership interests of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any Investment Property, or otherwise in respect thereof, or (ii) any sums paid upon or in respect of any Investment Property upon the liquidation or dissolution of any Issuer, such Grantor shall accept the same as the agent of the Administrative Agent and the Lenders, hold the same in trust for the Administrative Agent and the Lenders, segregated from other funds of such Grantor, and promptly deliver the same to the Administrative Agent in accordance with the terms hereof. 4.11 EQUIPMENT. Each Grantor will maintain each item of Equipment in good working order and condition (reasonable wear and tear and obsolescence excepted), and in accordance with any manufacturer's manual, and will as quickly as practicable provide all 15 maintenance, service and repairs necessary for such purpose and will promptly furnish to the Administrative Agent a statement respecting any material loss or damage to any of the Equipment. 4.12 VEHICLES. Upon the request of the Administrative Agent upon the occurrence and during the continuance of an Event of Default, all applications for certificates of title or ownership indicating the Administrative Agent's first priority Lien on the Vehicle covered by such certificate, and any other necessary documentation, shall be filed in each office in each jurisdiction which the Administrative Agent shall deem reasonably advisable to perfect its Liens on the Vehicles. Prior thereto, each certificate of title or ownership relating to each Vehicle shall be maintained by the applicable Grantor in accordance with applicable Law to reflect the ownership interest of such Grantor. 4.13 FURTHER ASSURANCES. Upon the request of the Administrative Agent and at the sole expense of the Grantors, each Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (a) with respect to Government Contracts, assignment agreements and notices of assignment, in form and substance satisfactory to the Administrative Agent, duly executed by any Grantors party to such Government Contract in compliance with the Assignment of Claims Act (or analogous state applicable Law), and (b) all applications, certificates, instruments, registration statements, and all other documents and papers the Administrative Agent may reasonably request and as may be required by law in connection with the obtaining of any consent, approval, registration, qualification, or authorization of any Person deemed necessary or appropriate for the effective exercise of any rights under this Agreement. ARTICLE V. REMEDIAL PROVISIONS 5.01 GENERAL REMEDIES. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the UCC or any other applicable Law. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent may disclaim any warranties of title, possession and quiet enjoyment. The Administrative Agent or any Lender shall have the right upon any such public 16 sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor's premises or elsewhere. To the extent permitted by applicable Law, each Grantor waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder except to the extent any such claims, damages, or demands result solely from the gross negligence or willful misconduct of the Administrative Agent or any Lender, in each case against whom such claim is asserted. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. 5.02 SPECIFIC REMEDIES. (a) The Administrative Agent hereby authorizes each Grantor to collect such Grantor's Accounts, under the Administrative Agent's direction and control; provided that, the Administrative Agent may curtail or terminate such authority at any time after the occurrence and during the continuance of an Event of Default. (b) Upon the occurrence and during the continuance of an Event of Default: (i) the Administrative Agent may communicate with Account Debtors of any Account subject to a Security Interest and upon the request of the Administrative Agent, each Grantor shall notify (such notice to be in form and substance satisfactory to the Administrative Agent) its Account Debtors that such Accounts have been assigned to the Administrative Agent, for the ratable benefit of itself and the Lenders; (ii) each Grantor shall forward to the Administrative Agent, on the last Business Day of each week, deposit slips related to all cash, money, checks or any other similar items of payment received by the Grantor during such week, and, if requested by the Administrative Agent, copies of such checks or any other similar items of payment, together with a statement showing the application of all payments on the Collateral during such week and a collection report with regard thereto, in form and substance satisfactory to the Administrative Agent; (iii) whenever any Grantor shall receive any cash, money, checks or any other similar items of payment relating to any Collateral (including any Proceeds of any Collateral), such Grantor agrees that it will, within one (1) Business Day of such receipt, deposit all such items of payment into the Collateral Account or in a Deposit Account at Controlled Depositary, until such Grantor shall deposit such cash, money, checks or any other similar items of payment in the Collateral Account or in a Deposit Account at a Controlled Depositary, such Grantor shall hold such cash, money, checks or any other similar items of payment in trust for the Administrative Agent and Lenders and as property of the Administrative Agent and Lenders, separate from the other funds of such Grantor, and the Administrative Agent shall have the right to transfer or direct the transfer of the balance of each Deposit Account to the Collateral 17 Account. All such Collateral and Proceeds of Collateral received by the Administrative Agent hereunder shall be held by the Administrative Agent in the Collateral Account as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 5.04. (iv) the Administrative Agent shall have the right to receive any and all cash dividends, payments or distributions made in respect of any Investment Property, or Partnership/LLC Interests or other Proceeds paid in respect of any Investment Property, or Partnership/LLC Interests, and any or all of any Investment Property, or Partnership/LLC Interests shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (A) all voting, corporate and other rights pertaining to such Investment Property, or Partnership/LLC Interests at any meeting of shareholders, partners or members of the relevant Issuers and (B) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property, or Partnership/LLC Interests as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Investment Property, or Partnership/LLC Interests upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate, partnership or company structure of any Issuer or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Investment Property, or Partnership/LLC Interests, and in connection therewith, the right to deposit and deliver any and all of the Investment Property, or Partnership/LLC Interests with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it; but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and the Administrative Agent and the Lenders shall not be responsible for any failure to do so or delay in so doing. In furtherance thereof, each Grantor hereby authorizes and instructs each Issuer with respect to any Collateral consisting of Investment Property and Partnership/LLC Interests to (i) comply with any instruction received by it from the Administrative Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) except as otherwise expressly permitted hereby, pay any dividends, distributions or other payments with respect to any Investment Property, or Partnership/LLC Interests directly to the Administrative Agent; and (v) the Administrative Agent shall be entitled to (but shall not be required to): (A) do all acts which the Administrative Agent may deem necessary or proper to protect its Security Interest granted hereunder, provided such acts are not inconsistent with or in violation of the terms of any of the Credit Agreement, of the other Loan Documents or applicable Law, and (B) sell, assign or otherwise transfer any Collateral in accordance with the Credit Agreement, the other Loan Documents and applicable Law. (c) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent's intent to exercise its corresponding rights pursuant to Section 5.02(b), each Grantor shall be permitted to receive all cash dividends, payments or other distributions made in respect of any 18 Investment Property and Partnership/LLC Interests, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and other corporate, company and partnership rights with respect to any Investment Property and Partnership/LLC Interests; provided that, no vote shall be cast or other corporate, company and partnership right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would impair the Collateral or which would result in a Default or Event of Default under any provision of the Credit Agreement, this Agreement or any other Loan Document. 5.03 REGISTRATION RIGHTS. (a) [RESERVED.] (b) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Restricted Securities Collateral, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Restricted Securities Collateral for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. (c) Each Grantor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Restricted Securities Collateral valid and binding and in compliance with any and all other applicable Laws. Each Grantor further agrees that a breach of any of the covenants contained in this Section 5.03 will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 5.03 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 5.04 APPLICATION OF PROCEEDS. At such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent's election, the Administrative Agent may apply all or any part of the Collateral or any Proceeds of the Collateral in payment in whole or in part of the Obligations (after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements) in accordance with Section 9.03 of the Credit Agreement. Any balance of such Proceeds remaining 19 after shall be paid over to the Borrower, on behalf of the Grantors, or to whomsoever (if such Person is not a Grantor) may be lawfully entitled to receive the same. Only after (i) the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-610 and Section 9-615 of the UCC and (ii) the payment in full of the Obligations and the termination of the Commitments, shall the Administrative Agent account for the surplus, if any, to any Grantor, or to whomever may be lawfully entitled to receive the same (if such Person is not a Grantor). 5.05 WAIVER, DEFICIENCY. Except to the extent prohibited under applicable Law (including Section 9-602 of the UCC), each Grantor waives and agrees not to assert any rights or privileges which it may acquire under Sections 9-210, 9-607, 9-608, 9-610, 9-615, 9-620, 9-621, 9-623, 9-624, 9-625 or 9-627 of the UCC. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. ARTICLE VI. THE ADMINISTRATIVE AGENT 6.01 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. (a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, following the occurrence and during the continuance of an Event of Default to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following upon the occurrence and continuation of an Event of Default: (i) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Account or with respect to any other Collateral whenever payable; (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may request to evidence the Administrative Agent's and the Lenders' security interest in_ such Intellectual Property and the goodwill and General Intangibles of such Grantor relating thereto or represented thereby; 20 (iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof, (iv) execute, in connection with any sale provided for in this Agreement, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and (v) (A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (F) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may deem appropriate; (G) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and such Grantor's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent's and the Lenders' Security Interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. (b) If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement in accordance with the provisions of Section 6.01(a). (c) The expenses of the Administrative Agent incurred in connection with actions taken pursuant to the terms of this Agreement, together with interest thereon at a rate per annum equal to the Default Rate for Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand. (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof in accordance with Section 6.01(a). All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the Security Interests created hereby are released. 21 6.02 DUTY OF ADMINISTRATIVE AGENT. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Lender nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Administrative Agent and the Lenders hereunder are solely to protect the Administrative Agent's and the Lenders' interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Lender to exercise any such powers. The Administrative Agent and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 6.03 AUTHORITY OF ADMINISTRATIVE AGENT. Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement to make any inquiry respecting such authority. ARTICLE VII. MISCELLANEOUS 7.01 AMENDMENTS IN WRITING. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 11.01 of the Credit Agreement. 7.02 NOTICES. All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 11.02 of the Credit Agreement. 7.03 NO WAIVER BY COURSE OF CONDUCT, CUMULATIVE REMEDIES. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 7.01), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative 22 Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 7.04 ENFORCEMENT EXPENSES, INDEMNIFICATION. (a) Each Grantor agrees to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Grantor is a party, (including, without limitation, in connection with any workout, restructuring, bankruptcy or other similar proceeding) including, without limitation, the reasonable fees and disbursements of counsel to each Lender and of counsel to the Administrative Agent. (b) Each Grantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes (in each case, subject to Section 4.01 of the Credit Agreement) which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. (c) Each Grantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from any and all liabilities, obligations, losses, damages, penalties, costs and expenses in connection with actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent any Grantor would be required to do so pursuant to Section 11.05 of the Credit Agreement. (d) The agreements in this Section 7.04 shall survive termination of the Commitments and repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents. 7.05 GOVERNING LAW; CONSENT TO JURISDICTION. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA SITTING IN CHARLOTTE OR OF THE UNITED STATES FOR THE WESTERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR AND THE ADMINISTRATIVE AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GRANTOR AND THE ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ANY 23 OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH GRANTOR AND THE ADMINISTRATIVE AGENT WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 7.06 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 7.07 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of each Grantor (and shall bind all Persons who become bound as a Grantor to this Collateral Agreement), the Administrative Agent and the Lenders and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent (given in accordance with Section 7.01). 7.08 SET-OFF. Each Grantor hereby irrevocably authorizes the Administrative Agent and each Lender at any time and from time to time pursuant to Section 11.09 of the Credit Agreement, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or such Lender to or for the credit or the account of such Grantor, or any part thereof in such amounts as the Administrative Agent or such Lender may elect, against and on account of the obligations and liabilities of such Grantor to the Administrative Agent or such Lender hereunder and claims of every nature and description of the Administrative Agent or such Lender against such Grantor, in any currency, whether arising hereunder, under the Credit Agreement, any other Loan Document or otherwise, as the Administrative Agent or such Lender may elect, whether or not the Administrative Agent or any Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Administrative Agent and each Lender shall notify such Grantor promptly of any such set-off and the 24 application made by the Administrative Agent or such Lender of the proceeds thereof; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each Lender under this Section 7.07 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such Lender may have. 7.09 COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7.10 SEVERABILITY. Any provision of this Agreement or any other Loan Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. 7.11 SECTION HEADING. The Section headings used in this Agreement are for ,convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 7.12 INTEGRATION. This Agreement and the other Loan Documents represent the agreement of the Grantors, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents. 7.13 ACKNOWLEDGEMENTS. (a) Each Grantor hereby acknowledges that: (i) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party, (ii) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor, and (iii) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby or thereby among the Lenders or among the Grantors and the Lenders. (b) Each Issuer party to this Agreement acknowledges receipt of a copy of this Agreement and agrees to be bound thereby and to comply with the terms thereof insofar as such terms are applicable to it. Each Issuer agrees to provide such notices to the Administrative Agent as may be necessary to give full effect to the provisions of this Agreement. 7.14 ADDITIONAL GRANTORS. Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to Section 7.15 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of a Joinder Agreement in form and substance satisfactory to the Administrative Agent. 25 7.15 RELEASES. (a) At such time as the Obligations shall have been paid in full and the Commitments have been terminated, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. At the request and sole expense of any Grantor following any such termination, the Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral. In the event that all the capital stock of any Grantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement, then, at the request of the Borrower and at the expense of the Grantors, such Grantor shall be released from its. obligations hereunder; provided that the Borrower shall have delivered to the Administrative Agent, at least ten (10) Business Days prior to the date of the proposed release, a written request for release identifying the relevant Grantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. [Signature Pages to Follow] 26 IN WITNESS WHEREOF, the parties hereto have caused this Collateral Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above. BLUE RHINO CORPORATION, as Grantor By: /s/ Mark Castaneda ------------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer BLUE RHINO CONSUMER PRODUCTS, LLC, as Grantor and Issuer By: /s/ Mark Castaneda ------------------------------------------- Name: Mark Castaneda Title: Manager USA LEASING, L.L.C., as Grantor and Issuer Blue Rhino Corporation, Manager By: /s/ Mark Castaneda ------------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer UNIFLAME, LLC, as Grantor and Issuer By: /s/ Mark Castaneda ------------------------------------------- Name: Mark Castaneda Title: Manager CPD ASSOCIATES, INC., as Grantor and Issuer By: /s/ Mark Castaneda ------------------------------------------- Name: Mark Castaneda Title: Vice President [Signature pages continue] UNIFLAME CORPORATION, as Grantor and Issuer By: /s/ Kurt Gehsmann ----------------------------------- Name: Kurt Gehsmann Title: Vice President UNI-ASIA, LTD., as an Issuer only By: /s/ Malcolm R. McQuilken ----------------------------------- Name: Malcolm R. McQuilken Title: CEO/President [Signature Pages Continue] BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Michael Brashler ----------------------------------------------- Name: Michael Brashler Title: Vice President and Senior Agency Officer EXHIBIT A To Collateral Agreement FORM OF PERFECTION CERTIFICATE Pursuant to a Credit Agreement dated as of November 20, 2002 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement"), by and among BLUE RHINO CORPORATION, a North Carolina corporation (the "Borrower"), the lenders who are or may become a party thereto, as Lenders, and BANK OF AMERICA, N.A., a national banking association, as Administrative Agent for the Lenders (the "Administrative Agent"), the Borrower has entered into the Collateral Agreement, dated as of November 20, 2002 (as amended, supplemented or otherwise modified, the "Collateral Agreement") in favor of the Administrative Agent for the benefit of the Lenders. This Perfection Certificate is delivered pursuant to the Collateral Agreement. Each Grantor hereby certifies to the Administrative Agent and each Lender as follows: 1. IDENTIFICATION INFORMATION. (a) The jurisdiction of incorporation, organization or formation of each Grantor is as follows: (b) The location of the chief executive office of each Grantor is as follows:(1) (c) The exact legal name of each Grantor as it appears in its [Articles or Certificate of Incorporation] [Formation] [or] [other applicable document evidencing formation] is as follows: (d) Except as set forth herein, no Grantor has changed its identity or organizational structure in any way within the past five years. (e) The following is a list of all other names (including trade names or similar appellations) used by any Grantor or any of their respective divisions or other business units at any time during the past five years: (f) The taxpayer identification number of each Grantor is as follows: (g) The registered organization identification number(2) of each Grantor is as follows: - -------------- (1) For an organization which is not a registered organization (i.e. a general partnership), the debtor's location is deemed to be its chief executive office. (2) This is the number assigned to the registered organization by the Secretary of State and is usually found on the time stamped copy of the organization documents filed with the Secretary of State's office. 2. CURRENT LOCATIONS. (a) The respective chief executive offices of each Grantor is located at the following addresses: Grantor Mailing Address County and State ------- --------------- ---------------- (b) The following are the only locations at which any Grantor maintains any books or records relating to any Accounts: Grantor Mailing Address County and State ------- --------------- ---------------- (c) The following are all the locations not identified above where the Grantors maintain any Inventory or Equipment: Grantor Mailing Address County and State ------- --------------- ---------------- 3. UNUSUAL TRANSACTIONS. Other than as set forth below, all Accounts have been originated by the Grantors and all Inventory and Equipment have been acquired by the Grantors in the ordinary course of business. 4. RELIANCE. The undersigned acknowledges that the Administrative Agent and the Lenders are entitled to rely and have, in fact, relied on the information contained herein, and any successor or assign of the Agent or the Lenders is entitled to rely on the information contained herein. IN WITNESS WHEREOF, the undersigned have executed this Perfection Certificate, this _____ day of ____________________, ____. [GRANTOR] By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- 2 EX-10.4 18 g81245exv10w4.txt EX-10.4 PATENT SECURITY AGREEMENT EXHIBIT 10.4 PATENT SECURITY AGREEMENT THIS PATENT SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this "Agreement") is entered into as of November 20, 2002 by BLUE RHINO CORPORATION, a Delaware corporation, CPD ASSOCIATES, INC., a North Carolina corporation, and UNIFLAME CORPORATION, a Delaware corporation (collectively, the "Grantors"), in favor of BANK OF AMERICA, N.A., as Administrative Agent (the "Administrative Agent") under the Credit Agreement (as defined below) The Grantors own certain patent and patent applications, including those patents and patent applications listed on Schedule 1 annexed hereto, and are parties to the patent licenses listed on Schedule 2 annexed hereto; and Pursuant to the terms of the Collateral Agreement dated of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the "Collateral Agreement"), between the Grantors and the Administrative Agent, the Grantors have granted to the Administrative Agent a security interest in certain assets of the Grantors, including all right, title and interest of each of the Grantors in, to and under all Patent Collateral (as hereinafter defined) as collateral security for the. prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations owing by Blue Rhino Corporation, as Borrower (the "Borrower") under the Credit Agreement, dated of even date herewith (as amended, restated, supplemented or otherwise modified, the "Credit Agreement"), by and among the Borrower, the Lenders party thereto and the Administrative Agent, and the other Loan Documents described in the Credit Agreement. All capitalized terms defined in the Credit Agreement or the Collateral Agreement and not otherwise defined herein have the respective meanings provided for in the Credit Agreement or the Collateral Agreement, as applicable. To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Credit Extensions to the Borrowers thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of itself and the Lenders, as follows: 1. GRANT OF SECURITY INTEREST. Each Grantor does hereby grant to the Administrative Agent a continuing security interest in all of such Grantor's right, title and interest in, to and under all of the following (all of the following items or types of property being herein collectively referred to as the "Patent Collateral"), whether now existing or hereafter created or acquired, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations: (a) each Patent, including, without limitation, each Patent referred to in Schedule 1, annexed hereto, together with any reissues, continuations, divisions or extensions thereof; (b) all Patent Licenses and other agreements providing the Grantor with the right to use, or pursuant to which the Grantor provides the right to use, any of the items described in Section 1(a), including each Patent License referred to in Schedule 2; and (c) all, products and proceeds of, and the rights associated with, the foregoing, including, without limitation, any claim by any such Grantor against third parties for past, present or future (i) infringement of any Patent, including, without limitation, the Patents referred to in Schedule 1, the Patents issued with respect to the Patent applications or provisional Patent applications referred to in Schedule 1 and, to the extent applicable, the patents licensed under any Patent License, or (ii) breach or enforcement of any Patent License. 2. OTHER SECURITY INTERESTS. This security interest is granted in conjunction with the security interests granted to the Administrative Agent pursuant to the Collateral Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest granted herein are without prejudice to, and are in addition to, those set forth in the Collateral Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provisions of this Agreement are deemed to conflict with the Collateral Agreement, the provisions of the Collateral Agreement shall govern. 3. RESTRICTIONS ON FUTURE AGREEMENTS. Each Grantor agrees that until all Obligations shall have been satisfied in full and the Credit Agreement shall have been terminated, such Grantor will not, without the Administrative Agent's prior written consent, enter into any agreement including, without limitation, any license agreement, which is inconsistent with such Grantor's obligations under this Agreement if such action would reasonably be expected to materially adversely affect the fair market value of the Patent Collateral or the benefits of this Agreement to the Administrative Agent, and such Grantor further agrees that it will not take any action, or permit any action to be taken by others subject to its control, including licensees, or fail to take any action, which would materially adversely affect the validity or enforcement of the rights transferred to the Administrative Agent under this Agreement. 4. NEW PATENTS. Each Grantor represents and warrants to the Administrative Agent that the Patents listed on Schedule 1 and the Patent Licenses listed on Schedule 2 constitute all of the Patents now owned by or licensed to such Grantor for which registrations have been issued or applied for in the United States Patent and Trademark Office. If, before the Obligations have been satisfied in full and the Credit Agreement terminated, the Grantor shall obtain rights to any new patents, patent applications or provisional Patent applications granted or filed in the United States or in any foreign country, the provisions of Section 1 above shall automatically apply thereto and the Grantor shall give to the Administrative Agent prompt written notice thereof. The Grantor hereby authorizes the Administrative Agent to modify this Agreement upon such written notice by amending Schedule 1 and Schedule 2 to include any future patents, patent applications, provisional Patent applications and license agreements which are Patents, as applicable, under Section 1 above or under this Section 4. 5. LENDERS NOT LIABLE. Neither the Administrative Agent nor any Lender by virtue of this Agreement assumes any obligations whatsoever in respect of the Patent Collateral including, without limitations, any obligation to renew registrations of or defend the validity or enforceability of the Patent Collateral. 6. COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy) and all of said counterparts, taken together, shall be deemed to constitute one and the same instrument. 7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the successors and assigns of the Grantors and shall inure to the benefit of the Grantors, the Administrative Agent and the Lenders and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. [Signature Pages Follow] IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed by its duly authorized officer thereunto, all as of the date first set forth above. BLUE RHINO CORPORATION, as Grantor By: /s/ Mark Castaneda ------------------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer UNIFLAME CORPORATION, as Grantor By: /s/ Kurt Gehsmann ------------------------------------------------ Name: Kurt Gehsmann Title: Vice President [Signature Pages Continue] ACKNOWLEDGMENT STATE OF NORTH CAROLINA COUNTY OF FORSYTH I, Abbye R. Caudle a Notary Public for said County and State, do hereby certify that Mark Castaneda personally appeared before me this day and stated that he is Exec. VP & CFO of BLUE RHINO CORPORATION and acknowledged the due execution of the foregoing instrument. Witness my hand and official seal, this 13th day of November, 2002. /s/ Abbye R. Caudle ---------------------------------- Notary Public My commission expires: 9/26/04 - --------------------------- ACKNOWLEDGMENT STATE OF NORTH CAROLINA COUNTY OF FORSYTH I, Abbye R. Caudle a Notary Public for said County and State, do hereby certify that Kurt Gehsmann personally appeared before me this day and stated that he is Vice President of UNIFLAME CORPORATION and acknowledged the due execution of the foregoing instrument. Witness my hand and official seal, this 13th day of November, 2002. /s/ Abbye R. Caudle ---------------------------------- Notary Public My commission expires: 9/26/04 - --------------------------- Agreed and Accepted as of November 20, 2002. BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Michael Brashler ------------------------------- Name: Michael Brashler Title: Vice President and Senior Agency Officer [Acknowledgment Follows] Schedule 2 to Patent Security Agreement EX-10.5 19 g81245exv10w5.txt EX-10.5 TRADEMARK SECURITY AGREEMENT EXHIBIT 10.5 TRADEMARK SECURITY AGREEMENT THIS TRADEMARK SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this "Agreement") is entered into as of November 20, 2002 by BLUE RHINO CORPORATION, a Delaware corporation, CPD ASSOCIATES, INC., a North Carolina corporation, and UNIFLAME CORPORATION, a Delaware corporation (collectively, the "Grantors"), in favor of BANK OF AMERICA, N.A., as Administrative Agent (the "Administrative Agent") under the Credit Agreement (as defined below). The Grantors own certain trademarks and service marks, including those trademark registrations and trademark applications listed on Schedule 1 annexed hereto, and are parties to the trademark licenses listed on Schedule 2 annexed hereto; and Pursuant to the terms of the Collateral Agreement dated of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the "Collateral Agreement"), between the Grantors and the Administrative Agent, the Grantors have granted to the Administrative Agent a security interest in certain assets of the Grantors, including all right, title and interest of each of the Grantors in, to and under all Trademark Collateral (as hereinafter defined) as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations owing by Blue Rhino Corporation, as Borrower (the "Borrower") under the Credit Agreement, dated of even date herewith (as amended, restated, supplemented or otherwise modified, the "Credit Agreement"), by and among the Borrower, the Lenders party thereto and the Administrative Agent, and the other Loan Documents described in the Credit Agreement. All capitalized terms defined in the Credit Agreement or the Collateral Agreement and not otherwise defined herein have the respective meanings provided for in the Credit Agreement or the Collateral Agreement, as applicable. To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Credit Extensions to the Borrowers thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of itself and the Lenders, as follows: 1. GRANT OF SECURITY INTEREST. Each Grantor does hereby grant to the Administrative Agent a- continuing security interest in all of such Grantor's right, title and interest in, to and under all of the following (all of the following items or types of property being herein collectively referred to as the "Trademark Collateral"), whether now existing or hereafter created or acquired, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations: (a) all Trademarks, including, without limitation, each Trademark referred to in Schedule 1 annexed hereto together with any divisions or renewals thereof; (b) all Trademark Licenses and other agreements providing the Grantor with the right to use, or pursuant to which such Grantor provides the right to use, any of the items described in Section 1(a), including each Trademark license referred to in Schedule 2 annexed hereto; (c) all of the goodwill of the business connected with the use of, and symbolized by, each item described in Section 1(a) or Section 1(b); (d) the right to sue third parties for past, present or future infringements of any Trademark Collateral described in Section 1(a) and, to the extent applicable, Section 1(b); and (e) all products and proceeds of, and the rights associated with, the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark or Trademark registration including, without limitation, the Trademarks and Trademark registrations referred to in Schedule 1 annexed hereto, the Trademark registrations issued with respect to the Trademark applications referred to in Schedule 1 and the trademarks licensed under any Trademark License, (ii) injury to the goodwill associated with the use of any such Trademark, Trademark registration or trademark licensed under any Trademark License, or (iii) breach or enforcement of any Trademark license. 2. OTHER SECURITY INTERESTS. This security interest is granted in conjunction with the security interests granted to the Administrative Agent pursuant to the Collateral Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interest granted herein are without prejudice to, and are in addition to, those set forth in the Collateral Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provisions of this Agreement are deemed to conflict with the Collateral Agreement, the provisions of the Collateral Agreement shall govern. 3. RESTRICTIONS ON FUTURE AGREEMENTS. Each Grantor agrees that until all Obligations shall have been satisfied in full and the Credit Agreement shall have been terminated, such Grantor will not, without the Administrative Agent's prior written consent, enter into any agreement including, without limitation, any license agreement, which is inconsistent with such Grantor's obligations under this Agreement if such action would reasonably be expected to materially adversely affect the fair market value of the Trademark Collateral or the benefits of this Agreement to the Administrative Agent, and each Grantor further agrees that it will not take any action, or permit any action to be taken by others subject to its control, including licensees, or fail to take any action, which would materially adversely affect the validity or enforcement of the rights transferred to the Administrative Agent under this Agreement. 4. NEW TRADEMARKS. Each Grantor represents and warrants to the Administrative Agent that the Trademarks listed on Schedule 1 and the Trademark Licenses listed on Schedule 2 constitute all of the Trademarks now owned by or licensed to such Grantor for which registrations have been issued or applied for in the United States Patent and Trademark Office. If, before the Obligations have been satisfied in full and the Credit Agreement terminated, the Grantor shall (i) obtain rights to any new trademarks, trademark registrations or applications or tradenames used in the United States or in any foreign country or (ii) become entitled to the benefit of any trademark application, trademark, trademark registration or tradename used in the United States or in any foreign country, the provisions of Section 1 above shall automatically apply thereto and the Grantor shall give to the Administrative Agent prompt written notice thereof. The Grantor hereby authorizes the Administrative Agent to modify this Agreement 2 upon such written notice by amending Schedule 1 and Schedule 2 to include any future trademarks, trademark registrations, trademark applications, tradenames and license agreements which are Trademarks, as applicable, under Section 1 above or under this Section 4. 5. LENDERS NOT LIABLE. Neither the Administrative Agent nor any Lender by virtue of this Agreement assumes any obligations whatsoever in respect of the Trademark Collateral including, without limitations, any obligation to renew registrations of or defend the validity, enforceability or distinctiveness of the Trademark Collateral. 6. COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy) and all of said counterparts, taken together, shall be deemed to constitute one and the same instrument. 7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the successors and assigns of the Grantors and shall inure to the benefit of the Grantors, the Administrative Agent and the Lenders and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. [Signature Pages Follow] 3 IN WITNESS WHEREOF, the Grantors have caused this Trademark Security Agreement to be duly executed by their duly authorized officer thereunto, all as of the date first set forth above. BLUE RHINO CORPORATION, as Grantor By: /s/ Mark Castaneda ----------------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer CPD ASSOCIATES, INC., as Guarantor By: /s/ Mark Castaneda ----------------------------------------------- Name: Mark Castaneda Title: Vice President UNIFLAME CORPORATION, as Grantor By: /s/ Kurt Gehsmann ----------------------------------------------- Name: Kurt Gehsmann Title: Vice President [Signature Pages Continue] 4 ACKNOWLEDGMENT STATE OF NORTH CAROLINA COUNTY OF FORSYTH I, Abbye R. Caudle, a Notary Public for said County and State, do hereby certify that Mark Castaneda personally appeared before me this day and stated that he is Exec. VP & CFO of BLUE RHINO CORPORATION and acknowledged the due execution of the foregoing instrument. Witness my hand and official seal, this 13th day of November, 2002. /s/ Abbye R. Caudle --------------------------------------- Notary Public My commission expires: 9/26/04 - ------------------------ 5 ACKNOWLEDGMENT STATE OF NORTH CAROLINA COUNTY OF FORSYTH I, Abbye R. Caudle, a Notary Public for said County and State, do hereby certify that Mark Castaneda personally appeared before me this day and stated that he is Vice President of CPD ASSOCIATES, INC. and acknowledged the due execution of the foregoing instrument. Witness my hand and official seal, this 13th day of November, 2002. /s/ Abbye R. Caudle --------------------------------------- Notary Public My commission expires: 9/26/04 - ------------------------ 6 ACKNOWLEDGMENT STATE OF NORTH CAROLINA COUNTY OF FORSYTH I, Abbye R. Caudle a Notary Public for said County and State, do hereby certify that Kurt Gehsmann personally appeared before me this day and stated that he is Vice President of UNIFLAME CORPORATION and acknowledged the due execution of the foregoing instrument. Witness my hand and official seal, this 13th day of November, 2002. /s/ Abbye R. Caudle --------------------------------------- Notary Public My commission expires: 9/26/04 - ------------------------ 7 Agreed and Accepted as of November 20, 2002. BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Michael Brashler -------------------------------------- Name: Michael Brashler Title: Vice President and Senior Agency Officer [Acknowledgment Follows] 8 Schedule 1

- ----------------------- --------------------- -------------------- --------------------- -------------------- INTELLECTUAL TRADEMARK DATE OF FIRST USE EFFECTIVE OR STATUS PROPERTY MARK OWNER IN COMMERCE FILING DATE OF REGISTRATION OR APPLICATION - ----------------------- --------------------- -------------------- --------------------- -------------------- AMERICA'S BLUE RHINO April 20, 1999 May 6, 1999 Affidavit of use CHOICE FOR CORPORATION due after April GRILL GAS 104 Cambridge 10, 2006, but Plaza Drive before April 10, Reg. No. Winston-Salem, 2007; renewal due 2,443,339 NC 27104 April 10, 2011 Registered: April 10, 2001 - ----------------------- --------------------- -------------------- --------------------- -------------------- BISON BLUE RHINO February 24, 1998 September 1, 1998 Affidavit of use CORPORATION due after July 13, Reg. No. 104 Cambridge 2004, but before 2,261,216 Plaza Drive July 13, 2005; Registered July Winston-Salem, renewal due July 13, 1999 NC 27104 13, 2009. - ----------------------- --------------------- -------------------- --------------------- -------------------- BISON Design BLUE RHINO February 24, 1998 September 1, 1998 Affidavit of use CORPORATION due after July 13, Reg. No. 104 Cambridge 2004, but before 2,261,220 Plaza Drive July 13, 2005; Registered July Winston-Salem, renewal due July 13, 1999 NC 27104 13, 2009. - ----------------------- --------------------- -------------------- --------------------- -------------------- BLUE RHINO & Design CPD ASSOCIATES, INC. March 24, 1994 May 23, 1994 Renewal due June 104 Cambridge Plaza 13, 2005 Reg. No. 1,898,501 Drive Registered: June 13, Winston-Salem, NC 1995 27104 - ----------------------- --------------------- -------------------- --------------------- -------------------- DURACLAY BLUE RHINO April 16, 1996 July 16, 1996 Affidavit of use CORPORATION due after May 6, Reg. No. 2,059,459 104 Cambridge Plaza 2002, but before Registered May 6, 1997 Drive May 6, 2003; Winston-Salem, NC renewal due May 6, 27104 2007. - ----------------------- --------------------- -------------------- --------------------- -------------------- ENDLESS SUMMER BLUE RHINO September 2, 1998 August 25, 1998 Application CORPORATION pending; Statement Reg. No. 2,493,024 104 Cambridge Plaza of Use accepted Registered: September Drive March 20, 2001, 25, 2001 Winston-Salem, NC application will 27104 register in due course. - ----------------------- --------------------- -------------------- --------------------- --------------------

- ----------------------- ------------------------------------------ INTELLECTUAL DESCRIPTION OF GOODS AND PROPERTY MARK SERVICES/INT. CLASSES - ----------------------- ------------------------------------------ AMERICA'S Propane gas (Int. 4); Metal propane gas CHOICE FOR cylinders (Int. 6); and exchanging and GRILL GAS refurbishing propane gas cylinders (Int. 37). Reg. No. 2,443,339 Registered: April 10, 2001 - ----------------------- ------------------------------------------ BISON Manually operated valves made primarily of metal for use on propane gas tanks Reg. No. (Int. 6). 2,261,216 Registered July 13, 1999 - ----------------------- ------------------------------------------ BISON Design Manually operated valves made primarily of metal for use on propane gas tanks Reg. No. (Int. 6). 2,261,220 Registered July 13, 1999 - ----------------------- ------------------------------------------ BLUE RHINO & Design Propane gas (Int. 4) and metal propane gas cylinders (Int. 6). Reg. No. 1,898,501 Registered: June 13, 1995 - ----------------------- ------------------------------------------ DURACLAY Planters for gardening (Int. 21). Reg. No. 2,059,459 Registered May 6, 1997 - ----------------------- ------------------------------------------ ENDLESS SUMMER Portable Propane heaters (Int. 11). Reg. No. 2,493,024 Registered: September 25, 2001 - ----------------------- ------------------------------------------

- ----------------------- --------------------- -------------------- --------------------- -------------------- ENDLESS SUMMER CPD ASSOCIATES, INC. N/A February 14, 2001 Application pending 104 Cambridge Plaza Drive Winston-Salem, NC 27104 Serial No. 76/212,933 APPLICATION BEING PROSECUTED BY LAWRENCE J. CRAIN - ----------------------- ------------------------------------------ ENDLESS SUMMER Propane gas; firewood and gelled alcohol fuel (Int. 4); Manually operated valves made primarily of metal for use on propane gas tanks; metal propane gas cylinders; Serial No. 76/212,933 and metal goods namely metal trellises, door stops, metal weather vanes, freestanding tool racks, andirons, APPLICATION BEING baskets, hooks, log racks, fireplace PROSECUTED BY fenders, sculptures composed of LAWRENCE J. CRAIN non-precious metal, storage boxes (Int. 6); Hand tools, namely shovels, trowels, rakes, hoes, pokers and tongs; barbecue hand-tools and utensils, namely forks and tongs (Int. 8); Portable electric heaters; portable gas heaters; fireplace inserts composed of andirons, artificial logs and artificial embers fueled by gas, electricity, or alcohol; gas pilots; barbecue grills, replacement barbecue burners and cooking grills; and fitted and/or semi-fitted barbecue grill covers; ornamental outdoor fountains; outdoor fireplaces (Int. 11); Furniture and articles, namely plant stands, garden furniture, non-metal weather vanes, free-standing non-metal tool racks, fireplace screens, benches, magazine racks, domestic fireplace bellows, hangers for fireplace accessories; (Int. 20); Planters for gardening; house wares and glass, namely plant holders, flower pots and vases; wood baskets, fireplace brushes, ash buckets, ash bins, metal buckets/pots, teapots not of precious metal; and barbecue hand-tools and utensils, namely spatulas, scraping and basting brushes; insect traps (Int. 21); Distributorships featuring new, used and reconditioned heaters; independent sales representatives in the fields of new, used and reconditioned heaters; wholesale and retail sales and leasing of new, used and reconditioned heaters (Int. 35); and Installation, repair and maintenance of heaters and leasing of heaters; exchanging and refurbishing propane gas cylinders (Int. 37). - ----------------------- ------------------------------------------ - ----------------------- --------------------- -------------------- --------------------- -------------------- ENDLESS SUMMER COMFORT BLUE RHINO September 2, 1998 August 25, 1998 Affidavit of use CORPORATION due after January 104 Cambridge Plaza 16, 2006, but Drive before January 16, Reg. No. 2,421,880 Winston-Salem, NC 2007; renewal due Registered: January 27104 January 16, 2011. 16, 2001 - ----------------------- --------------------- -------------------- --------------------- -------------------- ENJOY OUTDOOR LIVING BLUE RHINO May 6, 1999 APPLICATION - - LONGER CORPORATION ABANDONED FOR 104 Cambridge Plaza FAILURE TO FILE A Drive STATEMENT OF USE Winston-Salem, NC EFFECTIVE NOVEMBER 27104 26, 2000 - ----------------------- --------------------- -------------------- --------------------- -------------------- GARDEN ART BLUE RHINO January 1, 1997 August 18, 1995 Affidavit of use CORPORATION due after Reg. No. 2,191,603 104 Cambridge Plaza September 22, Registration No. Drive 2003, but before September 22, 1998 Winston-Salem, NC September 22, 27104 2004; renewal due September 22, 2008. - ----------------------- --------------------- -------------------- --------------------- -------------------- GRILL AFICIONADO CPD ASSOCIATES, INC. N/A September 24, 2001 Affidavit of use 104 Cambridge Plaza due - date TBD Application No. Drive 76/316,142 Winston-Salem, NC 27104 - ----------------------- --------------------- -------------------- --------------------- -------------------- GRILL GAS & Design BLUE RHINO September 7, 1999 May 6, 1999 Affidavit of use CORPORATION due after May 22, Reg. No. 2,454,250 104 Cambridge Plaza 2006, but before Registered: May 22, Drive May 22, 2007; 2001 Winston-Salem, NC renewal due May 27104 22, 2011. - ----------------------- --------------------- -------------------- --------------------- -------------------- HARMONY UNIFLAME N/A October 18, 2000 Application Corporation pending; non-final Serial No. 76/148,835 1817 North Kenosha action mailed Road March 26, 2001 APPLICATION BEING Zion, Illinois 60095 PROSECUTED BY LAWRENCE J. CRAIN - ----------------------- --------------------- -------------------- --------------------- -------------------- - ----------------------- ------------------------------------------ ENDLESS SUMMER COMFORT Distributorships featuring new, used, and reconditioned heaters; independent sales representatives in the fields of new, used, and reconditioned heaters; Reg. No. 2,421,880 wholesale and retail sales of new, used, Registered: January and reconditioned heaters (Int. 35); and 16, 2001 Installation, repair, and maintenance of heaters and leasing of heaters (Int. 37). - ----------------------- ------------------------------------------ ENJOY OUTDOOR LIVING Portable propane heaters (Int. 11); - - LONGER Distributorships featuring new, used, and reconditioned heaters; independent sales representatives in the fields of new, used, and reconditioned heaters; wholesale and retail sales of new, used, and reconditioned heaters (Int. 35); and Installation, repair, and maintenance of heaters and leasing of heaters (Int. 37). - ----------------------- ------------------------------------------ GARDEN ART Metal goods, namely, metal trellises, door stops, metal weather vanes, and Reg. No. 2,191,603 freestanding metal tool racks (Int. 6); Registration No. Hand tools, namely, shovels, trowels, September 22, 1998 forks, rakes, and hoes (Int. 8); Non-metallic building materials, namely, non-metal trellises and wooden fencing stays (Int. 19); Furniture and articles, namely, plant stands; garden furniture, non-metal weather vanes; free-standing non-metal tool racks (Int. 20); and Housewares and glass, namely, plant holders, flower pots, and vases (Int. 21). - ----------------------- ------------------------------------------ GRILL AFICIONADO Propane Gas (Int. 4); Cooking utensils (Int. 21); Educational services (Int. Application No. Class 41); Consulting Services (Class 42) 76/316,142 - ----------------------- ------------------------------------------ GRILL GAS & Design Propane gas (Int. 4); Metal propane gas cylinders (Int. 6); and exchanging and Reg. No. 2,454,250 refurbishing propane gas cylinders (Int. Registered: May 22, 37). 2001 - ----------------------- ------------------------------------------ HARMONY Giftware, including fountains, ceramics, candles and candle holders (Int. 21). Serial No. 76/148,835 APPLICATION BEING PROSECUTED BY LAWRENCE J. CRAIN - ----------------------- ------------------------------------------ - ----------------------- --------------------- -------------------- --------------------- -------------------- RHINOTUFF CPD ASSOCIATES, INC. April 15, 1996 February 29, 1996 Affidavit of use 104 Cambridge Plaza due after October Reg. No. 2,102,712 Drive 7, 2002, but Registered: October Winston-Salem, NC before October 7, 7, 1997 27104 2003; renewal due October 7, 2007. - ----------------------- --------------------- -------------------- --------------------- -------------------- SHIPPINGSPOT CPD ASSOCIATES, INC. N/A Filed April 23, 2001 Application pending 104 Cambridge Plaza Serial No. 76/245,033 Drive Winston-Salem, NC 27104 - ----------------------- --------------------- -------------------- --------------------- -------------------- SHIPPINGSPOT CPD ASSOCIATES, INC. N/A Filed September 24, Application pending 104 Cambridge Plaza 2001 Design Drive Winston-Salem, NC Serial No. 76/316,141 27104 - ----------------------- --------------------- -------------------- --------------------- -------------------- SKEETERVAC CPD ASSOCIATES, INC. N/A Filed April 5, 2002 Application pending 104 Cambridge Plaza Application No.: Drive 76/392,024 Winston-Salem, NC 27104 - ----------------------- --------------------- -------------------- --------------------- -------------------- TRI-SAFE January 1, 1998 March 2, 1998 Affidavit of use due after June 29, Reg. No. 2,256,865 CPD ASSOCIATES, INC. 2004, but before Registered: June 29, 104 Cambridge Plaza June 29, 2005; 1999 Drive renewal due June Winston-Salem, NC 29, 2009. Note - moved from 27104 Pederson Haupt to A&B 2.02 - ----------------------- --------------------- -------------------- --------------------- -------------------- UNIFLAME BLUE RHINO June 1990 January 10, 1997 Affidavit of use CORPORATION due after March 3, Reg. No. 2,140,530 104 Cambridge Plaza 2003, but before Registered March 3, Drive March 3, 2004; 1998 Winston-Salem, NC renewal due March 27104 3, 2008. - ----------------------- --------------------- -------------------- --------------------- -------------------- - ----------------------- ------------------------------------------ RHINOTUFF Removable cylindrical plastic coverings for protecting and labeling reusable gas Reg. No. 2,102,712 cylinders (Int. 20). Registered: October 7, 1997 - ----------------------- ------------------------------------------ SHIPPINGSPOT Computer hardware and software (Int. 9); Cooperative advertising and marketing Serial No. 76/245,033 (Int. 35); Shipping enablement services; packing and storing of goods and parcels for transport and arranging for transport with a carrier; (Int. 39); Technical consulting services regarding computer hardware and software (Int. 42). - ----------------------- ------------------------------------------ SHIPPINGSPOT Computer hardware and software (Int. 9); Cooperative advertising and marketing Design (Int. 35); Shipping enablement services; packing and storing of goods and parcels Serial No. 76/316,141 for transport and arranging for transport with a carrier; (Int. 39); Technical consulting services regarding computer hardware and software (Int. 42). - ----------------------- ------------------------------------------ SKEETERVAC Propane devices for exterminating insects (Int. Class 7). Application No.: 76/392,024 - ----------------------- ------------------------------------------ TRI-SAFE Safety device in the nature of a floater piece for use in propane cylinder valves Reg. No. 2,256,865 to prevent overfilling of the propane Registered: June 29, cylinder (Int. 9). 1999 Note - moved from Pederson Haupt to A&B 2.02 - ----------------------- ------------------------------------------ UNIFLAME Firewood and gelled alcohol fuel (Int. 4); Metal products, namely andirons, Reg. No. 2,140,530 wood baskets, hooks, log racks, Registered March 3, freestanding tool racks, fireplace 1998 fenders, sculptures composed of non-precious metal, storage boxes (Int. 6); Hand tools, namely, shovels, pokers, and tongs (Int. 8); Portable electric heaters; fireplace inserts composed of andirons, artificial logs and artificial embers fueled by gas, electricity, or alcohol; gas pilots; (Int. 11); Fire log tote bags (Int. 18): Fireplace mantels and fireplace surrounds (Int. 19); Fireplace screens, benches, magazine racks, domestic fireplace bellows, hangers for fireplace accessories (Int. 20); Woodbaskets of wood, fireplace brushes, ash buckets, ash bins, metal buckets/pots, teapots not of precious metal (Int. 21); Matches, matchboxes composed of non-precious metal (Int. 34). - ----------------------- ------------------------------------------ - ----------------------- --------------------- -------------------- --------------------- -------------------- UNIFLAME UNIFLAME N/A March 3, 1998 Application pending Corporation 1817 North Kenosha Serial No. 76/249,710 Road Zion, Illinois 60095 - ----------------------- --------------------- -------------------- --------------------- -------------------- UNIGRILL BLUE RHINO February 1, 1997 November 20, 1996 Affidavit of use CORPORATION due after May 4, Reg. No. 2,243,212 104 Cambridge Plaza 2004, but before Registered May 4, 1999 Drive May 4, 2005; Winston-Salem, NC renewal due May 4, 27104 2009. - ----------------------- --------------------- -------------------- --------------------- -------------------- - ----------------------- ------------------------------------------ UNIFLAME Propane gas (Int. 4); Manually operated valves made primarily of metal for use on propane tanks; metal propane gas Serial No. 76/249,710 cylinders; and metal goods, namely, metal trellises, doorstops, metal weather vanes, baskets (Int. 6); Hand tools, namely, trowels, rakes and hoes; barbeque hand tools and utensils, namely forks and tongs (Int. 8); Portable gas heaters; barbeque grills, replacement barbeque burners and cooking grills; fitted and/or semi-fitted barbeque grill covers; ornamental outdoor fountains; outdoor fireplaces (Int. 11); Furniture and articles, namely plant stands, garden furniture, non-metal weather vanes, free-standing non-metal tool racks (Int. 20); Planters for gardening, housewares and glass, namely, plant holders, flower pots, and vases, barbeque hand tools and utensils, namely spatulas, scraping and basting brushes; insect traps (Int. 21); Distributorships featuring new, used and reconditioned heaters; independent sales representatives in the files of new, used and reconditioned heaters; wholesale and retail sales and leasing of new, used and reconditioned heaters (Int. 35); and Installation, repair and maintenance of heaters and leasing of heaters; exchange and refurbishing propane gas cylinders (Int. 37). - ----------------------- ------------------------------------------ UNIGRILL Barbecue grills; fitted and/or semi-fitted barbecue grill covers (Int. Reg. No. 2,243,212 8); Barbecue hand-tools and utensils, Registered May 4, 1999 namely, spatulas and scraping and basting brushes (Int. 11); Barbecue hand-tools and utensils, namely, forks, and tongs (Int. 21). - ----------------------- ------------------------------------------ Schedule 2 to Trademark Security Agreement None EX-10.6 20 g81245exv10w6.txt EX-10.6 FIRST AMENDMENT TO INVESTMENT AGREEMENT EXHIBIT 10.6 FIRST AMENDMENT TO INVESTMENT AGREEMENT THIS FIRST AMENDMENT TO INVESTMENT AGREEMENT (this "First Amendment") is made as of November 20, 2002 by and among: (i) Blue Rhino Corporation, a Delaware corporation (the "Company"), (ii) USA Leasing, L.L.C., a Delaware limited liability company, Rhino Services, L.L.C., a Delaware limited liability company, CPD Associates, Inc., a North Carolina corporation, Quickship, Inc., a Delaware corporation, Uniflame Corporation, a Delaware corporation, Blue Rhino Consumer Products, LLC, a Delaware limited liability company and Uniflame, LLC, a Delaware limited liability company (collectively with the Company, the "Borrowers"); and (iii) Allied Capital Corporation, a Maryland corporation ("Allied"). RECITALS: A. Allied invested the aggregate sum of Fifteen Million Dollars ($15,000,000) in the Borrowers in exchange for certain debentures and a warrant to purchase the common stock of the Company, pursuant to an Investment Agreement among Allied and the Borrowers dated June 15, 2001 (the "Original Investment Agreement;" as amended by this First Amendment and as further amended from time to time, the "Investment Agreement"). B. The Borrowers have now requested that Allied modify certain terms of the Investment Agreement, and Allied has agreed subject to the terms and conditions hereof. NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Allied and its successors and assigns with respect to any of the Debentures or the Warrant, and the Borrowers hereby agree as follows: 1. Definitions. (a) All capitalized terms used herein without definition shall have the meanings given to such terms in the Investment Agreement. (b) Each of the following definitions set forth in Section 1.1 is hereby deleted in its entirety and amended and restated as follows: "Asset Disposition" means any sale, lease (other than operating leases entered into in the ordinary course of business), transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any of its Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "disposition") of any assets of the Company or any of its Subsidiaries other than (a) the sale or other disposition of obsolete, uneconomical, negligible, worn-out or surplus assets in the ordinary course of business and in a commercially reasonable manner (including but not limited to equipment and intellectual property) so long as the proceeds from such sale or other disposition are applied to replace or upgrade the assets of the Company or its Subsidiaries or to repay the Senior Debt or amounts outstanding under the Debentures, (b) the sale of Inventory in the ordinary course of business for fair value and on an arms'-length basis, (c) the sale, lease, transfer or other disposition of assets in connection with a Permitted Reorganization; (d) the sale, lease transfer or other disposition of assets from the Company or any of its Subsidiaries to any Credit Party; (e) the Non-Propane Products Divestiture; provided that both before and after giving effect to such disposition (i) no Default or Event of Default has occurred and is continuing and (ii) the Company shall have demonstrated pro forma compliance with the financial covenants set forth in Section 6.12; (f) dispositions by the Company or any Subsidiary thereof, of assets acquired in connection with a Permitted Acquisition that the Company or such Subsidiary intended to sell at the time of such Permitted Acquisition; provided that (i) such assets were identified in writing to the Holders at the time of such Permitted Acquisition and (ii) the aggregate fair market value of such assets does not exceed fifteen percent (15%) of the aggregate consideration paid in connection with such Permitted Acquisition and (iii) so long as the proceeds from such sale or other disposition are applied to repay the Senior Debt or amounts outstanding under the Debentures; or (g) the sale, lease, transfer or other disposition of assets in any Fiscal Year having a book value, in the aggregate with all other assets (except assets which are excluded under clauses (a) through (f) above) sold, leased, transferred or disposed of during such Fiscal Year, not to exceed $1,000,000 so long as the proceeds from such sale or other disposition are applied to repay the Senior Debt or amounts outstanding under the Debentures. "Fixed Charge Ratio" means, as of the date of determination, the ratio of (a) aggregate EBITDA of the Company for the immediately preceding four (4) fiscal quarter period ending on, or most recently ended prior to, such date of determination plus Consolidated Rental Expenses of the Company during such period less the sum of (i) Maintenance Capital Expenditures made during such period and (ii) cash income taxes (federal, state, local and foreign) paid during such period to (b) the sum of (i) all scheduled payments of principal made with respect to Indebtedness during such period, (ii) Interest Expense paid in cash during such period, (iii) dividends paid in cash by the Company paid during such period and (iv) Consolidated Rental Expenses of the Company during such period. "Funded Indebtedness" means, as of any date of determination, for any Person on a consolidated basis, the sum of the following of such Person and its Subsidiaries (determined in accordance with GAAP on a Consolidated basis and without duplication): (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all direct obligations arising under letters of credit (including standby and commercial), bankers' acceptances, bank guaranties, surety bonds and similar instruments, (c) all obligations in respect of the deferred purchase price of property or services (other than accrued liabilities and all trade accounts payable in the ordinary course of business), including, without limitation, all purchase money Indebtedness, (d) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations, (e) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (d) above of Persons other than such Person or any of its Subsidiaries, and (g) all Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to such Person or such Subsidiary." 2 "Indebtedness" means, with respect to any Person at the time of any determination (in each case determined in accordance with GAAP on a Consolidated basis and without duplication), all obligations, contingent or otherwise, of such Person which should be classified upon the balance sheet of such Person as liabilities, but in any event including: (a) all obligations of such Person for borrowed money; (b) all obligations of such Person upon which interest charges are customarily paid or accrued; (c) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments; (d) all obligations of such Person' under conditional sale or other title retention agreements relating to property or assets purchased by such Person; (e) all obligations of such Person issued or assumed as the deferred and unpaid purchase price of property or services (excluding all accrued liabilities and all trade accounts payable incurred in the ordinary course of business that are not past due and which are classified as short term liabilities in accordance with GAAP); (f) all obligations of others secured by (or having an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed; (g) all Guarantee Obligations by such Person of Indebtedness of others; (h) all Capital Lease Obligations and Synthetic Lease Obligations of such Person; (i) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements; (j) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Capital Stock in such Person or any other Person; (k) all obligations of such Person, actual or contingent, as an account party in respect of letters of credit or similar facilities and bankers' acceptances; and (1) all obligations of any partnership or joint venture as to which such Person is or may become personally liable to the extent such obligations are deemed to be liabilities under GAAP. "Interest Expense" means, with respect to any Person and for any specified period, the sum of the following of such Person and its Subsidiaries for such period (in each case determined in accordance with GAAP on a Consolidated basis and without duplication): (i) all interest paid, accrued or scheduled to be paid in respect of any Funded Indebtedness (excluding original issue discount); (ii) the portion of rent expense of such Person and its Subsidiaries with respect to such period under conditional sale contracts, Capital Leases, Synthetic Lease Obligations and other title retention agreements that is treated as interest in accordance with GAAP; (iii) commissions, discounts and other fees and charges with respect to letters of credit and bankers' acceptance financings to the extent required by GAAP; and (iv) the amount of net settlement obligations under interest rate protection agreements respecting interest rate management and relating to the spread between the fixed interest rate under such agreements and the floating interest rate hedged thereby. "Senior Credit Facility" means that certain Credit Agreement, by and among the Company, Bank of America, N.A., as Administrative Agent Swing Line Lender and Letter of Credit Issuer, and the other lenders party thereto, dated as of November 20, 2002, as the same may be amended, supplemented or otherwise modified from time to time and any agreement or agreements renewing, replacing, restating or refinancing all or any of the debt or commitments thereunder or any notes or agreements otherwise evidencing any Senior Debt, but only in each case to the extent the Indebtedness thereunder continues to constitute Senior Debt as provided in the definition thereof. 3 "Senior Debt" means all of the following: (a) the aggregate principal indebtedness advanced from time to time under the Senior Credit Facility up to a maximum aggregate principal amount that shall not exceed $60,000,000 (as reduced by all payments and prepayments of principal outstanding under term loans made under such Senior Credit Facility and by the permanent reduction of the revolving credit facilities established under such Senior Credit Facility, (b) all interest accrued and accruing on the aggregate principal outstanding under the Senior Credit Facility from time to time (including, without limitation, any interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Credit Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding); (c) all other reasonable fees or monetary obligations owed under the Senior Credit Facility; and (d) all reasonable costs incurred by the Senior Lenders under the Senior Credit Facility in commencing or pursuing any enforcement action(s) with respect to the amounts described in clauses (a) through (c), including attorneys' fees and disbursements. "Senior Debt" shall also include all amendments, modifications, renewals, replacements, restatements and refinancings of the foregoing, in whole or in part, provided such amendments, modifications, renewals, replacements, restatements or refinancings do not (i) increase the interest rate or default rate payable on any component thereof by more than 2% over the interest rate or default rate, respectively, that is applicable thereto on the date hereof, (ii) extend the final maturity of the Senior Debt beyond August 1, 2006, (iii) provide for any annual principal amortization payment in excess of the Permitted Annual Amortization Amount, (iv) include additional financial covenants or amend any of the financial covenants set forth in the Senior Credit Facility to render such covenants more restrictive, other than additional financial covenants identical to those set forth in Section 6.12 hereof that are no more than 15% more restrictive as such financial covenants or (v) amend any provisions set forth in the Senior Credit Facility which expressly permit the prepayment of the Junior Debt to render such provisions more restrictive. (c) The definition of "Borrower's Business" is hereby amended to include the distribution and sale of propane fuel products of any type. (d) The following new definitions are hereby added to Section 1.1 of the Investment Agreement in proper alphabetical order to read as follows: "Attributable Indebtedness" means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease. "Consolidated Rental Expense" shall mean, for any period, for a Person and its Subsidiaries on a consolidated basis, the operating lease expense of such Person and its Subsidiaries determined in accordance with GAAP for leases with an initial term greater than one year, as disclosed in the notes to the consolidated financial statements of such Person and its Subsidiaries. 4 "First Amendment" means the First Amendment to Investment Agreement dated as of November __, 2002. "Maintenance Capital Expenditures" means, for any period, an amount equal to: (a) depreciation expense for the Company and its Subsidiaries, on a consolidated basis, during such period, multiplied by, (b) 0.50. "Non-Propane Products Divestiture" means one or more sales by UniFlame Corporation and/or QuickShip, Inc., wholly-owned Subsidiaries of the Company, of certain assets relating to their respective non-propane fueled products lines of business. "Permitted Distributorship Acquisition" means the proposed purchase by the Company and its Subsidiaries of approximately 10 of its independent distributors for a total consideration of approximately $22,700,000 (plus an amount of assumed liabilities and accruals not to exceed $10,000,000 in the aggregate), of which approximately $19,000,000 will be made in the form of common stock of the Company; provided that both before and after giving effect to such acquisition (i) no Default or Event of Default has occurred and is continuing and (ii) the Company shall have demonstrated pro forma compliance with the financial covenants set forth in Section 6.12. "Synthetic Lease Obligation" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). 2. Closing Conditions. The obligations of Allied to enter into this First Amendment and to perform its obligations hereunder are subject to the satisfaction of the following conditions on or prior to the date hereof: (a) The representations and warranties set forth herein shall be true and correct on and as of the date hereof. (b) The Credit Parties shall be in compliance with all the terms and provisions set forth herein and in each other Investment Document on their part to be observed or performed, and at the time of and immediately after the date hereof, no Event of Default or Default or event or condition that, after the giving of notice, passage of time, failure to cure or all of the foregoing would constitute an Event of Default, shall have occurred and be continuing. (c) Allied shall have received the following items: (i) this First Amendment, duly executed by the Borrowers; (ii) the Amended and Restated Debentures, duly executed by the parties thereto, in form and substance satisfactory to Allied; (iii) a copy of the Credit Agreement of even date among the Company, Bank of America, N.A., as Administrative Agent Swing Line Lender and Letter of Credit Issuer, 5 and the other lenders party thereto, dated as of November 20, 2002 (the "New Credit Agreement"), duly executed by the parties thereto; (iv) all fees and expenses due and payable under the Investment Documents, as amended hereby, on or prior to the date hereof, including without limitation, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrowers under Section 7 of this First Amendment; and (v) such other documents, instruments and information as Allied may reasonably request. (d) All conditions to the effectiveness of the New Credit Agreement, other than execution and delivery of this Amendment, shall be satisfied in full and the New Credit Agreement shall be in full force and effect upon and immediately after execution and delivery of this Amendment. 3. Amendments to Investment Agreement. The Original Investment Agreement is hereby modified as follows: (a) Section 4.27 of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "SECTION 4.27. Insurance. The Company has made available to Allied insurance certificates and accurate and complete copies of the insurance binders or policies for all of the insurance maintained by the Company or any of its Subsidiaries as listed on Schedule 4.27. The Company and its Subsidiaries have insurance in such amounts and covering such risks and liabilities as may be reasonable and prudent (after giving effect to any self insurance in an amount not to exceed (a) $500,000 per each occurrence and (b) $3,000,000 in the aggregate). Such insurance is in full force and effect and all premiums have been duly paid." (b) Section 6.2 of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "SECTION 6.2. Insurance. Each of the Credit Parties will keep its and each of its Subsidiaries' insurable properties adequately insured at all times by financially sound and reputable insurers (after giving effect to any self insurance in an amount not to exceed (a) $500,000 per each occurrence and (b) $3,000,000 in the aggregate); maintain such other insurance to such extent and against such risks as is reasonable and prudent and as may otherwise be reasonably required by the Holders, including commercial general liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it, hazard insurance and business interruption insurance; and maintain such other insurance as may be required by law." (c) Section 6.9 of the Investment Agreement is hereby deleted in its entirety an amended and restated as follows: 6 "SECTION 6.9. Environmental Provisions. The Credit Parties shall defend, indemnify and hold harmless the Holders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, dines liabilities, settlements, damages, costs and expenses of whatever kind or nature, known or unknown contingent or otherwise, arising out of, or in any way relating to the presence of Hazardous Materials, or the violation of, noncompliance with or liability under any Environmental Law: applicable to the operations of the Credit Parties or their Subsidiaries, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor." (d) Section 6.12(a) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(a) Funded Leverage Ratio. For the fiscal quarter ending October 31, 2002 and for each fiscal quarter ending thereafter, a Funded Leverage Ratio for the immediately preceding four (4) quarter period then ended shall not be more than the ratio set forth below for such date: - -------------------------------------------------------------------------------- QUARTERS ENDING RATIO - -------------------------------------------------------------------------------- October 31, 2002 through April 30, 2003 3.00 to 1.0 - -------------------------------------------------------------------------------- July 31, 2003 and thereafter 2.40 to 1.0 - -------------------------------------------------------------------------------- (e) Section 6.12(b) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(b) Fixed Charge Coverage Ratio. For the fiscal quarter ending October 31, 2002 and for each fiscal quarter ending thereafter, a Fixed Charge Coverage Ratio for the immediately preceding four (4) quarter period then ended shall not be less than 1.0 to 1.0." (f) Sections 6.12(c) and (d) of the Investment Agreement are hereby deleted in their entirety. (g) Section 7.1(a)(xii) of the Investment Agreement is hereby deleted in its entirety. (h) Section 7.1(a)(xiii) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(xiii) Capital Lease Obligations, Synthetic Lease Obligations and purchase money Indebtedness for equipment acquired in the ordinary course of the Borrowers' Business incurred after the date of the First Amendment not to exceed $1,000,000 in the aggregate outstanding at any time." 7 (i) Section 7.1 (a)(xv) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(xv) Indebtedness not otherwise permitted by the foregoing paragraphs of this Section 7.1; provided that at the time or creation, incurrence or assumption thereof and at any time thereafter, the aggregate principal amount of such Indebtedness shall not exceed $1,000,000." (j) Section 7.4(e) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(e) loans and advances, to employees in the ordinary course of the business of such Credit Party and its Subsidiaries as presently conducted in the aggregate amount of all such Investments under this clause (e) not to exceed $500,000 at any one time outstanding;" (k) Section 7.4(h) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(h) Investments in the R4 Technical Center; provided that any such Investments made after the date hereof shall not exceed $1,000,000 in the aggregate. (l) Section 7.4(j) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(j) additional Investments (other than additional Investments in the R4 Technical Center which is exclusively provided for under Section 7.4(h) above); provided that any such Investments made after the date hereof shall not exceed $1,000,000 in the aggregate; and" (m) Section 7.6(a) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(a) No Credit Party shall, nor permit any of its Subsidiaries to, declare or pay any Restricted Payments (other than a dividend or distribution of any shares of its common stock and dividends paid-in-kind to preferred stockholders); provided, however, that, any Subsidiary of a Credit Party may declare and pay a Restricted Payment to such Credit Party (and, in the case of a Restricted Payment by a non-Wholly-Owned Subsidiary, to the Company and any Subsidiary and to each other owner of Capital Stock or other equity interests of such Subsidiary on a pro rata basis based on their relative ownership interest). Notwithstanding anything herein to the contrary, but subject to the provisions of Section 2.7, (i) the Company may redeem or repurchase its Common Stock from officers, employees and directors of any Credit Party (or their estates) upon the termination of employment of any such Person or from service providers pursuant to equity incentive agreement or arrangements upon termination of their services to the Company or pursuant to agreements entered into to evidence grants or awards or other compensation under any stock option plan, stock purchase plan, management incentive plan, consulting agreement or other contract or arrangement approved by the Board; provided that (A) no Default or Event of Default is then in existence or would otherwise arise therefrom, 8 and (B) the aggregate amount of all cash paid in respect of all such shares so redeemed or repurchased does not exceed $1,000,000 in any fiscal year of the Company or $3,000,000 in the aggregate from and after the Closing Date, and (ii) so long as no Default or Event of Default is then in existence or would otherwise arise therefrom, the Credit Parties may make cash Restricted Payments to the Company, if the Company promptly uses such proceeds for the purposes described in clause (i) above." (n) Section 7.10 of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "Without the prior written consent of the Holders, no Credit Party shall, nor permit its Subsidiaries to, acquire any Capital Stock or assets of any Person (other than a Credit Party or a Subsidiary thereof or pursuant to a Permitted Reorganization or a Permitted Distributorship Acquisition) for aggregate consideration in excess of $2,000,000 per acquisition or $10,000,000 in the aggregate for all such acquisitions occurring after the Closing Date to which the Holders have not consented. To the extent that consideration is paid, in whole or in part, in shares of the Company's Capital Stock or securities convertible, exchangeable or exercisable into shares of the Company's Capital Stock, such securities shall be valued in the same manner as they are valued for such acquisition." (o) Section 8.1(g) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(g) any default is declared or otherwise occurs (after giving effect to any applicable notice and/or grace periods) under the Senior Debt or any other Indebtedness of the Credit Parties in excess of $1,000,000 (including the Senior Credit Facility), either (i) which is in the payment of any amount due thereunder when and as the same becomes due and payable or (ii) pursuant to which the lenders of such Indebtedness have accelerated the maturity thereof;" (p) Section 8.1(i) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(i) final non-appealable judgments for the payment of money in excess of $1,000,000 individually or in the aggregate to the extent not fully paid or discharged (excluding any portion thereof that is covered by an insurance policy issued by an insurance company of recognized standing and creditworthiness) is rendered against any Credit Party, and the same shall remain undischarged for a period of 30 consecutive days during which execution is not effectively stayed, or any action is legally taken by a judgment creditor to levy upon assets or properties of any Credit Party to enforce any such judgment; or" (q) Section 8.1(j) of the Investment Agreement is hereby deleted in its entirety and amended and restated as follows: "(j) an ERISA Event occurs that in the opinion of the Holders, when taken together with all other such ERISA Events, could reasonably be expected to result in liability of any Credit Party and its ERISA Affiliates in an aggregate amount exceeding $1,000,000;" 9 4. Representations and Warranties. To induce the Holders to execute and deliver this First Amendment, the Company hereby reaffirms all covenants, representations, and warranties made in the Investment Agreement and the other Investment Documents to the extent the same are not amended hereby and agree that all such covenants, representations, and warranties shall be deemed to have been remade as of the date of this Amendment. Any such representations and warranties made as of the Closing Date shall be made as of the date hereof. Any default by the Company in its warranties and representations made in this Amendment shall constitute an additional Event of Default under the Investment Agreement, as amended hereby. 5. Joinder. Each of Blue Rhino Consumer Products, LLC and Uniflame, LLC (the "New Credit Parties") hereby joins the Investment Agreement and the Debentures as a joint and several obligor thereunder and party thereto, subject to the terms and provisions thereof. Each New Credit Party hereby unconditionally and expressly agrees to become, by execution and delivery of this Agreement does become, and assumes, jointly and severally, each and every one of the obligations of, a "Borrower" under and as defined in the Investment Agreement and the Debentures. In addition, each New Credit Party makes each and every representation and warranty of a Borrower set forth in the Investment Agreement as of the date hereof except for those representations and warranties that relate to a prior date. Without limitation of the foregoing or of anything in the Investment Agreement or the Debentures, by such execution and delivery hereof each New Credit Party does become fully, jointly and severally liable, as a Borrower, for the payment of the Obligations as defined in the Investment Agreement and the Debentures. As provided for in Section 7.8(a) of the Investment Agreement, each New Credit Party joins as a Borrower under the Investment Agreement as if such New Credit Party had been an original party to the Investment Agreement and the Debentures. Each New Credit Party agrees to cooperate with the Holders and execute such further instruments and documents as the Holders shall reasonably request to effect, to the reasonable satisfaction of the Holders, the purposes hereof. 6. Consent. The Holders hereby consent to the execution and delivery of the New Credit Agreement and each of the Loan Documents (as defined herein) by the Borrowers and acknowledge that the Indebtedness evidenced thereby does not constitute a "Covered Financing" under Section 6.13. The Holders further acknowledge that the execution and delivery thereof shall not constitute a violation of Section 7.15 of the Investment Agreement. The parties hereto understand and agree that this consent shall be effective only with respect to the New Credit Agreement executed and delivered on the date hereof and only with respect to Sections 6.13 and 7.15 of the Investment Agreement. This consent shall not be deemed to constitute a consent to or waiver of any other term, provision or condition of the Investment Agreement or to prejudice any right or remedy that the Holders may now have or may have in the future under or in connection with any of the Investment Documents. 7. Acknowledgments by the Borrowers. The Borrowers acknowledge and agree with the Holders that as of the date hereof, the aggregate principal amount of the Obligations owing by the Borrowers to Allied under the Investment Agreement is $15,000,000, and all such Obligations are due and owing by the Borrowers to Allied in accordance with the Investment Documents and without any defense, deduction, offset, or counterclaim of any nature (all of which are hereby waived). 10 8. Reference to and Effect Upon Investment Agreement. Each reference in the Investment Agreement to "this Agreement," "hereunder," "hereof," or words of like import shall hereafter mean and be a reference to the Investment Agreement, as amended hereby and from time to time. Each reference in the Investment Agreement to the "Investment Documents" shall hereafter include this First Amendment and mean and be a reference to the Investment Documents, as amended hereby and from time to time. Except as specifically amended hereby, the Investment Agreement, the other Investment Documents, and each and every term and provision thereof shall remain in full force and effect and are hereby ratified and confirmed. The execution, delivery, and effectiveness of this First Amendment shall not operate as a waiver of any right, power, or remedy of Allied under the Investment Agreement or the other Investment Documents or constitute a waiver of any provision of the Investment Agreement or the other Investment Documents. 9. Fees and Expenses of Allied. On or prior to the date hereof, the Borrowers shall pay all reasonable fees and expenses incurred by Allied in connection with the preparation, negotiation, execution, and delivery of this First Amendment and any related documents, including, without limitation, the reasonable fees and expenses of Allied's counsel and out-of-pocket expenses. 10. Release. The Borrowers acknowledge that the Holders have fulfilled all of its obligations under the Investment Agreement and hereby release and forever discharge the Holders and their representatives, agents, employees, attorneys, successors, directors, officers, parents, affiliates, assigns, and subsidiaries (collectively the "Released Parties") of, to, and from any and all claims, defenses, actions, causes of action, suits, controversies, agreements, provisions, and demands in law or in equity, known or unknown (collectively, the "Claims") which the Borrowers ever had, now have, or may have arising from or relating to the Investment Documents, against or related to the Released Parties, through the date of this First Amendment. The Borrowers agree to assume the risk of any and all unknown, unanticipated or misunderstood claims which are released hereby. 11. Miscellaneous. (a) Entire Agreement; Integration Clause. This First Amendment and the other Investment Documents set forth the entire agreements and understandings of the parties hereto with respect to this transaction, and as such supersede any prior agreements, whether written or oral, regarding the matters described herein. (b) No Oral Modification or Waivers. The terms herein may not be modified or waived orally, but only by an instrument in writing signed by the party against which enforcement of the modification or waiver (as the case may be) is sought. (c) Governing Law. This First Amendment is governed by, and interpreted and construed in accordance with, the internal laws of the State of Maryland (without regard to its conflicts of law principles). 11 (d) Headings. The headings of the paragraphs and sub-paragraphs of this First Amendment are inserted for convenience only and shall not be deemed to constitute a part of this First Amendment or the other Investment Documents. (e) Severability. To the extent any provision herein violates any applicable law, that provision shall be considered void and the balance of this First Amendment shall remain unchanged and in full force and effect. (f) Counterparts. This First Amendment may be executed in as many counterpart copies as may be required. It shall not be necessary that the signature of, or on behalf of, each party appear on each counterpart, but it shall be sufficient that the signature of, or on behalf of, each party appear on one or more of the counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in any proof of this First Amendment to produce or account for more than a number of counterparts containing the respective signatures of, or on behalf of, all of the parties. (signatures begin next page) 12 IN WITNESS WHEREOF, the undersigned have executed and delivered this First Amendment as of the date first above written. COMPANY: BLUE RHINO CORPORATION By: /s/Mark Castaneda (SEAL) ------------------------------------ Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer OTHER BORROWERS: USA LEASING, L.L.C. By: Blue Rhino Corporation, as Manager By: /s/Mark Castaneda (SEAL) ------------------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer RHINO SERVICES, L.L.C. By: Blue Rhino Corporation, as Manager By: /s/ Mark Castaneda (SEAL) ------------------------------------ Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer CPD ASSOCIATES, INC. By: /s/ Mark Castaneda (SEAL) ------------------------------------ Name: Mark Castaneda Title: Vice President QUICKSHIP, INC. By: /s/ Mark Castaneda (SEAL) ----------------------------------------------- Name: Mark Castaneda Title: Assist. Secretary/Treasurer SIGNATURE PAGE TO FIRST AMENDMENT TO INVESTMENT AGREEMENT 13 UNIFLAME CORPORATION By: /s/ Kurt Gehsmann (SEAL) ------------------------------------ Name: Kurt Gehsmann Title: Vice President and Treasurer BLUE RHINO CONSUMER PRODUCTS, LLC By: Blue Rhino Corporation, as Manager By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer UNIFLAME, LLC By: Blue Rhino Corporation, as Manager By: /s/ Mark Castaneda (SEAL) ---------------------------- Name: Mark Castaneda Title: Executive Vice President and Chief Financial Officer ALLIED: ALLIED CAPITAL CORPORATION By: /s/ Thomas H. Westbrook (SEAL) -------------------------------- Name: Thomas H. Westbrook Title: Managing Director SIGNATURE PAGE TO FIRST AMENDMENT TO INVESTMENT AGREEMENT 14 EX-10.7 21 g81245exv10w7.txt EX-10.7 SECURITIES PURCHASE AGREEMENT EXHIBIT 10.7 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "AGREEMENT") is dated as of December 20, 2002 among Blue Rhino Corporation, a Delaware corporation (the "COMPANY"), and the purchasers identified on the signature pages hereto (each, a "PURCHASER" and collectively, the "PURCHASERS"). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company, securities of the Company as more fully described in this Agreement. NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated: "ADDITIONAL INVESTMENT RIGHTS" means, collectively, the Additional Investment Rights issued and sold under this Agreement, in the form of Exhibit A. "AFFILIATE" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. "BENEFICIAL OWNERSHIP" means beneficial ownership as determined pursuant to Rule 13d-3 of the Exchange Act. "BUSINESS DAY" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed. "CHANGE OF CONTROL" means the occurrence of any of the following in one or a series of related transactions: (i) an acquisition after the date hereof by an individual or legal entity or "group" (as described in Rule 13d-5(b)(1) under the Exchange Act) of more than one-half of the voting rights or equity interests in the Company; (ii) a replacement of more than one-half of the members of the Company's board of directors that is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or other directors previously approved by a majority of such individuals); (iii) a merger or consolidation of the Company or a sale of more than one-half of the assets of the Company in one or a series of related transactions, unless following such transaction or series of transactions, the holders of the Company's securities prior to the first such transaction continue to hold at least two-thirds of the voting rights and equity interests of the surviving entity or acquirer; (iv) a recapitalization, reorganization or other transaction involving the Company or any Subsidiary that constitutes or results in a transfer of more than one-half of the voting rights or equity interests in the Company to Persons other than holders of the Company's voting securities prior to such transaction; (v) consummation of a "Rule 13e-3 transaction" as defined in Rule 13e-3 under the Exchange Act with respect to the Company, or (vi) the execution by the Company or its controlling shareholders of an agreement providing for or reasonably likely to result in any of the foregoing events. "CLOSING" means the closing of the purchase and sale of the Shares and the Additional Investment Rights pursuant to Section 2.1. "CLOSING DATE" means the earlier of (i) the date on which the Purchasers deliver the purchase price set forth in Section 2.2(b) to the Company, and (ii) the date on which the Purchasers deliver the purchase price set forth in Section 2.2(b) to the Company Counsel in accordance with Section 2.2(c) except that if, in accordance with Section 2.2(c), the purchase price set forth in Section 2.2(b) is not released to the Company and is returned to the Purchasers, no Closing Date shall have occurred. "CLOSING PRICE" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on an Eligible Market or any other national securities exchange, the closing price per share of the Common Stock for such date (or the nearest preceding date) on the primary Eligible Market or exchange on which the Common Stock is then listed or quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; (c) if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent closing bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by Purchasers holding a majority of the Securities. "COMMISSION" means the Securities and Exchange Commission. "COMMON STOCK" means the common stock of the Company, par value $0.001 per share. "COMMON STOCK EQUIVALENTS" means, collectively, Options and Convertible Securities. "COMPANY COUNSEL" means Womble Carlyle Sandridge and Rice PLLC, counsel to the Company. "CONVERTIBLE SECURITIES" means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock. "EFFECTIVE DATE" means the date that the Registration Statement is first declared effective by the Commission. "ELIGIBLE MARKET" means any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market or the NASDAQ SmallCap Market. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FILING DATE" means January 19, 2003. "LIEN" means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction. "LOSSES" means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, costs of preparation and reasonable attorneys' fees. "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. "PERSON" means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or any court or other federal, state, local or other governmental authority or other entity of any kind. 2 "PER UNIT PURCHASE PRICE" means $15.79. "PROCEEDING" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. "PROSPECTUS" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement or any amendment to the Registration Statement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. "PURCHASER COUNSEL" means Proskauer Rose LLP, counsel to the Purchasers, or, in lieu thereof, any other single counsel selected by the Purchasers hereunder. "REGISTRABLE SECURITIES" means any Common Stock (including Underlying Shares) issued or issuable pursuant to the Transaction Documents, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing. "REGISTRATION STATEMENT" means the registration statement required to be filed under Article VI, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "REQUIRED EFFECTIVENESS DATE" means March 20, 2003. "RULE 144," "RULE 415," and "RULE 424" mean Rule 144, Rule 415 and Rule 424, respectively, promulgated by the Commission pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "SECURITIES" means the Shares, the Additional Investment Rights and the Underlying Shares. "SHARES" means an aggregate of 1,000,000 shares of Common Stock, which are being issued and sold to the Purchasers at the Closing. "SUBSIDIARY" means, except as such term is used in Section 3.1, any subsidiary, as defined in Rule 1-02(x) of Regulation S-X promulgated by the Commission, of the Company, and with respect to Section 3.1, any significant subsidiary as defined in Rule 1-02(w) of Regulation S-X promulgated by the Commission, of the Company. "TRADING DAY" means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any Eligible Market, then a day on which trading occurs on the NASDAQ National Market (or any successor thereto), or (c) if trading ceases to occur on the NASDAQ National Market (or any successor thereto), any Business Day. "TRADING MARKET" means the Nasdaq National Market or any other Eligible Market, or any national securities exchange, on which the Common Stock is then listed or quoted. "TRANSACTION DOCUMENTS" means this Agreement, the Additional Investment Rights and the Transfer Agent Instructions. "TRANSFER AGENT INSTRUCTIONS" means the Irrevocable Transfer Agent Instructions, in the form of Exhibit D, executed by the Company and delivered to and acknowledged in writing by the Company's transfer agent. 3 "UNDERLYING SHARES" means the shares of Common Stock issuable upon exercise of the Additional Investment Rights. "UNIT" means one Share and an Additional Investment Right to acquire 0.33 of a share of Common Stock. ARTICLE II PURCHASE AND SALE 2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally and not jointly, purchase from the Company, such number of Units indicated below such Purchaser's name on the signature page of this Agreement at the Per Unit Purchase Price. The Closing shall take place at the offices of Purchaser Counsel immediately following the execution hereof, or at such other location or time as the parties may agree. 2.2 Closing Deliveries. (a) At the Closing, the Company shall deliver or cause to be delivered to each Purchaser the following: (i) one or more stock certificates, free and clear of all restrictive and other legends (except as expressly provided in Section 4.1(b) hereof), evidencing such number of Shares equal to the number of Units indicated below such Purchaser's name on the signature page of this Agreement, registered in the name of such Purchaser; (ii) an Additional Investment Right, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire such number of Underlying Shares indicated below such Purchaser's name on the signature page of this Agreement, on the terms set forth therein; (iii) a legal opinion of Company Counsel, in the form of Exhibit B, executed by such counsel; and (iv) duly executed Transfer Agent Instructions acknowledged by the Company's transfer agent. (b) At the Closing, each Purchaser shall deliver or cause to be delivered to the Company an amount equal to the Per Unit Purchase Price multiplied by the number of Units indicated below such Purchaser's name on the signature page of this Agreement, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing to such Purchaser by the Company for such purpose. (c) Notwithstanding anything to the contrary in this Section 2.2, in the event that the Company cannot deliver all of the items set forth in Section 2.2(a) above, each Purchaser shall instead deliver the purchase price set forth in Section 2.2(b) to the Company Counsel, to be held by the Company Counsel in escrow on behalf of the Purchasers. Upon confirmation from the Purchaser Counsel of receipt by the Purchasers of all the items set forth in Section 2.2(a) above (which may be in writing or via email), the Company Counsel shall release the escrow funds to the Company. In the event all of the items set forth in Section 2.2(a) are not delivered to the Purchasers within one Trading Day after the Closing Date, the Purchasers shall have the right to demand that the Company Counsel release the escrow funds to the Purchasers. The Company Counsel hereby acknowledges and agrees to act as escrow agent in accordance with this Section 2.2(c). The Company Counsel (i) shall be entitled to rely on any written or email communication received from the Purchaser Counsel without any requirement to ascertain that the person(s) who have executed or conveyed such communication are authorized to do so or are the persons named therein or otherwise to pass upon any requirements of such communication that may be essential for 4 its validity and (ii) shall not be liable for any acts or omissions of any kind any unless caused by its own gross negligence or willful misconduct. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of the Company. The Company hereby represents and warrants to each of the Purchasers as of the date hereof as follows: (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien and all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights. (b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, (i) adversely affect the legality, validity or enforceability of any Transaction Document, (ii) have or result in a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole on a consolidated basis, or (iii) adversely impair the Company's ability to perform fully on a timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a "Material Adverse Effect"). (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents has been (or upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, to general principles of equity and to limitations on the rights to indemnity and contribution that exist by virtue of public policy. (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, except to the extent that such conflict, default or termination right could not reasonably be expected to have a Material Adverse Effect or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company 5 or a Subsidiary is subject (including federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject) or by which any property or asset of the Company or a Subsidiary is bound or affected. (e) Issuance of the Securities. The Securities (including the Underlying Shares) are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens (except for restrictions under federal and state securities laws) and shall not be subject to preemptive rights or similar rights of stockholders that have not been waived. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable upon exercise of the Additional Investment Rights. (f) Capitalization. The number of shares and type of all authorized, issued and outstanding capital stock, options and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) is set forth in Schedule 3.1(f). All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws. Except as disclosed in Schedule 3.1(f), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The Company has outstanding warrants to purchase an aggregate of 2,223,199 shares of Common Stock, which were issued in 3 different transactions, that contain certain anti-dilution or price adjustment provisions, and the exercise price or strike price of all such warrants as of the date hereof is $3.8685. The issue and sale of the Securities (including the Underlying Shares) will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. To the knowledge of the Company, except as specifically disclosed in Schedule 3.1(f) or as reflected in the SEC Reports, no Person or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the outstanding Common Stock, ignoring for such purposes any limitation on the number of shares of Common Stock that may be owned at any single time. (g) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials (together with any materials filed by the Company under the Exchange Act, whether or not required) being collectively referred to herein as the "SEC Reports" and, together with this Agreement and the Schedules to this Agreement, the "Disclosure Materials") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. The Company has delivered to each Purchaser true, correct and complete copies of all SEC Reports filed after the filing on December 16, 2002 of the Company's Form 10-Q for the quarter ending October 31, 2002. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments and the absence of footnotes. All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part of or specifically identified in the SEC Reports, to the extent required under the Exchange Act. 6 (h) Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports or in Schedule 3.1(h), (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that will result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans. (i) Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries that, if adversely determined, would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. (j) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as would not, individually or in the aggregate, have or result in a Material Adverse Effect. (k) Title to Assets. Except as disclosed on Schedule 3.1(k), the Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them, respectively, that is material to the respective businesses of the Company and the Subsidiaries and good and marketable title in all personal property owned by them, respectively, that is material to the respective businesses of the Company and the Subsidiaries, in each case free and clear of all Liens other than Liens that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries. Any real or personal property and facilities held under lease by the Company and the Subsidiaries are held under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such properties by the Company and the Subsidiaries and with which the Company and the Subsidiaries are in compliance. (l) Certain Fees. Except for the fees described in Schedule 3.1(l), all of which are payable to registered broker-dealers, no brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement, and the Company has not taken any action that would cause any Purchaser to be liable for any such fees or commissions. (m) Private Placement. Neither the Company nor any Person acting on the Company's behalf has sold or offered to sell or solicited any offer to buy the Securities by means of any form of general solicitation or advertising. Neither the Company nor any of its Affiliates nor any person acting on the Company's behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market. The 7 Company is not, and is not an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. The Company is not a United States real property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act of 1980. (n) Form S-3 Eligibility. The Company is eligible to register its Common Stock for resale by the Purchasers using Form S-3 promulgated under the Securities Act. (o) Listing and Maintenance Requirements. The Company has not, in the two years preceding the date hereof, received notice (written or oral) from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. (p) Registration Rights. Except as described in Schedule 3.1(p), the Company has not granted or agreed to grant to any Person any rights (including "piggy-back" registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied. (q) Application of Takeover Protections. There is no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's charter documents or the laws of its state of incorporation that is or could become applicable to any of the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, as a result of the Company's issuance of the Securities and the Purchasers' ownership of the Securities. (r) Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that constitutes material nonpublic information. The Company understands and confirms that each of the Purchasers will rely on the foregoing representations in effecting transactions in securities of the Company. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company's reports filed under the Exchange Act are incorporated into each effective registration statement filed by the Company under the Securities Act), except, until such time as the press release is issued as contemplated by Section 4.6, the execution of this Agreement. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2. (s) Acknowledgment Regarding Purchasers' Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Purchasers' purchase of the Securities. The Company further represents to each Purchaser that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. (t) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are required for use in connection with their respective businesses as described in the SEC Reports and that the failure to so have would have a Material Adverse Effect (collectively, the "Intellectual Property Rights"). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the 8 knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. (u) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. (v) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not, individually or in the aggregate, have or result in a Material Adverse Effect ("Material Permits"), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. (w) Transactions With Affiliates and Employees. Except as set forth in SEC Reports filed at least two days prior to the date hereof, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. (x) Solvency. Based on the financial condition of the Company as of the Closing Date, (i) the Company's fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company's existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company's assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). (y) Internal Accounting Controls. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, as to itself only and for no other Purchaser, represents and warrants to the Company as follows: (a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The purchase by such Purchaser of the Shares and the Additional Investment Rights hereunder has been duly authorized by all necessary action on the part of such 9 Purchaser. This Agreement has been duly executed and delivered by such Purchaser and constitutes the valid and binding obligation of such Purchaser, enforceable against it in accordance with its terms. (b) Investment Intent. Such Purchaser is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof other than, subject to the provisions of this Agreement, pursuant to an effective registration statement under the Securities Act or an available exemption from such registration and in compliance with all applicable federal and state securities laws. Such Purchaser understands and agrees that: (i) the offer and sale of the Securities have not been registered under the Securities Act by reason of the exemption from the registration provisions of the Securities Act provided by Section 4(2) thereof and Rule 506 promulgated thereunder, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Purchaser's representations, warranties and covenants as expressed herein; (ii) the Company is relying on such Purchaser's representations, warranties and covenants in offering and selling the Securities hereunder; and (iii) the Securities may not be transferred by such Purchaser except pursuant to an effective registration statement under the Securities Act or an available exemption from such registration and in compliance with all applicable federal and state securities laws. Subject to compliance with the foregoing, nothing contained herein shall be deemed a representation or warranty by such Purchaser to hold Securities for any period of time. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute or otherwise transfer any of the Securities. (c) Purchaser Status. At the time such Purchaser was offered the Shares and the Additional Investment Rights, it was, and at the date hereof it is, an "accredited investor" as defined in Rule 501(a) under the Securities Act because it is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership or limited liability company, not formed for the specific purpose of acquiring any of the Securities, with total assets in excess of $5,000,000. (d) Experience of such Purchaser. Such Purchaser has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. The Purchaser understands that its investment in the Securities involves a high degree of risk. (e) Access to Information. Such Purchaser acknowledges that it has reviewed the Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser's right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company's representations and warranties contained in the Transaction Documents. (f) Residency. Such Purchaser is domiciled in the jurisdiction set forth immediately below such Purchaser's name on the signature page hereof. ARTICLE IV OTHER AGREEMENTS OF THE PARTIES 4.1 Transfer Restrictions. 10 (a) In connection with any transfer of Securities other than pursuant to an effective registration statement or to the Company or pursuant to Rule 144(k), except as otherwise expressly set forth herein, the transferor, shall provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act or applicable state securities laws. Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books of the Company and with its transfer agent, without any such legal opinion, any transfer of Securities by a Purchaser to an Affiliate of such Purchaser, provided that the transferee certifies to the Company that it is an "accredited investor" as defined in Rule 501(a) under the Securities Act and delivers to the Company a written statement in which it makes such representations and certification as set forth in Sections 3.2(b), (c), (d), and (e). (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of the following legend on any certificate evidencing Securities: [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES. Certificates evidencing Securities shall not be required to contain such legend or any other legend (i) while a Registration Statement covering the resale of such Securities is effective under the Securities Act, (ii) if such Securities are eligible for sale under Rule 144, including, but not limited to, Rule 144(k), or (iii) if such legend is not required under the Securities Act. The Company shall cause its counsel to issue the legal opinion included in the Transfer Agent Instructions to the Company's transfer agent on (or within one Trading Day after) the Effective Date. Following the Effective Date or at such earlier time as a legend is no longer required for certain Securities, the Company will no later than three Trading Days following the delivery by a Purchaser to the Company or the Company's transfer agent of a legended certificate representing such Securities (and all other documents reasonably required by the Company or its transfer agent in connection therewith), deliver or cause to be delivered to such Purchaser a certificate representing such Securities that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. (c) The Company acknowledges and agrees that a Purchaser may from time to time pledge or grant a security interest in some or all of the Securities in connection with a bona fide margin agreement or other loan or financing arrangement secured by the Securities and, if required under the terms of such agreement, loan or arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties (subject to any restrictions on transfer applicable to such pledgees or secured parties pursuant to applicable law). Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders in the Prospectus. 11 4.2 Furnishing of Information. As long as any Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request of any Purchaser, the Company shall deliver to such Purchaser a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchasers and make publicly available in accordance with paragraph (c) of Rule 144 such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request to satisfy the provisions of Rule 144 applicable to the issuer of securities relating to the sale of securities pursuant to Rule 144. 4.3 Integration. The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that it knows or should know would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that it knows or should know would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market. 4.4 Reservation of Securities. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents. In the event that at any time the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations in full under the Transaction Documents, the Company shall promptly take such actions as may be required to increase the number of authorized shares. 4.5 Subsequent Placements. (a) From the date hereof until the Effective Date, the Company will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or the Subsidiaries' equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents. (b) The restrictions contained in paragraph (a) of this Section 4.5 shall not apply to (A) any issuance of Common Stock or grant of Options to employees, officers, directors of or consultants or advisors to the Company, in each case, pursuant to a stock-based plan duly approved by the Company's board of directors; (B) the issuance of securities in connection with a joint venture or development agreement or strategic partnership or similar agreement approved by the Company's board of directors, a primary purpose of which is not to raise equity capital; (C) upon exercise, conversion or exchange of any Common Stock Equivalents described in Schedule 3.1(f) (provided that such exercise or conversion occurs in accordance with the terms thereof, without amendment or modification); or (D) in connection with a transaction involving a sale of a Subsidiary or a line of business not resulting in a Change of Control. 4.6 Securities Laws Disclosure; Publicity. The Company shall, on the Closing Date, issue a press release reasonably acceptable to the Purchasers disclosing material terms of the transactions contemplated hereby. On or before the first Trading Day following the Closing Date, the Company shall file a Current Report on Form 8-K with the Commission (the "8-K Filing") describing the terms of the transactions contemplated by the Transaction Documents and, to the extent required by the Exchange Act, including as exhibits to such Current Report on Form 8-K this Agreement and the form of Additional Investment Rights, in the form required by the Exchange Act. Thereafter, the Company shall use its best efforts to timely file any filings and notices required by the Commission or applicable law that relate principally to the Sale of Securities provided for herein and provide copies thereof to the Purchasers promptly after filing. The Company shall promptly provide the Purchasers with a copy of any filing or dissemination of any disclosure required by this paragraph for their review. The Company and the Purchasers shall 12 consult with each other in issuing the 8-K Filing or any press releases that relate principally to the Sale of Securities provided for herein, and neither party shall issue any such press release or 8-K Filing without the prior consent of the other, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or filing. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except to the extent such disclosure (but not any disclosure as to the controlling Persons thereof) is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents not to, provide any Purchaser with any material nonpublic information regarding the Company or any of its Subsidiaries from and after the issuance of the press release contemplated in the first sentence of this Section 4.6 without the express written consent of such Purchaser, and the Purchaser shall not request any such material nonpublic information unless it expressly acknowledges in advance in writing that it is requesting material nonpublic information. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Transaction Documents, a Purchaser shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective officers, directors, employees or agents, if, and only if, the Company (i) has acknowledged in writing that such information constitutes material nonpublic information and (ii) does not publicly disclose such information within two Trading Days following receipt of notification of the breach of the foregoing covenant. No Purchaser shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, shareholders or agents for any such disclosure made in compliance with the preceding sentence. 4.7 Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder to promptly repay (in full, to the extent the proceeds are sufficient) amounts outstanding under the Senior Subordinated Debenture dated June 15, 2001 payable to Allied Capital Corporation and the remainder for working capital purposes and not to redeem any Company equity or equity-equivalent securities or to settle any outstanding litigation. 4.8 Reimbursement. If any Purchaser or any of its Affiliates or any officer, director, partner, controlling person, employee or agent of a Purchaser or any of its Affiliates (a "Related Person") becomes involved in any capacity in any Proceeding brought by or against any Person in connection with or as a result of the transactions contemplated by the Transaction Documents (other than relating to the Registration Statement, Prospectus or other matter covered by the indemnity in Article VI hereof), the Company will indemnify and hold harmless such Purchaser or Related Person for its reasonable legal and other expenses (including the reasonable costs of any investigation, preparation and travel) and for any Losses incurred in connection therewith, if and as such expenses or Losses are actually incurred, excluding only Losses that arise out of or result directly from such Purchaser's or Related Person's gross negligence or willful misconduct. In addition, the Company shall indemnify and hold harmless each Purchaser and Related Person from and against any and all Losses, if and as actually incurred, arising out of or relating to any breach by the Company of any of the representations, warranties or covenants made by the Company in this Agreement or any other Transaction Document. The conduct of any Proceedings for which indemnification is available under this paragraph shall be governed by Section 6.4(c) below. The indemnification obligations of the Company under this paragraph shall be in addition to any liability that the Company may otherwise have and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Purchasers and any such Related Persons. The Company also agrees that neither the Purchasers nor any Related Persons shall have any liability to the Company or any Person asserting claims on behalf of or in right of the Company in connection with or as a result of the transactions contemplated by the Transaction Documents, except to the extent that any Losses incurred by the Company arise out of or result directly from the gross negligence or willful misconduct of the applicable Purchaser or Related Person in connection with such transactions or arise out of or relate to any breach by a Purchaser of any of the representations, warranties or covenants made by a Purchaser in this Agreement or any other Transaction Document. If the Company breaches its obligations under any Transaction Document, then, in addition to any other liabilities the Company may have under any Transaction Document or applicable law, the Company shall pay or reimburse the Purchasers on demand for all costs of collection and enforcement (including reasonable attorneys fees and expenses) actually incurred and 13 reasonably documented. Without limiting the generality of the foregoing, the Company specifically agrees to reimburse the Purchasers on demand for all actually incurred and reasonably documented costs of enforcing the indemnification obligations in this paragraph. ARTICLE V CONDITIONS The provisions of this Article V shall apply only if the Closing Date is after the date hereof. 5.1 Conditions Precedent to the Obligations of the Purchasers. The obligation of each Purchaser to acquire Securities at the Closing is subject to the satisfaction or waiver by such Purchaser, at or before the Closing, of each of the following conditions: (a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date; and (b) Performance. The Company and each other Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing. 5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell Securities at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions: (a) Representations and Warranties. The representations and warranties of the Purchasers contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date; and (b) Performance. The Purchasers shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Purchasers at or prior to the Closing. ARTICLE VI REGISTRATION RIGHTS 6.1 Shelf Registration (a) As promptly as reasonably practicable, and in any event on or prior to the Filing Date, the Company shall prepare and file with the Commission a "Shelf" Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith as to which Purchasers holding a majority of the Registrable Securities may consent) and shall contain (except if otherwise directed by Purchasers holding a majority of the Registrable Securities) the "Plan of Distribution" attached hereto as Exhibit C. (b) The Company shall use its best efforts to cause the Registration Statement to be declared effective by the Commission as promptly as possible after the filing thereof, but in any event prior to the Required Effectiveness Date, and shall use its best efforts to keep the Registration Statement continuously effective under the Securities Act until the date each Purchaser named herein on the Closing Date can sell all of its Securities without 14 restriction pursuant to Rule 144(k) or such earlier date when all Registrable Securities covered by such Registration Statement have been sold publicly (the "Effectiveness Period"). (c) The Company shall notify each Purchaser promptly (and in any event within one Business Day) after receiving notification from the Commission that the Registration Statement has been declared effective. (d) Upon the occurrence of any Event (as defined below) and on every monthly anniversary thereof until the applicable Event is cured, as partial relief for the damages suffered therefrom by the Purchasers (which remedy shall not be exclusive of any other remedies available under this Agreement, at law or in equity), the Company shall pay to each Purchaser an amount in cash, as liquidated damages and not as a penalty, equal to 1.0% of the aggregate purchase price paid by such Purchaser hereunder. The payments to which a Purchaser shall be entitled pursuant to this Section 6.1(d) are referred to herein as "Event Payments." Any Event Payments payable pursuant to the terms hereof shall apply on a pro-rata basis for any portion of a month prior to the cure of an Event. In the event the Company fails to make Event Payments in a timely manner, such Event Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. (e) For such purposes, each of the following shall constitute an "Event": (i) the Registration Statement is not filed on or prior to the Filing Date or is not declared effective on or prior to the Required Effectiveness Date; (ii) after the Effective Date and during the Effectiveness Period, a Purchaser is not permitted to sell Registrable Securities under the Registration Statement (or a subsequent registration statement filed in replacement thereof) for any reason for more than seven Trading Days (whether or not consecutive); (iii) the Common Stock is not listed or quoted on any, or is suspended from trading on all, Eligible Markets for a period of four Trading Days (which need not be consecutive Trading Days); (iv) the Company fails to have available a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock available to issue Underlying Shares upon any exercise of the Additional Investment Rights. (f) The Company shall not, prior to the Effective Date of the Registration Statement, prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than one or more registration statements on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued in connection with any acquisition of any entity or business or equity securities issuable in connection with a stock option or other employee benefit plan. 6.2 Registration Procedures. In connection with the Company's registration obligations hereunder, the Company shall: (a) Not less than three Trading Days prior to the filing of a Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to the Purchasers and Purchaser Counsel copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Purchasers and Purchaser Counsel, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which Purchasers holding a majority of the Registrable Securities shall reasonably object; provided that, notwithstanding anything herein to the contrary, pending resolution of the 15 Purchasers' objection and the subsequent filing of such Registration Statement or Prospectus (or amendment or supplement thereto) within a reasonable time following such resolution, no Event shall be deemed to occur. (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement and, as so supplemented or amended, to be filed pursuant to Rule 424; (iii) use its best efforts to respond as promptly as reasonably practicable, and within ten days, to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably practicable after receipt of written request from any Purchaser, provide such Purchaser true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Purchasers thereof set forth in the Registration Statement, as may be amended, or in such Prospectus, as may be supplemented. (c) Notify the Purchasers of Registrable Securities to be sold under the Registration Statement and Purchaser Counsel as promptly as reasonably practicable, and (if requested by any such Person) confirm such notice in writing no later than one Trading Day thereafter, of any of the following events: (i) any Registration Statement or any post-effective amendment is declared effective; (ii) the Commission issues any stop order suspending the effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (iii) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (iv) the financial statements included in any Registration Statement become ineligible for inclusion therein or the Company has knowledge that any statement made in any Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference is untrue in any material respect or that a revision to a Registration Statement, Prospectus or other document is required so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) Use its best efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as reasonably practicable. (e) Furnish to each Purchaser and Purchaser Counsel, without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after receipt of written request from such Purchaser or Purchaser Counsel after the filing of such documents with the Commission. (f) Promptly deliver to each Purchaser and Purchaser Counsel, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. Subject to the terms hereof, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Purchasers in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. (g) (i) In the time and manner required by each Trading Market, if at all, prepare and file with such Trading Market an additional shares listing application covering all of the Registrable Securities; (ii) take all steps necessary to cause such Registrable Securities to be approved for listing on each Trading Market as soon as reasonably practicable thereafter; (iii) to the extent available to the Company, provide to the Purchasers evidence of 16 such listing; and (iv) maintain the listing of such Registrable Securities on each such Trading Market or another Eligible Market. (h) Prior to any public offering of Registrable Securities, use its best efforts to register or qualify or cooperate with the selling Purchasers and Purchaser Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Purchaser requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to take any and all other actions necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided that the Company shall not be required to qualify generally to do business as a foreign corporation in any jurisdiction where it is not so qualified or to execute a general consent to service of process in effecting such registration or qualification (or exemption therefrom). (i) Cooperate with the Purchasers to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by this Agreement and consistent with applicable law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and, if after the Effective Date, registered in such names as any such Purchasers may request. (j) Upon the occurrence of any event described in Section 6.2(c)(iv), as promptly as reasonably practicable, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) Cooperate with any due diligence investigation undertaken by the Purchasers in connection with the sale of Registrable Securities, including, without limitation, by making available any documents and information; provided that no Purchaser will request material nonpublic information unless it acknowledges in advance in writing that it is doing so, and the Company will not deliver or make available to any Purchaser material nonpublic information unless such Purchaser specifically so requests in writing. (l) If Holders of a majority of the Registrable Securities being offered pursuant to a Registration Statement select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, by providing customary legal opinions, comfort letters and indemnification and contribution obligations. (m) Comply with all applicable rules and regulations of the Commission. 6.3 Registration Expenses. The Company shall pay (or reimburse the Purchasers for) all fees and expenses incident to the performance of or compliance with this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses, including without limitation those related to filings with the Commission, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company and up to $10,000 in the aggregate for a single Purchaser Counsel for the Purchasers, (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market. Notwithstanding the foregoing, each Purchaser shall pay all selling commissions, brokerage fees and stock transfer taxes, if any, applicable to the Registrable Securities sold by such Purchaser. 6.4 Indemnification 17 (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser, the officers, directors, partners, members, agents and employees of each Purchaser, each Person who controls any such Purchaser (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements, alleged untrue statements, omissions or alleged omissions arise out of or result directly from (A) information regarding such Purchaser furnished in writing to the Company by such Purchaser expressly for use in connection therewith or (B) information relating to such Purchaser or such Purchaser's proposed method of distribution of Registrable Securities that is in conformity with the "Plan of Distribution" attached hereto as Exhibit C or was reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type specified in Section 6.2(c)(ii)-(iv), such Purchaser uses an outdated or defective Prospectus after the Company has notified such Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such Purchaser of the Advice contemplated in Section 6.5. The Company shall notify the Purchasers promptly of the institution or actual threat of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. (b) Indemnification by Purchasers. Each Purchaser shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents and employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses arising out of any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that (i) such untrue statement or omission arises out of or results directly from any information (A) furnished in writing by such Purchaser to the Company specifically for use in connection with such Registration Statement or such Prospectus or with any amendment or supplement thereto or (B) based upon information relating to such Purchaser or such Purchaser's proposed method of distribution of Registrable Securities that is in conformity with the "Plan of Distribution" attached hereto as Exhibit C or was reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type specified in Section 6.2(c)(ii)-(iv), such Purchaser uses an outdated or defective Prospectus after the Company has notified such Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such Purchaser of the Advice contemplated in Section 6.5. In no event shall the liability of any selling Purchaser hereunder be greater in amount than the dollar amount of the net proceeds received by such Purchaser upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have materially prejudiced the Indemnifying Party. An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; 18 or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is subsequently ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is judicially determined and not subject to appeal or review that such Indemnified Party is not entitled to indemnification hereunder). (d) Contribution. If a claim for indemnification under Section 6.4(a) or (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6.4(c), any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Purchaser from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 6.5 Dispositions. Each Purchaser agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. Each Purchaser further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6.2(c)(ii), (iii) or (iv), such Purchaser will discontinue disposition of such Registrable Securities under the Registration Statement until such Purchaser's receipt of the copies of the 19 supplemented Prospectus and/or amended Registration Statement contemplated by Section 6.2(j), or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. 6.6 No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Purchasers in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right to any of its security holders. 6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with a stock option or other employee benefit plan, then the Company shall send to each Purchaser written notice of such determination and if, within fifteen days after receipt of such notice, any such Purchaser shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Purchaser requests to be registered. ARTICLE VII MISCELLANEOUS 7.1 Termination. This Agreement may be terminated by the Company or any Purchaser, by written notice to the other parties, if the Closing has not been consummated by the third Business Day following the date of this Agreement; provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 7.2 Fees and Expenses. At the Closing, the Company shall pay to Mainfield Enterprises, Inc. an aggregate of $55,000 for their legal fees and expenses incurred in connection with its due diligence and its due diligence and the preparation and negotiation of the Transaction Documents. In lieu of the foregoing payment, Mainfield Enterprises, Inc. may retain such amount at the Closing or require the Company to pay such amount directly to Purchaser Counsel. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the issuance of the Securities. 7.3 Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company and the Purchasers will execute and deliver such further documents as may be reasonably requested in order to give effect to the intention of the parties under the Transaction Documents. 7.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the 20 Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses and facsimile numbers for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person. 7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers holding (or, in the case of an amendment prior to the Closing Date, committing to hold) a majority of the Securities or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Purchasers under Article VI and that does not directly or indirectly affect the rights of other Purchasers may be given by Purchasers holding at least a majority of the Registrable Securities to which such waiver or consent relates. 7.6 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers. Any Purchaser may assign its rights under this Agreement to any Person to whom such Purchaser is permitted to assign or transfer, and assigns or transfers, any Securities, provided such transferee delivers a statement to the Company in which it agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the "Purchasers." 7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Related Person is an intended third party beneficiary of Section 4.8 and each Indemnified Party is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of such Sections directly against the parties with obligations thereunder. 7.9 Governing Law; Venue; Waiver Of Jury Trial. The Corporate Laws Of The State Of Delaware Shall Govern All Issues Concerning The Relative Rights Of The Company And Its Stockholders AND All Questions Concerning The Construction, Validity, Enforcement And Interpretation Of This Agreement. THE COMPANY Hereby Irrevocably Submits To The Exclusive Jurisdiction Of The State And Federal Courts Sitting In The STATE OF DELAWARE For The Adjudication Of Any Dispute BROUGHT BY ANY PURCHASER Hereunder, In Connection Herewith Or With Any Transaction Contemplated Hereby Or Discussed Herein (Including With Respect To The Enforcement Of Any Of The Transaction Documents), And Hereby Irrevocably Waives, And Agrees Not To Assert In Any Suit, Action Or ProceedinG BROUGHT BY ANY PURCHASER, Any Claim That It Is Not Personally Subject To The Jurisdiction Of Any Such Court, That Such Suit, Action Or Proceeding Is Improper. Each purchaser HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN DELAWARe, for the adjudication of any dispute brought by the company hereunder, in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding brought by the company, any claim that it is not personally subject to the jurisdiction of any such court or that such suit, action or proceeding is improper. Each party Hereby Irrevocably Waives Personal Service Of Process And Consents To Process Being Served In Any Such Suit, Action Or Proceeding By Mailing A Copy Thereof Via Registered Or Certified Mail Or Overnight Delivery (With Evidence Of Delivery) To Such Party At The Address In Effect For Notices To It Under This Agreement And Agrees That Such Service Shall Constitute Good And Sufficient Service Of Process And Notice Thereof. Nothing Contained Herein 21 Shall Be Deemed To Limit In Any Way Any Right To Serve Process In Any Manner Permitted By Law. The Company Hereby Waives All Rights To A Trial By Jury. 7.10 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery and/or exercise of the Securities, as applicable. 7.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. 7.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 7.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 7.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and, if requested, customary and reasonable indemnity. If any Purchaser seeks a new certificate or instrument under such circumstances, it shall also comply with such other reasonable regulations and procedures and pay such other reasonable third party costs as the Company may prescribe. 7.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 7.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser hereunder or pursuant to the Additional Investment Rights or any Purchaser enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 7.17 Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or 22 event occurring after the date hereof and before the Closing Date, each reference herein to a number of shares or a price per share shall be amended to appropriately account for such event. 7.18 Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser to purchase Shares pursuant to this Agreement has been made by such Purchaser independently of any other Purchaser and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of the Subsidiary which may have been made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its agents or employees shall have any liability to any other Purchaser (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder and that no other Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment hereunder. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. [SIGNATURE PAGES TO FOLLOW] 23 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. BLUE RHINO CORPORATION By: /s/ Mark Castaneda ------------------------------------ Name: Mark Castaneda Title: Chief Financial Officer Address for Notice: 104 Cambridge Plaza Drive Winston-Salem, North Carolina 27104 Facsimile No.: (336) 659-6750 Telephone No.: (336) 659-6755 Attn: Mark Castaneda, Chief Financial Officer With a copy to: Womble Carlyle Sandridge & Rice, PLLC One West Fourth Street Winston-Salem, North Carolina 27101 Facsimile No.: (336) 726-6906 Telephone No.: (336) 721-3634 Attn: Peter A. Zorn, Esq. Consented and Acknowledged with respect to Section 2.2 (c) only WOMBLE CARLYLE SANDRIDGE & RICE PLLC By: /s/ Peter Zorn ------------------------ Name: Peter Zorn Title: Of Counsel [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR PURCHASERS FOLLOW] 24 MAINFIELD ENTERPRISES, INC. By: /s/ Avi Vigder ------------------------------------ Name: Avi Vigder Title: Authorized Signatory Domicile: British Virgin Islands Number of Units: 600,000 Underlying Shares subject to Additional Investment Rights: 198,000 Address for Notice: Mainfield Enterprises, Inc. c/o Avi Vigder 660 Madison Avenue New York, New York 10022 Facsimile No.: (212) 651-9010 Telephone No.: (212) 651-9000 With a copy to: Proskauer Rose LLP 1585 Broadway New York, New York 10036-8299 Facsimile No.: (212) 969-2900 Telephone No.: (212) 969-3000 Attn: Adam J. Kansler, Esq. 25 SMITHFIELD FIDUCIARY LLC By: /s/ Adam J. Chill --------------------------- Name: Adam J. Chill Title: Authorized Signatory Domicile: Cayman Islands Number of Units: 400,000 Underlying Shares subject to Additional Investment Rights: 132,000 Address for Notice: Smithfield Fiduciary LLC c/o Highbridge Capital Management, LLC 9 West 57th Street, 27th Floor New York, New York 10019 Facsimile No.: (212) 751-0755 Telephone No.: (212) 287-4720 Attn: Adam J. Chill 26 Exhibits: - -------- A Form of Additional Investment Right B Opinion of Company Counsel C Plan of Distribution D Transfer Agent Instructions [These exhibits are omitted. Blue Rhino Corporation will furnish supplementally a copy of any omitted exhibit to the Commission upon request.] 27 EX-10.8 22 g81245exv10w8.txt EX-10.8 FORM OF ADDITIONAL INVESTMENT RIGHT EXHIBIT 10.8 NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. BLUE RHINO CORPORATION ADDITIONAL INVESTMENT RIGHT Additional Investment Right No. [ ] Dated: December 20, 2002 Blue Rhino Corporation, a Delaware corporation (the "COMPANY"), hereby certifies that, for value received, [Name of Holder] or its registered assigns (the "HOLDER"), is entitled to purchase from the Company up to a total of [ ] shares of common stock, $0.001 par value per share (the "COMMON STOCK"), of the Company (each such share, an "ADDITIONAL INVESTMENT RIGHT SHARE" and all such shares, the "ADDITIONAL INVESTMENT RIGHT SHARES") at an exercise price equal to $[ ] per share (as adjusted from time to time as provided in Section 9, the "EXERCISE PRICE"), at any time and from time to time from and after the earlier of (i) 90 days after the Closing Date, and (ii) the Effective Date (such earlier date, the "TRIGGER DATE"), and through and including the 90th Trading Day following the Effective Date (the "EXPIRATION DATE"), subject to the following terms and conditions. This Additional Investment Right (this "ADDITIONAL INVESTMENT RIGHT") is one of a series of similar additional investment rights issued pursuant to that certain Securities Purchase Agreement, dated as of the date hereof, by and among the Company and the Purchasers identified therein (the "PURCHASE AGREEMENT"). All such additional investment rights are referred to herein, collectively, as the "ADDITIONAL INVESTMENT RIGHTS." 1. Definitions. In addition to the terms defined elsewhere in this Additional Investment Right, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement. 2. Registration of Additional Investment Right. The Company shall register this Additional Investment Right, upon records to be maintained by the Company for that purpose (the "ADDITIONAL INVESTMENT RIGHT REGISTER"), in the name of the Holder (which shall include the initial Holder or, as the case may be, any registered assignee to which this Additional Investment Right is permissibly assigned hereunder from time to time). The Company may deem and treat the registered Holder as the absolute owner of this Additional Investment Right for the purpose of any exercise hereof, any distribution in respect hereof and for all other purposes. 3. Registration of Transfers. The Company shall register the assignment and transfer of any portion of this Additional Investment Right in the Additional Investment Right Register, only upon (i) surrender of this Additional Investment Right, with the Form of Assignment attached hereto duly completed and signed, and (ii) if the registration statement is not effective, (x) if the assignment or transfer is not to an Affiliate of such Holder, delivery of an opinion of counsel reasonably satisfactory to the Company, to the effect that the transfer of such portion of this Additional Investment Right may be made pursuant to an available exemption from the registration requirements of the Securities Act and all applicable state securities or blue sky laws and (y) if the assignment or transfer is to an Affiliate of such Holder, delivery by the transferee of a written statement to the Company certifying that the transferee is an Affiliate of the Holder and an "accredited investor" as defined in Rule 501(a) under the Securities Act and making the representations and certifications as set forth in Sections 3.2(b), (c) and (d) of the Purchase Agreement, in each case, to the Company at its address specified in the Purchase Agreement. Upon any such registration, a new additional investment right to purchase Common Stock, in substantially the form of this Additional Investment Right (any such new additional investment right, a "NEW ADDITIONAL INVESTMENT RIGHT"), evidencing the portion of this Additional Investment Right so transferred shall be issued to the transferee and a New Additional Investment Right evidencing the remaining portion of this Additional Investment Right not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Additional Investment Right by the transferee shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Additional Investment Right that the Holder has in respect of this Additional Investment Right. 4. Exercise and Duration of Additional Investment Right. (a) This Additional Investment Right shall be exercisable by the registered Holder at any time and from time to time on or after the Trigger Date and through and including the Expiration Date. At 6:30 P.M., New York City time on the Expiration Date, the portion of this Additional Investment Right not exercised prior thereto shall be and become void and of no value and this Additional Investment Right shall be terminated and no longer outstanding. (b) The Holder may exercise this Additional Investment Right by delivering to the Company (i) an exercise notice, in the form attached hereto (the "EXERCISE NOTICE"), completed and duly signed, and (ii) payment of the Exercise Price for the number of Additional Investment Right Shares as to which this Additional Investment Right is being exercised, and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an "EXERCISE DATE." The delivery by (or on behalf of) the Holder of the Exercise Notice and the applicable Exercise Price as provided above shall constitute the Holder's certification to the Company that its representations contained in Section 3.2(b), (c) and (d) of the Purchase Agreement are true and correct as of the Exercise Date as if remade in their entirety 2 (or, in the case of any assignee Holder that is not a party to the Purchase Agreement, such assignee Holder's certification to the Company that such representations are true and correct as to such assignee Holder as of the Exercise Date). The Holder shall not be required to deliver the original Additional Investment Right in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Additional Investment Right and issuance of a New Additional Investment Right evidencing the right to purchase the remaining number of Additional Investment Right Shares. 5. Delivery of Additional Investment Right Shares. (a) Upon exercise of this Additional Investment Right, the Company shall promptly (but in no event later than three Trading Days after the Exercise Date) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate (provided that, if the Registration Statement is not effective and the Holder directs the Company to deliver a certificate for the Additional Investment Right Shares in a name other than that of the Holder or an Affiliate of the Holder, it shall deliver to the Company on the Exercise Date an opinion of counsel reasonably satisfactory to the Company to the effect that the issuance of such Additional Investment Right Shares in such other name may be made pursuant to an available exemption from the registration requirements of the Securities Act and all applicable state securities or blue sky laws or, if the transferee is an Affiliate of the Holder, the statement set forth in Section 3(ii)(y) in lieu of such opinion), a certificate for the Additional Investment Right Shares issuable upon such exercise, free of restrictive legends unless a registration statement covering the resale of the Additional Investment Right Shares and naming the Holder as a selling stockholder thereunder is not then effective and the Additional Investment Right Shares are not freely transferable without volume restrictions pursuant to Rule 144 under the Securities Act. The Holder, or any Person so designated by the Holder to receive Additional Investment Right Shares, shall be deemed to have become holder of record of such Additional Investment Right Shares as of the Exercise Date. The Company shall, upon the written request of the Holder, use its best efforts to deliver Additional Investment Right Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions. (b) This Additional Investment Right is exercisable either in its entirety or, from time to time, for a portion of the number of Additional Investment Right Shares. Upon surrender of this Additional Investment Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a New Additional Investment Warrant evidencing the right to purchase the remaining number of Additional Investment Warrant Shares, if requested in writing by the Holder. (c) The provisions of this Section 5(c) are expressly subject to the last sentence of Section 5(a). In addition to any other rights available to a Holder, if the Company fails to deliver to the Holder a certificate representing Additional Investment Right Shares on the date on which delivery of such certificate is required by this Additional Investment Right, such Holder may notify the Company via facsimile, mail or any other written means of its failure to deliver the certificate (a "DELIVERY FAILURE NOTICE"). If the Company fails to deliver to the Holder a certificate representing Additional Investment Right Shares by the third Trading Day 3 after delivery of the Delivery Failure Notice by the Holder and if, after such third Trading Day after the delivery of the Delivery Failure Notice the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Additional Investment Right Shares that the Holder anticipated receiving from the Company (a "BUY-IN"), then the Company shall, within three Trading Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which point the Company's obligation to deliver such certificate (and to issue such Additional Investment Right Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Additional Investment Right Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Additional Investment Right Shares, times (B) the Closing Price on the third Trading Day after the Exercise Date. (d) The Company's obligations to issue and deliver Additional Investment Right Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person. Nothing herein shall limit the Holder's right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing Additional Investment Right Shares upon exercise of the Additional Investment Right as required pursuant to the terms hereof. 6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Additional Investment Right shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Additional Investment Right Shares or Additional Investment Rights in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Additional Investment Right or receiving Additional Investment Right Shares upon exercise hereof. 7. Replacement of Additional Investment Right. If this Additional Investment Right is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Additional Investment Right, a New Additional Investment Right, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and, if requested, customary and reasonable indemnity. If the Holder seeks a New Additional Investment Right under such circumstances, it shall also comply with such other reasonable 4 regulations and procedures and pay such other reasonable third party costs as the Company may prescribe. 8. Reservation of Additional Investment Right Shares. The Company covenants that it will at all times reserve and keep available out of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Additional Investment Right Shares upon exercise of this Additional Investment Right as herein provided, the number of Additional Investment Right Shares which are then issuable and deliverable upon the exercise in full of this Additional Investment Right, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Additional Investment Right Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized and issued, fully paid and nonassessable. Each of the Company and the Holder will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed. 9. Certain Adjustments. The Exercise Price and number of Additional Investment Right Shares issuable upon exercise of this Additional Investment Right are subject to adjustment from time to time as set forth in this Section 9. (a) Stock Dividends and Splits. If the Company, at any time while this Additional Investment Right is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. (b) Pro Rata Distributions. If the Company, at any time while this Additional Investment Right is outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, "DISTRIBUTED PROPERTY"), then, upon any exercise of the Additional Investment Right that occurs after the record date fixed for determination of stockholders entitled to receive such distribution, the Holder shall be entitled to receive, in addition to the Additional Investment Right Shares otherwise issuable upon such exercise (if applicable), the Distributed Property distributed in respect of one share of Common Stock to holders of Common Stock as of such record date times the number of Additional Investment Right Shares for which the Holder exercises this Additional Investment Right (appropriately 5 adjusted for any stock splits, combination or similar event between such record date and such exercise). (c) Fundamental Transactions. If, at any time while this Additional Investment Right is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in any such case, a "FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to receive, upon exercise of this Additional Investment Right, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Additional Investment Right Shares then issuable upon exercise in full of this Additional Investment Right (the "ALTERNATE CONSIDERATION"). The aggregate Exercise Price for this Additional Investment Right will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Additional Investment Right following such Fundamental Transaction. At the Holder's request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a New Additional Investment Right consistent with the foregoing provisions and evidencing the Holder's right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and that the Additional Investment Right (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. If any Fundamental Transaction constitutes or results in a Change of Control, then at the request of the Holder delivered before the 90th day after such Fundamental Transaction (or, if earlier, before the Expiration Date), the Company (or any such successor or surviving entity) will purchase the Additional Investment Warrant from the Holder for a purchase price, payable in cash within five Trading Days after such request (or, if later, on the effective date of the Fundamental Transaction), equal to the Black Scholes value of the remaining unexercised portion of this Additional Investment Warrant on the date of such request. (d) Number of Additional Investment Right Shares. Simultaneously with any adjustment to the Exercise Price pursuant to paragraph (a) of this Section, the number of Additional Investment Right Shares that may be purchased upon exercise of this Additional Investment Right shall be increased or decreased proportionately, so that after such adjustment 6 the aggregate Exercise Price payable hereunder for the increased or decreased number of Additional Investment Right Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. (e) Calculations. All calculations under this Section 9 shall be made to the nearest cent or the nearest share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company; provided that such shares, upon disposition to a third party, shall then be considered outstanding. (f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will, at the written request of the Holder, promptly compute such adjustment in accordance with the terms of this Additional Investment Right and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Additional Investment Right Shares or other securities issuable upon exercise of this Additional Investment Right (as applicable), describing the transactions giving rise to such adjustments and showing in reasonable detail the facts upon which such adjustment is based, and deliver a copy of each such certificate to the Holder and to the Company's Transfer Agent. (g) Notice of Corporate Events. If, while this Additional Investment Right is outstanding, the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including, without limitation, any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary pro rata to the holders of Common Stock, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least 10 Trading Days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice. 10. Payment of Exercise Price. The Holder shall pay the Exercise Price in immediately available funds. 11. Limitation on Exercise. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon any exercise of this Additional Investment Right (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% (the "MAXIMUM PERCENTAGE") of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). 7 For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Additional Investment Right Shares requested in such Exercise Notice is permitted under this paragraph. The Company's obligation to issue shares of Common Stock in excess of the limitation referred to in this Section shall be suspended (and, except as provided below, shall not terminate or expire notwithstanding any contrary provisions hereof) until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation; provided that, if, as of 6:30 p.m., New York City time on the Expiration Date, the Company has not received written notice that the shares of Common Stock may be issued in compliance with such limitation, the Company's obligation to issue such shares shall terminate. By written notice to the Company, the Holder may waive the provisions of this Section or increase or decrease the Maximum Percentage to any other percentage specified in such notice, but (i) any such waiver or increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any such waiver or increase or decrease will apply only to the Holder and not to any other holder of Additional Investment Rights. 12. Fractional Shares. The Company shall not be required to issue or cause to be issued fractional Additional Investment Right Shares on the exercise of this Additional Investment Right. If any fraction of a Additional Investment Right Share would, except for the provisions of this Section, be issuable upon exercise of this Additional Investment Right, the number of Additional Investment Right Shares to be issued will be rounded up to the nearest whole share. 13. Notices. Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address and facsimile numbers for such notices or communications shall be as set forth in the Purchase Agreement. 14. Additional Investment Right Agent. The Company shall serve as additional investment right agent under this Additional Investment Right. Upon 30 days' notice to the Holder, the Company may appoint a new additional investment right agent. Any corporation into which the Company or any new additional investment right agent may be merged or any corporation resulting from any consolidation to which the Company or any new additional investment right agent shall be a party or any corporation to which the Company or any new additional investment right agent transfers substantially all of its corporate trust or stockholder services business shall be a successor additional investment right agent under this Additional 8 Investment Right without any further act. Any such successor additional investment right agent shall promptly cause notice of its succession as additional investment right agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Additional Investment Right Register. 15. Restrictions on Transfers. From the date of the initial exercise of this Additional Investment Right (if any) until the six (6) month anniversary of such initial exercise, the Holder agrees that it shall maintain Beneficial Ownership of at least a number of shares of Common Stock equal to the number of Additional Investment Right Shares purchased under this Additional Investment Right. 16. Miscellaneous. (a) Subject to the restrictions on transfer set forth on the first page hereof and in Section 15, this Additional Investment Right may be transferred or assigned by the Holder; provided that the Company's obligation to register such transfer or assignment and right to recognize the registered Holder as the absolute owner hereof shall be as set forth in Section 3 and Section 2, respectively. This Additional Investment Right may not be assigned by the Company except to a successor in the event of a Fundamental Transaction. This Additional Investment Right shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Additional Investment Right shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Additional Investment Right. This Additional Investment Right may be amended only in writing signed by the Company and the Holder, or their respective successors and assigns. (b) The Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Additional Investment Right, 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 Holder against impairment. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Additional Investment Right Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Additional Investment Right Shares on the exercise of this Additional Investment Right, and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Additional Investment Right. (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THE CORPORATE LAWS OF THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS AND ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS ADDITIONAL INVESTMENT RIGHT. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF DELAWARE FOR THE ADJUDICATION OF ANY DISPUTE 9 HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY. (d) The headings herein are for convenience only, do not constitute a part of this Additional Investment Right and shall not be deemed to limit or affect any of the provisions hereof. (e) In case any one or more of the provisions of this Additional Investment Right shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Additional Investment Right shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor and, upon such agreement, shall incorporate such substitute provision in this Additional Investment Right. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK, SIGNATURE PAGE FOLLOWS] 10 IN WITNESS WHEREOF, the Company has caused this Additional Investment Right to be duly executed by its authorized officer as of the date first indicated above. BLUE RHINO CORPORATION By: ____________________ Name: __________________ Title: _________________ 11 FORM OF EXERCISE NOTICE (To be executed by the Holder to exercise the right to purchase shares of Common Stock under the foregoing Additional Investment Right) To: Blue Rhino Corporation The undersigned is the Holder of Additional Investment Right No. _______ (the "ADDITIONAL INVESTMENT RIGHT") issued by Blue Rhino Corporation, a Delaware corporation (the "COMPANY"). Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Additional Investment Right. 1. The Additional Investment Right is currently exercisable to purchase a total of ______________ Additional Investment Right Shares. 2. The undersigned Holder hereby exercises its right to purchase _________________ Additional Investment Right Shares pursuant to the Additional Investment Right. 3. The holder shall pay the sum of $____________ to the Company in accordance with the terms of the Additional Investment Right. 4. Pursuant to this exercise, the Company shall deliver to the holder _______________ Additional Investment Right Shares in accordance with the terms of the Additional Investment Right. 5. Following this exercise, the Additional Investment Right shall be exercisable to purchase a total of ______________ Additional Investment Right Shares. Dated:_______________, _____ Name of Holder: (Print)________________________________ By: ___________________________________ Name: _________________________________ Title: ________________________________ (Signature must conform in all respects to name of holder as specified on the face of the Additional Investment Right) FORM OF ASSIGNMENT [To be completed and signed only upon transfer of Additional Investment Right] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the within Additional Investment Right to purchase ____________ shares of Common Stock of Blue Rhino Corporation to which the within Additional Investment Right relates and appoints ________________ attorney to transfer said right on the books of Blue Rhino Corporation with full power of substitution in the premises. Dated:_______________, _____ __________________________________________ (Signature must conform in all respects to name of holder as specified on the face of the Additional Investment Right) __________________________________________ Address of Transferee __________________________________________ __________________________________________ In the presence of: _____________________________ EX-10.9 23 g81245exv10w9.txt EX-10.9 LETTER AGREEMENT EXHIBIT 10.9 [Letterhead of Blue Rhino Corporation] March 5, 2003 Smithfield Fiduciary LLC c/o Highbridge Capital Management, LLC 9 West 57th Street, 27th Floor New York, New York 10019 Mainfield Enterprises, Inc. c/o Avi Vigder 660 Madison Avenue New York, New York 10022 Gentlemen: Reference is made to (i) the Securities Purchase Agreement dated as of December 20, 2002 (the "SPA") among Blue Rhino Corporation (the "Company") and Smithfield Fiduciary LLC and Mainfield Enterprises, Inc. (together, the "Purchasers") and (ii) the Additional Investment Rights of even date therewith executed by the Company in favor of each of the Purchasers (the "Additional Investment Rights" and, together with the SPA, the "Investment Documents"). The purpose of this letter is to document our agreement to modify certain terms of the SPA and the Additional Investment Rights pursuant to Section 7.5 of the SPA and Section 16(a) of each Additional Investment Right. For good and valuable consideration, the receipt and sufficiency of which the undersigned parties hereby acknowledge, the undersigned parties agree that, notwithstanding anything to the contrary contained in the SPA, the Additional Investment Rights or elsewhere: (i) the Company may use the net proceeds from the sale of the Securities (as defined therein) thereunder to repay amounts outstanding under its Senior Subordinated Debenture dated June 15, 2001 payable to Allied Capital Corporation, for general working capital, for any other corporate purpose or in any combination of the foregoing, except that the Company may not use the proceeds to redeem any Company equity or equity-equivalent securities or to settle any outstanding litigation; (ii) the term "Expiration Date," as used and in the Additional Investment Rights, shall mean October 1, 2003; and (iii) the Investment Documents shall be deemed amended to be consistent with the foregoing. This letter agreement may be executed in two or more counterparts, transmitted by facsimile or otherwise, each of which shall be deemed an original and all of which taken together shall constitute a single instrument. This letter agreement shall be governed by the laws of the state of Delaware. Please confirm your agreement with the foregoing by signing the enclosed copy of this letter and returning it to the Company (to the attention of Mark Castaneda, Chief Financial Officer). [signatures follow on next page] Sincerely, BLUE RHINO CORPORATION By: /s/ Mark Castaneda ------------------------- Name: Mark Castaneda Title: CFO Acknowledged and agreed: MAINFIELD ENTERPRISES, INC. By: /s/ Eldad Gal -------------------------------- Name: Eldad Gal Title: Authorized Signatory SMITHFIELD FIDUCIARY LLC By: /s/ Adam J Chill -------------------------------- Name: Adam J Chill Title: Authorized Signatory EX-10.10 24 g81245exv10w10.txt EX-10.10 AMENDED AND RESTATED STOCK OPTION PLAN EXHIBIT 10.10 BLUE RHINO CORPORATION AMENDED AND RESTATED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (AS AMENDED AND RESTATED THROUGH FEBRUARY 21, 2003) BLUE RHINO CORPORATION AMENDED AND RESTATED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (AS AMENDED AND RESTATED THROUGH FEBRUARY 21, 2003) This Amended and Restated Stock Option Plan for Non-Employee Directors amends and restates in its entirety as of February 21, 2003, that certain Stock Option Plan for Non-Employee Directors of Blue Rhino Corporation, which was originally effective on May 18, 1998 and previously amended and restated as of December 30, 1998, May 17, 2001 and October 31, 2001. SECTION 1. PURPOSE. The purpose of the Stock Option Plan for Non-Employee Directors (the "Plan") is to attract and retain persons of exceptional ability to serve as members of the Board of Directors of Blue Rhino Corporation (the "Company"), and to align the interests of the Company's non-employee directors with that of the stockholders in enhancing the value of the Company's capital stock. This purpose will be carried out through the granting of nonqualified stock options (individually, an "option," and collectively, "options") to eligible non-employee directors of the Company. SECTION 2. ADMINISTRATION. (a) The Plan shall be administered by the Board of Directors of the Company (the "Board" or the "Board of Directors"), unless the Board delegates all or part of its discretion to administer the Plan to the Compensation Committee of the Board or such successor committee of the Board that is designated by the Board to administer the Plan (collectively, the "Committee"). The Committee shall be comprised of such number of "non-employee directors," as such term is defined in Rule 16b-3 adopted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be necessary to comply with Rule 16b-3, unless otherwise determined by the Board. For the purposes herein, the Board, and, upon delegation of authority to the Committee, the Committee, shall be referred to herein collectively as the "Administrator." (b) Any action of the Administrator may be taken by a written instrument signed by all of the members of the Board or the Committee, as the case may be, and any action so taken by written consent shall be as fully effective as if it had been taken by a majority of the members at a meeting duly held and called. Subject to the provisions of the Plan, the Administrator shall have full and final authority, in its discretion, to establish, amend and rescind rules and regulations for the administration of the Plan; to construe and interpret the Plan, the rules and regulations, and the agreements evidencing options granted under the Plan; and to make all other determinations deemed necessary or advisable for administering the Plan. Notwithstanding any other provision herein, (i) the Administrator also shall have authority, in its discretion, to accelerate the date that any option which was not otherwise exercisable or vested shall become exercisable or vested in whole or in part, and (ii) the Administrator shall also have authority, in its discretion, to extend the period during which an option may be exercised. To the extent, if any, necessary to comply with Rule 16b-3, provisions in SECTION 6 of the Plan relating to the grant of options following the annual meeting of stockholders of the Company, and the amount, price and timing of such options, shall not be subject to the discretion of the Administrator or any other person. No member of the Administrator shall be liable for any action or determination made in good faith with respect to the Plan. The Administrator may delegate to an officer or officers of the Company the authorization to execute and deliver on behalf of the Company any document or instrument required to be delivered under this Plan. SECTION 3. TYPE OF OPTIONS. Options granted pursuant to the Plan shall be nonstatutory options which are not intended to meet the requirements of SECTION 422 of the Internal Revenue Code of 1986, as amended (the "Code"). SECTION 4. ELIGIBILITY. Directors of the Company who, at the time of grant, are not employees or officers of the Company ("Eligible Directors") shall be eligible to participate in the Plan. Each Eligible Director to whom options are granted shall be referred to herein as a "Participant" in the Plan. SECTION 5. SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as provided in SECTION 10 below, an aggregate of 400,000 shares of the Company's Common Stock, par value $0.001 (the "Common Stock"), shall be available for issuance pursuant to the provisions of the Plan. Such shares may be authorized and unissued shares or may be shares issued and thereafter acquired by the Company. If an option granted under the Plan shall expire or terminate for any reason without having been exercised in whole or in part, the unpurchased shares subject to such option shall again be available for subsequent option grants under the Plan. SECTION 6. AUTOMATIC GRANT OF OPTIONS. (a) Annual Grants. (i) On December 30, 1998 each Eligible Director shall receive an option to purchase 8,000 shares of Common Stock. During the period commencing with the first annual meeting of stockholders to occur after December 30, 1998 and ending October 30, 2001, each Eligible Director of the Company shall receive an annual option grant to purchase 4,000 shares of Common Stock. Commencing October 31, 2001, and thereafter, each Eligible Director shall receive an annual option grant to purchase 12,000 shares of Common Stock. Except as provided in SECTION 6(b), the date of grant of an option (the "Grant Date") shall be December 30, 1998 with respect to the options granted on that date and the first business day after each subsequent annual meeting of the stockholders with respect to the options granted on such subsequent dates. (ii) Notwithstanding the provisions of SECTION 6(a) herein, in the event that a Participant fails to attend four Board meetings between the Grant Date and the date of the next annual meeting of the stockholders of the Company, 2 the Participant shall forfeit options to purchase one-fourth (1/4) of the shares subject to the particular option for each meeting less than four which the Participant attends during such period; provided, however, that in the event the Participant fails to attend at least two Board meetings between the Grant Date and the date of the next annual meeting, the Participant shall forfeit all options granted to him or her on the previous Grant Date under this SECTION 6(a). Participation by conference telephone or by other telecommunications equipment will be deemed attendance at a Board meeting for the purpose of receiving options under this SECTION 6(a). (b) Committee Meeting Grants. Commencing with the date of the 2001 Annual Meeting of Stockholders, and thereafter, each Eligible Director who serves on the Board's Executive Committee, Audit Committee and/or Compensation Committee (each, a "Committee"), shall receive an option for 1,000 shares of Common Stock for each meeting of the respective Committee(s) on which the Eligible Director serves at which such Eligible Director is in attendance. The last business day of each of the Company's fiscal quarters shall be a Grant Date for options under this SECTION 6(b), and, on each such Grant Date, an option shall be granted to each Eligible Director who served on a Committee at any time during the quarter then ending based on the number of Committee meetings attended by such Eligible Director during such quarter. Participation by telephone conference or by other telecommunications equipment will be deemed attendance at a Committee meeting for the purpose of receiving options under this SECTION 6(b). Options granted pursuant to SECTION 6(b) shall not be subject to the forfeiture provisions of SECTION 6(a)(ii). SECTION 7. TERMS AND CONDITIONS OF OPTIONS. 7.1 Exercise and Term of Options. (a) Each option granted under the Plan shall be exercisable at the rate of one-third (1/3) per year commencing on the first anniversary of the Grant Date, such that the option shall become exercisable in full on the third anniversary of each Grant Date, subject to the provisions of SECTION 7.1(b) and SECTION 9 hereof. Options granted under the Plan shall expire ten years from the date on which the option is granted, unless terminated earlier in accordance with the Plan. (b) Notwithstanding the provisions of SECTION 7.1(a) above, an option granted to any Participant shall become immediately exercisable in full upon the first to occur of: (i) The death of the Participant, in which case the option may be exercised by the Participant's executor or administrator, or if not so exercised, by the legatees or distributees of his or her estate or by such other person or persons to whom the Participant's rights under the option shall pass by will or by the applicable laws of descent and distribution; 3 (ii) Such time as the Participant ceases to be a director of the Company by reason of his or her permanent disability (as determined by the Administrator); (iii) Such time as the Participant ceases to be a director of the Company as a result of retirement from the Board of Directors on or after attaining age 65; or (iv) Such time as a Participant ceases to be eligible to participate in this Plan by reason of his or her becoming an employee of the Company or any of its subsidiaries. (c) In the event a Participant ceases to be a director of the Company by reason of death as described in SECTION 7.1(b)(i), any option granted to such Participant hereunder shall expire 90 days from the date the Participant ceases to be a director of the Company, but in no event later than the day preceding the tenth anniversary of the Grant Date of such option. (d) In the event that the Participant ceases to be a director of the Company due to disability, retirement or becoming an employee of the Company or a subsidiary as described in SECTIONS 7.1(b)(ii) through (iv), and after his or her option has become exercisable in whole or in part, such option shall remain exercisable in whole or in part, as the case may be, in accordance with the terms hereof for a period of 30 days from the date the Participant ceases to be a director, but in no event later than the day preceding the tenth anniversary of the Grant Date of such option. (e) In the event that the services of a Participant as a director of the Company terminate for a reason other than due to death, disability, retirement or becoming an employee of the Company as provided in SECTION 7.1(b)(i) through (iv) above, then his options shall terminate at the time of his termination of service; provided, however, that no portion of the option may be exercised later than the day preceding the tenth anniversary of the Grant Date of such option. 7.2 Exercise Price. The exercise price of each share of Common Stock subject to an option shall be the "Fair Market Value" of a share of Common Stock on the Grant Date of the option. "Fair Market Value" means the value determined on the basis of the good faith determination of the Administrator, without regard to whether the Common Stock is restricted or represents a minority interest, pursuant to the applicable method described below: (a) If the Common Stock is listed on a national securities exchange or quoted on The NASDAQ Stock Market ("NASDAQ"), the "Fair Market Value" shall be the closing price per share of the Common Stock on the date on which the option is granted or other determination is made (each, a "valuation date") or the most recent trading date preceding the valuation date for which such information is available, as reported by the principal national exchange on which such shares are traded (in the case of an exchange) or by the NASDAQ, as the case may be; 4 (b) If the Common Stock is not listed on a national securities exchange or quoted on the NASDAQ, but is actively traded in the over-the-counter market, the "Fair Market Value" shall be the average of the closing bid and asked prices for the Common Stock on the valuation date, or the most recent trading date preceding the valuation date for which such quotations are reported; and (c) If, on the relevant date, the Common Stock is not publicly traded or reported as described in SECTION 7.2(a) or (b) herein, the "Fair Market Value" shall be determined in good faith by the Administrator. 7.3 Payment of Exercise Price; Tax Withholding. (a) Subject to the terms and conditions of the Plan, an option granted hereunder shall, to the extent then exercisable, be exercisable in whole or in part by giving written notice to the Company's Secretary stating the number of shares with respect to which the option is being exercised, accompanied by payment in full for such shares. (b) An option may be exercised by providing payment (i) in cash or check and (ii) if approved by the Administrator, payment in full or in part may also be made (A) by delivering Common Stock already owned by the Participant having a total Fair Market Value on the date of such delivery equal to the Option Price; (B) by authorizing the Company to retain shares of Common Stock which would otherwise be issuable upon exercise of the Option having a total Fair Market Value on the date of delivery equal to the Option Price; (C) by the delivery of cash by a broker-dealer to whom the Participant has submitted a notice of exercise (in accordance with Part 220, Chapter II, Title 12 of the Code of Federal Regulations, so-called "cashless" exercise); or (D) by any combination of the foregoing. No shares of Common Stock will be issued until full payment therefor has been made. (c) The Participant shall pay the Company an amount sufficient to cover withholding required by law for any federal, state, local or foreign taxes, if any, in connection with an exercise of options herewith. A Participant may elect in lieu of paying cash to deliver shares of Common Stock or direct the Company that shares of Common Stock be withheld to satisfy required tax withholding and such shares shall be valued at the Fair Market Value as of the exercise date and the Administrator shall determine the timing and other terms and conditions in which the use of shares of Common Stock to satisfy tax withholding may take place. 7.4 Rights as a Stockholder. No person will have any rights of a stockholder as to shares of Common Stock subject to an option until, after proper exercise of the option or other action required, such shares have been recorded on the Company's official stockholder records as having been issued or transferred. Upon exercise of the option or any portion thereof, the Company will have thirty (30) days in which to issue the shares, and the Participant will not be treated as a stockholder for any purpose whatsoever prior to such issuance. No adjustment will be made for cash dividends or other rights for which the record date is prior to the date such 5 shares are recorded as issued or transferred in the Company's official stockholder records, except as provided herein or in an option agreement. 7.5 Documentation of Option Grants. Option grants shall be evidenced by written instruments prescribed by the Administrator from time to time. The instruments may be in the form of agreements to be executed by both the Participant and the president or any vice president of the Company or in the form of certificates, letters or similar instruments, which need not be executed by the Participant but acceptance of which will evidence agreement to the terms of the grant. 7.6 Nontransferability of Options. Except as otherwise provided in this SECTION 7.6, no option granted under the Plan shall be assignable or transferable by the Participant to whom it is granted, either voluntarily or by operation of law, except (a) by will or the laws of descent and distribution or (b) to the extent permitted by the Administrator in a manner consistent with the registration provisions of the Securities Act of 1933, as amended (the "Securities Act"), during the lifetime of the Participant, to (i) the spouse or lineal descendants of the Participant ("Immediate Family Members"), (ii) a trust or trusts maintained for the exclusive benefit of the Participant and/or such Immediate Family Members, or (iii) a limited partnership or limited liability company in which the only partners or members are the Participant and/or such Immediate Family Members, formed for estate planning purposes; provided, that (y) the stock option agreement or any amendment thereto executed by the Administrator pursuant to which such option is granted must expressly provide for the transferability in a manner consistent with this SECTION, and (z) subsequent transfers of a transferred option shall be prohibited (except as otherwise provided in this SECTION 7.6), and except that distributions may be made to the Participant and/or such Immediate Family members from trusts, family limited partnerships or family limited liability companies described herein). Following a transfer permitted herein, any such option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided, that for the purposes of SECTIONS 7.3 and 7.4 of this Plan, the term "Participant" shall be deemed to refer to the permitted transferee with respect of the options so transferred. The events contained in SECTIONS 7.1(b), 7.1(c) 7.1(d) and 7.1(e) shall continue to be applied with respect to the original Participant, and transferred options shall expire at or after the date the original Participant ceases to be a director of the Company as provided in SECTIONS 7.1(c), 7.1(d) and 7.1(e) and shall otherwise be exercisable by the transferee only to the extent and for the periods specified in SECTIONS 7.1 and 7.3. 7.7 Approvals. The effectiveness of the Plan and any options granted hereunder are subject to the approval of the Plan by affirmative vote of a majority of the shares of the Common Stock present in person or by proxy and entitled to vote at an annual or special meeting of the stockholders or by written consent as provided in the Company's charter or by-laws. In the event that the Plan is not approved by the stockholders, the Plan and any options granted hereunder shall be void as of no effect. The Company's obligation to sell and deliver shares of Common Stock under the Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of the Common Stock. 6 SECTION 8. REGULATORY COMPLIANCE AND LISTING. The issuance or delivery of any shares of stock subject to exercisable options hereunder may be postponed by the Administrator for such period as may be required to comply with any applicable requirements under federal securities laws, any applicable listing requirements of any national securities exchange or similar organization or any requirements under any law or regulation applicable to the issuance or delivery of such shares. The Company shall not be obligated to issue or deliver any such shares if the issuance or delivery thereof would constitute a violation of any provision of any law or of any regulation of any governmental authority or any rule of any national securities exchange or similar organization. SECTION 9. CHANGE IN CONTROL. Notwithstanding anything to the contrary in the Plan, the following shall apply to all outstanding options granted under the Plan: 9.1 Definitions. The following definitions shall apply to this SECTION 9: (a) A "Change in Control" shall mean: (i) The acquisition by any individual entity or group (within the meaning of SECTION 13(d)(3) or 14(d)(2) of the 1934 Act) or beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company or any of its subsidiaries, (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (D) any acquisition by any corporation with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by individuals, entities or groups who were the beneficial owners, respectively, of at least 50% of the Outstanding Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Voting Securities, or (E) the acquisition by any individual, entity or group which on the date this Plan was adopted by the Board owned 50% or more of the Outstanding Voting Securities. (ii) Approval by the stockholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Voting Securities immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% of the combined voting 7 power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Voting Securities; or (iii) Approval by the stockholders of the Company of (A) a complete liquidation or dissolution of the Company or (B) the sale or other disposition of all or substantially all of the assets of the Company other than to a corporation, with respect to which following such sale or other disposition, more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power for the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Voting Securities. (b) "CIC Price" shall mean the higher of (i) the highest price paid for a share of Common Stock in the transaction or series of transactions pursuant to which a Change in Control of the Company shall have occurred, or (ii) the highest reported sales price of a share of Common Stock during the 60-day period immediately preceding the date upon which the event constituting a Change in Control shall have occurred. 9.2 Acceleration of Vesting and Payment of Stock Options. (a) Upon the occurrence of an event constituting a Change in Control, all options outstanding on such date shall become 100% vested and exercisable and shall be repurchased by the Company by making a cash payment to the Participant for such options as soon as may be practicable. Upon such payment, such stock options shall be canceled. (b) The amount of cash to be paid to a Participant shall be determined by multiplying the number of shares subject to the Participant's outstanding options by the difference between the exercise price per share and the CIC Price, if higher. (c) Notwithstanding SECTION 9.2(a) and 9.2(b) herein, if the exercise price of options held by a Participant exceeds the CIC Price or the Fair Market Value on the date on which the first event constituting a Change in Control (as defined in SECTION 9.1 herein) occurs, as the case may be, such option shall be 100% vested and exercisable but shall not be canceled. SECTION 10. ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION. In the event of a stock dividend, stock split or combination of shares, recapitalization or other change in the Company's capitalization, or other distribution with respect to holders of the 8 Common Stock (other than normal cash dividends), automatic adjustment shall be made in the number and kind of shares as to which outstanding options or portions thereof then unexercised shall be exercisable and in the available shares set forth in SECTION 5 hereof, to the end that the proportionate interest of the option holder shall be maintained as before the occurrence of such event. Such adjustment in outstanding options shall be made without change in the total price applicable to the unexercised portion of such options and with a corresponding adjustment in the option price per share. Automatic adjustment shall also be made in the number and kind of shares subject to options subsequently granted under the Plan. SECTION 11. NO RIGHT TO REELECTION. Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any non-employee director for reelection by the Company's stockholders, nor confer upon any non-employee director the right to remain a member of the Board for any period of time or at any particular rate of compensation. SECTION 12. AMENDMENT AND TERMINATION. (a) The Board may amend, modify or terminate the Plan at any time and from time to time; provided, however, that unless required by law, no such amendment or modification shall (i) materially adversely affect any right or obligation with respect to any outstanding option without the consent of the holder of the option, or (ii) unless previously approved by the stockholders, increase the number of shares of Common Stock available for grants as provided in SECTION 5 hereof other than an adjustment pursuant to SECTION 10 hereof. In addition, no such amendment shall, unless previously approved by the stockholders (where such approval is necessary to satisfy then applicable requirements of federal securities laws, the Code or rules of any stock exchange on which the Company's Common Stock is listed) (i) in any manner affect the eligibility requirements set forth in SECTION 4 hereof, (ii) increase the number of shares of Common Stock subject to any option, (iii) change the purchase price of the shares of Common Stock subject to any option, (iv) extend the period during which options may be granted under the Plan, or (v) materially increase the benefits to Participants under the Plan. (b) Unless earlier terminated by the Board of Directors, or the shares reserved under the Plan shall have all been committed for options granted pursuant to the Plan, the Plan shall terminate on December 31, 2008; provided, however, that options which are granted on or before this date shall remain exercisable in accordance with their respective terms after the termination of the Plan. SECTION 13. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors and permitted assigns of a Participant, including but not limited to, the estate of such Participant and the executor, administrator or trustee of such estate, the guardian or legal representative of the Participant. SECTION 14. GOVERNING LAW. The validity, construction and effect of the Plan and any action taken or relating to the Plan shall be determined in accordance with the laws of 9 the State of Delaware, without regard to the principles of conflicts of laws, and applicable federal law. SECTION 15. SECTION 16(B) COMPLIANCE. It is the intention of the Company that transactions by Eligible Directors under the Plan shall comply with Rule 16b-3 under the Exchange Act. If any Plan provision is later found not to be in compliance with SECTION 16 of the Exchange Act, then, unless the Administrator shall determine otherwise, the provision shall be deemed null and void or otherwise construed in such a manner as to enable transactions under the Plan to meet the requirements of Rule 16b-3 or any successor rule. 10 IN WITNESS WHEREOF, this Amended and Restated Stock Option Plan for Non-Employee Directors, as further amended and restated effective as of February 21, 2003, has been executed in behalf of the Company. BLUE RHINO CORPORATION By: /S/ BILLY D. PRIM ----------------------------------------- Billy D. Prim President and Chief Executive Officer Attest: /s/ Mark Castaneda - --------------------------------- Mark Castaneda Secretary [Corporate Seal] 11 EX-99.1 25 g81245exv99w1.txt EX-99.1 SECTION 906 CERTIFICATION OF THE CEO Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Blue Rhino Corporation (the "Company") for the period ending January 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Billy D. Prim, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Billy D. Prim Billy D. Prim Chairman and Chief Executive Officer March 13, 2003 EX-99.2 26 g81245exv99w2.txt EX-99.2 SECTION 906 CERTIFICATION OF THE CFO Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Blue Rhino Corporation (the "Company") for the period ending January 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark Castaneda, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Mark Castaneda Mark Castaneda Chief Financial Officer March 13, 2003 -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.1

                                                                     EXHIBIT 4.1

                              REVOLVING CREDIT NOTE


$11,250,000.00                                                November 20, 2002


         FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to BANK OF AMERICA, N.A. or registered assigns (the "Lender"), in
accordance with the provisions of the Credit Agreement (as hereinafter defined),
the principal amount of each Revolving Credit Loan from time to time made by the
Lender to the Borrower under that certain Credit Agreement, dated as of November
20, 2002 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Credit Agreement;" the terms defined therein
being used herein as therein defined), among the Borrower, the Lenders from time
to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C
Issuer and Swing Line Lender.

         The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Credit Loan from the date of such Revolving Credit Loan until
such principal amount is paid in full, at such interest rates and at such times
as provided in the Credit Agreement. Except as otherwise provided in Section
2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments
of principal and interest shall be made to the Administrative Agent for the
account of the Lender in Dollars in immediately available funds at the
Administrative Agent's Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Credit
Agreement.

         This Note is one of the Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one
or more loan accounts or records maintained by the Lender in the ordinary course
of business. The Lender may also attach schedules to this Note and endorse
thereon the date, amount and maturity of its Revolving Credit Loans and payments
with respect thereto.

         The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.






         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA.

                                    BLUE RHINO CORPORATION


                                    By:      Mark Castaneda
                                         ---------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer


                                       2



            REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO




                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

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                                       3

EX-4.2

                                                                     EXHIBIT 4.2

                              REVOLVING CREDIT NOTE

$7,500,000.00                                                 November 20, 2002


FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to
SUNTRUST BANK or registered assigns (the "Lender"), in accordance with the
provisions of the Credit Agreement (as hereinafter defined), the principal
amount of each Revolving Credit Loan from time to time made by the Lender to the
Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the "Credit Agreement;" the terms defined therein being used
herein as therein defined), among the Borrower, the Lenders from time to time
party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer
and Swing Line Lender.

The Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Loan from the date of such Revolving Credit Loan until such
principal amount is paid in full, at such interest rates and at such times as
provided in the Credit Agreement.. Except as otherwise provided in Section
2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments
of principal and interest shall be made to the Administrative Agent for the
account of the Lender in Dollars in immediately available funds at the
Administrative Agent's Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Credit
Agreement.

This Note is one of the Notes referred to in the Credit Agreement, is entitled
to the benefits thereof and may be prepaid in whole or in part subject to the
terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one
or more loan accounts or records maintained by the Lender in the ordinary course
of business. The Lender may also attach schedules to this Note and endorse
thereon the date, amount and maturity of its Revolving Credit Loans and payments
with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.






THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA.

                                    BLUE RHINO CORPORATION


                                    By:  /s/ Mark Castaneda
                                         --------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer



                                       2



            REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO



                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

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                                       3

EX-4.3

                                                                     EXHIBIT 4.3

                              REVOLVING CREDIT NOTE

$7,500,000.00                                                 November 20, 2002


FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to
RBC CENTURA BANK or registered assigns (the "Lender"), in accordance with the
provisions of the Credit Agreement (as hereinafter defined), the principal
amount of each Revolving Credit Loan from time to time made by the Lender to the
Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the "Credit Agreement;" the terms defined therein being used
herein as therein defined), among the Borrower, the Lenders from time to time
party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer
and Swing Line Lender.

The Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Loan from the date of such Revolving Credit Loan until such
principal amount is paid in full, at such interest rates and at such times as
provided in the Credit Agreement. All payments of principal and interest shall
be made to the Administrative Agent for the account of the Lender in Dollars in
immediately available funds at the Administrative Agent's Office. If any amount
is not paid in full when due hereunder, such unpaid amount shall bear interest,
to be paid upon demand, from the due date thereof until the date of actual
payment (and before as well as after judgment) computed at the per annum rate
set forth in the Credit Agreement.

This Note is one of the Notes referred to in the Credit Agreement, is entitled
to the benefits thereof and may be prepaid in whole or in part subject to the
terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one
or more loan accounts or records maintained by the Lender in the ordinary course
of business. The Lender may also attach schedules to this Note and endorse
thereon the date, amount and maturity of its Revolving Credit Loans and payments
with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.






THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA.

                                    BLUE RHINO CORPORATION


                                    By:  /s/ Mark Castaneda
                                         --------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer



                                       2



            REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO



                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------



                                       3

EX-4.4

                                                                     EXHIBIT 4.4

                              REVOLVING CREDIT NOTE

$11,250,000.00                                                November 20, 2002


FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to
WACHOVIA BANK, NATIONAL ASSOCIATION or registered assigns (the "Lender"), in
accordance with the provisions of the Credit Agreement (as hereinafter defined),
the principal amount of each Revolving Credit Loan from time to time made by the
Lender to the Borrower under that certain Credit Agreement, dated as of November
20, 2002 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Credit Agreement;" the terms defined therein
being used herein as therein defined), among the Borrower, the Lenders from time
to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C
Issuer and Swing Line Lender.

The Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Loan from the date of such Revolving Credit Loan until such
principal amount is paid in full, at such interest rates and at such times as
provided in the Credit Agreement. Except as otherwise provided in Section
2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments
of principal and interest shall be made to the Administrative Agent for the
account of the Lender in Dollars in immediately available funds at the
Administrative Agent's Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Credit
Agreement.

This Note is one of the Notes referred to in the Credit Agreement, is entitled
to the benefits thereof and may be prepaid in whole or in part subject to the
terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one
or more loan accounts or records maintained by the Lender in the ordinary course
of business. The Lender may also attach schedules to this Note and endorse
thereon the date, amount and maturity of its Revolving Credit Loans and payments
with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.






THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA.

                                     BLUE RHINO CORPORATION


                                     By:  /s/ Mark Castaneda
                                          --------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                              Financial Officer



                                       2



            REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO



                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------



                                       3

EX-4.5

                                                                     EXHIBIT 4.5

                              REVOLVING CREDIT NOTE

$7,500,000.00                                                 November 20, 2002


FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to
LASALLE BANK NATIONAL ASSOCIATION or registered assigns (the "Lender"), in
accordance with the provisions of the Credit Agreement (as hereinafter defined),
the principal amount of each Revolving Credit Loan from time to time made by the
Lender to the Borrower under that certain Credit Agreement, dated as of November
20, 2002 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Credit Agreement;" the terms defined therein
being used herein as therein defined), among the Borrower, the Lenders from time
to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C
Issuer and Swing Line Lender.

The Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Loan from the date of such Revolving Credit Loan until such
principal amount is paid in full, at such interest rates and at such times as
provided in the Credit Agreement. Except as otherwise provided in Section
2.05(f) of the Credit Agreement with respect to Swing Line Loans, all payments
of principal and interest shall be made to the Administrative Agent for the
account of the Lender in Dollars in immediately available funds at the
Administrative Agent's Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Credit
Agreement.

This Note is one of the Notes referred to in the Credit Agreement, is entitled
to the benefits thereof and may be prepaid in whole or in part subject to the
terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one
or more loan accounts or records maintained by the Lender in the ordinary course
of business. The Lender may also attach schedules to this Note and endorse
thereon the date, amount and maturity of its Revolving Credit Loans and payments
with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.






THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA.

                                     BLUE RHINO CORPORATION


                                     By:  /s/Mark Castaneda
                                          --------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                              Financial Officer



                                       2



            REVOLVING CREDIT LOANS AND PAYMENTS WITH RESPECT THERETO



                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------



                                       3

EX-4.6

                                                                     EXHIBIT 4.6

                                    TERM NOTE

$3,750,000.00                                                 November 20, 2002

         FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to BANK OF AMERICA, N.A. or registered assigns (the "Lender"), in
accordance with the provisions of the Credit Agreement (as hereinafter defined),
the principal amount of each Term Loan from time to time made by the Lender to
the Borrower under that certain Credit Agreement, dated as of November 20, 2002
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the "Credit Agreement;" the terms defined therein being used
herein as therein defined), among the Borrower, the Lenders from time to time
party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer
and Swing Line Lender.

         The Borrower promises to pay interest on the unpaid principal amount of
each Term Loan from the date of such Term Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the Credit
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent's Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Credit Agreement.

         This Note is one of the Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Term Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender in the ordinary course of business.
The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Term Loans and payments with respect thereto.

         The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.






         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA.

                                    BLUE RHINO CORPORATION


                                    By:  /s/ Mark Castaneda
                                         --------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer







                  TERM LOANS AND PAYMENTS WITH RESPECT THERETO




                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------

EX-4.7

                                                                     EXHIBIT 4.7

                                    TERM NOTE

$2,500,000.00                                                  November 20, 2002


         FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to SUNTRUST BANK or registered assigns (the "Lender"), in accordance with
the provisions of the Credit Agreement (as hereinafter defined), the principal
amount of each Term Loan from time to time made by the Lender to the Borrower
under that certain Credit Agreement, dated as of November 20, 2002 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the "Credit Agreement;" the terms defined therein being used herein as
therein defined), among the Borrower, the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender.

         The Borrower promises to pay interest on the unpaid principal amount of
each Term Loan from the date of such Term Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the Credit
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent's Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Credit Agreement.

         This Note is one of the Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Term Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender in the ordinary course of business.
The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Term Loans and payments with respect thereto.

         The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.






         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA.

                                     BLUE RHINO CORPORATION


                                     By:  /s/ Mark Castaneda
                                         ---------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                              Financial Officer






                  TERM LOANS AND PAYMENTS WITH RESPECT THERETO




                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------

EX-4.8

                                                                     EXHIBIT 4.8

                                    TERM NOTE

$2,500,000.00                                                  November 20, 2002


         FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to RBC CENTURA BANK or registered assigns (the "Lender"), in accordance
with the provisions of the Credit Agreement (as hereinafter defined), the
principal amount of each Term Loan from time to time made by the Lender to the
Borrower under that certain Credit Agreement, dated as of November 20, 2002 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the "Credit Agreement;" the terms defined therein being used
herein as therein defined), among the Borrower, the Lenders from time to time
party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer
and Swing Line Lender.

         The Borrower promises to pay interest on the unpaid principal amount of
each Term Loan from the date of such Term Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the Credit
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent's Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Credit Agreement.

         This Note is one of the Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Term Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender in the ordinary course of business.
The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Term Loans and payments with respect thereto.

         The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.






         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA.

                                    BLUE RHINO CORPORATION


                                    By:  /s/Mark Castaneda
                                         --------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer






                  TERM LOANS AND PAYMENTS WITH RESPECT THERETO




                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------

EX-4.9

                                                                     EXHIBIT 4.9

                                    TERM NOTE

$3,750,000.00                                                 November 20, 2002


         FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to WACHOVIA BANK, NATIONAL ASSOCIATION or registered assigns (the
"Lender"), in accordance with the provisions of the Credit Agreement (as
hereinafter defined), the principal amount of each Term Loan from time to time
made by the Lender to the Borrower under that certain Credit Agreement, dated as
of November 20, 2002 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the "Credit Agreement;" the terms defined
therein being used herein as therein defined), among the Borrower, the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent, L/C Issuer and Swing Line Lender.

         The Borrower promises to pay interest on the unpaid principal amount of
each Term Loan from the date of such Term Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the Credit
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent's Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Credit Agreement.

         This Note is one of the Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Term Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender in the ordinary course of business.
The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Term Loans and payments with respect thereto.

         The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.






         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA.

                                   BLUE RHINO CORPORATION


                                   By:  /s/ Mark Castaneda
                                        --------------------------------------
                                   Name:    Mark Castaneda
                                   Title:   Executive Vice President and Chief
                                            Financial Officer






                  TERM LOANS AND PAYMENTS WITH RESPECT THERETO



                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------
 ----     -------       -------      ------      ---------       ----------     --------

EX-4.10

                                                                    EXHIBIT 4.10

                                    TERM NOTE

$2,500,000.00                                                  November 20, 2002


         FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to LASALLE BANK NATIONAL ASSOCIATION or registered assigns (the
"Lender"), in accordance with the provisions of the Credit Agreement (as
hereinafter defined), the principal amount of each Term Loan from time to time
made by the Lender to the Borrower under that certain Credit Agreement, dated as
of November 20, 2002 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the "Credit Agreement;" the terms defined
therein being used herein as therein defined), among the Borrower, the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent, L/C Issuer and Swing Line Lender.

         The Borrower promises to pay interest on the unpaid principal amount of
each Term Loan from the date of such Term Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the Credit
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent's Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Credit Agreement.

         This Note is one of the Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the
benefits of the Guaranty and is secured by the Collateral. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable all as provided in the Credit
Agreement. Term Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender -in the ordinary course of
business. The Lender may also attach schedules to this Note and endorse thereon
the date, amount and maturity of its Term Loans and payments with respect
thereto.

         The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.






         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA.

                                     BLUE RHINO CORPORATION


                                     By:  /s/ Mark Castaneda
                                         ---------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                              Financial Officer





                  TERM LOANS AND PAYMENTS WITH RESPECT THERETO




                                                 AMOUNT OF
                                               PRINCIPAL OR     OUTSTANDING
                                     END OF      INTEREST        PRINCIPAL
          TYPE OF      AMOUNT OF    INTEREST     PAID THIS        BALANCE      NOTATION
 DATE    LOAN MADE     LOAN MADE     PERIOD        DATE          THIS DATE      MADE BY
- -------------------------------------------------------------------------------------------
                                                             

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EX-4.11

                                                                    EXHIBIT 4.11

THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE SECURITIES LAWS. THIS DEBENTURE MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OF THE DEBENTURE UNDER SUCH ACT
AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE ISSUER HEREOF IS
SATISFIED THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER.

THIS DEBENTURE IS SUBJECT TO THE TERMS OF SUBORDINATION SET FORTH IN SECTION 4
HEREOF.


               AMENDED AND RESTATED SENIOR SUBORDINATED DEBENTURE

                  THIS AMENDED AND RESTATED SENIOR SUBORDINATED DEBENTURE (the
"AMENDED AND RESTATED DEBENTURE") is made as of this 20th day of November, 2002
by and among: (i) BLUE RHINO CORPORATION, a Delaware corporation (the
"COMPANY"), (ii) USA LEASING, L.L.C., a Delaware limited liability company,
RHINO SERVICES, L.L.C., a Delaware limited liability company, CPD ASSOCIATES,
INC., a North Carolina corporation, QUICKSHIP, INC., a Delaware corporation,
UNIFLAME CORPORATION, a Delaware corporation, BLUE RHINO CONSUMER PRODUCTS, LLC,
a Delaware limited liability company and UNIFLAME, LLC, a Delaware limited
liability company (collectively with the Company, the "BORROWERS"), (iii) ALLIED
CAPITAL CORPORATION, a Maryland corporation (the "HOLDER").

                                    RECITALS

                  A. Pursuant to an Investment Agreement dated as of June 15,
2001 (the "EXISTING INVESTMENT AGREEMENT") by and among the Borrowers and the
Holder, the Holder purchased senior subordinated debentures (the "ORIGINAL
DEBENTURES") in the aggregate principal amount of $15,000,000.

                  B. The Existing Investment Agreement is being amended as of
November 20, 2002 by the First Amendment to Investment Agreement (the "FIRST
AMENDMENT") (the Existing Investment Agreement, as amended by the First
Amendment and as may be further amended from time to time, is herein referred to
as the "INVESTMENT AGREEMENT").

                  C. In connection with the First Amendment, the Borrowers and
the Holder have agreed to amend certain terms and conditions of the Investment
Agreement and to amend and restate the Original Debentures.

                  Now, therefore, in consideration of the foregoing and other
good and valuable consideration, the parties agree that the Original Debenture
shall be amended, restated, and consolidated in its entirety by this Amended and
Restated Debenture.






                           AMENDED AND RESTATED SENIOR
                             SUBORDINATED DEBENTURE


$15,000,000                                                        June 15, 2001

                  FOR VALUE RECEIVED, the undersigned, (i) BLUE RHINO
CORPORATION a Delaware corporation (the "COMPANY"), (ii) USA LEASING, L.L.C., a
Delaware limited liability company, RHINO SERVICES, L.L.C., a Delaware limited
liability company, CPD ASSOCIATES, INC., a North Carolina corporation,
QUICKSHIP, INC., a Delaware corporation, UNIFLAME CORPORATION, a Delaware
corporation, BLUE RHINO CONSUMER PRODUCTS, LLC, a Delaware limited liability
company and UNIFLAME, LLC, a Delaware limited liability company (collectively
with the Company, the "BORROWERS") jointly and severally promise to pay to the
order of ALLIED CAPITAL CORPORATION, a Maryland corporation (the "HOLDER"), the
principal sum of FIFTEEN MILLION DOLLARS ($15,000,000), together with interest
thereon as set forth below, at its offices or such other place as the Holder may
designate in writing.

         1. Investment Agreement. This Amended and Restated Senior Subordinated
Debenture (the "DEBENTURE") amends and restates the Senior Subordinated
Debenture executed and delivered by the Borrowers at the Closing in connection
with an investment (the "INVESTMENT") made by the Holder in the Borrowers,
pursuant to the terms and conditions of an Investment Agreement by and among the
Borrowers and the Holder, dated of even date herewith (, as amended the
"INVESTMENT AGREEMENT"). This Debenture is subject to the terms and conditions
of the Investment Agreement. A copy of the Investment Agreement may be examined
during normal business hours at the offices of the Company. Any capitalized term
used herein and not otherwise defined herein shall have the meaning assigned to
it in the Investment Agreement.

         2. Interest Rate Provisions.

                  2.1 Interest. Except as provided in Section 4.2.2 hereof, from
the date hereof and thereafter until the repayment of this Debenture in full,
interest shall accrue on the principal balance of this Debenture outstanding
from time to time at the fixed rate of 13% per annum.

                  2.2 Default Interest Rate. If (i) the Borrowers shall default
in the payment when due of the principal of or interest on this Debenture or any
other amount becoming due hereunder, by acceleration or otherwise, or under any
other Loan Document to which any Borrower is a party or (ii) any other Default
or Event of Default exists under Section .12 of the Investment Agreement, in
each case whether or not such default is declared, the interest rate on this
Debenture shall each increase to 17% per annum.

                  2.3 Calculation of Interest. Interest shall be calculated on
the basis of a 360-day year assuming 12 equal 30 day months and shall be
computed for each payment period on the principal balance for the actual number
of days outstanding.



                                       2


         3. Payment Provisions. The following payment provisions are subject to
Section hereof.

                  3.1 Interest Payments. Commencing on August 1, 2001, and
continuing on each succeeding November 1, February 1, May 1 and August 1
thereafter, up to and including the Maturity Date (each such date, a "PAYMENT
DATE"), the Borrowers shall pay in cash to the Holder quarterly installments of
interest only (in arrears) on the then outstanding principal balance under this
Debenture.

                  3.2 Principal Payments and Payment at Maturity. On the
Maturity Date, the entire then outstanding principal balance of this Debenture,
together with all accrued but unpaid interest, and all other sums owed hereunder
shall be due and payable in full in cash without further notice or demand.

                  3.3 Prepayments; Application of Payments.

                           (a) The Borrowers may prepay the then outstanding
principal amount of this Debenture in whole or in part at any time, so long as
if such prepayment occurs prior to the date of the third anniversary hereof, the
Borrowers pay to the Holder a prepayment premium (the "PREPAYMENT PREMIUM") as
defined in and calculated in accordance with Section 2.6 of the Investment
Agreement along with such prepayment. The Prepayment Premium shall be due
whether this Debenture is due upon voluntary or mandatory prepayment of this
Debenture in whole or in party. No Prepayment Premium shall be due or payable
with respect to any prepayment that occurs after June 15, 2004.

                           (b) Each prepayment with respect to this Debenture
shall be made in increments of $500,000 and shall be applied in the following
order of priority: (i) first, to any Prepayment Premium due pursuant to Section
2.6 of the Investment Agreement; (ii) second, to accrued, but unpaid, interest
at the applicable rate; and (iii) finally, to the then outstanding principal
balance of the Debenture.

                  3.4 Mandatory Prepayment of the Debenture.

                           (a) Election Requiring Borrowers to Prepay Debenture.
Upon a Change of Control, the Holder shall have the right (but not the
obligation) to require the Borrowers to (a) prepay this Debenture for an amount
equal to the then outstanding principal balance, all accrued but unpaid interest
thereon and all Prepayment Premiums and (b) pay all of the other Obligations in
full (the "MANDATORY PREPAYMENT PRICE"), which amount shall be calculated on the
date of the prepayment and be payable in cash on such date.

                           (b) Procedure for Mandatory Prepayment. At least 30
days but no more than 60 days prior to a Change of Control, the Company shall
provide written notice ("Notice of Transfer") to the Holder setting forth the
event constituting the Change of Control and the date of such event. Upon
receipt of the Notice of Transfer, the Holder shall have 30 days during which it
may elect to require the Borrowers to prepay this Debenture. If the Holder
elects to require the Borrowers to prepay this Debenture, it shall provide
written notice ("Notice of



                                       3


Prepayment") to the Borrowers of its election to do so within the 30-day period
after its receipt of the Notice of Transfer. The Borrowers shall pay the
Mandatory Prepayment Price on the date of the Change of Control.

         4. Subordination. The indebtedness represented by this Debenture is
subordinate to the Senior Debt of the Borrowers in accordance with the terms
hereof.

                  4.1 Definitions. Capitalized terms used but not otherwise
defined herein shall have the following meanings:

                  Collection Action shall mean, with respect to the Junior Debt
         (a) to sue for, take or receive from or on behalf of any Borrower or
         any guarantor of the Junior Debt, by set-off or in any other manner,
         the whole or any part of any moneys which may now or hereafter be owing
         by any Borrower or any such guarantor with respect to the Junior Debt,
         (b) to initiate or participate with others in any suit, action or
         Proceeding against any Borrower or any such guarantor (including any
         right to sue the Borrower or to file or participate in the filing of
         any involuntary bankruptcy petition against such Borrower) to (i)
         enforce payment of or to collect the whole or any part of the Junior
         Debt or (ii) commence judicial enforcement of any of the rights and
         remedies under the Junior Debt Documents or applicable law with respect
         to the Junior Debt, (c) to exercise any put option or to cause any
         Borrower or any such guarantor to honor any redemption or mandatory
         prepayment obligation with respect to the Junior Debt or the Warrants
         or any capital stock of the Company obtained upon exercise of the
         Warrants or (d) to take any action to realize upon any collateral
         securing the Junior Debt (if any) or to exercise any other right or
         remedy with respect to such collateral.

                  Junior Debt shall mean all of the obligations of the Borrowers
         to Holder evidenced by this Debenture and all other amounts now or
         hereafter owed by the Borrowers to Holder under any of the Junior Debt
         Documents.

                  Junior Debt Documents shall mean this Debenture, the
         Investment Agreement, Warrants and any guaranty with respect to the
         Junior Debt and all other documents, agreements and instruments
         executed and delivered in connection therewith.

                  Junior Default shall mean a default in the payment of the
         Junior Debt or in the performance of any term, covenant or condition
         contained in the Junior Debt Documents or any other occurrence
         permitting Holder to accelerate the payment of all or any portion of
         the Junior Debt.

                  Junior Default Notice shall mean a written notice from Holder
         or the Company to holders of Senior Debt pursuant to which such holders
         are notified of the occurrence of a Junior Default, which notice
         incorporates a reasonably detailed description of such Junior Default.

                  Reorganization Subordinated Securities shall mean any notes,
         other del securities, or equity securities issued in a Proceeding in
         substitution of all or any portion of the



                                       4


         Junior Debt, in each case that are subordinated in right of payment,
         performance or otherwise to the Senior Debt (or any notes or other
         securities issued in substitution c all or any portion of the Senior
         Debt) to at least the same extent that the Junior Debt is subordinated
         to the Senior Debt pursuant to the terms hereof.

                  Proceeding shall mean any voluntary or involuntary insolvency,
         bankruptcy receivership, custodianship, liquidation, dissolution,
         reorganization, assignment for the benefit of creditors, appointment of
         a custodian, receiver, trustee or other officer with similar powers or
         any other proceeding for the liquidation, dissolution or other winding
         up of a person or entity.

                  Senior Acceleration shall mean acceleration of the
         indebtedness due under the Senior Debt Documents.

                  Senior Credit Facility means that certain Credit Agreement, by
         and among the Company, Bank of America, N.A., as Administrative Agent
         Swing Line Lender and Letter of Credit Issuer, and the other lenders
         party thereto, dated as of November 20, 2002, as the same may be
         amended, supplemented or otherwise modified from time to time and any
         agreement or agreements renewing, replacing, restating or refinancing
         all or any of the debt or commitments thereunder or any notes or
         agreements otherwise evidencing any Senior Debt, but only in each case
         to the extent the Indebtedness thereunder continues to constitute
         Senior Debt as provided in the definition thereof.

                  Senior Covenant Default shall mean any default or event of
         default with respect to the financial covenants or the negative
         covenants in the Senior Credit Facility, which default or event of
         default entitles the holders of Senior Debt to accelerate the maturity
         of the Senior Debt.

                  Senior Debt means all of the following: (a) the aggregate
         principal indebtedness advanced from time to time under the Senior
         Credit Facility up to a maximum aggregate principal amount that shall
         not exceed $60,000,000 (as reduced by all payments and prepayments of
         principal outstanding under term loans made under such Senior Credit
         Facility and by the permanent reduction of the revolving credit
         facilities established under such Senior Credit Facility, (b) all
         interest accrued and accruing on the aggregate principal outstanding
         under the Senior Credit Facility from time to time (including, without
         limitation, any interest accruing after the filing of any petition in
         bankruptcy, or the commencement of any insolvency, reorganization or
         like proceeding relating to any Credit Party, whether or not a claim
         for post-filing or post-petition interest is allowed in such
         proceeding); (c) all other reasonable fees or monetary obligations owed
         under the Senior Credit Facility; and (d) all reasonable costs incurred
         by the Senior Lenders under the Senior Credit Facility in commencing or
         pursuing any enforcement action(s) with respect to the amounts
         described in clauses (a) through (c), including attorneys' fees and
         disbursements. "Senior Debt" shall also include all amendments,
         modifications, renewals, replacements, restatements and refinancings of
         the foregoing, in whole or in pa provided such amendments,
         modifications, renewals, replacements, restatements refinancings do not
         (i) increase the interest rate or default rate payable on any component


                                       5

         thereof by more than 2% over the interest rate or default rate,
         respectively, that is applicable thereto on the date hereof, (ii)
         extend the final maturity of the Senior Debt beyond August 1, 2006,
         (iii) provide for any annual principal amortization payment in excess
         of the Permitted Annual Amortization Amount, (iv) include additional
         financial covenants or amend any of the financial covenants set forth
         in the Senior Credit Facility to render such covenants more
         restrictive, other than additional financial covenant identical to
         those set forth in Section 6.12 of the Investment Agreement that are no
         more than 15% more restrictive as such financial covenants or (v) amend
         any provisions set forth in the Senior Credit Facility which expressly
         permit the prepayment of the Junior Debt to render such provisions more
         restrictive.

                  Senior Debt Documents shall mean the Senior Credit Facility
         and all other documents, agreements and instruments evidencing or
         pertaining to all or any portion of the Senior Debt.

                  Senior Default shall mean any Senior Payment Default or Senior
         Covenant Default.

                  Senior Default Notice shall mean a written notice from the
         holders of Senior Debt to Holder pursuant to which Holder is notified
         of the occurrence of a Senior Default, which notice incorporates a
         reasonably detailed description of such Senior Default.

                  Senior Payment Default shall mean any failure by the Borrowers
         to make any required payment of interest or principal, or any other
         monetary payment, under the Senior Debt Documents, which failure
         continues beyond the expiration of any applicable cure period provided
         by the terms of the Senior Debt Documents, including, without
         limitation, any default in payment of Senior Debt after acceleration
         thereof.

                  Warrant means, collectively, the warrants to purchase
         1,372,071 shares of Common Stock of the Company (as adjusted in
         accordance with the terms thereof), issued in accordance with the
         Investment Agreement.

                  4.2 Subordination.

                           4.2.1 Subordination of Junior Debt to Senior Debt.
Each of the Borrowers covenants and agrees, and Holder by its acceptance of this
Debenture (whether upon original issue or upon transfer or assignment) likewise
covenants and agrees, that (a) the payment of any and all of the Junior Debt
shall be subordinate and subject in right of payment, to the extent and in the
manner hereinafter set forth, to the prior payment in full in cash of the Senior
Debt and (b) the existing and hereafter acquired liens and security interests of
any holder of Senior Debt in any collateral securing all or any portion of the
Senior Debt shall be senior, regardless of the time or method of perfection, to
all existing and hereafter acquired liens security interests, if any, of Holder
(or any agent therefor) in the collateral, if any, securing all or any portion
of the Junior Debt. The Company shall provide to Holder notice of each holder of
Senior Debt upon the incurrence of Senior Debt from such holder, which notice
shall include the name, address and phone number of such holder, and Holder
shall promptly acknowledge in writing receipt of



                                       6

such notice. Each holder of Senior Debt, whether now outstanding or hereafter
created, incurred, assumed or guaranteed, shall be deemed to have acquired
Senior Debt in reliance upon the provisions contained herein. This Section 4
shall constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders or, or continue to hold Senior Debt, and such
provisions are made for the benefit of the holders of the Senior Debt, and such
holders are made obligees hereunder and any one or more of them may enforce such
provisions.

                           4.2.2 Proceedings.

                           (a) Payments. In the event of any Proceeding
involving any Borrower, (i) all Senior Debt first shall be paid in full in cash
before any payment of or with respect to the Junior Debt from such Borrower
shall be made (other than a distribution of Reorganization Subordinated
Securities which Holder is hereby specifically authorized to receive and
retain); (ii) any payment or distribution, whether in cash, property or
securities which, but for the terms hereof, otherwise would be payable or
deliverable in respect of the Junior Debt from such Borrower (other than a
distribution of Reorganization Subordinated Securities which Holder is hereby
specifically authorized to receive and retain), shall be paid or delivered
directly to holders of Senior Debt (pro rata to such holders) (to be held and/or
applied thereby in accordance with the terms of the Senior Debt Documents) until
all Senior Debt is paid in full, in cash, and Holder irrevocably authorizes,
empowers and directs all receivers, trustees, liquidators custodians,
conservators and others having authority in the premises to effect all such
payments and distributions, and Holder also irrevocably authorizes, empowers and
directs holders of Senior Debt to demand, sue for, collect and receive every
such payment or distribution; and (iii) Holder agrees to execute and deliver to
each holder of Senior Debt of which Holder has notice or its representative all
such further instruments confirming the authorization referred to in the
foregoing clause (ii).

                           (b) Voting and Other Matters. At any meeting of
creditors or in the event of any Proceeding involving any Borrower, Holder shall
retain the right to vote, file a proof of claim and otherwise act with respect
to the Junior Debt (including the right to vote to accept or reject any plan of
partial or complete liquidation, reorganization, arrangement, composition, or
extension), provided that Holder shall not initiate or prosecute any claim or
action in such Proceeding challenging the enforceability of the Senior Debt,
this Section 4, or any liens and security interests securing the Senior Debt. In
the event Holder fails to execute, verify, deliver and file any proofs of claim
in respect of the Junior Debt in connection with any such Proceeding prior to 15
days before the expiration of the time to file any such proof or fails to vote
any such claim in any such Proceeding prior to 5 days before the expiration of
the time to vote any such claim, Holder hereby irrevocably authorizes, empowers
and appoints the holders of Senior Debt its agent and attorney-in-fact to
execute, verify, deliver and file such proofs of claim and vote such claim in
any such Proceeding; provided the holders of Senior Debt shall have no
obligation to exercise any such authority with respect to Holder's claim. In the
event that the holders of Senior Debt vote any claim in accordance with the
authority granted hereby Holder shall not be entitled to change or withdraw such
vote.

                           (c) Reinstatement. The Senior Debt shall continue to
be treated as Senior Debt and the provisions hereof shall continue to govern the
relative rights and priorities of



                                       7


holders of Senior Debt and Holder even if all or part of the Senior Debt or the
security interests securing the Senior Debt are subordinated, set aside, avoided
or disallowed in connection with any such Proceeding. This Section 4 shall be
reinstated if at any time any payment of any of the Senior Debt is rescinded or
must otherwise be returned by any holder of Senior Debt or any representative of
such holder.

                           4.2.3 Payment Upon Senior Default.

                           (a) Commencement of Payment Blockage. Subject to
Section 4.2.3(b), the Borrowers may not make and Holder may not receive any
payment with respect to this Debenture or any other Junior Debt Document
(whether as a result of a Collection Action or otherwise) if, at the time of
such payment:

                                    (i) A Senior Payment Default exists and such
                           Senior Payment Default shall not have been cured or
                           waived in accordance with the terms of the Senior
                           Debt Documents;

                                    (ii) The Company and Holder shall have
                           received a Senior Default Notice from the holders of
                           Senior Debt stating that a Senior Covenant Default
                           exists; or

                                    (iii) the holders of Senior Debt have
                           accelerated such Senior Debt.

                           (b) Termination of Payment Blockage. The Borrowers
may resume payments (and may make any payments missed due to the application of
Section 4.2.3(a)) in respect of the Junior Debt or any judgment with respect
thereto:

                                    (i) In the case of a Senior Payment Default
                           referred to in Section 4.2.3(a)(i), upon a cure or
                           waiver thereof in accordance with the terms of the
                           Senior Debt Documents;

                                    (ii) In the case of a Senior Covenant
                           Default referred to in Section 4.2.3(a)(ii), upon the
                           earlier to occur of (x) the cure or waiver of all
                           Senior Covenant Defaults referenced in the applicable
                           Senior Default Notice in accordance with the terms of
                           the Senior Debt Documents, or (y) the expiration of a
                           period of 180 days from the date such Senior Default
                           Notice was received by Holder; or

                                    (iii) In the case of acceleration of the
                           Senior Debt, upon the earlier to occur of (y) the
                           indefeasible satisfaction in full of the Senior Debt
                           and the termination of all lending commitments under
                           the Senior Debt Documents, and (z) any modification
                           of the Senior Debt Documents by which the
                           acceleration is rescinded and the indebtedness is
                           reinstated and no longer immediately due and payable
                           in full.



                                       8


                           (c) Limitation on Payment Blockages. Notwithstanding
any provision of this Section 4.2.3 to the contrary:

                                    (i) The Borrowers shall not be prohibited
                           from making and Holder shall not be prohibited from
                           receiving, payments under Section 4.2.3(a)(ii) (x) on
                           more than one occasion within any period of 365
                           consecutive days and (y) on more than an aggregate of
                           four occasions so long as this Debenture is
                           outstanding; and

                                    (ii) No Senior Covenant Default existing on
                           the date a Senior Default Notice is given pursuant to
                           Section 4.2.3 shall be used as a basis for any
                           subsequent Senior Default Notice unless such default
                           has been cured or waived for a period of at least 90
                           days.

                           (d) Non-Applicability to Proceeding. The provisions
of this Section 4.2.3 shall not apply to any payment with respect to which
Section 4.2.2 would be applicable.

                           4.2.4 Payments Otherwise Permitted. The failure of
the Borrowers to make any payment with respect to the Junior Debt by reason of
the operation of Section 4.2.3 shall not be construed as preventing the
occurrence of a Junior Default under the applicable Junior Debt Documents.
Nothing contained in this Section 4.2 or elsewhere herein or in the Junior Debt
Documents shall prevent the Borrowers at any time, except during the pendency of
any Proceeding referred to in Section 4.2.2 or under the conditions referred to
in Section 4.2.3 from making payments or prevent Holder from receiving payments
or exercising any remedy available to Holder under the Junior Debt documents at
any time on account of the principal, interest or other charges with respect to
the Junior Debt.

                           4.2.5 Restriction on Collection Action by Holder.
Upon any event of default under the Junior Debt Documents, and after fifteen
days prior written notice to holders of Senior Debt of which Holder has notice,
Holder may accelerate the Junior Debt. Notwithstanding any such acceleration or
any default under the Junior Debt Documents, until the Senior Debt is
indefeasibly paid in full in cash and all lending commitments under the Senior
Debt Documents have been terminated, Holder shall not, without the prior written
consent of the holders of a majority in principal amount of the Senior Debt,
take any Collection Action with respect to the Junior Debt, except as permitted
in the following sentence or Section 4.2.2 hereof Upon the earliest to occur of:

                           (a) the passage of 180 days from the delivery of a
Junior Debt Notice to the holders of Senior Debt of which Holder has notice if
any Junior Default described therein shall not have been cured or waived within
such period; or

                           (b) acceleration of the Senior Debt; or

                           (c) the occurrence of any Proceeding with respect to
any Borrower or its assets; or



                                       9


                           (d) the commencement by any holder of the Senior Debt
of any judicial or non judicial action or proceeding against any Borrower or any
guarantor of the Senior Debt to (i) enforce payment of or to collect the whole
or any part of the Senior Debt, (ii) enforce any of the rights and remedies
available to any holder of the Senior Debt with respect to the Senior Debt or
any collateral securing the Senior Debt, or (iii) realize upon any of the
collateral securing the Senior Debt or exercise any other right or remedy with
respect to such collateral; or

                           (e) the occurrence of any Senior Default or Junior
Default arising from the merger, sale, liquidation, dissolution, or change of
control of any Borrower,

Holder may, upon ten days prior written notice to the holders of Senior Debt of
which Holder has notice, take any Collection Action. Such ten day notice may be
given during the 180 day period described in clause (a) above. Notwithstanding
the foregoing, Holder may vote, file proofs of claim and otherwise act with
respect to the Junior Debt in any Proceeding involving any Borrower or its
assets to the extent otherwise permitted by Section 4.2.2. Any amount received
by Holder as a result of any Collection Action with respect to the Junior Debt
prior to the indefeasible satisfaction of the Senior Debt in full in cash and
termination of all lending commitments under the Senior Debt Documents will be
paid to the holders of Senior Debt (pro rata to such holders) to the extent
required by the provisions of Section 4.2.8 hereof.

                           4.2.6 Prepayments. Except as expressly permitted
under Section 8.14(b) of the Senior Credit Facility (or as expressly permitted
by any replacements thereof), which are expressly permitted hereby, the
Borrowers shall not be entitled to make, or Holder be entitled to demand, take,
receive, or retain, any prepayments of interest or principal on account of any
of the Junior Debt prior to the indefeasible payment in full in cash of the
Senior Debt and the termination of all lending commitments under the Senior Debt
Documents. Payments received by Holder after acceleration of the Junior Debt or
the commencement of a Collection Action otherwise permitted hereby shall not
constitute a prohibited prepayment under this Section 4.2.6.

                           4.2.7 Amendment of Junior Debt Documents. Until the
Senior Debt is paid in full in cash and notwithstanding anything contained in
the Junior Debt Documents, the Senior Credit Facility or any of the other Senior
Debt Documents to the contrary, Holder shall not, without the prior written
consent of the holders of a majority in principal amount of the Senior Debt,
agree to any amendment, modification or supplement to the Junior Debt Documents
the effect of which is to (i) increase the maximum principal amount of the
Junior Debt or rate of interest on any of the Junior Debt, (ii) change any date
upon which payments of principal or interest on the Junior Debt are due to an
earlier date, (iii) add or make more restrictive any event of default or any
covenant with respect to the Junior Debt, (iv) change any redemption or
prepayment provisions of the Junior Debt to an earlier date or add any
additional events requiring such redemption or prepayment, (v) alter the
subordination provisions with respect to the Junior Debt, including, without
limitation, subordinating the Junior Debt to any other debt, (vi) take any liens
or security interests in assets of any Borrower or any other assets securing the
Senior Debt (other than such liens or security interests, if any, that exist in
favor of Holder as of the date hereof and are otherwise permitted by the Senior
Debt Documents ), (viii) change or amend any other term of the Junior Debt
Documents if such change or amendment would result in a Senior



                                       10


Default or (ix) permit the exercise of the put rights of Holder under Section
3.2 of the Investor Rights Agreement prior to the fifth anniversary of the date
thereof.

                           4.2.8 Incorrect Payments and Proceeds of Collection
Action. If the Holder receives, prior to the indefeasible satisfaction of the
Senior Debt in full in cash and termination of all lending commitments under the
Senior Debt Documents, any payment or distribution on account of the Junior Debt
not permitted hereby (whether received as a result of a Collection Action or
otherwise), such payment or distribution shall be held in trust by Holder for
the benefit of all holders of Senior Debt and shall be promptly paid over to the
holders of Senior Debt (pro rata to such holders), or their designated
representatives, for application (in accordance with the Senior Debt Documents)
to the payment of the Senior Debt then remaining unpaid, until indefeasible
satisfaction of the Senior Debt in full in cash and termination of all lending
commitments under the Senior Debt Documents.

                           4.2.9 Sale Transfer, etc. Holder shall not sell,
assign, pledge, dispose of or otherwise transfer all or any portion of the
Junior Debt or any Junior Debt Document (a) without giving prior written notice
of such action to the holders of Senior Debt, and (b) unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the holders of Senior Debt of which the transferee or Holder has
notice an agreement providing for the continued subordination and forbearance of
the Junior Debt to the Senior Debt as provided herein and for the continued
effectiveness of all of the rights of the holders of the Senior Debt arising
hereunder. Notwithstanding the failure to execute or deliver any such agreement,
the subordination effected hereby shall survive any sale, assignment, pledge,
disposition or other transfer of all or any portion of the Junior Debt, and the
terms hereof shall be binding upon the successors and assigns of Holder.

                  4.3 Modifications to Senior Debt. The holders of Senior Debt
may at any time and from time to time without the consent of or notice to
Holder, without incurring liability to Holder and without impairing or releasing
the obligations of Holder hereunder, change the manner or place of payment or
extend the time of payment of or renew or alter any of the terms of the Senior
Debt, or amend in any manner any agreement, note, guaranty or other instrument
evidencing or securing or otherwise relating to the Senior Debt; provided that
the Junior Debt shall not be subordinated in accordance herewith to indebtedness
or obligations to the extent such indebtedness or obligations do not constitute
"Senior Debt" under the definition set forth in Section 4.1 hereof.

                  4.4 Continued Effectiveness. The terms hereof, the
subordination effected hereby, and the rights and the obligations of Holder, the
Borrowers, any holders of the Senior Debt arising hereunder shall not be
affected, modified or impaired in any manner or to any extent by the validity or
enforceability of any of the Senior Debt Documents or the Junior Debt Documents,
or any exercise or non-exercise of any right, power or remedy under or in
respect of the Senior Debt or the Senior Debt Documents or the Junior Debt or
the Junior Debt Documents. The Holder and each other holder of Junior Debt
hereby acknowledges that the provisions hereof are intended to be enforceable at
all times, whether before the commencement of, after the commencement of, in
connection with or premised on the occurrence of a Proceeding.



                                       11


                  4.5 No Contest by Holder. Holder agrees that it will not at
any time contest the validity, perfection, priority or enforceability of the
Senior Debt, the Senior Debt Documents or the liens and security interests of
any holders of the Senior Debt in any collateral securing the Senior Debt.

                  4.6 Representations and Warranties. The original Holder of
this Debenture hereby represents and warrants to the holders of Senior Debt as
follows:

                           4.6.1 Existence and Power. Holder is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland.

                           4.6.2 Authority. Holder has the power and authority
to enter into, execute, deliver and carry out the terms hereof, all of which
have been duly authorized by all proper and necessary action and are not
prohibited by its organizational documents.

                           4.6.3 Binding Agreements. This Debenture constitutes
the valid and legally binding obligation of Holder enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by equitable principles.

                           4.6.4 Conflicting Agreements; Litigation. No
provisions of any mortgage, indenture, contract, agreement, statute, rule,
regulation, judgment, decree or order binding on Holder conflicts with, or
requires any consent which has not already been obtained under, or would in any
way prevent the execution, delivery or performance of the terms hereof by
Holder. The execution, delivery and carrying out of the terms hereof will not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any lien or security interest in the property of Holder
pursuant to the terms of any such mortgage, indenture, contract or agreement. No
pending or, to the best of Holder's knowledge, threatened, litigation,
arbitration or other proceedings if adversely determined would in any way
prevent the performance of the terms hereof by Holder.

                           4.6.5 No Divestiture. Holder is the sole owner,
beneficially and of record, of this Debenture and the Junior Debt.

                           4.6.6 Default under Junior Note. No Junior Default
exists under or with respect to this Debenture or any of the other Junior Debt
Documents.

                  4.7 Junior Default Notice. The Company shall provide the
holders of Senior Debt with a Junior Default Notice upon the occurrence of each
Junior Default, and shall notify such holders in the event such Junior Default
is cured or waived.

                  4.8 Cumulative Rights, No Waivers. Each and every right,
remedy and power granted to any holder of the Senior Debt hereunder shall be
cumulative and in addition to any other rights remedy or power specifically
granted herein or the Senior Debt Documents or now or hereafter existing in
equity, at law, by virtue of statute or otherwise, and may be exercised by any
holder of Senior Debt, from time to time, concurrently or independently and as
often and in such



                                       12


order as such holder may deem expedient. Any failure or delay on the part of the
holder of Senior Debt in exercising any such right, remedy or power, or
abandonment or discontinuance of steps to enforce the same, shall not operate as
a waiver thereof or affect the rights of such holder thereafter to exercise the
same, and any single or partial exercise of any such right, remedy or power
shall not preclude any other or further exercise thereof or the exercise of any
other right, remedy or power, and no such failure, delay, abandonment or single
or partial exercise of the rights of such holder hereunder shall be deemed to
establish a custom or course of dealing or performance among the parties hereto.

                  4.9 Modification. Any modification or waiver of any provision
hereof, or any consent to any departure by Holder therefrom, shall not be
effective in any event unless the same is in writing and signed by the holders
of a majority in principal amount of the outstanding Senior Debt, and then such
modification, waiver or consent shall be effective only in the specific instance
and for the specific purpose given. Any notice or demand given to Holder by any
holder of Senior Debt in any circumstances not specifically required by such
holder hereunder shall not entitle Holder to any other or further notice or
demand in the same, similar or other circumstances unless specifically required
hereunder.

                  4.10 Additional Documents and Actions. Holder at any time, and
from time to time, after the execution and delivery hereof, promptly will
execute and deliver such further documents and do such further acts and things
as the holders of Senior Debt reasonably may request that may be necessary in
order to effect fully the purposes hereof.

                  4.11 Notices. Unless otherwise specifically provided herein,
any notice or other communication required or permitted to be given shall be in
writing addressed to the respective party at the address provided by such party
to the Company and may be personally served, telecopied or sent by overnight
courier service or certified or registered United States mail and shall be
deemed to have been given (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted on a Business
Day before 4:00 p.m. (Eastern time) or, if not, on the next succeeding Business
Day; (c) if delivered by overnight courier, two Business Days after delivery to
such courier properly addressed; or (d) if by United States mail, four Business
Days after deposit in the United States mall, postage prepaid and properly
addressed.

                  4.12 Defines Rights of Creditors; Obligations Unconditional.
The provisions of this Section 4 are solely for the purpose of defining the
relative rights of Holder and the holders of Senior Debt and shall not be deemed
to create any rights or priorities in favor of any other Person, including,
without limitation, the Borrowers. As between the Borrowers and Holder, nothing
contained herein shall impair the unconditional and absolute obligation of the
Borrowers to Holder to pay the Junior Debt as such Junior Debt shall become due
and payable in accordance with the Junior Debt Documents.

                  4.13 Subrogation. After the indefeasible payment in full in
cash of the Senior Debt and the termination of all lending commitments under the
Senior Debt Documents, and prior to repayment in full of the Junior Debt, Holder
shall be subrogated to the rights of the holders of Senior Debt to the extent
that distributions otherwise payable to Holder have been



                                       13


applied to the Senior Debt in accordance with the provisions of this Section 4.
For purposes of such subrogation, no payments or distributions to the holders of
Senior Debt of any cash, property or securities to which Holder would be
entitled except for the provisions of this Section 4, and no payments pursuant
to the provisions of this Section 4 to the holders of Senior Debt by Holder,
shall, as among the Borrowers, their creditors (other than the holders of Senior
Debt), any guarantors of the Senior Debt or Junior Debt, and Holder be deemed to
be a payment of distribution by the Borrowers or such guarantor to or on account
of the Senior Debt. The holders of Senior Debt shall have no obligation or duty
to protect Holder's rights of subrogation arising pursuant to this Section 4 or
under any applicable law, nor shall such holders be liable for any loss to, or
impairment of, any subrogation rights held by the Holder

                  4.14 Conflict. In the event of any conflict between any term,
covenant or condition of this Section 4 and any term, covenant or condition of
any of the Junior Debt Documents, the provisions of this Section 4 shall control
and govern.

                  4.15 WAIVER OF JURY TRIAL. HOLDER, THE BORROWERS AND THE
HOLDERS OF SENIOR DEBT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECTION 4. EACH
OF HOLDER, THE BORROWERS AND THE HOLDERS OF SENIOR DEBT ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS RELIED ON THE WAIVER IN ENTERING INTO THIS SECTION 4 AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF HOLDER,
BORROWER AND HOLDERS OF SENIOR DEBT WARRANTS AND REPRESENTS THAT EACH HAS HAD
THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

                  4.16 Reliance. Upon any payment or distribution of assets of
the Company or any guarantor of the Junior Debt or Senior Debt in connection
with any Proceeding with respect thereto, Holder shall be entitled to rely upon
any order or decree by any court of competent jurisdiction in which such
Proceeding is pending, delivered to Holder, purporting to enforce or interpret
this Section 4 for the purpose of ascertaining the holders of Senior Debt
entitled to participate in such payment or distribution in accordance with this
Section 4, the amount thereof, and all other matters related thereto. Holder
shall not at any time be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to it, unless and until Holder
shall have received written notice thereof in accordance with this Section 4
from the Company or the holders of Senior Debt, and prior to the receipt of any
such written notice Holder shall be entitled to assume conclusively that no such
facts exist, without, however limiting the rights of the holders of Senior Debt
to recover from Holder, or the obligation of Holder to turn over to the holders
of Senior Debt, any payment or distribution made to Holder to which Holder is
not entitled in accordance with this Section 4.

         5. Assignment. This Debenture and the obligations hereunder may not be
assigned by the Borrowers without the prior written consent of the Holder.



                                       14


         6. Default and Remedies. The occurrence of an Event of Default under
the Investment Agreement shall constitute a default hereunder and shall entitle
the Holder to exercise the rights and remedies specified in the Investment
Agreement, as well as those available at law or in equity.

         7. Waivers. Each of the Borrowers hereby waives presentment, demand,
protest, or further notice of any kind (except such notices as may be
specifically required by the express terms of the Investment Agreement).

         8. Controlling Law. This Debenture and all matters related hereto shall
be governed, construed and interpreted strictly in accordance with the laws of
the State of Maryland, without regard to its principles of conflicts of law.

         9. No Usury. This Debenture is subject to the express condition that at
no time shall the Borrowers be obligated or required to pay interest hereunder
at a rate which could subject the Holder to either civil or criminal liability
as a result of being in excess of the maximum rate which the Borrowers are
permitted by law to contract or agree to pay. If, by the terms of this
Debenture, the Borrowers are at any time required or obligated to pay interest
at a rate in excess of such maximum rate, the rate of interest under this
Debenture shall be deemed to be immediately reduced to such maximum rate and
interest payable hereunder shall be computed at such maximum rate and the
portion of all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of this Debenture.

         10. No Novation. All of the terms, covenants and conditions of the
Original Debenture shall continue, except as specifically amended and restated
hereby. This Amended and Restated Debenture does not extinguish the outstanding
indebtedness and is not intended to be a substitution or novation of the
original indebtedness or instruments evidencing the same, all of which shall
continue in full force and effect except as specifically amended and restated
hereby or by instruments executed concurrently herewith.



                            [Signatures on next page]



                                       15


                  IN WITNESS WHEREOF, the undersigned has caused this Amended
and Restated Debenture to be executed and its seal affixed on the day and year
first above written.


                                  BLUE RHINO CORPORATION

                                  By:  /s/ Mark Castaneda    (SEAL)
                                       ----------------------------
                                           Name:    Mark Castaneda
                                           Title:   Executive Vice President

                                  USA LEASING, L.L.C.
                                  By:      Blue Rhino Corporation, as Manager

                                  By:  /s/ Mark Castaneda    (SEAL)
                                       ----------------------------
                                           Name:    Mark Castaneda
                                           Title:   Executive Vice President and
                                           Chief Financial Office

                                  RHINO SERVICES, L.L.C.
                                  By:      Blue Rhino Corporation, as Manager

                                  By:  /s/ Mark Castaneda    (SEAL)
                                       ----------------------------
                                           Name:    Mark Castaneda
                                           Title:   Executive Vice President and
                                           Chief Financial Office

                                  CPD ASSOCIATES, INC.

                                  By:  /s/ Mark Castaneda    (SEAL)
                                       ----------------------------
                                           Name:    Mark Castaneda
                                           Title:   Vice President

                                  QUICKSHIP, INC.

                                  By:  /s/ Mark Castaneda    (SEAL)
                                       ----------------------------
                                           Name:  Mark Castaneda
                                           Title:  Asst. Secretary/Treasurer

                                  UNIFLAME CORPORATION


                                  By:  /s/ Kurt Gehsmann     (SEAL)
                                       ----------------------------
                                           Name:    Kurt Gehsmann
                                           Title:   Vice President


                                       16



                                  BLUE RHINO CONSUMER PRODUCTS, LLC

                                  By:      Blue Rhino Corporation, as Manager


                                  By:  /s/ Mark Castaneda    (SEAL)
                                       ----------------------------
                                           Name:    Mark Castaneda
                                           Title:   Executive Vice President and
                                           Chief Financial Office

                                  UNIFLAME, LLC

                                  By:      Blue Rhino Corporation, as Manager

                                  By:  /s/ Mark Castaneda    (SEAL)
                                       ----------------------------
                                           Name:    Mark Castaneda
                                           Title:   Executive Vice President and
                                           Chief Financial Office





                                       17

EX-10.1.A

                                                                 EXHIBIT 10.1(a)


- -------------------------------------------------------------------------------



                                CREDIT AGREEMENT

                          Dated as of November 20, 2002

                                      Among



                             BLUE RHINO CORPORATION,
                                as the Borrower,



                             BANK OF AMERICA, N.A.,
                   as Administrative Agent, Swing Line Lender
                                 and L/C Issuer,



                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                              as Syndication Agent,

                                       and

                         The Other Lenders Party Hereto





                         BANC OF AMERICA SECURITIES LLC,
                                       as
                    Sole Lead Arranger and Sole Book Manager


- -------------------------------------------------------------------------------





                                TABLE OF CONTENTS



         Section                                                                                               Page
         -------                                                                                               ----
                                                                                                         

ARTICLE I.            DEFINITIONS AND ACCOUNTING TERMS............................................................1
   1.01               Defined Terms...............................................................................1
   1.02               Other Interpretive Provisions..............................................................26
   1.03               Accounting Terms...........................................................................27
   1.04               Rounding...................................................................................27
   1.05               References to Agreements and Laws..........................................................27
   1.06               Times of Day...............................................................................27
   1.07               Letter of Credit Amounts...................................................................27
   1.08               Borrowing Base.............................................................................28

ARTICLE II.           THE COMMITMENTS AND CREDIT EXTENSIONS......................................................28
   2.01               Revolving Credit Loans.....................................................................28
   2.02               Term Loan..................................................................................29
   2.03               Conversions and Continuations of Revolving Credit Loans and Term Loan......................30
   2.04               Letters of Credit..........................................................................31
   2.05               Swing Line Loans...........................................................................38
   2.06               Prepayments................................................................................41
   2.07               Voluntary Termination or Reduction of Revolving Credit Commitments.........................45
   2.08               Repayment of Loans.........................................................................45

ARTICLE III.          GENERAL LOAN PROVISIONS....................................................................46
   3.01               Interest...................................................................................46
   3.02               Fees.......................................................................................46
   3.03               Computation of Interest and Fees...........................................................47
   3.04               Evidence of Debt...........................................................................47
   3.05               Payments Generally.........................................................................48
   3.06               Security...................................................................................50

ARTICLE IV.           TAXES, YIELD PROTECTION AND ILLEGALITY.....................................................50
   4.01               Taxes......................................................................................50
   4.02               Illegality.................................................................................51
   4.03               Inability to Determine Rates...............................................................52
   4.04               Increased Cost and Reduced Return; Capital Adequacy........................................52
   4.05               Funding Losses.............................................................................52
   4.06               Matters Applicable to all Requests for Compensation........................................53
   4.07               Survival...................................................................................53

ARTICLE V.            CONDITIONS PRECEDENT TO CREDIT EXTENSIONS..................................................53
   5.01               Conditions of Initial Credit Extension.....................................................53
   5.02               Conditions to all Credit Extensions........................................................56
   5.03               Post-Closing Condition.....................................................................56



                                       i


                                                                                                         

ARTICLE VI.           REPRESENTATIONS AND WARRANTIES.............................................................56
   6.01               Existence, Qualification and Power; Compliance with Laws...................................57
   6.02               Authorization; No Contravention............................................................57
   6.03               Governmental Authorization; Other Consents.................................................57
   6.04               Binding Effect.............................................................................57
   6.05               Financial Statements; No Material Adverse Effect...........................................58
   6.06               Litigation.................................................................................58
   6.07               No Default.................................................................................58
   6.08               Ownership of Property; Liens...............................................................58
   6.09               Environmental Compliance...................................................................59
   6.10               Insurance..................................................................................60
   6.11               Taxes......................................................................................60
   6.12               ERISA Compliance...........................................................................60
   6.13               Subsidiaries...............................................................................61
   6.14               Margin Regulations; Investment Company Act; Public Utility Holding
                      Company Act................................................................................61
   6.15               Disclosure.................................................................................62
   6.16               Compliance with Laws.......................................................................62
   6.17               Intellectual Property; Licenses, Etc.......................................................62
   6.18               Employee Relations.........................................................................63
   6.19               Burdensome Provisions......................................................................63
   6.20               Survival of Representations and Warranties, Etc............................................63

ARTICLE VII.          AFFIRMATIVE COVENANTS......................................................................63
   7.01               Financial Statements.......................................................................63
   7.02               Certificates; Other Information............................................................64
   7.03               Notices....................................................................................65
   7.04               Payment of Obligations.....................................................................66
   7.05               Preservation of Existence, Etc.............................................................66
   7.06               Maintenance of Properties..................................................................66
   7.07               Maintenance of Insurance...................................................................67
   7.08               Compliance with Laws.......................................................................67
   7.09               Environmental Laws.........................................................................67
   7.10               Compliance with ERISA......................................................................68
   7.11               Compliance With Agreements.................................................................68
   7.12               Books and Records..........................................................................68
   7.13               Inspection Rights..........................................................................68
   7.14               Use of Proceeds............................................................................69
   7.15               Additional Subsidiaries....................................................................69
   7.16               Swap Contracts.............................................................................70
   7.17               Further Assurances.........................................................................70

ARTICLE VIII.         NEGATIVE COVENANTS.........................................................................70
   8.01               Liens......................................................................................70
   8.02               Investments................................................................................71
   8.03               Indebtedness...............................................................................72




                                       ii


                                                                                                         

   8.04               Fundamental Changes........................................................................74
   8.05               Dispositions...............................................................................75
   8.06               Restricted Payments........................................................................76
   8.07               Limitations on Exchange and Issuance of Capital Stock......................................76
   8.08               Change in Nature of Business...............................................................77
   8.09               Accounting Changes; Organizational Documents...............................................77
   8.10               Transactions with Affiliates...............................................................77
   8.11               Burdensome Agreements......................................................................77
   8.12               Use of Proceeds............................................................................77
   8.13               Impairment of Security Interests...........................................................77
   8.14               Amendments, Payments and Prepayments of Subordinated Indebtedness..........................78
   8.15               Financial Covenants........................................................................78

ARTICLE IX.           EVENTS OF DEFAULT AND REMEDIES.............................................................79
   9.01               Events of Default..........................................................................79
   9.02               Remedies Upon Event of Default.............................................................82
   9.03               Application of Funds.......................................................................82

ARTICLE X.            ADMINISTRATIVE AGENT.......................................................................83
   10.01              Appointment and Authorization of Administrative Agent......................................83
   10.02              Delegation of Duties.......................................................................84
   10.03              Liability of Administrative Agent..........................................................84
   10.04              Reliance by Administrative Agent...........................................................84
   10.05              Notice of Default..........................................................................85
   10.06              Credit Decision; Disclosure of Information by Administrative Agent.........................85
   10.07              Indemnification of Administrative Agent....................................................86
   10.08              Administrative Agent in its Individual Capacity............................................86
   10.09              Successor Administrative Agent.............................................................86
   10.10              Administrative Agent May File Proofs of Claim..............................................87
   10.11              Collateral and Guaranty Matters............................................................88

ARTICLE XI.           MISCELLANEOUS..............................................................................88
   11.01              Amendments, Etc............................................................................88
   11.02              Notices and Other Communications; Facsimile Copies.........................................90
   11.03              No Waiver; Cumulative Remedies.............................................................91
   11.04              Attorney Costs, Expenses and Taxes.........................................................91
   11.05              Indemnification by the Borrower............................................................91
   11.06              Payments Set Aside.........................................................................92
   11.07              Successors and Assigns.....................................................................93
   11.08              Confidentiality............................................................................96
   11.09              Set-off....................................................................................96
   11.10              Interest Rate Limitation...................................................................97
   11.11              Counterparts...............................................................................97
   11.12              Integration................................................................................97
   11.13              Survival of Representations and Warranties.................................................97
   11.14              Severability...............................................................................97




                                      iii


                                                                                                         

   11.15              Tax Forms..................................................................................98
   11.16              Governing Law..............................................................................99
   11.17              Waiver of Right to Trial by Jury..........................................................100




SCHEDULES

         2.01     Commitments and Commitment Percentages
         6.01     Jurisdictions of Organization and Qualification
         6.06     Litigation
         6.09     Environmental Matters
         6.13     Subsidiaries and Other Equity Investments
         6.19     Burdensome Provisions
         8.01     Existing Liens
         8.02     Existing Investments
         8.03     Existing Indebtedness
         8.10     Transactions with Affiliates
         11.02    Administrative Agent's Office, Certain Addresses for Notices

EXHIBITS
                  FORM OF

         A        Loan Notice
         B        Swing Line Loan Notice
         C        Note
         D        Compliance Certificate
         E        Assignment and Assumption
         F        Guaranty Agreement
         G        Collateral Agreement
         H        Opinion Matters
         I        Joinder Agreement
         J        Borrowing Base Certificate


                                       iv



                                CREDIT AGREEMENT

         This CREDIT AGREEMENT ("Agreement") is entered into as of November 20,
2002, among BLUE RHINO CORPORATION, a Delaware corporation (the "Borrower"),
each lender from time to time party hereto (collectively, the "Lenders" and
individually, a "Lender"), and BANK OF AMERICA, N.A., as Administrative Agent,
Swing Line Lender and L/C Issuer.

         The Borrower has requested that the Lenders provide a revolving credit
facility and a term loan facility, and the Lenders are willing to do so on the
terms and conditions set forth herein.

         In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

ARTICLE I.
                        DEFINITIONS AND ACCOUNTING TERMS

         1.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:

         "Account Debtor" means any Person who is or who may become obligated to
the Borrower or any of its Subsidiaries under or on account of an Account.

         "Accounts" means all "accounts" (as defined in the UCC) of the Borrower
or any of its Subsidiaries, including without limitation all present or future
accounts receivable, all rights to payment for goods sold or leased or to be
sold or leased or for services rendered or to be rendered, whether or not earned
by performance, all rights in any merchandise or goods which any of the same may
represent, all notes receivable, book debts, notes, bills, drafts, acceptances,
choses in action, contract rights, instruments and documents and all sums of
money due or to become due thereon and all proceeds thereof and all rights,
title, security interests and guarantees with respect to each of the foregoing.

         "Additional Equity Offering" means the planned offering of common stock
of the Borrower; provided that such offering occurs on or before May 31, 2003.

         "Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

         "Administrative Agent's Office" means the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 11.02, or such
other address or account as the Administrative Agent may from time to time
notify the Borrower and the Lenders.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control




with the Person specified. "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise voting power, by
contract or otherwise. "Controlling" and "Controlled" have meanings correlative
thereto. Without limiting the generality of the foregoing, a Person shall be
deemed to be Controlled by another Person if such other Person possesses,
directly or indirectly, power to vote 10% or more of the securities having
ordinary voting power for the election of directors, managing general partners
or the equivalent.

         "Agent-Related Persons" means the Administrative Agent, together with
its Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

         "Aggregate Commitments" means the Commitments of all the Lenders.

         "Agreement" means this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.

         "Applicable Rate" means the following percentages per annum, based upon
the Consolidated Total Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Administrative Agent pursuant to Section 7.02(b):



- -------------------------------------------------------------------------------------------------------
                                           APPLICABLE RATE
- -------------------------------------------------------------------------------------------------------
                                                                        Eurodollar

                                                                          Rate +

                                                                            and
- -------------------------------------------------------------------------------------------------------
                                                                               
     1          Less than or equal to 0.75:1           0.375%              2.00%           0.50%

     2      Greater than 0.75:1 but less than or       0.500%              2.25%           0.75%

     3      Greater than 1.25:1 but less than or       0.500%              2.50%           1.00%

     4      Greater than 1.75:1 but less than or       0.500%              2.75%           1.25%

     5              Greater than 2.25:1                0.500%              3.00%           1.50%
- -------------------------------------------------------------------------------------------------------



         Any increase or decrease in the Applicable Rate resulting from a change
in the Consolidated Total Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 7.02(b); provided, that if a Compliance
Certificate is not delivered when due in accordance with such Section 7.02(b),
then Pricing Level 4 shall apply as of the first Business Day after the date on
which such Compliance Certificate was required to have been delivered. For the
period from the Closing Date to the first Business Day immediately following the
date of



                                       2


delivery of a Compliance Certificate for the period ended October 31, 2002, the
Applicable Rate shall be (a) 2.75% for the Eurodollar Rate and the Letter of
Credit Fee, (b) 1.25% for the Base Rate, and 0.50% for the Commitment Fee.

         "Arranger" means Banc of America Securities LLC, in its capacity as
sole lead arranger and sole book manager.

         "Assignment and Assumption" means an Assignment and Assumption
substantially in the form of Exhibit E.

         "Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all expenses and
disbursements of internal counsel.

         "Attributable Indebtedness" means, on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

         "Audited Financial Statements" means the audited consolidated balance
sheet of the Borrower and its Subsidiaries for the Fiscal Year ended July 31,
2002, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such Fiscal Year of the Borrower and its
Subsidiaries, including the notes thereto.

         "Availability Period" means the period from and including the Closing
Date to the earliest of (a) the Revolving Credit Maturity Date, (b) the date of
termination of the Revolving Credit Commitments pursuant to Section 2.06, and
(c) the date of termination of the commitment of each Lender to make Revolving
Credit Loans and of the obligation of the of the L/C Issuer to make L/C Credit
Extensions pursuant to Section 9.02.

         "Bank of America" means Bank of America, N.A., a national banking
association, and its successors.

         "Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." The "prime rate" is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

         "Base Rate Loan" means a Loan that bears interest based on the Base
Rate.

         "Borrower" has the meaning set forth in the introductory paragraph
hereto.



                                       3


         "Borrowing" means a Revolving Credit Borrowing, a Swing Line Borrowing
or a Term Loan Borrowing, as the context may require.

         "Borrowing Base" means, as of any date of determination and subject to
Section 1.08 and the following sentence: the sum of: (a) 80% of Eligible
Accounts, (b) 50% of Eligible Inventory, (c) 50% of Cylinder Inventory and (d)
50% of Eligible Equipment. Subject to any adjustments or corrections described
in Section 1.08, the Borrowing Base at any relevant time will be based on the
most recent Borrowing Base Certificate received by Administrative Agent pursuant
to Section 5.01 (a) or Section 7.02(c); provided that, if the Borrower fails to
deliver any Borrowing Base Certificate pursuant to Section 7.02(c) (i) on or
before the date it is due, the Borrower may not obtain any Loan or L/C Credit
Extension until such Borrowing Base Certificate is received by Administrative
Agent, or (ii) within 15 days after the date it is due, the Borrowing Base will
thereafter be $0.00 until such Borrowing Base Certificate is received by
Administrative Agent.

         "Borrowing Base Certificate" means a certificate in substantially the
form of Exhibit J, properly completed and signed by a Responsible Officer of the
Borrower, and accompanied by a reasonably detailed summary with listings and
agings of all Collateral, all in form and detail satisfactory to Administrative
Agent.

         "Borrowing Limit" means, as of any date of determination, the lesser of
(a) the Borrowing Base less the Outstanding Amount of the Term Loan and (b) the
Revolving Credit Commitments.

         "Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks are authorized to close under the Laws of, or are in
fact closed in, the state where the Administrative Agent's Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

         "Cash Collateralize" has the meaning set forth in Section 2.04(g).

         "Change of Control" means, with respect to any Person, an event or
series of events by which:

         (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, but excluding any employee
benefit plan of such person or its subsidiaries, and any person or entity acting
in its capacity as trustee, agent or other fiduciary or administrator of any
such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a person or group shall
be deemed to have "beneficial ownership" of all securities that such person or
group has the right to acquire (such right, an "option right"), whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the equity securities of such Person entitled to
vote for members of the board of directors or equivalent governing body of such
Person on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right); or



                                       4


         (b) during any period of 12 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of such
Person cease to be composed of individuals (i) who were members of that board or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or

         (c) the Borrower shall cease to own 100% of the capital stock of each
of the Guarantors; or

         (d) shall cause a "change of control," as defined in the Senior
Subordinated Debt Documents;

         provided, that a Permitted Reorganization shall not constitute a Change
of Control.

         "Closing Date" means, the first date all the conditions precedent in
Section 5.01 are satisfied or waived in accordance with Section 5.01 (or, in the
case of Section 5.01(c), waived by the Person entitled to receive the applicable
payment).

         "Code" means the Internal Revenue Code of 1986.

         "Collateral" means the collateral security for all or a portion of the
Obligations pledged or granted pursuant to the Security Documents.

         "Collateral Agreement" means that certain Collateral Agreement dated as
of the date hereof, by each of the Loan Parties in favor of the Administrative
Agent on behalf of the Lenders, substantially in the form of Exhibit G.

         "Commitment" means, as to each Lender, the sum of such Lender's
Revolving Credit Commitment and Term Loan Commitment, in an aggregate principal
amount at any one time outstanding not to exceed the amounts set forth opposite
such Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant
to which such Lender becomes a party hereto, as applicable, as such amount may
be adjusted from time to time in accordance with this Agreement.

         "Compliance Certificate" means a certificate substantially in the form
of Exhibit D.

         "Consolidated EBITDA" means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the



                                       5


following to the extent deducted in calculating such Consolidated Net Income:
(i) Consolidated Interest Charges for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations and capital leases,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings and net payments (if any) pursuant
to hedging obligations), (ii) the provision for federal, state, local and
foreign income taxes payable by the Borrower and its Subsidiaries for such
period, (iii) the amount of depreciation, amortization (including amortization
of goodwill and other intangibles but excluding amortization -of prepaid cash
expenses that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents and
accrual of or reserve for cash expenses in any future period or amortization of
a prepaid cash expense that was paid in a prior period) of the Borrower and its
Subsidiaries for such period to the extent that such depreciation, amortization
and other non-cash expenses were deducted in determining such Consolidated Net
Income and (iv) other expenses of the Borrower and its Subsidiaries reducing
such Consolidated Net Income which do not represent a cash item in such period
or any future period and minus (b) all non-cash items increasing Consolidated
Net Income for such period (other than items that were accrued in the ordinary
course of business).

         "Consolidated EBITDAR" means, for any period, the sum of Consolidated
EBITDA plus Consolidated Rental Expense for such period.

         "Consolidated Fixed Charges" means, for any period, the sum of the
following determined on a consolidated basis, for the Borrower and its
Subsidiaries in accordance with GAAP: (a) Consolidated Interest Charges paid in
cash, (b) dividends paid in cash by the Borrower, (c) scheduled principal
payments with respect to Indebtedness and (d) Consolidated Rental Expense.

         "Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of (a) the sum of (i) Consolidated EBITDAR for the
period of the four prior Fiscal Quarters ending on such date less (ii)
Maintenance Capital Expenditures made during such period less (iii) cash income
taxes (federal, state, local and foreign) paid by the Borrower and its
Subsidiaries during such period to (b) Consolidated Fixed Charges for such
period.

         "Consolidated Funded Indebtedness" means, as of any date of
determination, for the Borrower and its Subsidiaries on a consolidated basis,
the sum of (without duplication) (a) the outstanding principal amount of all
obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures,
notes, loan agreements or other similar instruments, (b) all direct obligations
arising under letters of credit (including standby and commercial), bankers'
acceptances, bank guaranties, surety bonds and similar instruments, (c) all
obligations in respect of the deferred purchase price of property or services
(other than accrued liabilities and all trade accounts payable in the ordinary
course of business), including, without limitation, all purchase money
Indebtedness, (d) Attributable Indebtedness in respect of capital leases and
Synthetic Lease Obligations, (e) without duplication, all Guarantees with
respect to outstanding Indebtedness of the types specified in clauses (a)
through (d) above of Persons other than the Borrower or any Subsidiary,



                                       6


and (g) all Indebtedness of the types referred to in clauses (a) through (f)
above of any partnership or joint venture (other than a joint venture that is
itself a corporation or limited liability company) in which the Borrower or a
Subsidiary is a general partner or joint venturer, unless such Indebtedness is
expressly made non-recourse to the Borrower or such Subsidiary.

         "Consolidated Interest Charges" means, for any period, for the Borrower
and its Subsidiaries on a consolidated basis, the sum of (a) all interest,
premium payments, debt discount, commissions, fees, charges and related expenses
of the Borrower and its Subsidiaries in connection with borrowed money
(including capitalized interest) (whether paid, accrued or scheduled to be
paid), in connection with the deferred purchase price of assets, or in
connection with letters of credit and bankers' acceptance financings in each
case to the extent treated as interest in accordance with GAAP, (b) the portion
of rent expense of the Borrower and its Subsidiaries with respect to such period
under capital leases that is treated as interest in accordance with GAAP and (c)
the amount of net settlement obligations of the Borrower and its Subsidiaries
under any Swap Contract respecting interest rate management and relating to the
spread between the fixed interest rate under such Swap Contract and the floating
interest rate hedged thereby.

         "Consolidated Net Income" means, for any period, for the Borrower and
its Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses) for that
period.

         "Consolidated Rental Expense" shall mean, for any period, for the
Borrower and its Subsidiaries on a consolidated basis, the operating lease
expense of the Borrower and its Subsidiaries determined in accordance with GAAP
for leases with an initial term greater than one year, as disclosed in the notes
to the consolidated financial statements of the Borrower and its Subsidiaries.

         "Consolidated Senior Indebtedness" means, as of any date of
determination, all Consolidated Funded Indebtedness of the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) on such date less any outstanding Subordinated
Indebtedness, including, without limitation, the Senior Subordinated Debt.

         "Consolidated Senior Leverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated Senior Indebtedness to (b)
Consolidated EBITDA for the period of four Fiscal Quarters most recently ended
for which the Borrower has delivered financial statements pursuant to Section
7.01(a) or Section 7.01(b).

         "Consolidated Net Worth" means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, Shareholders' Equity
of the Borrower and its Subsidiaries on that date.

         "Consolidated Total Leverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated Funded Indebtedness as of such date
to (b) Consolidated EBITDA for the



                                       7


period of the four Fiscal Quarters most recently ended for which the Borrower
has delivered financial statements pursuant to Section 7.01(a) or Section
7.01(b).

         "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

         "Control" has the meaning set forth in the definition of "Affiliate."

         "Credit Extension" means each of the following: (a) a Borrowing and (b)
an L/C Credit Extension.

         "Cylinder Inventory" means, subject to modification by the
Administrative Agent pursuant to Section 1.08, the net book value of all
non-obsolete cylinder Inventory (excluding Valve Inventory) of any Loan Party
which is owned or under lease to third party lessees on terms and conditions
satisfactory to the Administrative Agent.

         "Debtor Relief Laws" means the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

         "Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.

         "Default Rate" means an interest rate equal to (a) the Base Rate plus
(b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each
case to the fullest extent permitted by applicable Laws.

         "Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Revolving Credit Loans, the Term Loan, participations in L/C
Obligations or participations in Swing Line Loans required to be funded by it
hereunder within one Business Day of the date required to be funded by it
hereunder, (b) has otherwise failed to pay over to the Administrative Agent or
any other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

         "Disposition" or "Dispose" means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.

         "Disposition Proceeds" has the meaning set forth in Section 2.06(e).



                                       8


         "Dollar" and "$" mean lawful money of the United States.

         "Domestic Subsidiary" means any Subsidiary that is organized under the
laws of any political subdivision of the United States.

         "Eligible Assignee" has the meaning set forth in Section 11.07(g).

         "Eligible Accounts" means, subject to modification by the
Administrative Agent pursuant to Section 1.08, the face value of all Accounts
which are bona fide existing obligations of the named Account Debtor arising
from the sale and delivery of merchandise or the rendering of services to such
Account Debtor in the ordinary course of a Loan Party's business and are
actually owing to such Loan Party and to the best knowledge of the Loan Parties,
are not contingent for any reason, and such Loan Party has lawful and absolute
Title to such Account and the unqualified right to assign and grant a security
interest therein to the Administrative Agent, and shall not include:

         (a) any Account which is more than sixty (60) days past due;

         (b) any Account which is due from an Account Debtor more than 30% or
more of whose Accounts are not eligible pursuant to clause (a);

         (c) any Account for which there exists a right of set off, defense or
discount (except regular discounts allowed in the ordinary course of business to
promote prompt payment) and for which no defense or counterclaim has been
asserted;

         (d) any Account which represents an obligation of any local, state or
federal governmental agency or entity (other than Accounts not exceeding
$250,000 in the aggregate from the Army and Air Force Exchange Service as
Account Debtor which such Accounts shall not be excluded from Eligible Accounts
pursuant to this clause (d));

         (e) any Account which arises out of a contract or order which, by its
terms, forbids or makes void or unenforceable any assignment of or granting of a
security interest in such Account by such Loan Party to the Administrative
Agent;

         (f) any Account arising from a "sale on approval," "sale or return,"
"consignment," or subject to any other repurchase or return agreement;

         (g) any Account which represents an obligation of a customer which is
not a resident of the United States or its territories unless such account is
supported by a letter of credit in form and substance satisfactory to the
Administrative Agent;

         (h) any Account which arises from the sale or lease to or performance
of services for, or represents an obligation of, an employee, affiliate,
partner, parent or Subsidiary of a Loan Party, including, without limitation, R4
Technical Center;

         (i) any unapplied credits over 61 days old;



                                       9


         (j) any Account that is evidenced by chattel paper or an instrument of
any kind, unless such chattel paper or instrument is duly endorsed to and is in
the possession of the Administrative Agent, or with respect to electronic
chattel paper, is under the "control" (as defined in the UCC) of the
Administrative Agent;

         (k) any Account that is subject to any Lien or security interest
whatsoever, other than the Administrative Agent's first priority perfected
security interest;

         (l) any Account for which the Account Debtor is insolvent or the
subject of any bankruptcy or insolvency proceeding of any kind (other than
Accounts not exceeding $1,000,000 in the aggregate from Kmart, Inc. as Account
Debtor which such Accounts shall not be excluded from Eligible Accounts pursuant
to this clause (l)); and

         (m) any Account for which the Account Debtor is located in any state
which requires that the counterparty to such Account, in order to sue any Person
in such state's courts, either (i) qualify to do business in such state or (ii)
file a report with the taxation department of such state, and such Loan Party
has either not qualified as a foreign corporation authorized to transact
business in such state, or has not filed appropriate reports with the taxation
division for the then current year and the Account Debtor is not otherwise
amenable to suit in another convenient jurisdiction or the creditworthiness of
the Account Debtor is not otherwise approved by the Administrative Agent.

         "Eligible Equipment" means, subject to modification by the
Administrative Agent pursuant to Section 1.08, the net book value of all
equipment and machinery owned by the Loan Parties (excluding leasehold
improvements, computer equipment, truck graphics, computer software and laptops)
valued after appropriate reduction for depreciation determined in accordance
with GAAP and as reflected on the most recent financial statements of the
Borrower and its Subsidiaries delivered pursuant to Section 7.01(a) or Section
7.01(b); provided that (a) such equipment and machinery is located in the United
States, (b) such equipment and machinery is not subject to any Lien (other than
(i) Liens in favor of the Administrative Agent and (ii) Liens resulting from the
lease of equipment owned by any Loan Party to R4 Technical Center), and (c) the
Administrative Agent has a first priority perfected security interest in such
equipment and machinery pursuant to the requirements of the Security Documents.

         "Eligible Inventory" means, subject to modification by the
Administrative Agent pursuant to Section 1.08, the net book value of all
Inventory (other than Cylinder Inventory and Valve Inventory) of any Loan Party
which satisfies and continues to satisfy each of the following requirements:

         (a) Any warranty or representation contained in this Agreement or any
of the other Loan Documents applicable either to Inventory in general or to any
specific Inventory remains true and correct in all material respects with
respect to such Inventory;

         (b) The Inventory is in the possession of a Loan Party;

         (c) If such Inventory is located in a public warehouse or at a leased
location, the Administrative Agent shall have received a bailee letter or
landlord agreement, in form and



                                       10


substance satisfactory to the Administrative Agent, as the case may be, on or
prior to the date such bailee letter or landlord agreement is required to be
delivered pursuant to the terms of the Collateral Agreement;

         (d) Such Inventory consists of finished goods;

         (e) Such Inventory is not under consignment to or from any Person;

         (f) Such Inventory is of good and merchantable quality, free from
defects which would materially and adversely affect the market value thereof,

         (g) Such Inventory is not obsolete or currently unfit for use or sale
in the ordinary course of the business of the Borrower; and

         (h) Such Inventory is not subject to any Lien, except for the
Administrative Agent's Lien, and the Administrative Agent has a first priority
perfected Lien in such Inventory.

         "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

         "ERISA" means the Employee Retirement Income Security Act of 1974.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

         "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment



                                       11


as a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Borrower or any ERISA Affiliate.

         "Eurodollar Base Rate" has the meaning set forth in the definition of
Eurodollar Rate.

         "Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent
pursuant to the following formula:

                           Eurodollar Rate =          Eurodollar Base Rate
                                            ------------------------------------
                                            1.00 - Eurodollar Reserve Percentage
                  Where,

                  "Eurodollar Base Rate" means, for such Interest Period:

                  (a) the rate per annum equal to the rate determined by the
         Administrative Agent to be the offered rate that appears on the page of
         the Telerate screen (or any successor thereto) that displays an average
         British Bankers' Association Interest Settlement Rate for deposits in
         Dollars (for delivery on the first day of such Interest Period) with a
         term equivalent to such Interest Period, determined as of approximately
         11:00 a.m. (London time) two Business Days prior to the first day of
         such Interest Period, or

                  (b) if the rate referenced in the preceding clause (a) does
         not appear on such page or service or such page or service shall not be
         available, the rate per annum equal to the rate determined by the
         Administrative Agent to be the offered rate on such other page or other
         service that displays an average British Bankers' Association Interest
         Settlement Rate for deposits in Dollars (for delivery on the first day
         of such Interest Period) with a, term equivalent to such Interest
         Period, determined as of approximately 11:00 a.m. (London time) two
         Business Days prior to the first day of such Interest Period, or

                  (c) if the rates referenced in the preceding clauses (a) and
         (b) are not available, the rate per annum determined by the
         Administrative Agent as the rate of interest at which deposits in
         Dollars for delivery on the first day of such Interest Period in same
         day funds in the approximate amount of the Eurodollar Rate Loan being
         made, continued or converted by Bank of America and with a term
         equivalent to such Interest Period would be offered by Bank of
         America's London Branch to major banks in the London interbank
         eurodollar market at their request at approximately 4:00 p.m. (London
         time) two Business Days prior to the first day of such Interest Period.



                                       12


         "Eurodollar Rate Loan" means a Loan that bears interest at a rate based
on the Eurodollar Rate.

         "Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.

         "Event of Default" has the meaning set forth in Section 9.01.

         "Existing Facility" means the credit facilities described in the Second
Amended and Restated Loan Agreement dated as of June 30, 2000 by and between the
Borrower and Bank of America, as amended, restated, supplemented or otherwise
modified as of the date hereof.

         "Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.

         "Fee Letter" means the letter agreement, dated July 12, 2002, among the
Borrower, the Administrative Agent and the Arranger.

         "Fiscal Year" means the Borrower's Fiscal Year, which is the period of
twelve consecutive calendar months ending on July 31.

         "Fiscal Quarter" means each of the four periods of three consecutive
calendar months which make up each Fiscal Year.

         "Foreign Lender" has the meaning set forth in Section 11.15(a)(i).

         "Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.

         "FRB" means the Board of Governors of the Federal Reserve System of the
United States.

         "GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute



                                       13


of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or such other principles as may be approved
by a significant segment of the accounting profession in the United States, that
are applicable to the circumstances as of the date of determination,
consistently applied.

         "Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

         "Granting Lender" has the meaning set forth in Section 11.07(h).

         "Guarantee" means, as to any Person, any (a) any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith. The term "Guarantee" as a verb has a corresponding meaning.

         "Guarantors" means, collectively, all existing and future domestic
Subsidiaries of the Borrower (other than the Non-Material Subsidiaries).

         "Guaranty Agreement" means the Guaranty Agreement dated as of the date
hereof by the Guarantors in favor of the Administrative Agent on behalf of the
Lenders, substantially in the form of Exhibit F.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas,



                                       14


infectious or medical wastes and all other substances or wastes of any nature
regulated pursuant to any Environmental Law.

         "Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

         (a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;

         (b) all direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), bankers' acceptances, bank
guaranties, surety bonds and similar instruments;

         (c) net obligations of such Person under any Swap Contract;

         (d) all obligations of such Person to pay the deferred purchase price
of property or services (other than accrued liabilities and trade accounts
payable in the ordinary course of business);

         (e) indebtedness (excluding prepaid interest thereon) secured by a Lien
on property owned or, being purchased by such Person (including indebtedness
arising under conditional sales or other Title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse;

         (f) capital leases and Synthetic Lease Obligations;

         (g) all obligations of such Person to purchase, redeem, retire, defease
or otherwise make any payment in respect of capital stock in such Person or any
other Person; and

         (h) all Guarantees of such Person in respect of any of the foregoing.

         For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

         "Indemnified Liabilities" has the meaning set forth in Section 11.05.

         "Indemnitees" has the meaning set forth in Section 11.05.

         "Insurance and Condemnation Proceeds" has the meaning set forth in
Section 2.06(e).

         "Interest Payment Date" means, (a) as to any Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however,



                                       15


that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base
Rate Loan (including a Swing Line Loan), the last Business Day of each calendar
quarter and the Maturity Date.

         "Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, as selected by the Borrower in its Loan Notice; provided
that:

         (a) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;

         (b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;

         (c) no Interest Period shall extend beyond the Revolving Credit
Maturity Date or the Term Loan Maturity Date, as applicable; and

         (d) after giving effect to all Borrowings, all conversions of Loans
from one Type to the other, and all continuations of Loans as the same Type,
there shall not be more than- eight Interest Periods in effect with respect to
Eurodollar Rate Loans.

         "Inventory" means all "inventory" (as now or hereafter defined in the
UCC) of any Loan Party, including all accessions thereto, documents therefor and
any products made or processed therefrom and all substances, if any, commingled
therewith or added thereto.

         "Investment" means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person, (b)
a loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

         "IP Rights" has the meaning set forth in Section 6.17.

         "IRS" means the United States Internal Revenue Service.



                                       16


         "Joinder Agreement" means each joinder agreement executed in favor of
the Administrative Agent, for the ratable benefit of itself and the Lenders,
pursuant to requirements of Section 7.15 substantially in the form of Exhibit I.

         "Laws" means, collectively, all international, foreign, Federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

         "L/C Advance" means, with respect to each Lender, such Lender's funding
of its participation in any L/C Borrowing in accordance with its Revolving
Credit Commitment Percentage.

         "L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Revolving Credit Borrowing.

         "L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.

         "L/C Issuer" means Bank of America in its capacity as issuer of Letters
of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

         "L/C Obligations" means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit lulus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

         "Lender" has the meaning set forth in the introductory paragraph hereto
and, as the context requires, includes the L/C Issuer and the Swing Line Lender.

         "Lending Office" means, as to any Lender, the office or offices of such
Lender described as such in such Lender's Administrative Questionnaire, or such
other office or offices as a Lender may from time to time notify the Borrower
and the Administrative Agent.

         "Letter of Credit" means any letter of credit issued hereunder. A
Letter of Credit may be a commercial letter of credit or a standby letter of
credit.

         "Letter of Credit Application" means an application and agreement for
the issuance or amendment of a Letter of Credit in the form from time to time in
use by the L/C Issuer.

         "Letter of Credit Expiration Date" means the day that is seven days
prior to the Revolving Credit Maturity Date then in effect (or, if such day is
not a Business Day, the next preceding Business Day).



                                       17


         "Letter of Credit Sublimit" means an amount equal to the lesser of (a)
$15,000,000 and (b) the Revolving Credit Commitments. The Letter of Credit
Sublimit is part of, and not in addition to, the Revolving Credit Commitments.

         "Lien" means any deed of trust, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge,
or preference, priority or other security interest or preferential arrangement
of any kind or nature whatsoever (including any conditional sale or other Title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing).

         "Loans" means the collective reference to the Revolving Credit Loans,
the Term Loan and Swing Line Loans and "Loan" means any of such Loans.

         "Loan Documents" means this Agreement, each Note, each Security
Document, and the Fee Letter and the Guaranty Agreement.

         "Loan Notice" means a notice of (a) a Revolving Credit Borrowing, (b) a
Term Loan Borrowing, (c) a conversion of Loans from one Type to the other, or
(d) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which,
if in writing, shall be substantially in the form of Exhibit A.

         "Loan Parties" means, collectively, the Borrower and each Guarantor.

         "Maintenance Capital Expenditures" means, for any period, an amount
equal to: (a) depreciation expense for the Borrower and its Subsidiaries, on a
consolidated basis, during such period, multiplied by, (b) 0.50.

         "Material Adverse Effect" means (a) material adverse change in, or a
material adverse effect upon, the operations, business, properties, liabilities
(actual or contingent), condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.

         "Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.

         "Net Cash Proceeds" means:

         (a) with respect to any incurrence of any Indebtedness by the Borrower
or any Subsidiary, the aggregate amount of all cash received by the Borrower or
any Subsidiary in respect of such Indebtedness, net of all reasonable fees,
discounts, commissions and expenses incurred by the Borrower or such Subsidiary
in connection therewith.



                                       18


         (b) with respect to the sale of any asset by the Borrower or any
Subsidiary, the excess, if any, of (i) the sum of cash and cash equivalents
received in connection with such sale (including any cash received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) over (ii) the sum of (A) the
principal amount of any Indebtedness that is secured by such asset and that is
required to be repaid in connection with the sale thereof (other than
Indebtedness under the Loan Documents), (B) the out-of-pocket expenses incurred
by the Borrower or any Subsidiary in connection with such sale and (C) income
taxes reasonably estimated to be actually payable within two years of the date
of the relevant asset sale as a result of any gain recognized in connection
therewith;

         (c) with respect to the sale of any capital stock or other equity
interest by the Borrower or any Subsidiary, the excess of (i) the sum of the
cash and cash equivalents received in connection with such sale over (ii) the
underwriting discounts and commissions, and other out-of-pocket expenses,
incurred by the Borrower or such Subsidiary in connection with such sale; and

         (d) with respect to any payment under an insurance policy or in
connection with a condemnation proceeding, the amount of cash proceeds received
by the Borrower or any Subsidiary from an insurance company or Governmental
Authority, as applicable, net of all expenses of collection.

         "Non-Propane Products Divestiture" means one or more sales by UniFlame
Corporation and/or QuickShip, Inc., wholly-owned Subsidiaries of the Borrower,
of certain assets relating to their respective non-propane fueled products lines
of business.

         "Non-Material Subsidiaries" means the collective reference to (a)
QuickShip, Inc. and Rhino Services, LLC and (b) any Subsidiary formed after the
Closing Date, which such Subsidiary is not engaged in any business operations
and does not possess assets in excess of $10,000.

         "Note" means a promissory note made by the Borrower in favor of a
Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit C.

         "Obligations" means (a) all advances to, and debts, liabilities, fees,
commissions, obligations, covenants and duties of, any Loan Party arising under
any Loan Document or otherwise with respect to any Loan or Letter of Credit,
whether direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against any
Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief
Laws naming such Person as the debtor in such proceeding, regardless of whether
such interest and fees are allowed claims in such proceeding and (b) all
existing or future payment and other obligations owing by the Borrower under any
Swap Contract (which such Swap Contract is permitted hereunder) entered into
with any Person that is a Lender or an Affiliate thereof at the time such Swap
Contract is entered into.



                                       19


         "Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

         "Outstanding Amount" means (a) with respect to Revolving Credit Loans,
the Term Loan and Swing Line Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowings and prepayments
or repayments of Revolving Credit Loans, the Term Loan and Swing Line Loans, as
the case may be, occurring on such date; and (b) with respect to any L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any L/C Credit Extension occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements of outstanding unpaid drawings under
any Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date.

         "Participant" has the meaning set forth in Section 11.07(d).

         "PBGC" means the Pension Benefit Guaranty Corporation.

         "Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

         "Permitted Distributorship Acquisition" means the proposed purchase by
the Borrower and its Subsidiaries of approximately 10 of its independent
distributors for a total consideration of approximately $22,700,000 (plus an
amount of assumed liabilities and accruals not to exceed $10,000,000 in the
aggregate), of which approximately $19,000,000 will be made in the form of
common stock of the Borrower.

         "Permitted Acquisition" means any Investment permitted pursuant to
Section 8.02(f) or Section 8.02(g).

         "Permitted Liens" means the Liens permitted pursuant to Section 8.01.

         "Permitted Reorganization" means any one or more (or any combination)
of the following transactions: (a) a merger, consolidation or any analogous
reorganization or transaction of a Loan Party with a Proposed Loan Party
provided that the Proposed Loan Party is the surviving entity in the case of a
merger or (b) a sale, lease, transfer or other disposition of any



                                       20


assets by a Loan Party to another Loan Party and/or a Proposed Loan Party;
provided that in each case: (i) each Loan Party or Proposed Loan Party is
Solvent and will be Solvent immediately after giving effect to any such
transaction, (ii) no Default or Event of Default exists or will exist
immediately after giving effect to any such transaction, (iii) no Loan Party
that survives the Permitted Reorganization shall be released from this Agreement
or the other Loan Documents; (iv) immediately following the Permitted
Reorganization, the Proposed Loan Parties and the Loan Parties surviving the
Permitted Reorganization shall own all of the assets that were owned by the Loan
Parties immediately preceding the Permitted Reorganization (except for
Dispositions otherwise expressly permitted under this Agreement), and (v) the
Borrower, its Subsidiaries and each Proposed Loan Party shall have complied with
applicable provisions of Section 8.04(c). For purposes of this definition of
"Permitted Reorganization," any party formed specifically to effect the
Permitted Reorganization shall be deemed "Solvent."

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

         "Proposed Loan Party" means, with respect to any Permitted
Reorganization, (a) a Wholly-Owned Subsidiary of a Loan Party that joins this
Agreement and the other Loan Documents as a Borrower or Guarantor on the
effective date of such Permitted Reorganization or (b) with the consent of the
Lenders, which consent shall not be unreasonably withheld, a Person that joins
this Agreement and the other Loan Documents as a Borrower on the effective date
of such Permitted Reorganization and agrees to be substituted for Blue Rhino
Corporation as the Borrower under this Agreement and a Wholly-Owned Subsidiary
of such Person that joins this Agreement and other Loan Documents as a Borrower
or a Guarantor on the effective date of such Permitted Reorganization.

         "R4 Technical Center" means R4 Technical Center - North Carolina, LLC,
a Delaware limited liability company.

         "Register" has the meaning set forth in Section 11.07(c).

         "Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than events for which the 30 day notice period has been waived.

         "Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Revolving Credit Loans or the Term Loan, a Loan
Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit
Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan
Notice.

         "Required Lenders" means, as of any date of determination, Lenders
holding more than 66-2/3% of the sum of (a) the Revolving Credit Commitments (or
the Revolving Credit Outstandings if the Revolving Credit Commitments have been
terminated (with the aggregate amount of each Lender's risk participation and
funded participation in L/C Obligations and



                                       21


Swing Line Loans being deemed "held" by such Lender for purposes of this
definition)) and (b) the Term Loans; provided that (i) the Commitment of, and
the portion of the Revolving Credit Outstandings or the Term Loan, as
applicable, held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders and (ii) "Required
Lenders" shall at all time be comprised of at least three (3) Lenders.

         "Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer or assistant treasurer of a Loan Party. Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any capital stock or
other equity interest of the Borrower or any Subsidiary, or any payment (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock or other equity interest
or of any option, warrant or other right to acquire any such capital stock or
other equity interest.

         "Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Loans of the same Type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by each of the
Lenders pursuant to Section 2.01.

         "Revolving Credit Commitment" means, as to each Lender, its obligation
to (a) to make Revolving Credit Loans in accordance with the provisions of
Section 2.01(a), (b) to purchase participations in L/C Obligations and (c) to
purchase participations in Swing Line Loans, in an aggregate principal amount at
any one time outstanding not to exceed the amounts set forth opposite such
Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement. "Revolving Credit
Commitments" means the aggregate Revolving Credit Commitment of all Lenders. On
the Closing Date the Revolving Credit Commitments shall be $45,000,000.

         "Revolving Credit Commitment Percentage" means, as to each Lender at
any time, a fraction (expressed as a percentage, carried out to the ninth
decimal place), the numerator of which is the amount of the Revolving Credit
Commitment of such Lender at such time and the denominator of which is the
amount of the Revolving Credit Commitments at such time; provided that if the
commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 9.02, then
the Revolving Credit Commitment Percentage of each Lender shall be determined
based on the Revolving Credit Commitment Percentage of such Lender immediately
prior to such termination and after giving effect to any subsequent assignments
made pursuant to the terms hereof. The initial Revolving Credit Commitment
Percentage of each Lender is set forth opposite the name of



                                       22


such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable.

         "Revolving Credit Loan" has the meaning set forth in Section 2.01(a).

         "Revolving Credit Maturity Date" means November 10, 2005.

         "Revolving Credit Outstandings" means the aggregate Outstanding Amount
of all Revolving Credit Loans, Swing Line Loans and L/C Obligations.

         "SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

         "Security Documents" means the Collateral Agreement and any documents
creating a Lien for the benefit of the Administrative Agent executed by any Loan
Party after the Closing Date, including all filings, financing statements and
other documents delivered in connection therewith.

         "Senior Subordinated Debt" means the obligations of the Borrower and
others in the initial principal amount of $15,000,000 incurred pursuant to the
Senior Subordinated Debt Documents, as such documents may be amended, restated,
supplemented or otherwise modified in a manner consistent with the terms hereof.

         "Senior Subordinated Debt Documents" means the collective reference to
(a) the Investment Agreement and the Senior Subordinated Debenture, each dated
as of June 15, 2001 by and among the Borrower, certain Subsidiaries of the
Borrower and Allied Capital Corporation, and (b) each other "Loan Document" (as
defined in the Investment Agreement), in each case, as amended, restated,
supplemented or otherwise modified pursuant to the terms hereof.

         "Shareholders' Equity" means, as of any date of determination,
consolidated shareholders' equity of the Borrower and its Subsidiaries as of
that date determined in accordance with GAAP.

         "Solvent" means, as to the Borrower and its Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is able to pay its debts as they mature, (b) owns property having
a value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.

         "Subordinated Indebtedness" means the collective reference to the
Senior Subordinated Debt and any other Indebtedness of the Borrower or any
Subsidiary subordinated in right and time of payment to the Obligations and
containing such other terms and conditions (including, without limitation,
subordination terms), in each case as are satisfactory to the Required Lenders.



                                       23


         "Subsidiary" of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrower.

         "Swap Contract" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.

         "Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

         "Swing Line" means the revolving credit facility made available by the
Swing Line Lender pursuant to Section 2.05.

         "Swing Line Borrowing" means a borrowing of a Swing Line Loan pursuant
to Section 2.05.

         "Swing Line Lender" means Bank of America in its capacity as provider
of Swing Line Loans, or any successor swing line lender hereunder.

         "Swing Line Loan" has the meaning set forth in Section 2.05(a).



                                       24


         "Swing Line Loan Notice" means a notice of a Swing Line Borrowing
pursuant to Section 2.05(b), which, if in writing, shall be substantially in the
form of Exhibit B.

         "Swing Line Sublimit" means an amount equal to the lesser of (a)
$5,000,000 and (b) the Revolving Credit Commitments. The Swing Line Sublimit is
part of, and not in addition to, the Revolving Credit Commitments.

         "Synthetic Lease Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

         "Term Loan" shall have the meaning assigned to such term in Section
2.02.

         "Term Loan Borrowing" means a borrowing consisting of simultaneous Term
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the
same Interest Period made by each of the Lenders pursuant to Section 2.02.

         "Term Loan Commitment" means, as to each Lender, its obligation to make
its portion of the Term Loan in accordance with the provisions of Section
2.02(a) in an aggregate principal amount at any one time outstanding not to
exceed the amounts set forth opposite such Lender's name on Schedule 2.01 or in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement. "Term Loan Commitments" means the aggregate Term
Loan Commitment of all Lenders. On the Closing Date the Term Loan Commitments
shall be $15,000,000.

         "Term Loan Maturity Date" means September 30, 2005.

         "Term Loan Percentage" means, as to each Lender (a) prior to making the
Term Loan, a fraction (expressed as a percentage, carried out to the ninth
decimal place), the numerator of which is the amount of the Term Loan Commitment
of such Lender at such time and the denominator of which is the amount of the
Term Loan Commitments at such time and (b) after the making of the Term Loan, a
fraction (expressed as a percentage, carried out to the ninth decimal place),
the numerator of which is the outstanding principal balance of the Term Loan of
such Lender and the denominator of which is the aggregate outstanding principal
balance of the Term Loan of all the Lenders. The initial Term Loan Percentage of
each Lender is set forth opposite the name of such Lender on Schedule 2.01, or
in the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable.

         "Threshold Amount" means $1,000,000.

         "Type" means, with respect to a Revolving Credit Loan or Term Loan, its
character as a Base Rate Loan or a Eurodollar Rate Loan.



                                       25


         "UCC" means, subject to Section 1.04, the Uniform Commercial Code in
effect in the State of North Carolina, as amended or modified from time to time.

         "Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.

         "United States" and "U.S." mean the United States of America.

         "Unreimbursed Amount" has the meaning set forth in Section 2.04(c)(i).

         "Valve Inventory" means Inventory of any Loan Party in the form of
cylinder valves which are subject to the proprietary intellectual property or
other rights (including, without limitation, all TS2 valves) of such Loan Party.

         "Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such Person or one or
more wholly owned subsidiaries of such Person or by such Person and one or more
wholly owned subsidiaries of such Person.

         1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

         (a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.

         (b) (i) The words "herein," "hereto," "hereof" and "hereunder" and
words of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.

                  (ii) Article, Section, Exhibit and Schedule references are
to the Loan Document in which such reference appears.

                  (iii) The term "including" is by way of example and not
limitation.

                  (iv) The term "documents" includes any and all
instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or
electronic form.

         (c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including;" the words "to"
and "until" each mean "to but excluding;" and the word "through" means "to and
including."



                                       26


         (d) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.

         1.03 ACCOUNTING TERMS. (a) All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.

         (b) If at any time any change in GAAP would affect the computation of
any financial ratio or requirement set forth in any Loan Document, and either
the Borrower or the Required Lenders shall so request, the Administrative Agent,
the Lenders and the Borrower shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Required Lenders); provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

         1.04 ROUNDING. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement and any determination of the Borrowing Base
shall be calculated by dividing the appropriate component by the other component
or, with respect to the Borrowing Base, multiplying such component by the
advance rate percentage, carrying the result to one place more than the number
of places by which such ratio or percentage is expressed herein and rounding the
result up or down to the nearest number (with a rounding-up if there is no
nearest number).

         1.05 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

         1.06 TIMES OF DAY. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

         1.07 LETTER OF CREDIT AMOUNTS. Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall be
deemed to mean the maximum face amount of such Letter of Credit after giving
effect to all increases thereof contemplated by such Letter of



                                       27


Credit or the Letter of Credit Application therefor, whether or not such maximum
face amount is in effect at such time.

         1.08 BORROWING BASE. The Borrowing Base shall be determined and
computed to avoid duplication or multiple inclusion of any item of Collateral.
The Administrative Agent may make such adjustments or corrections to any
Borrowing Base Certificate as the Administrative Agent may determine in good
faith is necessary or appropriate to determine and compute the Borrowing Base in
accordance with the intent of this Agreement, and any such determination will be
binding on the Borrower.

                                   ARTICLE II.
                      THE COMMITMENTS AND CREDIT EXTENSIONS

         2.01 REVOLVING CREDIT LOANS.

         (a) Revolving Credit Commitment. Subject to the terms and conditions
set forth herein, each Lender severally agrees to make revolving loans (each
such loan, a "Revolving Credit Loan") to the Borrower from time to time, on any
Business Day during the Availability Period, in an aggregate amount not to
exceed at any time outstanding the amount of such Lender's Revolving Credit
Commitment; provided, however, that after giving effect to any Revolving Credit
Borrowing, (i) the Revolving Credit Outstandings shall not exceed the Borrowing
Limit, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans
of any Lender, plus such Lender's Revolving Credit Commitment Percentage of the
Outstanding Amount of all L/C Obligations, plus such Lender's Revolving Credit
Commitment Percentage of the Outstanding Amount of all Swing Line Loans shall
not exceed such Lender's Revolving Credit Commitment. Within the limits of each
Lender's Revolving Credit Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.01, prepay under
Section 2.06, and reborrow under this Section 2.01. Revolving Credit Loans may
be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

         (b) Borrowing Procedures.

                  (i) Each Revolving Credit Borrowing shall be made upon the
Borrower's irrevocable notice to the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Administrative Agent not
later than 11:00 a.m. (A) three Business Days prior to the requested date of any
Revolving Credit Borrowing of Eurodollar Rate Loans, and (B) on the requested
date of any Revolving Credit Borrowing of Base Rate Loans. Each telephonic
notice by the Borrower pursuant to this Section 2.01(b) must be confirmed
promptly by delivery to the Administrative Agent of a written Loan Notice,
appropriately completed and signed by a Responsible Officer of the Borrower.
Each Revolving Credit Borrowing of Eurodollar Rate Loans shall be in a principal
amount of $2,000,000 or a whole multiple of $500,000 in excess thereof. Except
as provided in Section 2.04(c) and Section 2.05(c), each Revolving Credit
Borrowing of Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof. Each Loan Notice (whether
telephonic or written) shall specify (A) the requested date of the Revolving
Credit Borrowing (which shall be a Business Day), (B) the principal amount of
Revolving Credit Loans to be borrowed, (C) the



                                       28


Type of Revolving Credit Loans to be borrowed, and (D) if applicable, the
duration of the Interest Period with respect thereto. If the Borrower fails to
specify a Type of Revolving Credit Loan in a Loan Notice, then the applicable
Revolving Credit Loans shall be made as Base Rate Loans. If the Revolving Credit
Borrower requests a Borrowing of Eurodollar Rate Loans in any such Loan Notice,
but fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month.

                  (ii) Following receipt of a Loan Notice, the Administrative
Agent shall promptly notify each Lender of the amount of its Revolving Credit
Commitment Percentage of the applicable Revolving Credit Loans. Each Lender
shall make the amount of its Revolving Credit Loan available to the
Administrative Agent in immediately available funds at the Administrative
Agent's Office not later than 2:00 p.m. on the Business Day specified in the
applicable Loan Notice. Upon satisfaction of the applicable conditions set forth
in Section 5.02 (and, if such Revolving Credit Borrowing is the initial Credit
Extension, Section 5.01), the Administrative Agent shall make all funds so
received available to the Borrower in like funds as received by the
Administrative Agent either by (A) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (B) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower; provided,
however, that if, on the date the Loan Notice with respect to such Revolving
Credit Borrowing is given by the Borrower, there are L/C Borrowings outstanding,
then the proceeds of such Revolving Credit Borrowing shall be applied, first, to
the payment in full of any such L/C Borrowings and second, to the Borrower as
provided above.

                  (iii) The Administrative Agent shall promptly notify the
Borrower and the Lenders of the interest rate applicable to any Interest Period
for Revolving Credit Loans bearing interest based upon the Eurodollar Rate upon
determination of such interest rate. The determination of the Eurodollar Rate by
the Administrative Agent shall be conclusive in the absence of manifest error.
At any time that Revolving Credit Loans bearing interest based upon the Base
Rate are outstanding, the Administrative Agent shall notify the Borrower and the
Lenders of any change in Bank of America's prime rate used in determining the
Base Rate promptly following the public announcement of such change.

                  (iv) During the existence of a Default, no Loans may be
requested as Eurodollar Rate Loans without the consent of the Required Lenders.

         2.02 TERM LOAN.

         (a) Term Commitment. Subject to the terms and conditions set forth
herein, each Lender severally agrees to make available to the Borrower on the
Closing Date such Lender's Term Loan Percentage of a term loan (the "Term Loan";
each component thereof may be referred to herein ass a "Term Loan") in an
aggregate principal amount equal to the Term Loan Commitments. The Term Loan may
consist of Base Rate Loans or Eurodollar Rate Loans, or a combination thereof,
as the Borrower may request. Amounts repaid on the Term Loan may not be
reborrowed.



                                       29


         (b) Borrowing Procedures.

                  (i) The Borrower shall give irrevocable notice to the
Administrative Agent, which may be given by telephone, not later than 11:00 a.m.
(or such later time as the Administrative Agent and the Borrower shall agree)
(A) on the Closing Date, with respect to the portion of the Term Loan initially
consisting of a Base Rate Loan, or (B) on the third Business Day prior to the
Closing Date, with respect to the portion of the Term Loan initially consisting
of one or more Eurodollar Rate Loans. Each Term Loan Borrowing consisting of
Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole
multiple of $500,000 in excess thereof. Each portion of the Term Loan consisting
of Base Rate Loans shall be in a principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof. Such Loan Notice shall be irrevocable
and shall specify (A) that the funding of the Term Loan is requested, (B)
whether the funding of the Term Loan shall be comprised of Base Rate Loans,
Eurodollar Rate Loans or a combination thereof, and (C) if applicable, the
duration of the Interest Period with respect thereto. If the Borrower shall fail
to deliver such Loan Notice to the Administrative Agent by 11:00 a.m. on the
third Business Day prior to the Closing Date, then the full amount of the Term
Loan shall be disbursed on the Closing Date as a Base Rate Loan. If the Borrower
fails to specify a Type of Loan in a Loan Notice, then the Term Loan shall be
made as a Base Rate Loan. If the Borrower requests that the Term Loan or a
portion thereof consist of Eurodollar Rate Loans in any such Loan Notice, but
fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month. Each telephonic notice by the Borrower pursuant to
this Section 2.02(b) must be confirmed promptly by delivery to the
Administrative Agent of a written Loan Notice, appropriately completed and
signed by a Responsible Officer of the Borrower.

                  (ii) Following receipt of a Loan Notice, the Administrative
Agent shall promptly notify each Lender of the amount of its Term Loan
Percentage of the Term Loan. Each Lender shall make the amount of the Term Loan
to be made by such Lender available to the Administrative Agent in immediately
available funds at the Administrative Agent's Office not later than 2:00 p.m. on
the Closing Date. Upon satisfaction of the applicable conditions set forth in
Section 5.01 and Section 5.02, the Administrative Agent shall make all funds so
received available to the Borrower in like funds as received by the
Administrative Agent either by (A) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (B) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower.

                  (iii) The Administrative Agent shall promptly notify the
Borrower and the Lenders of the interest rate applicable to any Interest Period
for the portion of the Term Loan bearing interest based upon Eurodollar Rate
Loans upon determination of such interest rate. The determination of the
Eurodollar Rate by the Administrative Agent shall be conclusive in the absence
of manifest error. At any time that any portion of the Term Loan bearing
interest based upon Base Rate is outstanding, the Administrative Agent shall
notify the Borrower and the Lenders of any change in Bank of America's prime
rate used in determining the Base Rate promptly following the `public
announcement of such change.

         2.03 CONVERSIONS AND CONTINUATIONS OF REVOLVING CREDIT LOANS AND TERM
LOAN.



                                       30


         (a) The Borrower shall have the option to convert Loans (other than
Swing Line Loans) from one Type to the other and to continue Eurodollar Rate
Loans. Each conversion of Loans from one Type to the other, and each
continuation of Eurodollar Rate Loans shall be made upon the Borrower's
irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than
11:00 a.m. three Business Days prior to the requested date of any conversion to
or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate
Loans to Base Rate Loans. Each telephonic notice by the Borrower pursuant to
this Section 2.03(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Loan Notice, appropriately completed and
signed by a Responsible Officer of the Borrower. Each conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of
$2,000,000 or a whole multiple of $500,000 in excess thereof. Each conversion to
Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple
of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written)
shall specify (i) whether the Borrower is requesting a conversion of Revolving
Credit Loans or a Term Loan, as applicable, from one Type to the other, or a
continuation of Eurodollar Rate Loans, (ii) the requested date of the conversion
or continuation (which shall be a Business Day), (iii) the principal amount of
Loans to be converted or continued, (iv) the Type of Loans to which existing
Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to give a timely notice
requesting a conversion or continuation of Eurodollar Rate Loans, then the
applicable Eurodollar Rate Loans shall be converted to Base Rate Loans. Any such
automatic conversion to Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loans. If the Borrower requests a conversion to or continuation of
Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month.

         (b) Following receipt of a Loan Notice, the Administrative Agent shall
promptly notify each Lender. If no timely notice of a conversion or continuation
is provided by the Borrower, the Administrative Agent shall notify each Lender
of the details of any automatic conversion to Base Rate Loans described in the
preceding subsection.

         (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Loans may be
converted to or continued as Eurodollar Rate Loans without the consent of the
Required Lenders.

         2.04 LETTERS OF CREDIT.

         (a) Letter of Credit Commitment.

                  (i) Subject to the terms and conditions set forth herein, (A)
the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set
forth in this Section 2.04, (1) from time to time on any Business Day during the
period from the Closing Date until the Letter of Credit Expiration Date, to
issue Letters of Credit for the account of the Borrower, and to amend Letters of
Credit previously issued by it, in accordance with subsection (b) below, and (2)
to honor drafts under the Letters of Credit; and (B) the Lenders severally agree
to participate



                                       31


in Letters of Credit issued for the account of the Borrower; provided that the
L/C Issuer shall not be obligated to make any L/C Credit Extension with respect
to any Letter of Credit, and no Lender shall be obligated to participate in any
Letter of Credit if as of the date of such L/C Credit Extension, (x) the
Revolving Credit Outstandings would exceed the Borrowing Limit, (y) the
aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus
such Lender's Revolving Credit Commitment Percentage of the Outstanding Amount
of all L/C Obligations, plus such Lender's Revolving Credit Commitment
Percentage of the Outstanding Amount of all Swing Line Loans would exceed such
Lender's Revolving Credit Commitment, or (z) the Outstanding Amount of the L/C
Obligations would exceed the Letter of Credit Sublimit. Within the foregoing
limits, and subject to the terms and conditions hereof, the Borrower's ability
to obtain Letters of Credit shall be fully revolving, and accordingly the
Borrower may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit that have expired or that have been drawn upon and reimbursed.

                  (ii) The L/C Issuer shall be under no obligation to issue any
Letter of Credit if:

                           (A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C
Issuer from issuing such Letter of Credit, or any Law applicable to the L/C
Issuer or any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit,
or request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the L/C Issuer any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which the L/C Issuer in good faith deems material to it;

                           (B) subject to Section 2.04(b)(iii), the expiry date
of such requested Letter of Credit would occur more than twelve months after the
date of issuance or last renewal, unless the Required Lenders have approved such
expiry date;

                           (C) the expiry date of such requested Letter of
Credit would occur after the Letter of Credit Expiration Date, unless all the
Lenders have approved such expiry date;

                           (D) the issuance of such Letter of Credit would
violate one or more policies of the L/C Issuer; or

                           (E) such Letter of Credit is in an initial amount
less than $75,000, in the case of a commercial Letter of Credit, or $250,000, in
the case of a standby Letter of Credit.

                  (iii) The L/C Issuer shall be under no obligation to amend any
Letter of Credit if (A) the L/C Issuer would have no obligation at such time to
issue such Letter of Credit in its amended form under the terms hereof, or (B)
the beneficiary of such Letter of Credit does not accept the proposed amendment
to such Letter of Credit.



                                       32


         (b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.

                  (i) Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of the Borrower delivered to the L/C Issuer (with
a copy to the Administrative Agent) in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of the
Borrower. Such Letter of Credit Application must be received by the L/C Issuer
and the Administrative Agent not later than 11:00 a.m. at least two Business
Days (or such later date and time as the L/C Issuer may agree in a particular
instance in its sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be. In the case of a request for an initial issuance
of a Letter of Credit, such Letter of Credit Application shall specify in form
and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day); (B) the amount
thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the L/C Issuer may require. In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter
of Credit to be amended; (B) the proposed date of amendment thereof (which shall
be a Business Day); (C) the nature of the proposed amendment; and (D) such other
matters as the L/C Issuer may require.

                  (ii) Promptly after receipt of any Letter of Credit
Application, the L/C Issuer will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has received a copy of
such Letter of Credit Application from the Borrower and, if not, the L/C Issuer
will provide the Administrative Agent with a copy thereof. Upon receipt by the
L/C Issuer of confirmation from the Administrative Agent that the requested
issuance or amendment is permitted in accordance with the terms hereof, then,
subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Borrower or
enter into the applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer's usual and customary business practices.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the L/C Issuer a risk participation in such Letter of Credit in an amount equal
to the product of such Lender's Revolving Credit Commitment Percentage times the
amount of such Letter of Credit.

                  (iii) If the Borrower so requests in any applicable Letter of
Credit Application, the L/C Issuer may, in its sole and absolute discretion,
agree to issue a Letter of Credit that has automatic renewal provisions (each,
an "Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal Letter
of Credit must permit the L/C Issuer to prevent any such renewal at least once
in each twelve-month period (commencing with the date of issuance of such Letter
of Credit) by giving prior notice to the beneficiary thereof not later than a
day (the "Nonrenewal Notice Date") in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by
the L/C Issuer, the Borrower shall not be required to make a specific request to
the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require)



                                       33


the L/C Issuer to permit the renewal of such Letter of Credit at any, time to an
expiry date not later than the Letter of Credit Expiration Date; provided,
however, that the L/C Issuer shall not permit any such renewal if (A) the L/C
Issuer has determined that it would have no obligation at such time to issue
such Letter of Credit in its renewed form under the terms hereof (by reason of
the provisions of Section 2.04(a)(ii) or otherwise), or (B) it has received
notice (which may be by telephone or in writing) on or before the day that is
two Business Days before the Nonrenewal Notice Date (1) from the Administrative
Agent that the Required Lenders have elected not to permit such renewal or (2)
from the Administrative Agent, any Lender or the Borrower that one. or more of
the applicable conditions specified in Section 5.02 is not then satisfied.

                  (iv) Promptly after its delivery of any Letter of Credit or
any amendment to a Letter of Credit to an advising bank with respect thereto or
to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and
the Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

         (c) Drawings and Reimbursements; Funding of Participations.

                  (i) Upon receipt from the beneficiary of any Letter of Credit
of any notice of a drawing under such Letter of Credit, the L/C Issuer shall
notify the Borrower and the Administrative Agent thereof. Not later than 11:00
a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each
such date, an "Honor Date"), the Borrower shall reimburse the L/C Issuer through
the Administrative Agent in an amount equal to the amount of such drawing. If
the Borrower fails to so reimburse the L/C Issuer by such time, the
Administrative Agent shall promptly notify each Lender of the Honor Date, the
amount of the unreimbursed drawing (the "Unreimbursed Amount"), and the amount
of such Lender's Revolving Credit Commitment Percentage thereof. In such event,
the Borrower shall be deemed to have requested a Revolving Credit Borrowing of
Base Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.01 for the principal amount of Base Rate Loans, but subject to the
amount of the unutilized portion of the Revolving Credit Commitments and the
conditions set forth in Section 5.02 (other than the delivery of a Loan Notice).
Any notice given by the L/C Issuer or the Administrative Agent pursuant to this
Section 2.04(c)(i) may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

                  (ii) Each Lender (including the Lender acting as L/C Issuer)
shall upon any notice pursuant to Section 2.04(c)(i) make funds available to the
Administrative Agent for the account of the L/C Issuer at the Administrative
Agent's Office in an amount equal to its Revolving Credit Commitment Percentage
of the Unreimbursed Amount not later than 2:00 p.m. on the Business Day
specified in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.04(c)(iii), each Lender that so makes funds available
shall be deemed to have made a Revolving Credit Loan bearing interest at the
Base Rate to the Borrower in such amount. The Administrative Agent shall remit
the funds so received to the L/C Issuer.

                  (iii) With respect to any Unreimbursed Amount that is not
fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the
conditions set forth in



                                       34


Section 5.02 cannot be satisfied or for any other reason, the Borrower shall be
deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of
the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be
due and payable on demand (together with interest) and shall bear interest at
the Default Rate. In such event, each Lender's payment to the Administrative
Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.04.

                  (iv) Until each Lender funds its Revolving Credit Loan or L/C
Advance pursuant to this Section 2.04(c) to reimburse the L/C Issuer for any
amount drawn under any Letter of Credit, interest in respect of such Lender's
Revolving Credit Commitment Percentage of such amount shall be solely for the
account of the L/C Issuer.

                  (v) Each Lender's obligation to make Revolving Credit Loans or
L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of
Credit, as contemplated by this Section 2.04(c), shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against the L/C Issuer, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender's obligation to make Revolving Credit Loans
pursuant to this Section 2.04(c) is subject to the conditions set forth in
Section 5.02 (other than delivery by the Borrower of a Loan Notice). No such
making of an L/C Advance shall relieve or otherwise impair the obligation of the
Borrower to reimburse the L/C Issuer for the amount of any payment made by the
L/C Issuer under any Letter of Credit, together with interest as provided
herein.

                  (vi) If any Lender fails to make available to the
Administrative Agent for the account of the L/C Issuer any amount required to be
paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c)
by the time specified in Section 2.04(c)(ii), the L/C Issuer shall be entitled
to recover from such Lender (acting through the Administrative Agent), on
demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time
to time in effect. A certificate of the L/C Issuer submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.

         (d) Repayment of Participations.

                  (i) At any time after the L/C Issuer has made a payment under
any Letter of Credit and has received from any Lender such Lender's L/C Advance
in respect of such payment in accordance with Section 2.04(c), if the
Administrative Agent receives for the account of the L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether directly
from the Borrower or otherwise, including proceeds of Cash Collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Lender its Revolving Credit Commitment Percentage thereof (appropriately
adjusted, in the case of interest



                                       35


payments, to reflect the period of time during which such Lender's L/C Advance
was outstanding) in the same funds as those received by the Administrative
Agent.

                  (ii) If any payment received by the Administrative Agent for,
the account of the L/C Issuer pursuant to Section 2.04(c)(i) is required to be
returned under any of the circumstances described in Section 11.06 (including
pursuant to any settlement entered into by the L/C Issuer in its discretion),
each Lender shall pay to the Administrative Agent for the account of the L/C
Issuer its Revolving Credit Commitment Percentage thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect.

         (e) Obligations Absolute. The obligation of the Borrower to reimburse
the L/C Issuer for each drawing under each Letter of Credit and to repay each
L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

                  (i) any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other agreement or instrument relating thereto;

                  (ii) the existence of any claim, counterclaim, set-off,
defense or other right that the Borrower may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), the L/C Issuer or
any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

                  (iii) any draft, demand, certificate or other document
presented under such Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under such Letter of Credit;

                  (iv) any payment by the L/C Issuer under such Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of such Letter of Credit; or any payment made by the L/C Issuer
under such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of such Letter of Credit, including any arising in connection
with any proceeding under any Debtor Relief Law; or

                  (v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower.

         The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered `to it and, in the event of any claim
of noncompliance with



                                       36


the Borrower's instructions or other irregularity, the Borrower will immediately
notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived
any such claim against the L/C Issuer and its correspondents unless such notice
is given as aforesaid.

         (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer,
any Agent-Related Person nor any of the respective correspondents, participants
or assignees of the L/C Issuer shall be liable to any Lender for (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Lenders or the Required Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the
due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit Application. The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrower's
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the L/C Issuer, any
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the L/C Issuer, shall be liable or responsible for any of the
matters described in clauses (i) through (v) of Section 2.04(e); provided,
however, that anything in such clauses to the contrary notwithstanding, the
Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by the L/C Issuer's willful misconduct or gross
negligence or the L/C Issuer's willful failure to pay under any Letter of Credit
after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

         (g) Cash Collateral. Upon the request of the Administrative Agent, (i)
if the L/C Issuer has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if,
as of the Letter of Credit Expiration Date, any Letter of Credit may for any
reason remain outstanding and partially or wholly undrawn, the Borrower shall
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations (in an amount equal to such Outstanding Amount determined as of the
date of such L/C Borrowing or the Letter of Credit Expiration Date, as the case
may be). For purposes hereof, "Cash Collateralize" means to pledge and deposit
with or deliver to the Administrative Agent, for the benefit of the L/C Issuer
and the Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the L/C Issuer (which documents are hereby consented to
by the



                                       37


Lenders).. Derivatives of such term have corresponding meanings. The Borrower
hereby grants to the Administrative Agent, for the benefit of the L/C Issuer and
the Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing. Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at Bank of America.

         (h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed
by the L/C Issuer and the Borrower when a Letter of Credit is issued, (i) the
rules of the "International Standby Practices 1998" published by the Institute
of International Banking Law & Practice (or such later version thereof as may be
in effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the "ICC")
at the time of issuance (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.

         (i) Letter of Credit Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Revolving Credit
Commitment Percentage, letter of credit fees (the "Letter of Credit Fees") for
each Letter of Credit equal to the Applicable Rate times the daily maximum
amount available to be drawn under such Letter of Credit (whether or not such
maximum amount is then in effect under such Letter of Credit). The Letter of
Credit Fees shall be computed on a quarterly basis in arrears. The Letter of
Credit Fees shall be due and payable on the first Business Day after the end of
each calendar quarter, commencing with the first such date to occur after the
issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand. If there is any change in the Applicable Rate during any
quarter, the daily maximum amount of each Letter of Credit shall be computed and
multiplied by the Applicable Rate separately for each period during such quarter
that such Applicable Rate was in effect.

         (j) Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a
fronting fee with respect to each Letter of Credit in the amounts and at the
times specified in the Fee Letter. In addition, the Borrower shall pay directly
to the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect.
Such customary fees and standard costs and charges are due and payable on demand
and are nonrefundable.

         (k) (k) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.

         2.05 SWING LINE LOANS.

         (a) The Swing Line. Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees to make loans (each such loan, a "Swing
Line Loan") to the Borrower from time to time on any Business Day during the
Availability Period in an aggregate amount not to



                                       38


exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Revolving Credit Commitment Percentage of the Outstanding Amount of Revolving
Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may
exceed the amount of such Lender's Revolving Credit Commitment; provided,
however, that after giving effect to any Swing Line Loan, (i) the Revolving
Credit Outstandings shall not exceed the Borrowing Limit, and (ii) the aggregate
Outstanding Amount of the Revolving Credit Loans of any Lender, plus such
Lender's Revolving Credit Commitment Percentage of the Outstanding Amount of all
L/C Obligations, plus such Lender's Revolving Credit Commitment Percentage of
the Outstanding Amount of all Swing Line Loans shall not exceed such Lender's
Revolving Credit Commitment, and provided, further, that the Borrower shall not
use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line
Loan. Within the foregoing limits, and subject to the other terms and conditions
hereof, the Borrower may borrow under this Section 2.05, prepay under Section
2.06, and reborrow under this Section 2.05. Each Swing Line Loan shall be a Base
Rate Loan. Immediately upon the making of a Swing Line Loan, each Lender shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the Swing Line Lender a risk participation in such Swing Line Loan in an
amount equal to the product of such Lender's Revolving Credit Commitment
Percentage times the amount of such Swing Line Loan.

         (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon
the Borrower's irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to
be borrowed, which shall be a minimum of $100,000, and (ii) the requested
borrowing date, which shall be a Business Day. Each such telephonic notice must
be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has also received such Swing Line Loan
Notice and, if not, the Swing Line Lender will notify the Administrative Agent
(by telephone or in writing) of the contents thereof. Unless the Swing Line
Lender has received notice (by telephone or in writing) from the Administrative
Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of
the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to
make such Swing Line Loan as a result of the limitations set forth in the
proviso to the first sentence of Section 2.05(a), or (B) that one or more of the
applicable conditions specified in Article V is not then satisfied, then,
subject to the terms and conditions hereof, the Swing Line Lender will, not
later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan
Notice, make the amount of its Swing Line Loan available to the Borrower at its
office by crediting the account of the Borrower on the books of the Swing Line
Lender in immediately available funds.

         (c) Refinancing of Swing Line Loans.

                  (i) The Swing Line Lender at any time in its sole and absolute
discretion may request, on behalf of the Borrower (which hereby irrevocably
authorizes the Swing Line Lender



                                       39


to so request on its behalf), that each Lender make a Revolving Credit Loan
bearing interest at the Base Rate in an amount equal to such Lender's Revolving
Credit Commitment Percentage of the amount of Swing Line Loans then outstanding.
Such request shall be made in writing (which written request shall be deemed to
be a Loan Notice for purposes hereof) and in accordance with the requirements of
Section 2.01, without regard to the minimum and multiples specified therein for
the principal amount of Base Rate Loans, but subject to the unutilized portion
of the Revolving Credit Commitments and the conditions set forth in Section
5.02. The Swing Line Lender shall furnish the Borrower with a copy of the
applicable Loan Notice promptly after delivering such notice to the
Administrative Agent. Each Lender shall make an amount equal to its Revolving
Credit Commitment Percentage of the amount specified in such Loan Notice
available to the Administrative Agent in immediately available funds for the
account of the Swing Line Lender at the Administrative Agent's Office not later
than 2:00 p.m. on the day specified in such Loan Notice, whereupon, subject to
Section 2.05(c)(ii), each Lender that so makes funds available shall be deemed
to have made a Revolving Credit Loan bearing interest at the Base Rate to the
Borrower in such amount. The Administrative Agent shall remit the funds so
received to the Swing Line Lender.

                  (ii) If for any reason any Swing Line Loan cannot be
refinanced by such a Revolving Credit Borrowing in accordance with Section
2.05(c)(i), the request for Revolving Credit Loans bearing interest at the Base
Rate submitted by the Swing Line Lender as set forth herein shall be deemed to
be a request by the Swing Line Lender that each of the Lenders fund its risk
participation in the relevant Swing Line Loan and each Lender's payment to the
Administrative Agent for the account of the Swing Line Lender pursuant to
Section 2.05c)(i) shall be deemed payment in respect of such participation.

                  (iii) If any Lender fails to make available to the
Administrative Agent for the account of the Swing Line Lender any amount
required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.05(c) by the time specified in Section 2.05(c)(i), the Swing Line
Lender shall be entitled to recover from such Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the Federal Funds Rate from time to time in effect. A certificate of the Swing
Line Lender submitted to any Lender (through the Administrative Agent) with
respect to any amounts owing under this clause (iii) shall be conclusive absent
manifest error.

Each Lender's obligation to make Revolving Credit Loans or to purchase and fund
risk participations in Swing Line Loans pursuant to this Section 2.05(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Borrower or any
other Person for any reason whatsoever, (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided, however, that each Lender's obligation to
make Revolving Credit Loans pursuant to this Section 2.05(c) is subject to the
conditions set forth in Section 5.02. No such funding of risk participations
shall relieve or otherwise impair the obligation of the Borrower to repay Swing
Line Loans, together with interest as provided herein.



                                       40


         (d) Repayment of Participations.

                  (i) At any time after any Lender has purchased and funded a
risk participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will
distribute to such Lender its Revolving Credit Commitment Percentage of such
payment (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender's risk participation was funded) in
the same funds as those received by the Swing Line Lender.

                  (ii) If any payment received by the Swing Line Lender in
respect of principal or interest on any Swing Line Loan is required to be
returned by the Swing Line Lender under any of the circumstances described in
Section 11.06 (including pursuant to any settlement entered into by the Swing
Line Lender in its discretion), each Lender shall pay to the Swing Line Lender
its Revolving Credit Commitment Percentage thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned, at a rate per annum equal to the Federal Funds
Rate. The Administrative Agent will make such demand upon the request of the
Swing Line Lender.

         (e) Interest for Account of Swing Line Lender. The Swing Line Lender
shall be responsible for invoicing the Borrower for interest on the Swing Line
Loans. Until each Lender funds its Revolving Credit Loan bearing interest at the
Base Rate or risk participation pursuant to this Section 2.05 to refinance such
Lender's Revolving Credit Commitment Percentage of any Swing Line Loan, interest
in respect of such Revolving Credit Commitment Percentage shall be solely for
the account of the Swing Line Lender.

         (f) Payments Directly to Swing Line Lender. The Borrower shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.

         2.06 PREPAYMENTS.

         (a) Voluntary Prepayments of Revolving Credit Loans. The Borrower may,
upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Revolving Credit Loans in whole or in part without premium or
penalty; provided that (i) such notice must be received by the Administrative
Agent not later than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base
Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal
amount of $2,000,000 or a whole multiple of $500,000 in excess thereof; and
(iii) any prepayment of Base Rate Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if
less, the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the Type(s) of
Revolving Credit Loans to be prepaid. The Administrative Agent will promptly
notify each Lender of its receipt of each such notice, and of the amount of such
Lender's Revolving Credit Commitment Percentage of such prepayment. If such
notice is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied
by all accrued interest thereon, together with any additional



                                       41


amounts required pursuant to Section 4.05. Each such prepayment shall be applied
to the Revolving Credit Loans of the Lenders in accordance with their respective
Revolving Credit Commitment Percentages.

         (b) Voluntary Prepayments of Swing Line Loans. The Borrower may, upon
notice to the Swing Line Lender (with a copy to the Administrative Agent), at
any time or from time to time, voluntarily prepay Swing Line Loans in whole or
in part without premium or penalty; provided that (i) such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be
in a minimum principal amount of $100,000. Each such notice shall specify the
date and amount of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.

         (c) Voluntary Prepayments of Term Loan. The Borrower may, upon notice
to the Administrative Agent, at any time or from time to time voluntarily prepay
the Term Loan in whole or in part without premium or penalty; provided that (i)
such notice must be received by the Administrative Agent not later than 11:00
a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate
Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment
of Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole
multiple of $500,000 in excess thereof, and (iii) any prepayment of Base Rate
Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000
in excess thereof or, in each case, if less, the entire principal amount thereof
then outstanding. Each such notice shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the
amount of such Lender's Term Loan Percentage of such prepayment. If such notice
is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied
by all accrued interest thereon, together with any additional amounts required
pursuant to Section 4.05. Each such prepayment shall be applied to the
outstanding principal installments of the Term Loan in inverse order of maturity
thereof (and shall be applied to the Term Loan of the Lenders in accordance with
their respective Term Loan Percentages).

         (d) Mandatory Prepayments of Revolving Credit Loans.

                  (i) If for any reason the Revolving Credit Outstandings at any
time exceed the Borrowing Limit then in effect, the Borrower shall immediately
prepay Revolving Credit Loans and/or Swing Line Loans and/or Cash Collateralize
the L/C Obligations in an aggregate amount equal to the lesser of (A) the
Revolving Credit Outstandings and (B) the amount of such excess; provided that
the Borrower shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.06(d) unless after the prepayment in full of the
Revolving Credit Loans and Swing Line Loans the Revolving Credit Outstandings
exceed the Borrowing Limit then in effect.



                                       42


                  (ii) In the event proceeds ("Excess Proceeds") remain after
the prepayment of Term Loans pursuant to Section 2.06(e), the amount of such
Excess Proceeds shall be used on the date of the required prepayment under
Section 2.06(e) to prepay the outstanding principal amount of the Revolving
Credit Loans without a corresponding reduction of the Revolving Credit
Commitment.

         (e) Mandatory Prepayments of Term Loan.

                  (i) Debt Proceeds. The Borrower shall make mandatory principal
prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below
in amounts equal to one hundred percent (100%) of the aggregate Net Cash
Proceeds from any incurrence of Indebtedness permitted pursuant to Section
8.03(h) or otherwise permitted by the Required Lenders, by the Borrower or any
of its Subsidiaries. Such prepayment shall be made within three (3) Business
Days after the date of receipt of Net Cash Proceeds of any such transaction.

                  (ii) Equity Proceeds. The Borrower shall make mandatory
principal prepayments of the Term Loan in the manner set forth in Section
2.06(e)(v) below in amounts equal to one hundred percent (100%) of the aggregate
Net Cash Proceeds from any offering of equity securities by the Borrower or any
of its Subsidiaries (other than solely as a result of (A) offerings of equity
securities made in connection with any employee stock option, incentive plans or
stock purchase plan or made in connection with compensation or incentive plans
for directors and officers, in each case entered into in the ordinary course of
business and (B) the exercise of warrants existing on the Closing Date and set
forth on Schedule 6.13). Any such prepayments shall be made within three (3)
Business Days after the date of receipt of Net Cash Proceeds of any such
transaction. Notwithstanding any of the foregoing to the contrary, the Borrower
may apply the Net Cash Proceeds of the Additional Equity Offering to prepay the
Senior Subordinated Debt pursuant to Section 8.14 (the amount of such prepayment
in-full, the "Prepayment Amount"); provided that (1) no Default or Event of
Default is continuing or would result from such prepayment, (2) an amount of
such Net Cash Proceeds equal to $50,000,000 less the Prepayment Amount shall be
applied to repay outstanding Revolving Credit Loans pursuant to Section
2.06(d)(ii) as if such proceeds were "Excess Proceeds" and (3) any such Net Cash
Proceeds in excess of $50,000,000 shall be applied in accordance with Section
2.06(e)(v).

                  (iii) Asset Sale Proceeds. (A) No later than one hundred
eighty (180) days following the Borrower's receipt thereof, the Borrower shall
make mandatory principal prepayments of the Term Loan in the manner set forth in
Section 2.06(e)(v) below in amounts equal to one hundred percent (100%) of the
aggregate Net Cash Proceeds from the Disposition or series of related
Dispositions of assets by the Borrower or any of its Subsidiaries (other than
the Non-Propane Products Divestiture) permitted pursuant to Section 8.05(Q) or
(h) (the "Disposition Proceeds"); provided that (I) subject to the following
clause (II), any prepayment required pursuant to this Section 2.06(e)(iii) with
respect to any Disposition Proceeds of less than $200,000 (any such amounts, the
"Deferred Proceeds") may be deferred until such time as the aggregate amount of
all such Deferred Proceeds that have not previously been reinvested or applied
to prepay any Term Loans equals or exceeds $200,000 and (II) upon and during the
continuance of an Event of Default and upon notice from the Administrative
Agent, all Disposition Proceeds, received by the Borrower and its Subsidiaries
shall be applied to make



                                       43


prepayments of the Term Loan, such prepayments to be made within three (3)
Business Days after the Borrower's receipt of such Disposition Proceeds.
Notwithstanding any of the foregoing to the contrary, the Borrower may apply the
Net Cash Proceeds of the Non-Propane Products Divestiture to prepay the Senior
Subordinated Debt pursuant to Section 8.14; provided that (1) no Default or
Event of Default is continuing or would result from such prepayment, and (2) any
such Net Cash Proceeds in excess of the amount necessary to prepay the Senior
Subordinated shall be applied to repay outstanding Revolving Credit Loans
pursuant to Section 2.06(d)(ii) as if such proceeds were "Excess Proceeds".

                           (B) he Borrower shall make mandatory principal
prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below
in amounts equal to one hundred percent (100%) of the aggregate Net Cash
Proceeds from any award, judgment or other recovery (including, without
limitation, any settlement) received in connection with the action by the
Borrower, as plaintiff, against PricewaterhouseCoopers, L.L.P., as defendant,
pending in the General Court of Justice, Superior Division, Forsyth County,
North Carolina (Case No. 99 CVS 9706), by the Borrower or any of its
Subsidiaries. Such prepayment shall be made within three (3) Business Days after
the date of receipt of Net Cash Proceeds of any such award, judgment or other
recovery.

                  (iv) Insurance and Condemnation Proceeds. No later than one
hundred eighty (180) days following the date of receipt by the Borrower or any
of its Subsidiaries of any Net Cash Proceeds under any of the insurance policies
maintained pursuant to Section 7.07 or from any condemnation proceeding (the
"Insurance and Condemnation Proceeds") which have not been reinvested as of such
date in similar replacement assets, the Borrower shall make mandatory principal
prepayments of the Term Loan in the manner set forth in Section 2.06(e)(v) below
in amounts equal to one hundred percent (100%) of the aggregate amount of such
Insurance and Condemnation Proceeds received by the Borrower or any of its
Subsidiaries. Notwithstanding any of the foregoing to the contrary, upon and
during the continuance of an Event of Default and upon notice from the
Administrative Agent, all Insurance and Condemnation Proceeds, received by the
Borrower and its Subsidiaries shall be applied to make prepayments of the Term
Loan, such prepayments to be made within three (3) Business Days after the
Borrower's receipt of such Insurance and Condemnation Proceeds.

                  (v) Notice; Manner of Payment. Upon the occurrence of any
event triggering the prepayment requirement under Section 2.06(e)(i) through and
including Section 2.06(e)(iv), the Borrower shall promptly give written notice
to the Administrative Agent and upon receipt of such notice, the Administrative
Agent shall promptly so notify the Lenders. Each prepayment under this Section
2.06(e) shall be applied as follows: first, to reduce in inverse order of
maturity the remaining scheduled principal installments of the Term Loan
pursuant to Section 2.08(c) and second, to the extent of any excess, to repay
the Revolving Credit Loans pursuant to Section 2.06(d)(ii) to prepay the
outstanding principal amount of the Revolving Credit Loans without a
corresponding reduction of the Revolving Credit Commitment.

                  (vi) Prepayments of Term Loan. Amounts prepaid under the Term
Loan pursuant to this Section 2.06(e) may not be reborrowed and will constitute
a permanent reduction



                                       44


in the Term Loan Commitment. Each prepayment shall be accompanied by any amount
required to be paid pursuant to Section 4.05 hereof.

         2.07 VOLUNTARY TERMINATION OR REDUCTION OF REVOLVING CREDIT
COMMITMENTS.

         The Borrower may, upon notice to the Administrative Agent, terminate
the Revolving Credit Commitments, or from time to time permanently reduce the
Revolving Credit Commitments; provided that (i) any such notice shall be
received by the Administrative Agent not later than 11:00 a.m. five Business
Days prior to the date of termination or reduction, (ii) any such partial
reduction shall be in an aggregate amount of $2,000,000 or any whole multiple of
$500,000 in excess thereof, (iii) the Borrower shall not terminate or reduce the
Revolving Credit Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Revolving Credit Outstandings would exceed
the Borrowing Limit, and (iv) if, after giving effect to any reduction of the
Revolving Credit Commitments, the Letter of Credit Sublimit or the Swing Line
Sublimit exceeds the amount of the Revolving Credit Commitments, such Sublimit
shall be automatically reduced by the amount of such excess. The Administrative
Agent will promptly notify the Lenders of any such notice of termination or
reduction of the Revolving Credit Commitments. Any reduction of the Revolving
Credit Commitments shall be applied to the Revolving Credit Commitment of each
Lender according to its Revolving Credit Commitment Percentage. All Commitment
Fees accrued until the effective date of any termination of the Revolving Credit
Commitments shall be paid on the effective date of such termination.

         2.08 REPAYMENT OF LOANS.

         (a) Repayment of Revolving Credit Loans. The Borrower shall repay to
the Lenders on the Revolving Credit Maturity Date the aggregate principal amount
of Revolving Credit Loans outstanding on such date.

         (b) Repayment of Swing Line Loans. The Borrower shall repay each Swing
Line Loan on the earlier to occur of (i) the date five Business Days after such
Loan is made and (ii) the Revolving Credit Maturity Date.

         (c) Repayment of Term Loan. The Borrower shall repay the outstanding
principal amount of the Term Loan in consecutive quarterly installments
commencing December 31, 2002 as follows (as such installments may hereafter be
adjusted as a result of prepayments made pursuant to Section 2.06(e)), in each
case unless accelerated sooner pursuant to Section 9.02:

- -------------------------------------------------------------------------------
   YEAR                   PAYMENT DATE                PRINCIPAL INSTALLMENT
                                                               ($)
- -------------------------------------------------------------------------------
   2002                December 31, 2002                    1,000,000
- -------------------------------------------------------------------------------
   2003                  March 31, 2003                     1,000,000
              -----------------------------------------------------------------
                         June 30, 2003                      1,000,000
              -----------------------------------------------------------------
                       September 30, 2003                   1,000,000
              -----------------------------------------------------------------
                       December 31, 2003                    1,250,000
- -------------------------------------------------------------------------------



                                       45


- -------------------------------------------------------------------------------
   YEAR                   PAYMENT DATE                PRINCIPAL INSTALLMENT
                                                               ($)
- -------------------------------------------------------------------------------
   2004                  March 31, 2004                     1,250,000
              -----------------------------------------------------------------
                         June 30, 2004                      1,250,000
              -----------------------------------------------------------------
                       September 30, 2004                   1,250,000
              -----------------------------------------------------------------
                       December 31, 2004                    1,500,000
   ----------------------------------------------------------------------------
   2005                  March 31, 2005                     1,500,000
              -----------------------------------------------------------------
                         June 30, 2005                      1,500,000
              -----------------------------------------------------------------
                       September 30, 2005                   1,500,000
   ----------------------------------------------------------------------------

         If not sooner paid, the Term Loan shall be paid in full, together with
accrued interest thereon, on the Term Loan Maturity Date.

                                  ARTICLE III.
                             GENERAL LOAN PROVISIONS

         3.01 INTEREST.

         (a) Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan
(other than Swing Line Loans) shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to
the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.

         (b) If any amount payable by the Borrower under any Loan Document is
not paid when due (without regard to. any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Furthermore,
upon the request of the Required Lenders, while any Event of Default exists, the
Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.
Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.

         (c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

         3.02 FEES. In addition to certain fees described in subsections (i) and
(j) of Section 2.04:



                                       46


         (a) Commitment Fee. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Revolving Credit
Commitment Percentage, a commitment fee (the "Commitment Fee") equal to the
Applicable Rate times the actual daily amount by which the Revolving Credit
Commitments exceed the sum of (i) the Outstanding Amount of Revolving Credit
Loans and (ii) the Outstanding Amount of L/C Obligations. The Commitment Fee
shall accrue at all times during the Availability Period, including at any time
during which one or more of the conditions in Article V is not met, and shall be
due and payable quarterly in arrears on the last Business Day of each calendar
quarter, commencing with the first such date to occur after the Closing Date,
and on the Revolving Credit Maturity Date. The Commitment Fee shall be
calculated quarterly in arrears, and if there is any change in the Applicable
Rate during any quarter, the actual daily amount shall be computed and
multiplied by the Applicable Rate separately for each period during such quarter
that such Applicable Rate was in effect.

         (b) Other Fees.

                  (i) The Borrower shall pay to the Arranger and the
Administrative Agent for their own respective accounts fees in the amounts and
at the times separately agreed upon. Such fees shall be fully earned when paid
and shall not be refundable for any reason whatsoever.

                  (ii) The Borrower shall pay to the Lenders such fees as shall
have been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

         3.03 COMPUTATION OF INTEREST AND FEES. All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 3.05(a),
bear interest for one day.

         3.04 EVIDENCE OF DEBT.

         (a) The Credit Extensions made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by
the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Credit Extensions made by the Lenders to the Borrower
and the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Obligations. In
the event of any conflict between the accounts and records maintained by any
Lender and the accounts and records of the Administrative Agent in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error. Upon the request of any Lender made



                                       47


through the Administrative Agent, the Borrower shall execute and deliver to such
Lender (through the Administrative Agent) a Note, which shall evidence such
Lender's Loans in addition to such accounts or records. Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable), amount
and maturity of its Loans and payments with respect thereto.

         (b) In addition to the accounts and records referred to in subsection
(a), each Lender and the Administrative Agent shall maintain in accordance with
its usual practice accounts or records evidencing the purchases and sales by
such Lender of participations in Letters of Credit and Swing Line Loans. In the
event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error.

         3.05 PAYMENTS GENERALLY.

         (a) All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent's
Office in Dollars and in immediately available funds not later than 2:00 p.m. on
the date specified herein. The Administrative Agent will promptly distribute to
each Lender its Revolving Credit Commitment Percentage or Term Loan Percentage,
as applicable (or other applicable share as provided herein), of such payment in
like funds as received by wire transfer to such Lender's Lending Office. All
payments received by the Administrative Agent after 2:00 p.m. shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue.

         (b) If any payment to be made by the Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be.

         (c) Unless the Borrower or any Lender has notified the Administrative
Agent, prior to the date any payment is required to be made by it to the
Administrative Agent hereunder, that the Borrower or such Lender, as the case
may be, will not make such payment, the Administrative Agent may assume that the
Borrower or such Lender, as the case may be, has timely made such payment and
may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment was not in fact made to the Administrative Agent in immediately
available funds, then:

                  (i) if the Borrower failed to make such payment, each Lender
shall forthwith on demand repay to the Administrative Agent the portion of such
assumed payment that was made available to such Lender in immediately available
funds, together with interest thereon in respect of each day from and including
the date such amount was made available by the Administrative Agent to such
Lender to the date such amount is repaid to the Administrative Agent in
immediately available funds at the Federal Funds Rate from time to time in
effect; and



                                       48


                  (ii) if any Lender failed to make such payment, such Lender
shall forthwith on demand pay to the Administrative Agent the amount thereof in
immediately available funds, together with interest thereon for the period from
the date such amount was made available by the Administrative Agent to the
Borrower to the date such amount is recovered by the Administrative Agent (the
"Compensation Period") at a rate per annum equal to the Federal Funds Rate from
time to time in effect. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in the
applicable Borrowing. If such Lender does not pay such amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent may make a
demand therefor upon the Borrower, and the Borrower shall pay such amount to the
Administrative Agent, together with interest thereon for the Compensation Period
at a rate per annum equal to the rate of interest applicable to the applicable
Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a result of
any default by such Lender hereunder.

         A notice of the Administrative Agent to any Lender or the Borrower with
respect to any amount owing under this subsection (c) shall be conclusive,
absent manifest error.

         (d) If any Lender makes available to the Administrative Agent funds for
any Loan to be made by such Lender as provided in the foregoing provisions of
this Article III, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the applicable Credit Extension
set forth in Article V are not satisfied or waived in accordance with the terms
hereof, the Administrative Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.

         (e) The obligations of the Lenders hereunder to make Loans and to fund
participations in Letters of Credit and Swing Line Loans are several and not
joint. The failure of any Lender to make any Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan or purchase
its participation.

         (f) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

SHARING OF PAYMENTS. If, other than as expressly provided elsewhere herein, any
Lender shall obtain on account of the Loans made by it, or the participations in
L/C Obligations or in Swing Line Loans held by it, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share (or other share contemplated
hereunder) thereof, such Lender shall immediately (a) notify the Administrative
Agent of such fact, and (b) purchase from the other Lenders such participations
in the Loans made by them and/or such subparticipations in the participations in
L/C Obligations or Swing Line Loans held by them, as the case may be, as shall
be necessary to cause such purchasing Lender to share the excess payment in
respect of such Loans or such participations, as the case may be, pro rata with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter



                                       49


recovered from the purchasing Lender under any of the circumstances described in
Section 11.06 (including pursuant to any settlement entered into by the
purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered, without further
interest thereon. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.09) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases or
repayments. Each Lender that purchases a participation pursuant to this Section
shall from and after such purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the, portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.

         3.06 SECURITY. The Obligations shall be secured as provided in the
Security Documents.

                                   ARTICLE IV.
                     TAXES, YIELD PROTECTION AND ILLEGALITY

         4.01 TAXES.

         (a) Any and all payments by the Borrower to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Administrative Agent or such Lender, as the case may be, is
organized or maintains a lending office (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document to the Administrative Agent or any Lender, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section), each of the Administrative Agent and such Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable Laws, and (iv) within 30 days after the date of
such payment, the Borrower shall furnish to the Administrative



                                       50


Agent (which shall forward the same to such Lender) the original or a certified
copy of a receipt evidencing payment thereof.

         (b) In addition, the Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").

         (c) If the Borrower shall be required to deduct or pay any Taxes or
Other Taxes from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, the Borrower shall also pay to the
Administrative Agent or to such Lender, as the case may be, at the time interest
is paid, such additional amount that the Administrative Agent or such Lender
specifies is necessary to preserve the after-tax yield (after factoring in all
taxes, including taxes imposed on or measured by net income) that the
Administrative Agent or such Lender would have received if such Taxes or Other
Taxes had not been imposed.

         (d) The Borrower agrees to indemnify the Administrative Agent and each
Lender for, from and against (i) the full amount of Taxes and Other Taxes.
(including any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by the Administrative Agent and such
Lender, (ii) amounts payable under Section 4.01(c) and (iii) any liability
(including additions to tax, penalties, interest and expenses) arising therefrom
or with respect thereto, in each case whether or not such Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. Payment under this subsection (d) shall be made within 30 days after
the date the Lender or the Administrative Agent makes a demand therefor.

         4.02 ILLEGALITY. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through
the Administrative Agent, any obligation of such Lender, to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrower shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.
Upon any such prepayment or conversion, the Borrower shall also pay accrued
interest on the amount so prepaid or converted. Each Lender agrees to designate
a different Lending Office if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender.



                                       51


         4.03 INABILITY TO DETERMINE RATES. If the Required Lenders determine
that for any reason adequate and reasonable means do not exist for determining
the Eurodollar Base Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan, or that the Eurodollar Base Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan does
not adequately and fairly reflect the cost to such Lenders of funding such Loan,
the Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until the Administrative Agent (upon the instruction of
the Required Lenders) revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Revolving Credit Borrowing of Base
Rate Loans in the amount specified therein.

         4.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY.

         (a) If any Lender determines that as a result of the introduction of or
any change in or in the interpretation of any Law, or such Lender's compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining Eurodollar Rate Loans or (as the case may
be) issuing or participating in Letters of Credit, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this subsection (a) any such increased costs or
reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section
4.01 shall govern), (ii) changes in the basis of taxation of overall net income
or overall gross income by the United States or any foreign jurisdiction or any
political subdivision of either thereof under the Laws of which such Lender is
organized or has its Lending Office, and (iii) reserve requirements utilized in
the determination of the Eurodollar Rate), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such increased cost or reduction.

         (b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender's desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction; provided that no compensation shall be payable
pursuant to this clause (b) if the applicable Lender fails to demand
compensation for such increased costs within one-hundred eighty (180) days
following the date on which such Lender has actual knowledge of the event
resulting in such increase.

         4.05 FUNDING LOSSES. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:



                                       52


         (a) any continuation, conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);

         (b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower; or

         (c) any assignment of a Eurodollar Rate Loan on a day other than the
last day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 11.16; including any loss of anticipated profits
and any loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. The Borrower shall also pay any
customary administrative fees charged by such Lender in connection with the
foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 4.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the
London interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

         4.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION. A certificate
of the Administrative Agent or any Lender claiming compensation under this
Article IV and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, the Administrative Agent or such Lender may use any reasonable
averaging and attribution methods.

         4.07 SURVIVAL. All of the Borrower's obligations under this Article IV
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

                                   ARTICLE V.
                    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

         5.01 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of each
Lender to make its initial Credit Extension hereunder is subject to satisfaction
of the following conditions precedent:

         (a) Loan Documents, Certificates and Opinions. The Administrative
Agent's receipt of the following, each of which shall be originals or facsimiles
(followed promptly by originals) unless otherwise specified, each properly
executed by a Responsible Officer of the signing Loan Party, each dated the
Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to the Administrative Agent and its legal counsel:

                  (i) executed counterparts of this Agreement, the Security
Documents, the Guaranty Agreement and any other applicable Loan Documents,
sufficient in number for distribution to the Administrative Agent, each Lender
and the Borrower;



                                       53


                  (ii) a Note executed by the Borrower in favor of each Lender
requesting a Note;

                  (iii) a certificate of Responsible Officers of each Loan Party
certifying as to the incumbency and genuineness of the signature of each officer
of each Loan Party executing Loan Documents to which it is a party and
certifying that attached thereto is a true, correct and complete copy of (A) the
articles or certificate of incorporation or formation of each Loan Party and all
amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation, (B) the bylaws or
other governing document of each Loan Party as in effect on the date of such
certifications, (C) resolutions duly adopted by the board of directors or other
governing body of each Loan Party authorizing the borrowings contemplated
hereunder and the execution, delivery and performance of the Loan Documents to
which it is a party, and (D) certificates as of a recent date of the good
standing of each Loan Party under the laws of its jurisdiction of organization
and, to the extent requested by the Administrative Agent, each other
jurisdiction where each Loan Party is qualified to do business and a certificate
of the relevant taxing authorities of such jurisdictions certifying that such
Loan Party has filed required tax returns and owes no delinquent taxes;

                  (iv) a certificate signed by a Responsible Officer of the
Borrower certifying (A) that either (1) attaching copies of all consents,
licenses and approvals required in connection with the execution, delivery and
performance by such Loan Party and the validity against such Loan Party of the
Loan Documents to which it is a party, and such consents, licenses and approvals
shall be in full force and effect, or (2) stating that no such consents,
licenses or approvals are so required, (B) that the conditions specified in
Section 5.02(a) and Section 5.02(b) have been satisfied, (C) that there has been
no event or circumstance since the date of the Audited Financial Statements that
has had or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect; and (D) a calculation of the Consolidated
Total Leverage Ratio as of the last day of the Fiscal Quarter of the Borrower
most recently ended prior to the Closing Date;

                  (v) a certificate signed by a Responsible Officer certifying
that (A) the Borrower and each of its Subsidiaries (excluding QuickShip, Inc.)
are each Solvent, (B) the Borrower's payables are current and not past due, (C)
attached thereto are calculations evidencing compliance on a pro forma basis
with the covenants contained in Section 8.15, and (D) the financial projections
previously delivered to the Administrative Agent represent the good faith
estimates (utilizing reasonable assumptions) of the financial condition and
operations of the Borrower and its Subsidiaries;

                  (vi) a Borrowing Base Certificate as of the most recent month
end;

                  (vii) a favorable opinion of Womble Carlyle Sandridge & Rice,
counsel to the Loan Parties, addressed to the Administrative Agent and each
Lender, as to the matters set forth in Exhibit H and such other matters
concerning the Loan Parties and the Loan Documents as the Required Lenders may
reasonably request;



                                       54


                  (viii) such other assurances, certificates, documents,
consents or opinions as the Administrative Agent, the L/C Issuer, the Swing Line
Lender or the Required Lenders reasonably may require.

         (b) Collateral.

                  (i) Filings and Recordings. All filings and recordations that
are necessary to perfect the security interests of the Lenders in the collateral
described in the Security Documents shall have been received by the
Administrative Agent and the Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that upon such filings and recordations
such security interests constitute valid and perfected first priority Liens
therein.

                  (ii) Pledged Collateral. The Administrative Agent shall have
received (A) original stock certificates or other certificates evidencing the
capital stock or other ownership interests pledged pursuant to the Collateral
Agreement, together with an undated stock power for each such certificate duly
executed in blank by the registered owner thereof and (B) each original
promissory note pledged pursuant to the Collateral Agreement.

                  (iii) Lien Search. The Administrative Agent shall have
received the results of a Lien search (including a search as to judgments,
pending litigation and tax matters) made against the Loan Parties under the UCC
(or applicable judicial docket) as in effect in any state in which any of its
assets are located, indicating among other things that its assets are free and
clear of any Lien except for Permitted Liens.

                  (iv) Hazard and Liability Insurance. The Administrative Agent
shall have received certificates of insurance, evidence of payment of all
insurance premiums for the current policy year of each, and, if requested by the
Administrative Agent, copies (certified by a Responsible Officer) of insurance
policies in the form required under the Loan Documents and otherwise in form and
substance reasonably satisfactory to the Administrative Agent.

         (c) Payment of Fees. Any fees required to be paid on or before the
Closing Date shall have been paid.

         (d) Attorneys Fees. Unless waived by the Administrative Agent, the
Borrower shall have paid all Attorney Costs of the Administrative Agent to the
extent invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute its reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts between
the Borrower and the Administrative Agent).

         (e) Existing Facility. The Existing Facility shall be repaid in full
and terminated and all collateral security therefor shall be released, and the
Administrative Agent shall have received a pay-off letter in form and substance
satisfactory to it evidencing such repayment, termination, reconveyance and
release.

         (f) Other Documents. All opinions, certificates and other instruments
and all proceedings in connection with the transactions contemplated by this
Agreement shall be



                                       55


satisfactory in form and substance to the Administrative Agent. The
Administrative Agent shall have received copies of all other documents,
certificates and instruments reasonably requested thereby, with respect to the
transactions contemplated by this Agreement.

         5.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender
to honor any Request for Credit Extension is subject to the following conditions
precedent:

         (a) The representations and warranties of the Borrower and each other
Loan Party contained in Article VI, or any other Loan Document, or which are
contained in any document furnished at any time under or in connection herewith
or therewith that are subject to materiality or Material Adverse Effect
qualifications, shall be true and correct in all respects and the.
representations and warranties of the Borrower and each other Loan Party
contained in Article VI or any other Loan Document, or which are contained in
any document furnished at any time under or in connection herewith or therewith
that are not subject to materiality or Material Adverse Effect qualifications,
shall be true and correct in all material respects, in each case on and as of
the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that for
purposes of this Section 5.02, the representations and warranties contained in
subsections (a) and (b) of Section 6.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 7.01.

         (b) No Default or Event of Default shall exist, or would result from
such proposed Credit Extension.

         (c) The Administrative Agent and, if applicable, the L/C Issuer or the
Swing Line Lender shall have received a Request for Credit Extension in
accordance with the requirements hereof.

         (d) The Administrative Agent shall have received each additional
document, instrument, legal opinion or other item reasonably requested by it.

         Each Request for Credit Extension submitted by the Borrower shall be
deemed to be a representation and warranty that the conditions specified in
Section 5.02(a) and Section 5.02(b) have been satisfied on and as of the date of
the applicable Credit Extension.

         5.03 POST-CLOSING CONDITION. The Borrower shall deliver to the
Administrative Agent within 45 days from the Closing Date, the results of a Lien
search (including a search as to judgments, pending litigation and tax matters)
made against the Loan Parties under the UCC (or applicable judicial docket) as
in effect in any state in which any of its assets are located, indicating among
other things that its assets are free and clear of any Lien except for Permitted
Liens.

                                  ARTICLE VI.
                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Administrative Agent and
the Lenders that:



                                       56


         6.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each
Loan Party (a) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses, authorizations, consents
and approvals to (i) own its assets and carry on its business as now being
conducted and hereafter proposed to be conducted except where the absence of any
such license, authorization, consent or approval would not reasonably be
expected to have a Material Adverse Effect and (ii) execute, deliver and perform
its obligations under the Loan Documents to which it is a party, (c) is duly
qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, except where the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect, and (d) is in compliance with all Laws, except where the failure
to so comply would not reasonably be expected to have a Material Adverse Effect.
The jurisdictions in which the Borrower and its Subsidiaries are organized and
qualified to do business as of the Closing Date are described on Schedule 6.01.

         6.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien (other than a Permitted
Lien) under, (i) any Contractual Obligation to which such Person is a party
which such conflict, breach or contravention would reasonably be expected to
have a Material Adverse Effect or (ii) any order, injunction, writ or decree of
any Governmental Authority or any arbitral award to which such Person or its
property is subject, which would reasonably be expected to have a Material
Adverse Effect; or (c) violate any Law which would reasonably be expected to
have a Material Adverse Effect.

         6.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document. Each of
the Borrower and its Subsidiaries (a) has all Governmental Approvals required by
any applicable Law for it to conduct its business, each of which is in full
force and effect, is final and not subject to review on appeal and is not the
subject of any pending or, to the best of its knowledge, threatened attack by
direct or collateral proceeding, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect, (b) is in compliance
with each Governmental Approval applicable to it and in compliance with all
other applicable Laws relating to it or any of its respective properties, in
each case except where the absence of-such Governmental Approval would not
reasonably be expected to have a Material Adverse Effect and (c) has timely
filed all material reports, documents and other materials required to be filed
by it under all applicable Laws with any Governmental Authority and has retained
all material records and documents required to be retained by it under
applicable Law.

         6.04 BINDING EFFECT. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is



                                       57


party thereto. This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms.

         6.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.

         (a) The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all indebtedness and other liabilities, direct or
contingent required to be shown in accordance with GAAP, of the Borrower and its
Subsidiaries as of the date thereof, including liabilities for taxes,
commitments and Indebtedness.

         (b) Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, that has had
or could reasonably be expected to have a Material Adverse Effect.

         (c) As of the Closing Date and after giving effect to each Credit
Extension made hereunder, the Borrower and each of its Subsidiaries (other than
QuikShip, Inc.) will be Solvent.

         6.06 LITIGATION. Except as set forth on Schedule 6.06, there are no
actions, suits, proceedings, claims or disputes pending or, to the knowledge of
the Borrower after due and diligent investigation, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against the Borrower or any of its Subsidiaries or against any of their
properties or revenues that (a) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions contemplated hereby, or
(b) either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect.

         6.07 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default
under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default or an Event of Default has occurred and is continuing
or would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

         6.08 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each
Subsidiary has good record and marketable Title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of its business, and sufficient Title or rights to use all of its
personal property and assets, including, but not limited to, those reflected on
the balance sheets of the Borrower and its Subsidiaries delivered pursuant to
Section 7.01, except those which have been disposed of by the Borrower or its
Subsidiaries subsequent to such date which dispositions have been in the
ordinary course of business or as otherwise expressly permitted hereunder. The
property of the Borrower and its Subsidiaries is subject to no Liens, other than
Permitted Liens.



                                       58


         6.09 ENVIRONMENTAL COMPLIANCE.

         (a) Except as set forth' on Schedule 6.09 ("Disclosed Environmental
Matters"), the properties owned, leased or operated by the Borrower and its
Subsidiaries now or in the past do not contain, and to their knowledge have not
previously contained, any Hazardous Materials in amounts or concentrations which
(i) constitute or constituted a violation of applicable Environmental Laws which
would reasonably be expected to have a Material Adverse Effect or (ii) could
give rise to liability under applicable Environmental Laws, which would
reasonably be expected to have a Material Adverse Effect;

         (b) The Borrower, each Subsidiary and such properties and all
operations conducted in connection therewith are in compliance in all material
respects, and have been in compliance in all material respects, with all
applicable Environmental Laws, and there is no contamination at, under or about
such properties or such operations which could interfere with the continued
operation of such properties or impair the fair saleable value thereof, in each
case, which would reasonably be expected to have a Material Adverse Effect;

         (c) Except for Disclosed Environmental Matters, neither the Borrower
nor any Subsidiary thereof has received any notice of violation, alleged
violation, non-compliance, liability or potential `liability regarding
environmental matters, Hazardous Materials, or compliance with Environmental
Laws, in each case, which would reasonably be expected to have a Material
Adverse Effect, nor does the Borrower or any Subsidiary thereof have knowledge
or reason to believe that any such notice will be received or is being
threatened;

         (d) Hazardous Materials have not been transported or disposed of to or
from the properties owned, leased or operated by the Borrower and its
Subsidiaries in violation of, or in a manner or to a location which could give
rise to liability under, Environmental Laws which would reasonably be expected
to have a Material Adverse Effect, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of such properties
in violation. of, or in a manner that could give rise to liability under, any
applicable Environmental Laws, which would reasonably be expected to have a
Material Adverse Effect;

         (e) No judicial proceedings or governmental or administrative action is
pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary thereof is or will be
named as a potentially responsible party with respect to such properties or
operations conducted in connection therewith which would reasonably be expected
to have a Material Adverse Effect, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to Borrower, any Subsidiary or such properties or such operations,
which would reasonably be expected to have a Material Adverse Effect; and

         (f) There has been no release, or to the best of the Borrower's
knowledge, threat of release, of Hazardous Materials at or from properties
owned, leased or operated by the Borrower or any Subsidiary, now or in the past,
in violation of or in amounts or in a manner that could give



                                       59


rise to liability under Environmental Laws which would reasonably be expected to
have a Material Adverse Effect.

         6.10 INSURANCE. The properties of the Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies that are not
Affiliates of the Borrower and are reasonably acceptable to the Administrative
Agent and the Required Lenders, in such amounts (after giving effect to any
self-insurance in an amount not to exceed (a) $500,000 per each occurrence and
(b) $3,000,000 in the aggregate), with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or the applicable Subsidiary
operates.

         6.11 TAXES. The Borrower and its Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed, and have
paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. Such returns accurately
reflect in all material respects all liability for taxes of the Borrower and its
Subsidiaries for the periods covered thereby. There is no ongoing audit or
examination or, to the knowledge of the Borrower, other investigation by any
Governmental Authority of the tax liability of the Borrower and its Subsidiaries
which would reasonably be expected to have a Material Adverse Effect. No
Governmental Authority has asserted any Lien or other claim against the Borrower
or any Subsidiary thereof with respect to unpaid taxes which has not been
discharged or resolved, except those which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP. The charges, accruals and reserves
on the books of the Borrower and any of its Subsidiaries in respect of Federal,
state, local and other taxes for all Fiscal Years and portions thereof since the
organization of the Borrower and any of its Subsidiaries are in the judgment of
the Borrower adequate, and the Borrower does not anticipate any additional taxes
or assessments for any of such years. There is no proposed tax assessment
against the Borrower or any Subsidiary that would, if made, have a Material
Adverse Effect.

         6.12 ERISA COMPLIANCE.

         (a) As of the Closing Date, neither the Borrower nor any ERISA
Affiliate sponsors, maintains or makes contributions to, or has ever sponsored,
maintained, or made contributions to or has any obligation under a defined
benefit plan (as such term is defined in Section 3(35) of ERISA) or any Plan
which is subject to the minimum funding requirements of Section 412 of the Code
or the requirements of Title IV of ERISA.

         (b) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required



                                       60


contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

         (c) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

         (d) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Sections 4201
or 4243 of ERISA with respect to a Multiemployer Plan; (v) neither the Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA; and (vi) neither the Borrower nor any ERISA
Affiliate has engaged in a nonexempt prohibited transaction described in Section
406 of the ERISA or Section 4975 of the Code.

         6.13 SUBSIDIARIES. As of the Closing Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Part (a) of Schedule
6.13, and has no equity investments in any other corporation or entity other
than those specifically disclosed in Part (b) of Schedule 6.13. As of the
Closing Date, the capitalization of the Borrower and its Subsidiaries consists
of the number of shares, authorized, issued and outstanding, of such classes and
series, with or without par value, described on Schedule 6.13. All outstanding
shares have been duly authorized and validly issued and are fully paid and
nonassessable, with no personal liability attaching to the ownership thereof,
and not subject to any preemptive or similar rights. The shareholders of the
Subsidiaries of the Borrower and the number of shares owned by each as of the
Closing Date are described on Schedule 6.13. As of the Closing Date, there are
no outstanding stock purchase warrants, subscriptions, options, securities,
instruments or other rights of any type or nature whatsoever, which are
convertible into, exchangeable for or otherwise provide for or permit the
issuance of capital stock of the Borrower or its Subsidiaries, except as
described on Schedule 6.13.

         6.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT.

         (a) Neither the Borrower nor any of its Subsidiaries is engaged,
principally or as one of its important activities, in the business of
"purchasing" or "carrying" any "margin stock" (as each such term is defined or
used in Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock. No part of the proceeds of any of the Loans
or Letters of Credit will be used for purchasing or carrying margin stock or for
any purpose which



                                       61


violates, or which would be inconsistent with, the provisions of Regulation T, U
or X issued by the FRB.

         (b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.

         6.15 DISCLOSURE. The Borrower has disclosed to the Administrative Agent
and the Lenders all agreements, instruments and corporate or other restrictions
to which it or any of its Subsidiaries is subject, and all other matters known
to it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf of
any Loan Party to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

         6.16 COMPLIANCE WITH LAWS. Each of the Borrower and each Subsidiary is
in compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

         6.17 INTELLECTUAL PROPERTY; LICENSES, ETC. The Borrower and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, "IP Rights") that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect. To the best
knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person which would reasonably be expected to have a
Material Adverse Effect. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such
rights which would reasonably be expected to have a Material Adverse Effect, and
neither the Borrower nor any Subsidiary thereof is liable to any Person for
infringement under applicable Law with respect to any such rights as a result of
its business operations, which would reasonably be expected to have a Material
Adverse Effect.



                                       62


         6.18 EMPLOYEE RELATIONS. Each of the Borrower and its Subsidiaries has
a stable work force in place and is not, as of the Closing Date, party to any
collective bargaining agreement nor has any labor union been recognized as the
representative of its employees. The Borrower knows of no pending, threatened or
contemplated strikes, work stoppage or other collective labor disputes involving
its employees or those of its Subsidiaries.

         6.19 BURDENSOME PROVISIONS. Neither the Borrower nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
applicable Law which is so unusual or burdensome as in the foreseeable future
could be reasonably expected to have a Material Adverse Effect. The Borrower and
its Subsidiaries do not presently anticipate that future expenditures needed to
meet the provisions of any statutes, orders, rules or regulations of a
Governmental Authority will be so burdensome as to have a Material Adverse
Effect. Except as set forth on Schedule 6.19, no Subsidiary is party to any
agreement or instrument or otherwise subject to any restriction or encumbrance
that restricts or limits its ability to make dividend payments or other
distributions in respect of its capital stock to the Borrower or any Subsidiary
or to transfer any of its assets or properties to the Borrower or any other
Subsidiary in each case other than existing under or by reason of the Loan
Documents or applicable Law.

         6.20 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including, but not limited to, any such representation or warranty
made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Closing Date (except those that are expressly made as of a
specific date), shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder.

                                  ARTICLE VII.
                              AFFIRMATIVE COVENANTS

         So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, the Borrower shall, and shall (except in the
case of the covenants set forth in Section 7.01, Section 7.02, Section 7.03 and
Section 7.11) cause each Subsidiary to:

         7.01 FINANCIAL STATEMENTS. Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

         (a) as soon as available, but in any event within 90 days after the end
of each Fiscal Year of the Borrower, a consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year,
and the related consolidated and consolidating statements of income or
operations, shareholders' equity and cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal Year,
all in reasonable detail and prepared in accordance with GAAP, audited and
accompanied by a report



                                       63


and opinion of an independent certified public accountant of nationally
recognized standing reasonably acceptable to the Required Lenders, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any "going concern" or like qualification
or exception or any qualification or exception as, to the scope of such audit;
and

         (b) as soon as available, but in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower,
a consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such Fiscal Quarter, and the related consolidated
and consolidating statements of income or operations and cash flows for such
Fiscal Quarter and for the portion of the Borrower's Fiscal Year then ended,
setting forth in each case in comparative form the figures for the corresponding
Fiscal Quarter of the previous Fiscal Year and the corresponding portion of the
previous Fiscal Year, all in reasonable detail and certified by a Responsible
Officer of the Borrower as fairly presenting the financial condition, results of
operations, shareholders' equity and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.

As to any information contained in materials furnished pursuant to Section
7.02(e), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in subsections (a) and (b) above at the times specified
therein.

         7.02 CERTIFICATES; OTHER INFORMATION. Deliver to the Administrative
Agent and each Lender, in form and detail satisfactory to the Administrative
Agent and the Required Lenders:

         (a) concurrently with the delivery of the financial statements referred
to in Section 7.01(a), a report of its independent certified public accountants
stating that in the course of its audit (without any obligation to conduct any
other independent investigation) no knowledge was obtained of any Default with
the terms, covenants, provisions or conditions of Section 8.15 in so far as they
relate to accounting matters or, if any such Default shall exist, stating the
nature and status of such event;

         (b) concurrently with the delivery of the financial statements referred
to in Section 7.01(a) and Section 7.01(b), a duly completed Compliance
Certificate signed by a Responsible Officer of the Borrower;

         (c) (i) on the 15th of each fiscal month (or if the 15th is not a
Business Day, on the next succeeding Business Day), a duly completed Borrowing
Base Certificate signed by a Responsible Officer of the Borrower as of the end
of the fiscal month most recently ended prior to such date and (ii) on the last
Business Day of each fiscal month, a duly completed Borrowing Base Certificate
signed by a Responsible Officer of the Borrower as of the 15th of such fiscal
month;

         (d) promptly after any request by the Administrative Agent or any
Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of



                                       64


directors (or the audit committee of the board of directors) of the Borrower by
independent accountants in connection with the accounts or books of the Borrower
or any Subsidiary, or any audit of any of them;

         (e) promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which the Borrower may file or
be required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto;

         (f) concurrently with the delivery of any notice, document or other
communication to the holder or holders of the Senior Subordinated Debt, a copy
of such notice, document, or other communication; and

         (g) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance
with the terms of the Loan Documents, as the Administrative Agent or any Lender
may from time to time reasonably request.

         Documents required to be delivered pursuant to Section 7.01(a) or
Section 7.01(b) or Section 7.02(e) (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a link
thereto on the Borrower's website on the Internet at the website address listed
on Schedule 11.02; or (ii) on which such documents are posted on the Borrower's
behalf on IntraLinks/IntraAgency or another relevant website, if any, to which
each Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender and (ii) the Borrower shall notify
(which may be by facsimile or electronic mail) the Administrative Agent and each
Lender of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions i.e., soft copies) of such
documents. Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates and Borrowing Base Certificates required by Section 7.02(b) and
Section 7.02(c) to the Administrative Agent and each of the Lenders. Except for
such Compliance Certificates and Borrowing Base Certificates, the Administrative
Agent shall have no obligation to request the delivery or to maintain copies of
the documents referred to above, and in any event shall have no responsibility
to monitor compliance by the Borrower with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.

         7.03 NOTICES. Promptly notify the Administrative Agent and each Lender:



                                       65


         (a) of (i) the occurrence of any Default or Event of Default or (ii)
the occurrence or existence of any event or circumstance that would reasonably
be expected to become a Default or Event of Default;

         (b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of the Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;

         (c) of the occurrence of any ERISA Event;

         (d) of any material change in accounting policies or financial
reporting practices by the Borrower or any Subsidiary; and

         (e) of any of the events described in Section 2.06(e).

         Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken
and proposes to take with respect thereto. Each notice pursuant to Section
7.03(a) shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.

         7.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary; (b) all
lawful claims which, if unpaid, would by law become a Lien upon its property,
unless the same are being contested in good faith by appropriate proceedings
diligently conducted and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary; and (c) all Indebtedness, as and
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Indebtedness.

         7.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain
in full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 8.04 or Section 8.05; (b) take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c)
preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.

         7.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and



                                       66


condition, ordinary wear and tear excepted, (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect and (c) use
the standard of care typical in the industry in the operation and maintenance of
its facilities.

         7.07 MAINTENANCE OF INSURANCE. In addition to the specific insurance
requirements of the Security Documents, maintain with financially sound and
reputable insurance companies that are not Affiliates of the Borrower and are
reasonably acceptable to the Administrative Agent and the Required Lenders,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts (after giving effect to any
self-insurance in an amount not to exceed (a) $500,000 per each occurrence and
(b) $3,000,000 in the aggregate) as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days'
prior notice to the Administrative Agent of termination, lapse or cancellation
of such insurance and deliver to the Administrative Agent upon its request a
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby.

         7.08 COMPLIANCE WITH LAWS. Comply in all respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or
to its business or property, except in such instances in which such requirement
of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted, and maintain in full force and
effect all Governmental Approvals applicable to it or to its business or
property except where the failure to maintain would reasonably be expected to
result in a Material Adverse Effect.

         7.09 ENVIRONMENTAL LAWS. In addition to and without limiting the
generality of Section 7.08, (a) comply with, and exercise reasonable efforts to
ensure such compliance by all tenants and subtenants with all applicable
Environmental Laws and obtain and comply with and maintain, and exercise
reasonable efforts to ensure that all tenants and subtenants, if any, obtain and
comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws where the
failure to do so would reasonably be expected to have a Material Adverse Effect,
(b) conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws where the failure to do so would
reasonably be expected to have a Material Adverse Effect, and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
presence of Hazardous Materials, or the violation of, noncompliance with or
liability under any Environmental Laws applicable to the operations of the
Borrower or any such Subsidiary, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, - investigation and laboratory
fees, response costs, court costs and litigation expenses, except to the extent
that any of the foregoing



                                       67


directly result from the gross negligence or willful misconduct of the party
seeking indemnification therefor.

         7.10 COMPLIANCE WITH ERISA. In addition to and without limiting the
generality of Section 7.08, (a) except where the failure to so comply could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) comply with all material applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect to all
Employee Benefit Plans, (ii) not take any action or fail to take action the
result of which could be a liability to the PBGC or to a Multiemployer Plan,
(iii) not participate in any prohibited transaction that could result in any
civil penalty under ERISA or tax under the Code and (iv) operate each Employee
Benefit Plan in such a manner that will not incur any tax liability under
Section 4980B of the Code or any liability to any qualified beneficiary as
defined in Section 4980B of the Code and (b) furnish to the Administrative Agent
upon the Administrative Agent's request such additional information about any
Employee Benefit Plan as may be reasonably requested by the Administrative
Agent.

         7.11 COMPLIANCE WITH AGREEMENTS. Comply in all respects with each term,
condition and provision of all leases, agreements and other instruments entered
into in the conduct of its business including, without limitation, any
Contractual Obligation the failure to comply with which could reasonably be
expected to have a Material Adverse Effect; provided, that the Borrower or any
such Subsidiary may contest any such lease, agreement or other instrument in
good faith through applicable proceedings so long as adequate reserves are
maintained in accordance with GAAP.

         7.12 BOOKS AND RECORDS. (a) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Borrower or such Subsidiary, as the
case may be, and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over the Borrower or such Subsidiary, as the case may
be.

         7.13 INSPECTION RIGHTS. (a) Permit representatives and independent
contractors of the Administrative Agent and each Lender to visit and inspect any
of its properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants, all at the expense of the Borrower and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower, and (b) up to two times per fiscal
year, permit representatives and independent contractors of the Administrative
Agent to perform audits and examinations of the Collateral (including, without
limitation, legal due diligence concerning the Collateral as is deemed
reasonably necessary or desirable by the Administrative Agent), all at the
expense of the Borrower and at such reasonable times during normal business
hours, upon reasonable advance notice to the Borrower; provided, however, in
each case, that when an Event of Default exists the Administrative Agent or any
Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during
normal business hours and as often as may be reasonably desired, without advance
notice.



                                       68


         7.14 USE OF PROCEEDS. Use the proceeds of the Credit Extensions (a) for
working capital, capital expenditures and other general corporate purposes, (b)
to refinance the Existing Facility, (c) to repay or prepay the Senior
Subordinated Debt and (d) for the other purposes described herein, and not in
contravention of any Law or of any Loan Document.

         7.15 ADDITIONAL SUBSIDIARIES.

         (a) Additional Domestic Subsidiaries. Notify the Administrative Agent
at the time that any Person becomes a Domestic Subsidiary, and promptly
thereafter (and in any event within 30 days), cause such Person to (a) become a
Guarantor by executing and delivering to the Administrative Agent a counterpart
of the Guaranty Agreement or such other document as the Administrative Agent
shall deem appropriate for such purpose, (b) deliver to the Administrative Agent
a duly executed Joinder Agreement and comply with the terms of each Security
Document, (c) deliver to the Administrative Agent documents of the types
referred to in clauses (iii) and (iv) of Section 5.01(a) and favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
clauses (a) and (b)) and (d) deliver to the Administrative Agent such other
documents and closing certificates as may be reasonably requested by the
Administrative Agent, all in form, content and scope reasonably satisfactory to
the Administrative Agent.

         (b) Additional Foreign Subsidiaries. Notify the Administrative Agent at
the time that any Person becomes a Foreign Subsidiary, and promptly thereafter
(and in any event within 30 days), cause (a) the applicable Loan Party to
deliver to the Administrative Agent a supplement to the Security Documents
pledging sixty-five percent (65%) of the total outstanding ownership interest or
capital stock of such new Foreign Subsidiary and a consent thereto executed by
such new Foreign Subsidiary (including, without limitation, if applicable,
original stock certificates (or the equivalent thereof pursuant to the
Applicable Laws and practices of any relevant foreign jurisdiction) evidencing
the capital stock of such new Foreign Subsidiary, together with an appropriate
undated stock power for each certificate duly executed in blank by the
registered owner thereof), (b) such Person to deliver to the Administrative
Agent documents of the types referred to in clauses (iii) and (iv) of Section
5.01(a) and favorable opinions of counsel to such Person (which shall cover,
among other things, the legality, validity, binding effect and enforceability of
the documentation referred to in clauses (a) and (b)), and (c) such Person to
deliver to the Administrative Agent such other documents and closing
certificates as may be reasonably requested by the Administrative Agent, all in
form, content and scope reasonably satisfactory to the Administrative Agent.

         provided that this Section 7.15 shall not apply to any Non-Material
Subsidiary until the earlier to occur of (x) the date on which such Non-Material
Subsidiary (other than QuickShip, Inc. and Rhino Services, LLC) shall engage in
any business operations or possess assets in excess of $10,000 and (y) with
respect to (I) any Non-Material Subsidiary existing on the Closing Date, the
date that is 180 days thereafter and (II) any other Non-Material Subsidiary the
date that is one year after the formation thereof.



                                       69


         7.16 SWAP CONTRACTS. No later than May 31, 2003, enter into Swap
Contracts with respect to interest rate exposure under this Agreement with
durations covering the remaining term of this Agreement and an aggregate
notional principal amount thereunder equal to at least two thirds of the
outstanding principal amount of the Term Loan and with a Lender or other
counterparty reasonably satisfactory to the Administrative Agent and otherwise
in form and substance reasonably satisfactory to the Administrative Agent.

         7.17 FURTHER ASSURANCES. Make, execute and deliver all such additional
and further acts, things, deeds and instruments as the Administrative Agent or
the Required Lenders. (through the Administrative Agent) may reasonably require
to document and consummate the transactions contemplated hereby and to vest
completely in and insure the Administrative Agent and the Lenders their
respective rights under this Agreement, the Notes, the Letters of Credit and the
other Loan Documents.

                                 ARTICLE VIII.
                               NEGATIVE COVENANTS

         So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, the Borrower shall not, nor shall it permit any
Subsidiary to, directly or indirectly:

         8.01 LIENS. Create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
other than the following:

         (a) Liens pursuant to any Loan Document;

         (b) Liens existing on the date hereof and listed on Schedule 8.01 and
any renewals or extensions thereof, provided that the property covered thereby
is not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 8.03(c);

         (c) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

         (d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;

         (e) pledges or deposits in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by ERISA;

         (f) deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness), statutory obligations, surety bonds (other
than bonds related to judgments or



                                       70


litigation), performance bonds and other obligations of a like nature incurred
in the ordinary course of business;

         (g) easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person;

         (h) Liens securing judgments for the payment of money not constituting
an Event of Default under Section 9.01(h) or securing appeal or other surety
bonds related to such judgments;

         (i) Liens securing Indebtedness permitted under Section 8.03(f) and
Section 8.03(g); provided that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition;
and

         (j) Liens arising solely by virtue of any contractual or statutory or
common law provisions relating to banker's liens, rights to set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Loan Party or any Subsidiary in excess of those set forth by
regulations promulgated by the Board of Governors of the Federal Reserve System,
(ii) such deposit account is not intended by the Loan Party or such Subsidiary
to provide collateral to the depositary institution and (iii) such deposit
account is subject to a control agreement pursuant to the terms of the Security
Documents;

         8.02 INVESTMENTS. Make any Investments, except:

         (a) Investments held by the Borrower or such Subsidiary in the form of
cash equivalents or short-term marketable securities;

         (b) advances to officers, directors and employees of the Borrower and
Subsidiaries in an aggregate amount not to exceed $500,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

         (c) Investments of the Borrower in any Guarantor and Investments of any
Subsidiary in the Borrower or in another Subsidiary;

         (d) Investments- consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;

         (e) Guarantees permitted by Section 8.03;



                                       71


         (f) the Permitted Distributorship Acquisition; provided that both
before and after giving effect to such acquisition (i) no Default or Event of
Default has occurred and is continuing and (ii) the Borrower shall have
demonstrated pro forma_ compliance with the financial covenants set forth in
Section 8.15 and with the Borrowing Base;

         (g) Investments in the form of acquisitions of all or substantially all
of the business or a line of business (whether by the acquisition of capital
stock, assets or any combination thereof) of any other Person; provided that (i)
the entity to be acquired is a going concern, (ii) the entity to be acquired
shall engage in a business or the assets to be acquired shall be used in a
business described in Section 8.08, (iii) the Borrower shall have delivered to
the Administrative Agent on or before the closing date of the acquisition a
description of the acquisition, (iv) the Borrower shall have certified on or
before the closing date of the acquisition, in writing and in a form acceptable
to the Administrative Agent and the Lenders, that the acquisition has been
approved by the board of directors or equivalent governing body of the entity to
be acquired, (v) no Default or Event of Default shall- have occurred and be
continuing both before and after giving effect to the acquisition, (vi) the
Borrower shall have complied with Section 7.15, (vii) the Borrower shall have
delivered to the Administrative Agent a Compliance Certificate dated as of the
closing date of the acquisition demonstrating, in form and substance reasonably
satisfactory thereto, the pro forma compliance with each covenant contained in
Section 8.16 and (viii) the Borrower shall have obtained the prior written
consent of the Administrative Agent and the Required Lenders prior to the
consummation of such acquisition if (A) the aggregate purchase price of such
acquisition or series of related acquisitions (including, without limitation,
all cash payments, Indebtedness and other obligations assumed, earn out
payments, seller financing, deferred payments or equity issued) exceeds
$2,000,000 or (B) the aggregate purchase price of all acquisitions (including,
without limitation, all cash payments, Indebtedness and other obligations
assumed, earn out payments, seller financing, deferred payments or equity
issued) consummated during the term of this Agreement (including, without
limitation, such acquisition) exceeds $10,000,000;

         (h) Investments in Proposed Loan Parties or Wholly-Owned Subsidiaries
of a Loan Party that join this Agreement and the other Loan Documents as a
Borrower or become Guarantors on or prior to the date of such Investment;

         (i) Investments constituting capital expenditures permitted under this
Agreement;

         (j) Investments in the R4 Technical Center; provided that any such
Investments made during the term of this Agreement shall not exceed $1,000,000
in the aggregate;

         (k) Investments existing on the date hereof and listed on Schedule
8.02;

         (l) Investments in any Swap Contract permitted pursuant to Section
8.03(e); and

         (m) other Investments (other than the additional Investments in the R4
Technical Center which is exclusively provided for under Section 8.02(j)) not
exceeding $1,000,000 in the aggregate in any Fiscal Year of the Borrower.

         8.03 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:



                                       72


         (a) Indebtedness under the Loan Documents;

         (b) the Senior Subordinated Debt;

         (c) Indebtedness outstanding on the date hereof and listed on Schedule
8.03 and any refinancings, refundings, renewals or extensions thereof; provided
that (i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder and (ii) any refinancing,
refunding, renewal or extension of any Subordinated Indebtedness shall be (A) on
subordination terms at least as favorable to the Lenders as the subordination
terms of the Subordinated Indebtedness being refinanced, refunded or extended,
(B) no more restrictive on the applicable Loan Party than the Subordinated
Indebtedness being refinanced, refunded, renewed or extended and (C) in an
amount not less than the amount outstanding at the time of such refinancing,
refunding, renewal or extension;

         (d) Guarantees of the Borrower or any Subsidiary in respect of
Indebtedness otherwise permitted hereunder;

         (e) obligations (contingent or otherwise) of the Borrower or any
Subsidiary existing or arising under any Swap Contract; provided that (i) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by such
Person, and not for purposes of speculation or taking a "market view;" and (ii)
such Swap Contract does not contain any provision exonerating the non-defaulting
party from its obligation to make payments on outstanding transactions to the
defaulting party;

         (f) Indebtedness in respect of capital leases, Synthetic Lease
Obligations and purchase money obligations for fixed or capital assets within
the limitations set forth in Section 8.01(i); provided, however, that the
aggregate amount of all such Indebtedness at any one time outstanding shall not
exceed $1,000,000;

         (g) Indebtedness assumed in connection with an acquisition permitted
pursuant to Section 8.02(f) and (g) on terms and conditions, including, without
limitation, all collateral security therefor, acceptable to the Administrative
Agent;

         (h) (i) unsecured Indebtedness in an aggregate principal amount not to
exceed $1,000,000 at any time outstanding and (ii) other Subordinated
Indebtedness in an aggregate outstanding principal amount not to exceed
$1,000,000; provided that, in each case, the Borrower shall have complied with
the requirements of Section 2.06(e);

         (i) Indebtedness of any Loan Party or a Subsidiary of a Loan Party to
another Loan Party so long as (i) after such transaction, the Person providing
the Indebtedness will be Solvent and (ii) no Default or Event of Default then
exists or will exist after such transaction;



                                       73


         (j) Indebtedness of the Borrower or its Subsidiaries in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations, in each case provided in the ordinary course of business;

         (k) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness is
extinguished within five (5) Business Days of its incurrence;

         (l) Indebtedness in respect of taxes, assessments, governmental charges
or levies, claims of customs authorities and claims for labor, worker's
compensation, materials and supplies to the extent that payment therefor shall
not at the time be required to be made in accordance with the provisions of
Section 7.04;

         (m) Indebtedness in respect of judgments or awards permitted under
Section 8.01(h); and

         (n) endorsements for collection, deposit or negotiation and warranties
of products or services, in each case incurred in the ordinary course of
business.

         8.04 FUNDAMENTAL CHANGES. Merge, dissolve, liquidate, consolidate with
or into another Person, or Dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

         (a) any Subsidiary may merge with (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries, provided that when any Guarantor is merging with another
Subsidiary, the Guarantor shall be the continuing or surviving Person or the
survivor complies with all relevant requirements of Section 7.15 and becomes a
Guarantor;

         (b) any Subsidiary may Dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or to another
Subsidiary; provided that if the transferor in such a transaction is a
Guarantor, then the transferee must either be the Borrower or a Guarantor which
has satisfied all relevant requirements of Section 7.15;

         (c) any Subsidiary may merge with any other Person in connection with
any Permitted Acquisition, provided that the Subsidiary shall be the continuing
or surviving Person or the survivor complies with all relevant requirements of
Section 7.15 and becomes a Guarantor; and

         (d) the Borrower, its Subsidiaries and any Proposed Loan Parties may
consummate the Permitted Reorganization so long as the following conditions are
satisfied on or before the effective date of the Permitted Reorganization:

                  (i) the Borrower shall have delivered to the Administrative
Agent a written description of the Permitted Reorganization, including, without
limitation, an organizational



                                       74


chart and list of each Loan Party and Proposed Loan Party after given effect to
the Permitted Reorganization;

                  (ii) after giving effect to the Permitted Reorganization, the
Loan Parties will be the same as the obligors under the Senior Subordinated
Debt; and

                  (iii) the Borrower shall have delivered to the Administrative
Agent the items set forth in Section 7.15 for each Proposed Loan Party which is
not a Loan Party prior to the Permitted Reorganization, including, without
limitation, legal opinions, UCC financing statements and such other documents as
are required to ensure the continued priority, perfection and enforceability of
the Loan Documents.

         8.05 DISPOSITIONS. Except for the Permitted Reorganization, make any
Disposition or enter into any agreement to make any Disposition, except:

         (a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;

         (b) Dispositions of Inventory in the ordinary course of business;

         (c) Dispositions of equipment or real property to the extent that (i)
such property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;

         (d) Dispositions of property by the Borrower or any Subsidiary to the
Borrower or to a Guarantor which has satisfied any relevant requirements of
Section 7.15; provided that if the transferor of such property is a Guarantor,
the transferee thereof must either be the Borrower or a Guarantor;

         (e) Dispositions permitted by Section 8.04;

         (f) The Non-Propane Products Divestiture; provided that both before and
after giving effect to such Disposition (i) no Default or Event of Default has
occurred and is continuing and (ii) the Borrower shall have demonstrated pro
forma compliance with the financial covenants set forth in Section 8.16 and with
the Borrowing Base;

         (g) Dispositions by the Borrower or any Subsidiary thereof, of assets
acquired in connection with any Permitted Acquisition that the Borrower or such
Subsidiary intended to sell at the time of such Permitted Acquisition; provided
(i) such assets were identified in writing to the Administrative Agent at the
time of such Permitted Acquisition and (ii) the aggregate fair market value of
such assets does not exceed fifteen percent (15%) of the aggregate purchase
price paid in connection with such Permitted Acquisition (including, without
limitation, all cash payments, Indebtedness and other obligations assumed,
earn-out payments, seller financing, deferred payments or equity issued) and
(iii) the Borrower shall have complied with the requirements of Section 2.06(e).



                                       75


         (h) Dispositions by the Borrower and its Subsidiaries not otherwise
permitted under this Section 8.05; provided that (i) at the time of such
Disposition, no Default shall exist or would result from such Disposition, (ii)
the aggregate book value of all property Disposed of in reliance on this clause
(h) in any fiscal year shall not exceed $1,000,000, and (iii) the Borrower shall
have complied with the requirements of Section 2.06(e).

         provided, however, that any Disposition pursuant to clauses (a) through
(g) shall be for fair market value.

         8.06 RESTRICTED PAYMENTS. Except for the Permitted Reorganization,
declare or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except that as long as no Default
or Event of Default is continuing or would result therefrom:

         (a) each Subsidiary may make Restricted Payments to the Borrower and to
a Guarantor (and, in the case of a Restricted Payment by a non-Wholly-Owned
Subsidiary, to the Borrower and any Subsidiary and to each other owner of
capital stock or other equity interests of such Subsidiary on a pro rata basis
based on their relative ownership interests); and

         (b) the Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other
common equity interests of such Person.

         Notwithstanding anything in this Section 8.06 to the contrary, (i) the
Borrower may redeem or repurchase its common stock from officers, employees and
directors of any Loan Party (or their estates) upon the termination of
employment of any such Person or from service providers pursuant to equity
incentive agreement or arrangements upon termination of their services to the
Borrower pursuant to agreements entered into to evidence grants or awards or
other compensation under any stock option plan, stock purchase plan, management
incentive plan, consulting agreement or other contract or arrangement approved
by the Board of Directors of the Borrower; provided than (A) no Default or Event
of Default is then in existence or would otherwise arise therefrom, and (B) the
aggregate amount of all cash paid in respect of all such shares so redeemed or
repurchased does not exceed $1,000,000 in any Fiscal Year of the Borrower or
$3,000,000 in the aggregate during the term of this Agreement, and (ii) so long
as no Default or Event of Default is then in existence or would otherwise arise
therefrom, the Loan Parties may make cash Restricted Payments to the Borrower,
if the Borrower promptly uses such proceeds for the purposes described in clause
(i) above.

         8.07 LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK. Except for
the Permitted Reorganization, issue, sell or otherwise dispose of any class or
series of capital stock that, by its terms or by the terms of any security into
which it is convertible or exchangeable, is, or upon the happening of an event
or passage of time would be, (a) convertible or exchangeable into Indebtedness
or (b) required to be redeemed or repurchased, including at the option of the
holder, in whole or in part, or has, or upon the happening of an event or
passage of time would have, a redemption or similar payment due.



                                       76


         8.08 CHANGE IN NATURE OF BUSINESS. Engage in any material line of
business substantially different from those lines of business conducted by the
Borrower and its Subsidiaries on the date hereof or any business substantially
related or incidental thereto, including, without limitation, the distribution
and sale of propane fueled products of any type.

         8.09 ACCOUNTING CHANGES; ORGANIZATIONAL DOCUMENTS. (a) Except pursuant
to a Permitted Reorganization, change its Fiscal Year end, or make any change in
its accounting treatment and reporting practices except as required or permitted
by GAAP or (b) amend, modify or change its Organization Documents in any manner
directly and materially adverse to the rights or interests of the Lenders.

         8.10 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule
8.10, enter into any transaction of any kind with any Affiliate of the Borrower,
whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary
as would be obtainable by the Borrower or such Subsidiary at the time in a
comparable arm's length transaction with a Person other than an Affiliate;
provided that the foregoing restriction shall not apply to transactions between
or among the Borrower and any of its Wholly-Owned Subsidiaries or between and
among any Wholly-Owned Subsidiaries.

         8.11 BURDENSOME AGREEMENTS. Enter into any material Contractual
Obligation (other than this Agreement or any other Loan Document) that (a)
directly and materially restricts the ability (i) of any Subsidiary to make
Restricted Payments to the Borrower or any Guarantor or to otherwise transfer
property to the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee
the Indebtedness of the Borrower under the Loan Documents or (iii) of the
Borrower or any Subsidiary to grant Liens on property of such Person under the
Loan Documents; provided, however, that this clause (iii) shall not prohibit any
negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under Section 8.03(f) solely to the extent any such negative pledge
relates to the property financed by or the subject of such Indebtedness; (b)
contains covenants more restrictive than the provisions of Articles VII and
VIII; or (c) requires the grant of a Lien to secure an obligation of such Person
if a Lien is granted to secure another obligation of such Person.

         8.12 USE OF PROCEEDS. Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the FRB)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund indebtedness originally incurred for such purpose.

         8.13 IMPAIRMENT OF SECURITY INTERESTS. Take or omit to take any action,
which might or would have the result of materially impairing the security
interests in favor of the Administrative Agent with respect to the Collateral or
grant to any Person (other than the Administrative Agent for the benefit of
itself and the Lenders pursuant to the Security Documents) any interest
whatsoever in the Collateral, except for Liens permitted under Section 8.01 and
Dispositions permitted under Section 8.05.



                                       77


         8.14 AMENDMENTS, PAYMENTS AND PREPAYMENTS OF SUBORDINATED INDEBTEDNESS.

         (a) Amend or modify (or permit the modification or amendment of) any of
the terms or provisions of any documents or agreements evidencing

                  (i) the Senior Subordinated Debt (including, without
limitation, the Senior Subordinated Debt Documents) which such amendment or
modification would have the effect of (A) increasing the maximum principal
amount of the Senior Subordinated Debt or the rate of interest on any of the
Senior Subordinated Debt, (B) change any date upon which payments of principal
or interest on the Senior Subordinated Debt is due to an earlier date, (C) add
or make more restrictive any event of default or any covenant with respect to
the Senior Subordinated Debt other than as provided in this Agreement or as
currently provided in the Senior Subordinated Debt Documents, (D) change any
redemption or prepayment provisions of the Senior Subordinated Debt to an
earlier date or add any additional events requiring such redemption or
prepayment, (E) alter the subordination provision with respect to the Senior
Subordinated Debt, including, without limitation, subordinating the Senior
Subordinated Debt to any other Indebtedness, (F) take any Liens or security
interest in assets of any Loan Party or any other assets securing the
Obligations, (G) change or amend any other term of the Senior Subordinated Debt
Documents if such change or amendment would result in a Default or Event of
Default or (H) permit the exercise of the put rights of holder under Section 3.2
of the Investor Rights Agreement dated as of June 15, 2001 between the Borrower
and Allied Capital Corporation prior to the fifth anniversary of the date
thereof, in each case, without the consent of the Administrative Agent and the
Required Lenders, or

                  (ii) any other Subordinated Indebtedness in any manner which
would result in any such terms or provisions being more restrictive to the
Borrower or any Subsidiary, as determined by the Administrative Agent in its
reasonable judgment other than as provided in this Agreement or as currently
provided in the Senior Subordinated Debt Documents; or

         (b) Purchase, redeem, retire or otherwise acquire for value, or set
apart any money for a sinking, defeasance or other analogous fund for, the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of any Subordinated Indebtedness, except for (i) regularly
scheduled payments of interest in respect thereof required pursuant to the
instruments evidencing such Subordinated Indebtedness, (ii) prepayments,
redemption or acquisition for value of the Senior Subordinated Debt permitted
pursuant to Section 2.06(e) and (iii) other prepayments, redemption or
acquisition for value of the Senior Subordinated Debt; provided that, for
purposes of clause (iii), both before and after giving effect to such
prepayment, redemption or acquisition for value (A) no Default or Event of
Default has occurred and is continuing, and (B) the Borrower shall have
demonstrated pro forma compliance with the financial covenants set forth in
Section 8.15 and with the Borrowing Base.

         8.15 FINANCIAL COVENANTS.

         (a) Consolidated Net Worth. Permit Consolidated Net Worth as of the end
of any Fiscal Quarter to be less than the sum of (a) $70,000,000, plus (b) an
amount equal to 75% of the



                                       78


Consolidated Net Income earned in each full Fiscal Quarter ending after July 31,
2002 (with no deduction for a net loss in any such Fiscal Quarter), plus (c) an
amount equal to 100% of the aggregate increases in Shareholders' Equity of the
Borrower and its Subsidiaries after the date hereof by reason of the issuance
and sale of capital stock or other equity interests of the Borrower or any
Subsidiary (other than issuances to the Borrower or a wholly-owned Subsidiary),
including upon any conversion of debt securities of the Borrower into such
capital stock or other equity interests, minus (d) the total amount of goodwill
write-off from the dissolution or winding up of QuickShip, Inc., in an amount
not to exceed $7,000,000.

         (b) Consolidated Total Leverage Ratio. As of any Fiscal Quarter end
during any period set forth below, permit the Consolidated Total Leverage Ratio
for the four consecutive Fiscal Quarter period ending on such date to be greater
than the corresponding ratio set forth below:

                                                            Maximum Consolidated
        Four Fiscal Quarters Ending                         Total Leverage Ratio
        ------------------------------------------------------------------------
        Closing Date through April 30, 2003                       2.50 to 1.00
        July 31, 2003 and each Fiscal Quarter thereafter          2.00 to 1.00

         (c) Consolidated Senior Leverage Ratio. As of any Fiscal Quarter end,
permit the Consolidated Senior Leverage Ratio for the four consecutive Fiscal
Quarter period ending on such date to be greater than 2.00 to 1.00.

         (d) Consolidated Fixed Charge Coverage Ratio. As of any Fiscal Quarter
end, permit the Consolidated Fixed Charge Coverage Ratio for the four
consecutive Fiscal Quarter period ending on such date to be less than 1.25 to
1.00.

                                  ARTICLE IX.
                         EVENTS OF DEFAULT AND REMEDIES

         9.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event
of Default:

         (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i)
when and as required to be paid herein, any amount of principal of any Loan or
any L/C Obligation, or (ii) within three (3) days after the same becomes due,
any interest on any Loan or on any L/C Obligation, or any Commitment Fee or
other fee due hereunder, or (iii) within five (5) days after the same becomes
due, any other amount payable hereunder or under any other Loan Document; or

         (b) Specific Covenants. The Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 7.01, Section 7.02(a),
(b) or (c), Section 7.03, Section 7.05, Section 7.10, Section 7.11 or Section
7.13 or Article VIII; or

         (c) Other Defaults. Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days after the earlier to occur



                                       79


of (i) obtaining knowledge thereof by any Loan Party and (ii) written notice
thereof to the Borrower by the Administrative Agent; or

         (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Loan Party herein, any other Loan Document, or in any
document delivered in connection herewith or therewith that is subject to
materiality or Material Adverse Effect qualifications, shall be incorrect or
misleading in any respect when made or deemed made or any representation,
warranty, certification or statement of fact made or deemed made by or on behalf
of the Borrower or any other Loan Party herein, any other Loan Document, or in
any document delivered in connection herewith or therewith that is not subject
to materiality or Material Adverse Effect qualifications, shall be incorrect or
misleading in any material respect when made or deemed made; or

         (e) Cross-Default.

                  (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any material agreement or condition relating to any such Indebtedness
or Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to be demanded or to become
due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or (ii)
there occurs under any Swap Contract an Early Termination Date (as defined in
such Swap' Contract) resulting from (A) any event of default under such Swap
Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined)
under such Swap Contract as to which the Borrower or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination Value
owed by the Borrower or such Subsidiary as a result thereof is greater than the
Threshold Amount; or

                  (iii) The Borrower or any of its Subsidiaries shall default in
the payment when due, or in the performance or observance, of any obligation or
condition of any Contractual Obligation the result of which could reasonably be
expected to have a Material Adverse Effect, unless, but only as long as, the
existence of any such default is being contested by the Borrower or any such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect



                                       80


thereof have been established on the books of the Borrower or such Subsidiary to
the extent required by GAAP; or

         (f) Insolvency Proceedings, Etc. Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

         (g) Inability to Pay Debts; Attachment. (i) The Borrower or any
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 30 days after its issue or levy; or

         (h) Judgments. There is entered against the Borrower or any Subsidiary
(i) a final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 30 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or

         (i) Environmental. The Borrower or any of its Subsidiaries shall be
subject to Environmental Liability and such liability is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.

         (j) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

         (k) Invalidity of Loan Documents. Any Loan Document, at any time after
its execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Loan Party or any other Person contests in any manner
the validity or enforceability of any Loan Document;



                                       81


or any Loan Party denies that it has any or further liability or obligation
under any Loan Document, or purports to revoke, terminate or rescind any Loan
Document; or

         (l) Change of Control. There occurs any Change of Control with respect
to the Borrower.

         9.02 Remedies Upon Event of Default. If any Event of Default occurs and
is continuing, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, take any or all of the following actions:

         (a) declare the commitment of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such commitments and obligation shall be terminated;

         (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower;

         (c) require that the Borrower Cash Collateralize the L/C Obligations
(in an amount equal to the then Outstanding Amount thereof); and

         (d) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
Law;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.

         9.03 APPLICATION OF FUNDS. After the exercise of remedies provided for
in Section 9.02 (or after the Loans have automatically become immediately due
and payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 9.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

         First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article IV) payable to the Administrative Agent in its capacity as
such;

         Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable
to the Lenders (including Attorney



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Costs and amounts payable under Article IV), ratably among them in proportion to
the amounts described in this clause Second payable to them;

         Third, to payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans and L/C Borrowings and any termination
payments due in respect of a Swap Contract with any Lender or the Administrative
Agent, ratably among the Lenders in proportion to the respective amounts
described in this clause Third payable to them;

         Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders in
proportion to the respective amounts described in this clause Fourth held by
them;

         Fifth, to the Administrative Agent for the account of the L/C Issuer,
to Cash Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit; and

         Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.04(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

                                   ARTICLE X.
                              ADMINISTRATIVE AGENT

         10.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT.

         (a) Each Lender hereby irrevocably appoints, designates and authorizes
the Administrative Agent to take such action on its behalf under the provisions
of this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.



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         (b) The L/C Issuer shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith, and
the L/C Issuer shall have all of the benefits and immunities (i) provided to the
Administrative Agent in this Article X with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit issued
by it or proposed to be issued by it and the applications and agreements for
letters of credit pertaining to such Letters of Credit as fully as if the term
"Administrative Agent" as used in this Article X and in the definition of
"Agent-Related Person" included the L/C Issuer with respect to such acts or
omissions, and (ii) as additionally provided herein with respect to the L/C
Issuer.

         10.02 DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel and
other consultants or experts concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct.

         10.03 LIABILITY OF ADMINISTRATIVE AGENT. No Agent-Related Person shall
(a) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any Affiliate thereof.

         10.04 RELIANCE BY ADMINISTRATIVE AGENT.

         (a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any Loan
Party), independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent shall be fully justified in failing or refusing
to take any action under any Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such



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action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Required Lenders (or
such greater number of Lenders as may be expressly required hereby in any
instance) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders.

         (b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

         10.05 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default and stating that
such notice is a "notice of default." The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article IX; provided, however, that unless and until
the Administrative Agent has received any such direction, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable or
in the best interest of the Lenders.

         10.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE
AGENT. Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower hereunder. Each Lender also represents that it
,will, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent herein,



                                       85


the Administrative Agent shall not have any duty .or responsibility to provide
any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of any of the Loan Parties or any of their respective
Affiliates which may come into the possession of any Agent-Related Person.

         10.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of any Loan Party and without limiting the obligation of any Loan Party
to do so), pro rata, and hold harmless each Agent-Related Person for, from and
against any and all Indemnified Liabilities incurred by it; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of such Indemnified Liabilities to the extent determined in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from such Agent-Related Person's own gross negligence or willful misconduct;
provided, however, that no action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. Without limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section shall survive
termination of the Aggregate Commitments, the payment of all other Obligations
and the resignation of the Administrative Agent.

         10.08 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. Bank of America
and its Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with each of the Loan Parties and their respective Affiliates as though Bank of
America were not the Administrative Agent or the L/C Issuer hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, Bank of America or its Affiliates may receive
information regarding any Loan Party or its Affiliates (including information
that may be subject to confidentiality obligations in favor of such Loan Party
or such Affiliate) and acknowledge that the Administrative Agent shall be under
no obligation to provide such information to them. With respect to its Loans,
Bank of America shall have the same rights and powers under this Agreement as
any other Lender and may exercise such rights and powers as though it were not
the Administrative Agent or the L/C Issuer, and the terms "Lender" and "Lenders"
include Bank of America in its individual capacity.

         10.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders; provided
that any such resignation by Bank of America shall also constitute its
resignation as L/C Issuer and Swing Line Lender. If the Administrative Agent
resigns under this Agreement, the Required Lenders shall appoint from among the
Lenders a successor administrative agent for the Lenders, which successor
administrative agent shall be consented to by the Borrower at all times other
than during the



                                       86


existence of an Event of Default (which consent of the Borrower shall not be
unreasonably withheld or delayed). If no successor administrative agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Borrower, a successor administrative agent from among the Lenders. Upon
the acceptance of its appointment as successor administrative agent hereunder,
the Person acting as such successor administrative agent shall succeed to all
the rights, powers and duties of the retiring Administrative Agent, L/C, Issuer
and Swing Line Lender and the respective terms "Administrative Agent", "L/C
Issuer" and "Swing Line Lender" shall mean such successor administrative agent
and Letter of Credit issuer and Swing Line Lender, the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent shall be
terminated and the retiring L/C Issuer's and Swing Line Lender's rights, powers
and duties as such shall be terminated, without any other or further act or deed
on the part of such retiring L/C Issuer or Swing Line Lender or any other
Lender, other than the obligation of the successor L/C Issuer to issue letters
of credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or to make other arrangements satisfactory to the
retiring L/C Issuer to effectively assume the obligations of the retiring L/C
Issuer with respect-to such Letters of Credit. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article X and Section 11.04 and Section 11.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. If no successor administrative agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders. appoint a successor
agent as provided for above.

         10.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or otherwise

         (a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Section 2.04(i) and Section 2.04(i), Section
3.02 and Section 11.04) allowed in such judicial proceeding; and

         (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;



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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 3.02 and Section 11.04.

         Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

         10.11 COLLATERAL AND GUARANTY MATTERS. The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion

         (a) to release any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) upon termination of the
Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations) and the expiration or termination of all
Letters of Credit, (ii) that is sold or to be sold as part of or in connection
with any sale permitted hereunder or under any other Loan Document, or (iii)
subject to Section 11.01, if approved, authorized or ratified in writing by the
Required Lenders;

         (b) to subordinate any Lien on any property granted to or held by the
Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Section 8.01(i); and

         (c) to release any Guarantor from its obligations under the Guaranty
Agreement if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder.

         Upon request by the Administrative Agent at any time, the Required
Lenders will confirm in writing the Administrative Agent's authority to release
or subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Guaranty Agreement pursuant
to this Section 10.11.

                                   ARTICLE XI.
                                  MISCELLANEOUS

         11.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Required Lenders and the Borrower or the applicable Loan Party, as
the case may be, and acknowledged by the Administrative Agent, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall:



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         (a) waive any condition set forth in Section 5.01(a) without the
written consent of each Lender;

         (b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 9.02) without the written consent of
such Lender;

         (c) postpone any date fixed by this Agreement or any other Loan
Document for any payment (excluding mandatory prepayments) of principal,
interest, fees or other amounts due to the Lenders (or any of them), hereunder
or under any other Loan Document without the written consent of each Lender
directly affected thereby;

         (d) reduce the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso
to this Section 11.01) any fees or other amounts payable hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required Lenders shall
be necessary (i) to amend the definition of "Default Rate" or to waive any
obligation of the Borrower to pay interest at the Default Rate or (ii) to amend
any financial covenant hereunder (or any defined term used therein) even if the
effect of such amendment would be to reduce the rate of interest on any Loan or
L/C Borrowing or to reduce any fee payable hereunder;

         (e) change Section 3.06 or Section 9.03 in a manner that would alter
the pro rata sharing of payments required thereby without the written consent of
each Lender;

         (f) change any provision of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or

         (g) release any Guarantor from the Guaranty Agreement or all or a
material portion of the Collateral or release any Security Document (other than
asset sales permitted pursuant to Section 8.05 and as otherwise specifically
permitted or contemplated in this Agreement or the applicable Security Document)
without the written consent of each Lender;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other.
Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not



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be increased or extended without the consent of such Lender.

         11.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES.

         (a) General. Unless otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
by facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number or (subject to subsection
(c) below) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

         (i) if to the Borrower, the Administrative Agent, the L/C Issuer or the
Swing Line Lender, to the address, facsimile number, electronic mail address or
telephone number specified for such Person on Schedule 11.02 or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties; and

         (ii) if to any other Lender, to the address, facsimile number,
electronic mail address or telephone number specified in its Administrative
Questionnaire or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a notice to
the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line
Lender.

         All such notices and other communications shall be deemed to be given
or made upon the earlier to occur of (i) actual receipt by the relevant party
hereto and (ii) (A) if delivered by hand or by courier,, when signed for by or
on behalf of the relevant party hereto; (B) if delivered by mail, four Business
Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile,
when sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of
subsection (c) below), when delivered; provided, however, that notices and other
communications to the Administrative Agent, the L/C Issuer and the Swing Line
Lender pursuant to Article II shall not be effective until actually received by
such Person. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder.

         (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents
may be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually-signed originals and shall be binding on all Loan
Parties, the Administrative Agent and the Lenders. The Administrative Agent may
also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile document
or signature.

         (c) Limited Use of Electronic Mail. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Section 7.02, and to
distribute Loan Documents for execution by the parties thereto, and may not be
used for any other purpose.



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         (d) Reliance by Administrative Agent and Lenders. The Administrative
Agent and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Loan Notices and Swing Line Loan Notices) purportedly
given by or on behalf of the Borrower even if (i) such notices were not made in
a manner specified herein, were incomplete or were not preceded or followed by
any other form of notice specified herein, or (ii) the terms thereof, as
understood by the recipient, varied from any confirmation thereof. The Borrower
shall indemnify each Agent-Related Person and each Lender for, from and against
all losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of the Borrower. All
telephonic notices to and other communications with the Administrative Agent may
be recorded by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.

         11.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

         11.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (a) to
pay or reimburse the Administrative Agent for all costs and expenses incurred in
connection with the development, preparation, negotiation, execution, filing,
recording and insurance of this Agreement and the other Loan Documents and any
amendment, waiver, consent or other modification of the provisions hereof and
thereof (whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or
reimburse the Administrative Agent and each Lender for all costs and expenses
incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any "workout"
or restructuring in respect of the Obligations and during any legal proceeding,
including any proceeding under any Debtor Relief Law), including all Attorney
Costs. The foregoing costs and expenses shall include all search, filing,
recording, Title insurance and appraisal charges and fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or any Lender. All amounts due under this
Section 11.04 shall be payable within ten Business Days after demand therefor.
The agreements in this Section shall survive the termination of the Aggregate
Commitments and repayment of all other Obligations.

         11.05 INDEMNIFICATION BY THE BORROWER. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the "Indemnitees") for, from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature



                                       91


whatsoever which may at any time be imposed on, incurred by or asserted against
any such Indemnitee in any way relating to or arising out of or in connection
with (a) the execution, delivery, enforcement, performance or administration of
any Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (c) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by the Borrower, any Subsidiary or any other Loan Party, or
any Environmental Liability related in any way to the Borrower, any Subsidiary
or any other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"), in all cases, whether
or not caused by or arising, in whole or in part, out of the negligence of the
Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee. No Indemnitee shall be liable for any damages
arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in
connection with this Agreement, nor shall any Indemnitee have any liability for
any indirect or consequential damages relating to this Agreement or any other
Loan Document or arising out of its activities in connection herewith or
therewith (whether before or after the Closing Date). All amounts due under this
Section 11.05 shall be payable within ten Business Days after demand therefor.
The agreements in this Section shall survive the resignation of the
Administrative Agent, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.

         11.06 PAYMENTS SET ASIDE. To the extent that any payment by or on
behalf of the Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect.



                                       92


         11.07 SUCCESSORS AND ASSIGNS.

         (a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
subsection (f) of this Section 11.07 (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

         (b) Any Lender may at any time assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans (including for purposes of this
subsection (b), participations in L/C Obligations and in Swing Line Loans) at
the time owing to it); provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning Lender's Commitment and the Loans
at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this
Section) with respect to a Lender, the aggregate amount of the Commitment (which
for this purpose includes Loans outstanding thereunder) subject to each such
assignment, determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent or, if "Trade Date"
is specified in the Assignment and Assumption, as of the Trade Date, shall not
be less than $5,000,000 unless each of the Administrative Agent and, so long as
no Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed); (ii)
each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Lender's rights and obligations under this Agreement with
respect to the Loans or the Commitment assigned, except that this clause (ii)
shall not apply to rights in respect of Swing Line Loans; (iii) any assignment
of a Commitment must be approved by the Administrative Agent, the L/C Issuer and
the Swing Line Lender unless the Person that is the proposed assignee is itself
a Lender (whether or not the proposed assignee would otherwise qualify as an
Eligible Assignee); and (iv) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500. Subject to acceptance and recording
thereof by the Administrative Agent pursuant to subsection (c) of this Section,
from and after the effective date specified in each Assignment and Assumption,
the Eligible Assignee thereunder shall be a party to this Agreement and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue



                                       93


to be entitled to the benefits of Section 4.01, Section 4.04, Section 4.05,
Section 11.04 and Section 11.05 with respect to facts and circumstances
occurring prior to the effective date of such assignment). Upon request, the
Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection (d) of this Section.

         (c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent's Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at-any reasonable time
and from time to time upon reasonable prior notice.

         (d) Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower's Affiliates
or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans (including such Lender's participations in L/C
Obligations and/or Swing Line Loans) owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 11.01 that directly affects such Participant. Subject to subsection (e)
of this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Section 4.01, Section 4.04 and Section 4.05 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 11.09 as though it were a
Lender, provided such Participant agrees to be subject to Section 3.06 as though
it were a Lender.

         (e) A Participant shall not be entitled to receive any greater payment
under Section 4.01 or 4.04 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 4.01 unless the Borrower
is



                                       94


notified of the participation sold to such Participant and such Participant
agrees, for the benefit of .the Borrower, to comply with Section 11.15 as though
it were a Lender.

         (f) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its Note,
if any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank without the consent of either
the Borrower or the Administrative Agent; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

         (g) As used herein, the following terms have the following meanings:

                           "Eligible Assignee" means (a) a Lender; (b) an
                  Affiliate of a Lender; (c) an Approved Fund; and (d) any other
                  Person (other than a natural person) approved by (i) the
                  Administrative Agent, the L/C Issuer or the Swing Line Lender,
                  and (ii) unless an Event of Default has occurred and is
                  continuing, the Borrower (each such approval not to be
                  unreasonably withheld or delayed); provided that
                  notwithstanding the foregoing, "Eligible Assignee" shall not
                  include the Borrower or any of the Borrower's Affiliates or
                  Subsidiaries.

                           "Fund" means any Person (other than a natural person)
                  that is (or will be) engaged in making, purchasing, holding or
                  otherwise investing in commercial loans and similar extensions
                  of credit in the ordinary course of its business.

                           "Approved Fund" means any Fund that is administered
                  or managed by (a) a Lender, (b) an Affiliate of a Lender or
                  (c) an entity or an Affiliate of an entity that administers or
                  manages a Lender.

         (h) Notwithstanding anything to the contrary contained herein, if at
any time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may, (i) upon 30 days' notice to the
Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days' notice
to the Borrower, resign as Swing Line Lender. In the event of any such
resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled
to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender
hereunder; provided, however, that no failure by the Borrower to appoint any
such successor shall affect the resignation of Bank of America as L/C Issuer or
Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer,
it shall retain all the rights and obligations of the L/C Issuer hereunder with
respect to all Letters of Credit outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Revolving Credit Loans
bearing interest at the Base Rate or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.04(c)). If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of the Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and outstanding as of the
effective date of such resignation, including the right to require the Lenders
to make Revolving Credit Loans or fund risk participations in outstanding Swing
Line Loans pursuant to Section 2.05(c).



                                       95


         11.08 CONFIDENTIALITY. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential); (b) to the extent requested
by any regulatory authority; (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process; (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee of
or Participant in, or any prospective Eligible Assignee of or Participant in,
any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative transaction relating to obligations of the Loan
Parties; (g) with the consent of the Borrower; (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower; or (i) to the
National Association of Insurance Commissioners or any other similar
organization. In addition, the Administrative Agent and the Lenders may disclose
the existence of this Agreement and information about this Agreement to market
data collectors, similar service providers to the lending industry, and service
providers to the Administrative Agent and the Lenders in connection with the
administration and management of this Agreement, the -other Loan Documents, the
Commitments, and the Credit Extensions. For the purposes of this Section,
"Information" means all information received from any Loan Party relating to any
Loan Party or its business, other than any such information that is available to
the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Loan Party; provided that, in the case of information received
from a Loan Party after the date hereof, such information is clearly identified
in writing at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information of a
similar type.

         11.09 SET-OFF. In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Lender is authorized at any time and from time to time, without
prior notice to the Borrower or any other Loan Party, any such notice being
waived by the Borrower (on its own behalf and on behalf of each Loan Party) to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Loan Parties against any and all Obligations owing
to such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the Administrative Agent or such Lender
shall have made demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured or denominated in a
currency different from that of the applicable deposit or indebtedness. Each


                                       96


Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such setoff and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.

         11.10 INTEREST RATE LIMITATION. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "Maximum Rate"). If the Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

         11.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         11.12 INTEGRATION. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent or the
Lenders in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.

         11.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

         11.14 SEVERABILITY. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the


                                       97


illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

         11.15 TAX FORMS. (a) (i) Each Lender that is not a "United States
person" within the meaning of Section 7701(a)(30) of the Code (a "Foreign
Lender") shall deliver to the Administrative Agent, prior to receipt of any
payment subject to withholding under the Code (or upon accepting an assignment
of an interest herein), two duly signed completed copies of either IRS Form
W-8BEN or any successor thereto (relating to such Foreign Lender and entitling
it to an exemption from, or reduction of, withholding tax on all payments to be
made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS
Form W-8ECI or any successor thereto (relating to all payments to be made to
such Foreign Lender by the Borrower pursuant to this Agreement) or such other
evidence satisfactory to the Borrower and the Administrative Agent that such
Foreign Lender is entitled to an exemption from, or reduction of, U.S.
withholding tax, including any exemption pursuant to Section 881(c) of the Code.
Thereafter and from time to time, each such Foreign Lender shall (A) promptly
submit to the Administrative Agent such additional duly completed and signed
copies of one of such forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) as may then be
available under then current United States laws and regulations to avoid, or
such evidence as is satisfactory to the Borrower and the Administrative Agent of
any available exemption from or reduction of, United States withholding taxes in
respect of all payments to be made to such Foreign Lender by the Borrower
pursuant to this Agreement, (B) promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction, and (C) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws that the Borrower make any deduction or
withholding for taxes from amounts payable to such Foreign Lender.

         (ii) ach Foreign Lender, to the extent it does not act or ceases to act
for its own account with respect to any portion of any sums paid or payable to
such Lender under any of the Loan Documents (for example, in the case of a
typical participation by such Lender), shall deliver to the Administrative Agent
on the date when such Foreign Lender ceases to act for its own account with
respect to any portion of any such sums paid or payable, and at such other times
as may be necessary in the determination of the Administrative Agent (in the
reasonable exercise of its discretion), (A) two duly signed completed copies of
the forms or statements required to be provided by such Lender as set forth
above, to establish the portion of any such sums paid or payable with respect to
which such Lender acts for its own account that is not subject to U.S.
withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or
any successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.



                                       98


         (iii) The Borrower shall not be required to pay any additional amount
to any Foreign Lender under Section 4.01 (A) with respect to any Taxes required
to be deducted or withheld on the basis of the information, certificates or
statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant
to this Section 11.15(a) or (B) if such Lender shall have failed to satisfy the
foregoing provisions of this Section 11.15(a); provided that if such Lender
shall have satisfied the requirement of this Section 11.15(a) on the date such
Lender became a Lender or ceased to act for its own account with respect to any
payment under any of the Loan Documents, nothing in this Section 11.15(a) shall,
relieve the Borrower of its obligation to pay any amounts pursuant to Section
4.01 in the event that, as a result of any change in any applicable law, treaty
or governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender or other Person for the account of which
such Lender receives any sums payable under any of the Loan Documents is not
subject to withholding or is subject to withholding at a reduced rate.

         (iv) The Administrative Agent may, without reduction, withhold any
Taxes required to be deducted and withheld from any payment under any of the
Loan Documents with respect to which the Borrower is not required to pay
additional amounts under this Section 11.15(a).

         (b) Upon the request of the Administrative Agent, each Lender that is a
"United States person" within the meaning of Section 7701(a)(30) of the Code
shall deliver to the Administrative Agent two duly signed completed copies of
IRS Form W-9. If such Lender fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the Code,
without reduction.

         (c) If any Governmental Authority asserts that the Administrative Agent
did not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Lender, such Lender
shall indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including
Attorney Costs) of the Administrative Agent. The obligation of the Lenders under
this Section shall survive the termination of the Aggregate Commitments,
repayment of all other Obligations hereunder and the resignation of the
Administrative Agent.

         11.16 GOVERNING LAW.

         (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NORTH CAROLINA APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE
AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH
CAROLINA SITTING IN CHARLOTTE OR OF THE



                                       99


UNITED STATES FOR THE WESTERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR, OTHER DOCUMENT RELATED THERETO. THE
BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

         11.17 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                            [Signature Pages Follow]


                                      100


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                       BLUE RHINO CORPORATION


                                       By:  /s/ Mark Castaneda
                                       -----------------------------------------
                                       Name:  Mark Castaneda
                                       Title: Executive Vice President and Chief
                                              Financial Officer



                                      101


                              BANK OF AMERICA, N.A.,
                              as Administrative Agent

                              By:  /s/ Michael Brashler
                                   --------------------
                              Name:    Michael Brashler
                              Title:   Vice President and Senior Agency Officer



                                      102



                                           BANK OF AMERICA, N.A., as Lender, L/C
                                           Issuer and Swing Line Lender

                                           By:  /s/ J. Thomas Johnson, Jr.
                                           -------------------------------
                                           Name:    J. Thomas Johnson, Jr.
                                           Title:   Senior Vice President



                                      103



                                           WACHOVIA BANK, NATIONAL ASSOCIATION,
                                           as a Lender

                                           By:  /s/ Mark Evans
                                                --------------
                                           Name:    Mark Evans
                                           Title:   Senior Vice President



                                      104



                                                     SUNTRUST BANK, as a Lender

                                                     By:  /s/ C. Gray Key
                                                          ---------------
                                                     Name:    C. Gray Key
                                                     Title:   Director



                                      105



                                                   RBC CENTURA BANK, as a Lender


                                                   By:  /s/ Michael H. Trainor
                                                        ----------------------
                                                   Name:    Michael H. Trainor
                                                   Title:   Vice President



                                      106



                                          LASALLE BANK NATIONAL ASSOCIATION,
                                          as a Lender


                                          By:  /s/ Amy B. Yore
                                               ---------------
                                          Name:    Amy B. Yore
                                          Title:   Commercial Banking Officer



                                      107

EX-10.1.B

                                                                 EXHIBIT 10.1(b)

                                                                  CONFORMED COPY

                       FIRST AMENDMENT TO CREDIT AGREEMENT


         This FIRST AMENDMENT TO THE CREDIT AGREEMENT dated as of February 25,
2003 (the "Amendment"), is entered into by and among BLUE RHINO CORPORATION, a
Delaware corporation (the "Borrower"), the Lenders referred to in the Credit
Agreement referred to below (the "Lenders") and BANK OF AMERICA, N.A., as
Administrative Agent for the Lenders (the "Administrative Agent").

                              Statement of Purpose

         WHEREAS, the Borrower, the Lenders and the Administrative Agent are
parties to that certain Credit Agreement dated as of November 20, 2002 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), pursuant to which the Lenders have extended certain credit
facilities to the Borrower;

         WHEREAS, the Borrower, the Administrative Agent and the Lenders have
entered into that certain Consent and Waiver to Credit Agreement dated as of
January 22, 2003 (the "Consent"), pursuant to which the parties agreed, among
other things, to (i) extend the deadline by which the Borrower must apply the
Net Cash Proceeds in the amount of $14,955,500 from the completed Additional
Equity Offering (such amount, the "Prepayment Amount") to repay the Senior
Subordinated Debt or the Term Loan to February 25, 2003, and (ii) reserve
$10,000,000 of availability under the Revolving Credit Commitment for the
repayment of the Senior Subordinated Debt or the Term Loan;

         WHEREAS, the Borrower has requested that the Lenders and the
Administrative Agent agree to amend the Credit Agreement to, among other things,
(i) consent to the extension of the deadline by which the Borrower must apply
the Prepayment Amount to May 26, 2003, (ii) reduce the amount of the Revolving
Credit Commitment currently reserved for the repayment of the Senior
Subordinated Debt or the Term Loan to $5,000,000 and (iii) change the due dates
for delivery of the Borrowing Base Certificate; and

         WHEREAS, the Lenders and the Administrative Agent are, on the terms and
conditions stated below, willing to grant the requests of the Borrower.

         NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

         SECTION 1. Definitions. All capitalized, undefined terms used in this
Agreement shall have the meanings assigned thereto in the Credit Agreement.

         SECTION 2. Amendments. Pursuant to Section 11.01 of the Credit
Agreement and subject to the satisfaction of the conditions specified in Section
5 below (but effective as of the date hereof), the Credit Agreement is hereby
amended as follows:




         (a) Section 1.01 of the Credit Agreement (Defined Terms) is hereby
amended by deleting the definition of "Borrowing Base" in its entirety and
replacing it with the following:

                  "Borrowing Base" means, as of any date of determination and
         subject to Section 1.08 and the following sentence, the sum of (a) 80%
         of Eligible Accounts, (b) 50% of Eligible Inventory, (c) 50% of
         Cylinder Inventory, (d) 50% of Eligible Equipment and (e) 40% of
         Eligible In-Transit Inventory. Subject to any adjustments or
         corrections described in Section 1.08, the Borrowing Base at any
         relevant time will be based on the most recent Borrowing Base
         Certificate received by Administrative Agent pursuant to Section
         5.01(a) or Section 7.02(c); provided that, if the Borrower fails to
         deliver any Borrowing Base Certificate pursuant to Section 7.02(c) (i)
         on or before the date it is due, the Borrower may not obtain any Loan
         or L/C Credit Extension until such Borrowing Base Certificate is
         received by Administrative Agent, or (ii) within 15 days after the date
         it is due, the Borrowing Base will thereafter be $0.00 until such
         Borrowing Base Certificate is received by Administrative Agent.

         (b) Section 1.01 of the Credit Agreement (Defined Terms) is hereby
further amended by inserting the following definition of "Eligible In-Transit
Inventory" in proper alphabetical order:

                  "Eligible In-Transit Inventory" means, subject to modification
         by the Administrative Agent pursuant to Section 1.08, the net book
         value of all Inventory (other than Eligible Inventory, Cylinder
         Inventory and Valve Inventory) of any Loan Party currently in transit
         to a Loan Party from a third party supplier thereof; provided that (a)
         the full purchase price for such Inventory has been paid or is subject
         to an irrevocable commercial Letter of Credit issued hereunder, (b)
         such Inventory has been placed with a third party carrier and is
         subject to a negotiable bill of lading all originals of which have been
         indorsed to the Administrative Agent as consignee and are in the
         possession of the Administrative Agent or its designated agent, (c) the
         Administrative Agent has received all agency agreements and other
         documentation reasonably requested thereby in connection with the
         delivery of such Inventory and such negotiable bill of lading and (d)
         the aggregate net book value of all such Inventory included for
         purposes of calculating the Borrowing Base shall not exceed $10,000,000
         (before application of any advance rate for such Eligible In-Transit
         Inventory).

         (c) Section 7.02 of the Credit Agreement (Certificates; Other
Information) is hereby amended by deleting clause (c) in its entirety and
replacing it with the following:

                  "(c) (i) on the 20th of each fiscal month (or if the 20th is
         not a Business Day, on the next succeeding Business Day), a duly
         completed Borrowing Base Certificate signed by a Responsible Officer of
         the Borrower as of the end of the fiscal month most recently ended
         prior to such date and (ii) on the 25th of each fiscal month (or if the
         25th is not a Business Day, the next succeeding Business



                                       2


         Day), a duly completed Borrowing Base Certificate signed by a
         Responsible Officer of the Borrower as of the 15th of such fiscal
         month;"

         SECTION 3. Consents. Pursuant to Section 11.01 of the Credit Agreement
and subject to the satisfaction of the conditions specified in Section 5 below
(but effective as of the date hereof) the Borrower, the Administrative Agent and
the Lenders hereby consent to the following:

         (a) Notwithstanding anything to the contrary contained in Section
2.06(e) of the Credit Agreement or in the Consent, $5,000,000 of availability
under the Revolving Credit Commitment (the "Reserve Amount") is hereby reserved
for the purpose of repaying the Senior Subordinated Debt and/or the Term Loan on
or before May 26, 2003. The Reserve Amount shall be a replacement of, and not in
addition to, the $10,000,000 reserve established pursuant to the Consent. The
Borrower may apply the Prepayment Amount to repay the Senior Subordinated Debt
and/or the Term Loan at such times and in such relative proportion as the
Borrower elects in its sole discretion; provided that (i) the full amount of the
Prepayment Amount shall be used to make such repayment by May 26, 2003 and (ii)
the Reserve Amount shall only be available to be drawn to fund the last
$5,000,000 of the Prepayment Amount. Section 2.06(e)(ii) of the Credit Agreement
shall be interpreted and construed consistent with this Section 3(a) as it
relates to the application of the Net Cash Proceeds of the Additional Equity
Offering. The Borrower agrees and acknowledges that failure to apply the full
Prepayment Amount to repay the Senior Subordinated Debt and/or the Term Loan, on
or before May 26, 2003 shall constitute an immediate Default and Event of
Default.

         (b) The date upon which the Borrower shall have delivered to the
Administrative Agent a fully executed blocked account agreement, in form and
substance satisfactory to the Administrative Agent, for each deposit account of
any Loan Party held at Peoples Savings Bank (or otherwise complied with the
terms of Section 4.06 of the Collateral Agreement with respect to such deposit
accounts) is hereby extended to March 15, 2003.

         SECTION 4. Waiver. Pursuant to Section 11.01 of the Credit Agreement
and subject to the satisfaction of the conditions specified in Section 5 below
(but effective as of the date hereof), the Administrative Agent and the Lenders
hereby waive any Default or Event of Default that may have occurred under
Section 5 of the Consent as a result of the Borrower's failure to deliver to the
Administrative Agent a fully executed blocked account agreement for each deposit
account held by any Loan Party at Peoples Savings Bank by February 15, 2003.

         SECTION 5. Conditions of Effectiveness. This Amendment shall be
effective as of the date hereof if, and only if, the Administrative Agent shall
receive (a) counterparts of this Amendment executed by the Borrower, the
Required Lenders and the Administrative Agent, (b) an amendment fee from the
Borrower in an amount equal to $73,750, such fee to be distributed pro rata to
the Lenders signatory hereto, and (c) all additional fees separately agreed to
by the Borrower and the Administrative Agent.

         SECTION 6. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation,
execution, delivery and



                                       3


administration of this Amendment and the other instruments and documents to be
delivered hereunder (including, without limitation, all fees and expenses of
Kennedy Covington Lobdell & Hickman, L.L.P., as legal counsel to the
Administrative Agent).

         SECTION 7. Limited Waiver and Amendment. The Credit Agreement and each
other Loan Document shall continue to be, and shall remain, in full force and
effect. Except as expressly provided in this Amendment, this Amendment shall not
be deemed or otherwise construed (i) to be a waiver of, or consent to or a
modification or amendment of, any other term or condition of the Credit
Agreement or any other Loan Document; (ii) to prejudice any other right or
remedies that the Lenders may now have or may have in the future under or in
connection with the Credit Agreement or the Loan Documents, as such documents
may be amended, restated or otherwise modified from time to time; (iii) to be a
commitment or any other undertaking or expression of any willingness to engage
in any further discussion with the Borrower or any other person, firm or
corporation with respect to any waiver, amendment, modification or any other
change to the Credit Agreement or the Loan Documents or any rights or remedies
arising in favor of the Lenders under or with respect to any such documents; or
(iv) to be a waiver of, or consent to or a modification or amendment of, any
other term or condition of any other agreement by and among the Borrower and the
Lenders.

         SECTION 8. Representations and Warranties. By its execution hereof, the
Borrower hereby certifies that each of the representations and warranties set
forth in the Credit Agreement and the other Loan Documents is true and correct
as of the date hereof (other than representations and warranties which speak as
of a specific date pursuant to the Credit Agreement, which representations and
warranties shall have been true and correct as of such specific dates) as if
fully set forth herein, and that as of the date hereof and after giving effect
to this Amendment, no Default or Event of Default has occurred and is
continuing.

         SECTION 9. Integration. The Credit Agreement, as amended and modified
by this Amendment, comprises the complete and integrated agreement of the
parties on the subject matter hereof and thereof supersedes all prior written
and oral agreements on such subject matter.

         SECTION 10. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.

         SECTION 11. Governing Law. This Amendment shall be governed by,
construed and enforced in accordance with the laws of the State of North
Carolina, without reference to the conflicts or choice of law principles
thereof.

         SECTION 12. Fax Transmission. A facsimile, telecopy or other
reproduction of this Amendment may be executed by one or more parties hereto,
and an executed copy of this Amendment may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective for
all



                                       4


purposes. At the request of any party hereto, all parties hereto agree to
execute an original of this Amendment as well as any facsimile, telecopy or
other reproduction hereof.


                            [Signature Pages Follow]


                                       5



         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.



                                       BLUE RHINO CORPORATION


                                       By:    /s/ Mark Castaneda
                                            ------------------------------------
                                       Name:  Mark Castaneda
                                       Title: Executive Vice President and Chief
                                              Financial Officer





                                        BANK OF AMERICA, N.A.,
                                        as Administrative Agent


                                        By:    /s/ Dianne L. Douglas
                                             ----------------------------------
                                        Name:  Dianne L. Douglas
                                        Title: Vice President









                                        BANK OF AMERICA, N.A., as Lender, L/C
                                        Issuer and Swing Line Lender


                                        By:     /s/ J. Thomas Johnson, Jr.
                                             -----------------------------------
                                        Name:   J. Thomas Johnson, Jr.
                                        Title:  Senior Vice President









                                         WACHOVIA BANK, NATIONAL ASSOCIATION,
                                         as a Lender


                                         By:      /s/ Mark Evans
                                              --------------------------------
                                         Name:    Mark Evans
                                         Title:   Senior Vice President











                                            SUNTRUST BANK, as a Lender


                                            By:     /s/ C. Gray Key
                                                 -----------------------------
                                            Name:   C. Gray Key
                                            Title:  Director









                                           RBC CENTURA BANK, as a Lender


                                           By:    /s/ Michael H. Trainor
                                                -------------------------------
                                           Name:  Michael H. Trainor
                                           Title: Vice President









                                       LASALLE BANK NATIONAL ASSOCIATION,
                                       as a Lender


                                       By:     /s/ Amy B. Yore
                                            --------------------------------
                                       Name:   Amy B. Yore
                                       Title:  Assistant Vice President

EX-10.2

                                                                    EXHIBIT 10.2

- --------------------------------------------------------------------------------

                               GUARANTY AGREEMENT
                          dated as of November 20, 2002

                                  by and among

                             Certain Subsidiaries of

                             BLUE RHINO CORPORATION,
                                 as Guarantors,


                                   in favor of


                             BANK OF AMERICA, N.A.,
                             as Administrative Agent

- --------------------------------------------------------------------------------



                                TABLE OF CONTENTS


ARTICLE I    DEFINED TERMS..................................................1
   1.01      Defined Terms..................................................1
   1.02      Other Definitional Provisions..................................2

ARTICLE II   REPRESENTATIONS AND WARRANTIES.................................2
   2.01      Existence, Qualification and Power, Compliance with Laws.......2
   2.02      Authorization; No Contravention................................2
   2.03      Binding Effect.................................................2

ARTICLE III  UNCONDITIONAL GUARANTY.........................................3
   3.01      Guaranty.......................................................3
   3.02      Nature of Guaranty.............................................3
   3.03      Waivers........................................................4
   3.04      Modification of Loan Documents Etc.............................5
   3.05      Demand by the Administrative Agent.............................6
   3.06      Remedies.......................................................6
   3.07      Benefits of Guaranty...........................................6
   3.08      Agreements for Contribution....................................6
   3.09      Termination; Reinstatement.....................................7
   3.10      Payments.......................................................8

ARTICLE IV   MISCELLANEOUS..................................................8
   4.01      Amendments in Writing..........................................8
   4.02      Notices........................................................8
   4.03      No Waiver by Course of Conduct, Cumulative Remedies............8
   4.04      Enforcement Expenses, Indemnification..........................9
   4.05      Governing Law; Consent to Jurisdiction.........................9
   4.06      Waiver of Jury Trial..........................................10
   4.07      Successors and Assigns........................................10
   4.08      Set-Off.......................................................10
   4.09      Counterparts..................................................10
   4.10      Severability..................................................10
   4.11      Section Heading...............................................11
   4.12      Integration...................................................11
   4.13      Acknowledgements..............................................11



                               GUARANTY AGREEMENT


         THIS GUARANTY AGREEMENT (this "Guaranty" or this "Agreement"), dated as
of November 20, 2002, by and among the parties listed on the signature pages
hereto and any Additional Guarantor (as defined below) who may become party to
this Agreement (such parties and Additional Guarantors, collectively, the
"Guarantors"), in favor of BANK OF AMERICA, N.A., as Administrative Agent (in
such capacity, the "Administrative Agent") for the ratable benefit of the banks
and other financial institutions (the "Lenders") from time to time parties to
the Credit Agreement, dated as of November 20, 2002 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
by and among BLUE RHINO CORPORATION, a Delaware corporation, as borrower (the
"Borrower"), the Lenders, and the Administrative Agent.

                              STATEMENT OF PURPOSE

         Pursuant to the Credit Agreement, the Lenders have agreed to make
extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein.

         The Guarantors and the Borrower are part of a related corporate
structure and therefore extensions of credit to the Borrower will directly
benefit the Guarantor through increased working capital to the entire corporate
structure.

         It is a condition precedent to the obligation of the Lenders to make
their respective extensions of credit to the Borrower under the Credit Agreement
that the Guarantors shall have executed and delivered this Guaranty to the
Administrative Agent, for the ratable benefit of itself and the Lenders.

         In consideration of the mutual covenants and agreements herein
contained, and to induce the Administrative Agent and the Lenders to enter into
the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, the Guarantors hereby agree
with the Administrative Agent, for the ratable benefit of itself and the
Lenders, as follows:

                                    ARTICLE I

                                  DEFINED TERMS

         1.01 DEFINED TERMS. The following terms when used in this Guaranty
shall have the meanings assigned to them below:

         "Applicable Insolvency Laws" means all Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent, transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Sections 547, 548 and 550 and
other "avoidance" provisions of Title 11 of the United States Code).

         "Obligations" means with respect to (a) a Borrower, the meaning
assigned thereto in the Credit Agreement and (b) a Guarantor, the obligations of
such Guarantor hereunder.




         1.02 OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Guaranty
shall refer to this Agreement as a whole and not to any particular provision of
this Guaranty, and Section references are to this Guaranty unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. Where the
context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Guarantor, shall refer to such Guarantor's Collateral or
the relevant part thereof.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

         To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective Extensions
of Credit to the Borrower thereunder, Guarantor hereby represents and warrants
to the Administrative Agent and each Lender that:

         2.01 EXISTENCE, QUALIFICATION AND POWER, COMPLIANCE WITH LAWS. Each
Guarantor (a) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses, authorizations, consents
and approvals to (i) own its assets and carry on its business as now being
conducted and hereafter proposed to be conducted except where the absence of any
such license, authorization, consent or approval would not reasonably be
expected to have a Material Adverse Effect and (ii) execute, deliver and perform
its obligations under this Agreement, (c) is duly qualified and is licensed and
in good standing under the Laws of each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification or license except where the failure to so qualify, be licensed or
be in good standing, would not reasonably be expected to have a Material Adverse
Effect, and (d) is in compliance with all Laws, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect.

         2.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Guarantor of this Agreement, has been duly authorized by all
necessary corporate or other organizational action, and does not and will not
(a) contravene the terms of any of such Guarantor's Organization Documents; (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien (other than a Permitted Lien), under (i) any Contractual Obligation to
which such Guarantor is a party which such conflict, breach or contravention
would reasonably be expected to have a Material Adverse Effect or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Guarantor or its property is subject which would reasonably
be expected to have a Material Adverse Effect; or (c) violate any Law which
would reasonably be expected to have a Material Adverse Effect.

         2.03 BINDING EFFECT. This Agreement has been duly executed and
delivered by each Guarantor. This Agreement constitutes a legal, valid and
binding obligation of each Guarantor, enforceable against each Guarantor in
accordance with its terms.



                                       2


                                   ARTICLE III

                             UNCONDITIONAL GUARANTY

         3.01 GUARANTY. Each Guarantor hereby, jointly and severally with the
other Guarantors, unconditionally guarantees to the Administrative Agent for the
ratable benefit of itself and the Lenders, and their respective permitted
successors, endorsees, transferees and assigns, the prompt payment and
performance of all Obligations of the Borrower (such unconditional guaranty, the
"Guaranty"), whether primary or secondary (whether by way of endorsement or
otherwise), whether now existing or hereafter arising, whether or not from time
to time reduced or extinguished (except by payment thereof) or hereafter
increased or incurred, whether enforceable or unenforceable as against the
Borrower, whether or not discharged, stayed or otherwise affected by any
Applicable Insolvency Law or proceeding thereunder, whether created directly
with the Administrative Agent or any Lender or acquired by the Administrative
Agent or any Lender through assignment or endorsement, whether matured or
unmatured, whether joint or several, as and when the same become due and payable
(whether at maturity or earlier, by reason of acceleration, mandatory repayment
or otherwise), in accordance with the terms of any such instruments evidencing
any such obligations, including all renewals, extensions or modifications
thereof; provided, that notwithstanding anything to the contrary contained
herein, it is the intention of each Guarantor and the Lenders that, in any
proceeding involving the bankruptcy, reorganization, arrangement, adjustment of
debts, relief of debtors, dissolution or insolvency or any similar proceeding
with respect to any Guarantor or its assets, the amount of such Guarantor's
Obligations shall be in, but not in excess of, the maximum .amount thereof not
subject to avoidance or recovery by operation of Applicable Insolvency Laws
after giving effect to Section 3.08. To that end, but only in the event and to
the extent that after giving effect to Section 3.08 such Guarantor's Obligations
or any payment made pursuant to - such Guarantor's Obligations would, but for
the operation of the foregoing proviso, be subject to avoidance or recovery in
any such proceeding under Applicable Insolvency Laws after giving effect to
Section 3.08, the amount of such Guarantor's Obligations shall be limited to the
largest amount which, after giving effect thereto, would not, under Applicable
Insolvency Laws, render such Guarantor's Obligations unenforceable or avoidable
or otherwise subject to recovery under Applicable Insolvency Laws. To the extent
any payment actually made pursuant to the Obligations of any Guarantor exceeds
the limitation of the foregoing proviso and is otherwise subject to avoidance
and recovery in any such proceeding under Applicable Insolvency Laws, the amount
subject to avoidance shall in all events be limited to the amount by which such
actual payment exceeds such limitation and such Obligations as limited by the
foregoing proviso shall in all events remain in full force and effect and be
fully enforceable against such Guarantor. The foregoing proviso is intended
solely to preserve the rights of the Administrative Agent hereunder against such
Guarantor in such proceeding to the maximum extent permitted by Applicable
Insolvency Laws and neither such Guarantor, the Borrower, any other Guarantor
nor any other Person shall have any right or claim under such proviso that would
not otherwise be available under Applicable Insolvency Laws in such proceeding.

         3.02 NATURE OF GUARANTY.

         (a) Each Guarantor agrees that this Guaranty is a continuing,
unconditional guaranty of payment and performance and not of collection, and
that its obligations under this Guaranty shall be primary, absolute and
unconditional, irrespective of, and unaffected by:



                                       3


                  (i) the genuineness, validity, regularity, enforceability or
         any future amendment of, or change in, the Credit Agreement or any
         other Loan Document or any other agreement, document or instrument to
         which the Borrower or any Subsidiary thereof is or may become a party;

                  (ii) the absence of any action to enforce this Guaranty, the
         Credit Agreement or any other Loan Document or the waiver or consent by
         the Administrative Agent or any Lender with respect to any of the
         provisions of this Guaranty, the Credit Agreement or any other Loan
         Document; \

                  (iii) the existence, value or condition of, or failure to
         perfect its Lien against, any security for or other guaranty of the
         Obligations or any action, or the absence of any action, by the
         Administrative Agent or any Lender in respect of such security or
         guaranty (including, without limitation, the release of any such
         security or guaranty); or

                  (iv) any other action or circumstances which might otherwise
         constitute a legal or equitable discharge or defense of a surety or
         guarantor;

it being agreed by each Guarantor that, subject to the proviso in Section 3.01,
its obligations under this Guaranty shall not be discharged except pursuant to
the terms of Section 3.09.

         (b) Each Guarantor represents, warrants and agrees that its obligations
under this Guaranty are not and shall not be subject to any counterclaims,
offsets or defenses of any kind against the Administrative Agent, the Lenders or
the Borrower whether now existing or which may arise in the future.

         (c) Each Guarantor hereby agrees and acknowledges that the Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon this
Guaranty contained in this, and all dealings between the Borrower and any of the
Guarantors, on the one hand, and the Administrative Agent and the Lenders, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Guaranty.

         3.03 WAIVERS. To the extent permitted by law, each Guarantor expressly
waives all of the following rights and defenses (and agrees not to take
advantage of or assert any such right or defense):

         (a) any rights it may now or in the future have under any statute
(including, without limitation, North Carolina General Statutes Section 26-7, et
seq. or similar law), or at law or in equity, or otherwise, to compel the
Administrative Agent or any Lender to proceed in respect of the Obligations
against the Borrower or any other party or against any security for or other
guaranty of the payment and performance of the Obligations before proceeding
against, or as a condition to proceeding against, such Guarantor;

         (b) any defense based upon the failure of the Administrative Agent or
any Lender to commence an action in respect of the Obligations against the
Borrower, such Guarantor, any other guarantor or any other party or any security
for the payment and performance of the Obligations;

         (c) any right to insist upon, plead or in any manner whatever claim or
take the benefit or advantage of, any appraisal, valuation, stay, extension,
marshalling of assets or redemption laws, or exemption, whether now or at any
time hereafter in force, which may delay, prevent or



                                       4


otherwise affect the performance by such Guarantor of its Obligations, or the
enforcement by the Administrative Agent or the Lenders of this Guaranty;

         (d) any right of diligence, presentment, demand, protest and notice
(except as specifically required herein) of whatever kind or nature with respect
to any of the Obligations and waives, to the extent permitted by law, the
benefit of all provisions of law which are or might be in conflict with the
terms of this Guaranty; and

         (e) any and all right to notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon, or acceptance of, this Guaranty.

Each Guarantor agrees that any notice or directive given at any time to the
Administrative Agent or any Lender which is inconsistent with the foregoing
waivers shall be null and void and may be ignored by the Administrative Agent or
such Lender, and, in addition, may not be pleaded or introduced as evidence in
any litigation relating to this Guaranty for the reason that such pleading or
introduction would be at variance with the written terms of this Guaranty,
unless the Administrative Agent and the Required Lenders have specifically
agreed otherwise in writing. The foregoing waivers and agreements are of the
essence of the transaction contemplated by the Loan Documents and, but for this
Guaranty and such waivers, the Administrative Agent and Lenders would decline to
enter into the Credit Agreement.

         3.04 MODIFICATION OF LOAN DOCUMENTS ETC. Neither the Administrative
Agent nor any Lender shall incur any liability to any Guarantor as a result of
any of the following, and none of the following shall impair or release this
Guaranty or any of the Obligations of any Guarantor under this Guaranty:

         (a) any change or extension of the manner, place or terms of payment
of, or renew or alter all or any portion of, the Obligations;

         (b) any action under or in respect of the Loan Documents in the
exercise of any remedy, power or privilege contained therein or available to it
at law, in equity or otherwise, or waive or refrain from exercising any such
remedies, powers or privileges;

         (c) any amendment or modification, in any manner whatsoever, the Loan
Documents;

         (d) any extension or waiver of the time for performance by any
Guarantor, any other guarantor, the Borrower or any other Person of, or
compliance with, any term, covenant or agreement on its part to be performed or
observed under a Loan Document, or waive such performance or compliance or
consent to a failure of, or departure from, such performance or compliance;

         (e) the taking and holding security or collateral for the payment of
the Obligations or the sale, exchange, release, disposal of, or other dealing
with, any property pledged, mortgaged or conveyed, or in which the
Administrative Agent or the Lenders have been granted a Lien, to secure any
Indebtedness of any Guarantor, any other guarantor or the Borrower to the
Administrative Agent or the Lenders;

         (f) the. release anyone who may be liable in any manner for the payment
of any amounts owed by any Guarantor, any other guarantor or the Borrower to the
Administrative Agent or any Lender;



                                       5


         (g) any modification or termination the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of any
Guarantor, any other guarantor or the Borrower, are subordinated to the claims
of the Administrative Agent or any Lender; or

         (h) any application of any sums by whomever paid or however realized to
any Obligations owing by any Guarantor, any other guarantor or the Borrower to
the Administrative Agent or any Lender in such manner as the Administrative
Agent or any Lender shall determine in its reasonable discretion. .

         3.05 DEMAND BY THE ADMINISTRATIVE AGENT. In addition to the terms set
forth in this Article III and in no manner imposing any limitation on such
terms, if all or any portion of the then outstanding Obligations under the
Credit Agreement are declared to be immediately due and payable, then the
Guarantors shall, upon demand in writing therefor by the Administrative Agent to
the Guarantors, pay all or such portion of the corresponding Obligations due
hereunder then declared due and payable. Notwithstanding the foregoing, each
Guarantor agrees that, in the event of the dissolution or insolvency of the
Borrower or any Guarantor, or the inability or failure of the Borrower or any
Guarantor to pay debts as they become due, or an assignment by the Borrower or
any Guarantor for the benefit of creditors, or the commencement of any case or
proceeding in respect of the Borrower or any Guarantor under bankruptcy,
insolvency or similar laws, and if such event shall occur at a time when any of
the Obligations may not then be due and payable, each Guarantor will pay to the
Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, forthwith the full
amount which would be payable hereunder by each Guarantor if all such
Obligations were then due and payable.

         3.06 REMEDIES. Upon the occurrence and during the continuance of any
Event of Default, with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, enforce against the Guarantors their respective obligations and
liabilities hereunder and exercise such other rights and remedies as may be
available to the Administrative Agent hereunder, under the Loan Documents or
otherwise.

         3.07 BENEFITS OF GUARANTY. The provisions of this Guaranty are for the
benefit of the Administrative Agent and the Lenders and their respective
permitted successors, transferees, endorsees and assigns, and nothing herein
contained shall impair, as between the Borrower, the Administrative Agent and
the Lenders, the Obligations. In the event all or any part of the Obligations
are transferred, endorsed or assigned by the Administrative Agent or any Lender
to any Person or Persons as permitted under the Credit Agreement, any reference
to an "Administrative Agent", or "Lender" herein shall be deemed to refer
equally to such Person or Persons.

         3.08 AGREEMENTS FOR CONTRIBUTION.

         (a) To the extent any Guarantor is required, by reason of its
Obligations hereunder, to pay to any Lender an amount greater than the amount of
value (as determined in accordance with Applicable Insolvency Laws) actually
made available to or for the benefit of such Guarantor on account of the Credit
Agreement, this Agreement or any other Loan Document, such Guarantor shall have
an enforceable right of contribution against the Borrower and the remaining
Guarantors, and the Borrower and the remaining Guarantors shall be jointly and
severally liable, for repayment of the full amount of such excess payment.
Subject only to the subordination



                                       6


provided in the following subsection (a), such Guarantor further shall be
subrogated to any and all rights of the Lenders against the Borrower and the
remaining Guarantors to the extent of such excess payment.

         (b) To the extent that any Guarantor would, but for the operation of
this Section 3.08 and by reason of its Obligations hereunder or its obligations
to other Guarantors under this Section 3.08, be rendered insolvent for any
purpose under Applicable Insolvency Laws, each of the Guarantors hereby, agrees
to indemnify such Guarantor and commits to make a contribution to such
Guarantor's capital in an amount at least equal to the amount necessary to
prevent such Guarantor from having been rendered insolvent by reason of the
incurrence of any such obligations.

         (c) To the extent that any Guarantor would, but for the operation of
this Section 3.08 be rendered insolvent under any Applicable Insolvency Law by
reason of its incurring of obligations to any other Guarantor under the
foregoing subsections (a) and (b) above, such Guarantor shall, in turn have
rights of contribution and indemnity, to the full extent provided in the
foregoing subsections (a) and (b) above, against the Borrower and the remaining
Guarantors, such that all Obligations of all of the Guarantors hereunder and
under this Section 3.08 shall be allocated in a manner such that no Guarantor
shall be rendered insolvent for any purpose under Applicable Insolvency Law by
reason of its incurrence of such obligations.

         (d) Notwithstanding any payment or payments by any of the Guarantors
hereunder, or any set-off or application of funds of any of the Guarantors by
the Administrative Agent or any Lender, or the receipt of any amounts by the
Administrative Agent or any Lender with respect to any of the Obligations, none
of the Guarantors shall be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against the Borrower or the other Guarantors
or against any collateral security held by the Administrative Agent or any
Lender for the payment of the Obligations nor shall any of the Guarantors seek
any reimbursement from the Borrower or any of the other Guarantors in respect of
payments made by such Guarantor in connection with the Obligations, until all
amounts owing to the Administrative Agent and the Lenders on account of the
Obligations are paid in full and the Commitments, are terminated. If any amount
shall be paid to any Guarantor on account of such subrogation rights at any time
when all of the Obligations shall not have been paid in full, such amount shall
be held by such Guarantor in trust for the Administrative Agent, segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form received
by such Guarantor (duly endorsed by such Guarantor to the Administrative Agent,
if required) to be applied against the Obligations, whether matured or
unmatured, in such order as set forth in the Credit Agreement.

         3.09 TERMINATION; REINSTATEMENT.

         (a) Subject to clause (c) below, this Guaranty shall remain in full
force and effect until all the Obligations and all the Obligations of the
Guarantors shall have been paid in full and the Commitments terminated.

         (b) No payment made by the Borrower, any Guarantors, or any other
Person received or collected by the Administrative Agent or any Lender from and
Borrower, any Guarantor, or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such



                                       7


Guarantor in respect of the Obligations of the Guarantors or any payment
received or collected from such Guarantor in respect of the Obligations of the
Guarantors), remain liable for the Obligations of the Guarantors up to the
maximum liability of such Guarantor hereunder until the Obligations and all the
Obligations of the Guarantors shall have been paid in full and the Commitments
terminated.

         (c) Each Guarantor agrees that, if any payment made by the Borrower or
any other Person applied to the Obligations is at any time annulled, set aside,
rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid or the proceeds of any collateral are required
to be refunded by the Administrative Agent or any Lender to the Borrower, its
estate, trustee, receiver or any other party, including, without limitation, any
Guarantor, under any applicable Law or equitable cause, then, to the extent of
such payment or repayment, each Guarantor's liability hereunder (and any Lien
securing such liability) shall be and remain in full force and effect, as fully
as if such payment had never been made, and, if prior thereto, this Guaranty
shall have been canceled or surrendered (and if any Lien or collateral securing
such Guarantor's liability hereunder shall have been released or terminated by
virtue of such cancellation or surrender), this Guaranty (and such Lien) shall
be reinstated in full force and effect, and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect the
obligations of such Guarantor in respect of the amount of such payment (or any
Lien securing such obligation).

         3.10 PAYMENTS. Payment by the Guarantors shall be made to the
Administrative Agent, to be credited and applied upon the Obligations, in
immediately available Dollars to an account designated by the Administrative
Agent or at the address referenced herein for the giving of notice to the
Administrative Agent or at any other address that may be specified in writing
from time to time by the Administrative Agent.

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.01 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 11.01 of the Credit Agreement.

         4.02 NOTICES. All notices, requests and demands to or upon the
Administrative Agent or any Guarantor hereunder shall be made to the address of
the Borrower and effected in the manner provided for in Section 11.02 of the
Credit Agreement.

         4.03 NO WAIVER BY COURSE OF CONDUCT, CUMULATIVE REMEDIES. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 4.01), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default. No failure to exercise, nor any delay in
exercising on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative,



                                       8


may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.

         4.04 ENFORCEMENT EXPENSES, INDEMNIFICATION.

         (a) Each Guarantor agrees to pay or reimburse each Lender and the
Administrative Agent for all its costs and expenses incurred in connection with
enforcing or preserving any rights under this Agreement and the other Loan
Documents to which such Guarantor is a party, including, without limitation, the
reasonable fees and disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent.

         (b) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.

         (c) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from any and all liabilities, obligations, losses,
damages, penalties, costs and expenses in connection with actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement to the extent the Borrower would be required to do so pursuant
to Section 11.05 of the Credit Agreement.

         (d) The agreements in this Section 4.04 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.

         4.05 GOVERNING LAW; CONSENT TO JURISDICTION.

         (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NORTH CAROLINA APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE
AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH
CAROLINA SITTING IN CHARLOTTE OR OF THE UNITED STATES FOR THE WESTERN DISTRICT
OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR AND
THE ADMINISTRATIVE AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GRANTOR AND THE
ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO. EACH GRANTOR AND THE ADMINISTRATIVE AGENT WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.



                                       9


         4.06 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         4.07 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of each
Guarantor, the Administrative Agent and the Lenders and their successors and
assigns; provided that no Guarantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent.

         4.08 SET-OFF. Each Guarantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time pursuant
to Section 11.09 of the Credit Agreement, without notice to such Guarantor or
any other Guarantor, any such notice being expressly waived by each Guarantor,
to set-off and appropriate and apply any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Guarantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or such
Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such Guarantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender of the proceeds thereof; provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Lender under this Section 4.07 are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Administrative Agent or such Lender may have.

         4.09 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

         4.10 SEVERABILITY. Any provision of this Agreement or any other Loan
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be



                                       10


ineffective only to the extent of such prohibition or unenforceability without
invalidating the remainder of such provision or the remaining provisions hereof
or thereof or affecting the validity or enforceability of such provision in any
other jurisdiction.

         4.11 SECTION HEADING. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

         4.12 INTEGRATION. This Agreement and the other Loan Documents represent
the agreement of the Guarantors, the Administrative Agent and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.

         4.13 ACKNOWLEDGEMENTS. Each Guarantor hereby acknowledges that:

         (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;

         (b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Guarantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Guarantors, on the one hand, and the Administrative Agent and Lenders, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

         (c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Guarantors and the Lenders.



                           [Signature Pages to Follow]


                                       11




         IN WITNESS WHEREOF, the parties hereto have caused this Guaranty
Agreement to be executed under seal by their duly authorized officers, all as of
the day and year first written above.

                                BLUE RHINO CONSUMER PRODUCTS, LLC,
                                as Guarantor


                                By:           /s/ Mark Castaneda
                                   ---------------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Manager


                                USA LEASING, L.L.C., AS GUARANTOR

                                Blue Rhino Corporation, Manager


                                By:           /s/ Mark Castaneda
                                   ---------------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                     Financial Officer


                                UNIFLAME, LLC, as Guarantor


                                By:           /s/ Mark Castaneda
                                   ---------------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Manager


                                CPD ASSOCIATES, INC., as Guarantor


                                By:           /s/ Mark Castaneda
                                   ---------------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Vice President


                                UNIFLAME CORPORATION, as Guarantor


                                By:           /s/ Kurt Gehsmann
                                   ---------------------------------------------
                                     Name:    Kurt Gehsmann
                                     Title:   Vice President



                                       12

EX-10.3

                                                                    EXHIBIT 10.3




- -------------------------------------------------------------------------------



                              COLLATERAL AGREEMENT

                          dated as of November 20, 2002



                                  by and among



                             BLUE RHINO CORPORATION,
                         and certain of its Subsidiaries
                                  as Grantors,

                                   in favor of

                             BANK OF AMERICA, N.A.,
                             as Administrative Agent



- -------------------------------------------------------------------------------




                                TABLE OF CONTENTS


                                                                                                              
ARTICLE I.  DEFINED TERMS.........................................................................................1
         1.01     Terms Defined in the Uniform Commercial Code....................................................1
         1.02     Defined Terms...................................................................................1
         1.03     Other Definitional Provisions...................................................................5

ARTICLE II.  SECURITY INTEREST....................................................................................5
         2.01     Grant of Security Interest......................................................................5
         2.02     Grantors Remain Liable..........................................................................6

ARTICLE III.  REPRESENTATIONS AND WARRANTIES......................................................................6
         3.01     Existence; Qualification and Power; Compliance with Laws........................................6
         3.02     Authorization of Agreement; No Conflict.........................................................7
         3.03     Governmental Authorization; Other Consents......................................................7
         3.04     Binding Effect..................................................................................7
         3.05     Perfected First Priority Liens..................................................................8
         3.06     Title, No Other Liens...........................................................................8
         3.07     State of Organization; Location of Inventory, Equipment and Fixtures; other
                  Information.....................................................................................8
         3.08     Accounts........................................................................................9
         3.09     Chattel Paper...................................................................................9
         3.10     3.10 Commercial Tort Claims.....................................................................9
         3.11     Deposit Accounts................................................................................9
         3.12     Intellectual Property...........................................................................9
         3.13     Inventory.......................................................................................9
         3.14     Investment Property; Partnership/LLC Interests.................................................10
         3.15     Farm Products..................................................................................10

ARTICLE IV.  COVENANTS...........................................................................................10
         4.01     Maintenance of Perfected Security Interest; Further Information................................10
         4.02     Maintenance of Insurance.......................................................................10
         4.03     Changes in Locations; Changes in Name or Structure.............................................11
         4.04     Required Notifications.........................................................................11
         4.05     4.05 Delivery Covenants........................................................................12
         4.06     Control Covenants..............................................................................12
         4.07     Filing Covenants...............................................................................13
         4.08     Accounts.......................................................................................13
         4.09     Intellectual Property..........................................................................14
         4.10     Investment Property; Partnership/LLC Interests.................................................14
         4.11     Equipment......................................................................................14
         4.12     Vehicles.......................................................................................14
         4.13     Further Assurances.............................................................................14

ARTICLE V.  REMEDIAL PROVISIONS..................................................................................14
         5.01     General Remedies...............................................................................14
         5.02     Specific Remedies..............................................................................14
         5.03     Registration Rights............................................................................14



                                       i


                                                                                                              
         5.04     Application of Proceeds........................................................................14
         5.05     Waiver, Deficiency.............................................................................14

ARTICLE VI.  THE ADMINISTRATIVE AGENT............................................................................14
         6.01     Administrative Agent's Appointment as Attorney-In-Fact.........................................14
         6.02     Duty of Administrative Agent...................................................................14
         6.03     Authority of Administrative Agent..............................................................14

ARTICLE VII.  MISCELLANEOUS......................................................................................14
         7.01     Amendments in Writing..........................................................................14
         7.02     Notices........................................................................................14
         7.03     No Waiver by Course of Conduct, Cumulative Remedies............................................14
         7.04     Enforcement Expenses, Indemnification..........................................................14
         7.05     Governing Law; Consent to Jurisdiction.........................................................14
         7.06     Waiver of Jury Trial...........................................................................14
         7.07     Successors and Assigns.........................................................................14
         7.08     Set-Off........................................................................................14
         7.09     Counterparts...................................................................................14
         7.10     Severability...................................................................................14
         7.11     Section Heading................................................................................14
         7.12     Integration....................................................................................14
         7.13     Acknowledgements...............................................................................14
         7.14     Additional Grantors............................................................................14
         7.15     Releases.......................................................................................14



                                       ii



EXHIBITS:

Exhibit A       Form of Perfection Certificate


SCHEDULES:

Schedule 3.07     Jurisdiction of Organization; Taxpayer Identification Number;
                  Registered Organization Number; Mailing Address; Chief
                  Executive Office and other Locations
Schedule 3.10     Commercial Tort Claims
Schedule 3.09     Chattel Paper
Schedule 3.11     Deposit Accounts
Schedule 3.12     Intellectual Property
Schedule 3.14     Investment Property and Partnership/LLC Interests


                                      iii


                              COLLATERAL AGREEMENT

         THIS COLLATERAL AGREEMENT (this "Agreement"), dated as of November 20,
2002, by and among BLUE RHINO CORPORATION, a Delaware corporation (the
"Borrower"), certain of its Subsidiaries as identified on the signature pages
hereto and any Additional Grantor (as defined below) who may become party to
this Agreement (such Subsidiaries and Additional Grantors, collectively, with
the Borrower, the "Grantors"), in favor of BANK OF AMERICA, N.A., as
Administrative Agent (in such capacity, the "Administrative Agent") for the
ratable benefit of the banks and other financial institutions (the "Lenders")
from time to time parties to the Credit Agreement, dated as of even date
herewith (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), by and among the Borrower, the Lenders, and the
Administrative Agent.

         Pursuant to the Credit Agreement, the Lenders have agreed to make
Credit Extensions to the Borrower upon the terms and subject to the conditions
set forth therein.

         It is a condition precedent to the obligation of the Lenders to make
their respective Credit Extensions to the Borrower under the Credit Agreement
that the Grantors shall have executed and delivered this Agreement to the
Administrative Agent, for the ratable benefit of itself and the Lenders.

         To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective Credit
Extensions to the Borrowers thereunder, each Grantor hereby agrees with the
Administrative Agent, for the ratable benefit of itself and the Lenders, as
follows:

                                   ARTICLE I.
                                  DEFINED TERMS

         1.01 TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE.

         (a) The following terms when used in this Agreement shall have the
meanings assigned to them in the UCC (as defined in Section 1.02 below) as in
effect from time to time: "Account", "Account Debtor", "Authenticate",
"Certificated Security", "Chattel Paper"; "Commercial Tort Claim", "Deposit
Account", "Documents", "Electronic Chattel Paper", "Equipment", "Fixture",
"General Intangible", "Instrument", "Inventory", "Investment Property",
"Issuer", "Letter of Credit Rights", "Proceeds", "Record", "Securities
Entitlement", "Securities Intermediary", "Security Account", "Supporting
Obligation", "Tangible Chattel Paper", and "Uncertificated Security".

         (b) Terms defined in the UCC and not otherwise defined herein or in the
Credit Agreement shall have the meaning assigned in the UCC as in effect from
time to time.

         1.02 DEFINED TERMS. The following terms when used in this Agreement
shall have the meanings assigned to them below:

         "Additional Grantor" means each Subsidiary of the Borrower which
hereafter becomes a Grantor pursuant to Section 7.14 hereof and Section 7.15 of
the Credit Agreement.




         "Agreement" means this Collateral Agreement, as amended, restated,
supplemented or otherwise modified from time to time.

         "Applicable Insolvency Laws" means all Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Sections 547, 548 and 550 and
other "avoidance" provisions of Title 11 of the United States Code).

         "Assignment of Claims Act" means the Assignment of Claims Act of 1940
(41 U.S.C. Section 15, 31 U.S.C. Section 3737, and 31 U.S.C. Section 3727),
including all amendments thereto and regulations promulgated thereunder.

         "Collateral" shall have the meaning assigned thereto in Section 2.01.

         "Collateral Account" means any collateral account established by the
Administrative Agent as provided in Section 5.02.

         "Control" means the manner in which "control" is achieved under the UCC
with respect, with respect to any Collateral for which the UCC specifies a
method of achieving "control".

         "Controlled Depository" shall have the meaning assigned thereto in
Section 4.06.

         "Copyrights" means collectively, all of the following of any Grantor:
(a) all copyrights, rights and interests in copyrights, works protectable by
copyright, copyright registrations and copyright applications anywhere in the
world, including, without limitation, those listed on Schedule 3.12 hereto, (b)
all reissues, extensions, continuations (in whole or in part) and renewals of
any of the foregoing, (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past or
future infringements of any of the foregoing, (d) the right to sue for past,
present and future infringements of any of the foregoing and (e) all rights
corresponding to any of the foregoing throughout the world.

         "Copyright Licenses" means any written agreement naming any Grantor as
licensor or licensee, including, without limitation, those listed in Schedule
3.12, granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.

         "Effective Endorsement and Assignment" means, with respect to any
specific type of Collateral, all such endorsements, assignments and other
instruments of transfer reasonable requested by the Administrative Agent with
respect to the Security Interest granted in such Collateral, and in each case,
in form and substance satisfactory to the Administrative Agent.

         "Exempted Deposit Account" means any operating Deposit Account created
in the ordinary course of business; provided that (a) no more than $50,000 in
the aggregate is deposited in all such Deposit Accounts at any time and (b) the
applicable Grantor provides written notice to the Administrative Agent within
thirty (30) days of the creation of any such Deposit Account.



                                       2


         "Exempted Short Term Investment" means, any Investment permitted
pursuant to Section 8.02(a) of the Credit Agreement; provided that (a) such
Investment matures within seven (7) days and (b) the aggregate amount of all
such Investments outstanding at any time does not exceed $100,000.

         "Government Contract" means a contract between any Grantor and an
agency, department or instrumentality of the United States or any state,
municipal or local Governmental Authority located in the United States.

         "Guarantors" means the collective reference to each Person executing a
Guaranty Agreement.

         "Guaranty Agreement" shall have the meaning assigned thereto in the
Credit Agreement.

         "Intellectual Property" means collectively, all of the following of any
Grantor: (a) all systems software, applications software and internet rights,
including, without limitation, screen displays and formats, internet domain
names, web sites (including web links), program structures, sequence and
organization, all documentation for such software, including, without
limitation, user manuals, flowcharts, programmer's notes, functional
specifications, and operations manuals, all formulas, processes, ideas and
know-how embodied in any of the foregoing, and all program materials,
flowcharts, notes and outlines created in connection with any of the foregoing,
whether or not patentable or, copyrightable, (b) concepts, discoveries,
improvements and ideas, (c) any useful information relating to the items
described in clause (a) or (b), including know-how, technology, engineering
drawings, reports, design information, trade secrets, practices, laboratory
notebooks, specifications, test procedures, maintenance manuals, research,
development, manufacturing, marketing, merchandising, selling, purchasing and
accounting, (d) Patents and Patent Licenses, Copyrights and Copyright Licenses,
Trademarks and Trademark Licenses, and (e) other licenses to use any of the
items described in the foregoing clauses (a), (b), (c) and (d) or any other
similar items of such Grantor necessary for the conduct of its business.

         "Obligations" means with respect to the Borrower, the meaning assigned
thereto in the Credit Agreement and with respect to each Guarantor, the
obligations of such Guarantor under the Guaranty Agreement executed by such
Guarantor.

         "Partnership/LLC Interests" means, with respect to any Grantor, the
entire partnership, membership interest or limited liability company interest,
as applicable, of such Grantor in each partnership, limited partnership or
limited liability company owned thereby, including, without limitation, such
Grantor's capital account, its interest as a partner or member, as applicable,
in the net cash flow, net profit and net loss, and items of income, gain, loss,
deduction and credit of any such partnership, limited partnership or limited
liability company, as applicable, such Grantor's interest in all distributions
made or to be made by any such partnership, limited partnership or limited
liability company, as applicable, to such Grantor and all of the other economic
rights, titles and interests of such Grantor as a partner or member, as
applicable, of any such partnership, limited partnership or limited liability
company, as applicable, whether set forth in the partnership agreement or
membership agreement, as applicable, of such partnership,



                                       3


limited partnership or, limited liability company, as applicable, by separate
agreement or otherwise.

         "Patents" means collectively, all of the following of any Grantor: (a)
all patents, rights and interests in patents, patentable inventions and patent
applications anywhere in the world, including, without limitation, those listed
on Schedule 3.12 hereto, (b) all reissues, extensions, continuations (in whole
or in part) and renewals of any of the foregoing, (c) all income, royalties,
damages or payments now or hereafter due and/or payable under any of the
foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing, (d) the right to sue for past, present and future infringements of
any of the foregoing and (e) all rights corresponding to any of the foregoing
throughout the world.

         "Patent License" means all agreements now or hereafter in existence,
whether written or oral, providing for the grant by or to any Grantor of any
right to manufacture, use or sell any invention covered in whole or in part by a
Patent, including, without limitation, any of the foregoing referred to in
Schedule 3.12 hereto.

         "Perfection Certificate" means the perfection certificate dated as of
even date herewith, substantially in the form of Exhibit A attached hereto, and
otherwise in form and substance satisfactory to the Administrative Agent, and
duly certified by an officer, partner or member, as applicable, of each Grantor.

         "Permitted Liens" shall have the meaning assigned thereto in the Credit
Agreement.

         "Securities Act" means the Securities Act of 1933, including all
amendments thereto and regulations promulgated thereunder.

         "Security Interests" means the security interests granted pursuant to
Article II, as well as all other security interests created or assigned as
additional security for the Obligations pursuant to the provisions of the Credit
Agreement.

         "Subsidiary Issuer" means any Issuer of Investment Property or any
Partnership/LLC Interests, which such Issuer is a direct or indirect Subsidiary
of the Borrower.

         "Trademarks" means collectively, all of the following of any Grantor:
(a) all trademarks, rights and interests in trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos, other business identifiers, prints and labels on which any
of the foregoing have appeared or appear, all registrations and recordings
thereof, and all applications in connection therewith anywhere in the world,
including, without limitation, those, listed on Schedule 3.12 hereto, (b) all
reissues, extensions, continuations (in whole or in part) and renewals of any of
the foregoing, (c) all income, royalties, damages and payments now or hereafter
due and/or payable under any of the foregoing or with respect to any of the
foregoing, including, without limitation, damages or payments for past or future
infringements of any of the foregoing, (d) the right to sue for past, present
and future infringements of any of the foregoing and (e) all rights
corresponding to any of the foregoing throughout the world.



                                       4


         "Trademark License" means any agreement now or hereafter in existence,
whether written or oral, providing for the grant by or to any Grantor of any
right to use any Trademark, including, without limitation, any of the foregoing
referred to in Schedule 3.12.

         "UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina, as amended or modified from time to time.

         "Vehicles" means all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title under the
laws of any state and all tires all other appurtenances to any of the foregoing.

         1.03 OTHER DEFINITIONAL PROVISIONS. Terms defined in the Credit
Agreement and not otherwise defined herein shall have the meaning assigned
thereto in the Credit Agreement. The words "hereof," "herein", "hereto" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. Where the
context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor's Collateral or the
relevant part thereof.

                                   ARTICLE II.
                                SECURITY INTEREST

         2.01 GRANT OF SECURITY INTEREST. Each Grantor hereby grants, pledges
and collaterally assigns to the Administrative Agent, for the ratable benefit of
itself and the Lenders, a security interest in, all of such Grantor's right,
title and interest in the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest, and wherever located or deemed
located (collectively, the "Collateral"), as collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations:

         (a) all Accounts;

         (b) all Chattel Paper;

         (c) all Commercial Tort Claims identified on Schedule 3.10;

         (d) all Deposit Accounts;

         (e) all Documents;

         (f) all Equipment;

         (g) all Fixtures;

         (h) all General Intangibles;



                                       5


         (i) all Instruments;

         (j) all Intellectual Property;

         (k) all Inventory;

         (l) all Investment Property;

         (m) all Letter of Credit Rights;

         (n) all Vehicles;

         (o) all other personal property not otherwise described above;

         (p) all books and records pertaining to the Collateral; and

         (q) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and Supporting
Obligations (as now or hereafter defined in the UCC) given by any Person with
respect to any of the foregoing.

provided that any Security Interest on any capital stock or other ownership
interests issued by any Foreign Subsidiary shall be limited to 65% of all issued
and outstanding shares of all classes of capital stock or other ownership
interests of such Foreign Subsidiary.

         2.02 GRANTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding: (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Administrative Agent of any
of the rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, (c)
neither the Administrative Agent nor any Lender shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Administrative Agent or any Lender be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder, and (d) neither the Administrative Agent nor any Lender shall have
any liability in contract or tort for any Grantor's acts or omissions.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective Credit
Extensions to the Borrower thereunder, each Grantor hereby represents and
warrants to the Administrative Agent and each Lender that:

         3.01 EXISTENCE; QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each
Grantor (a) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses,



                                       6


authorizations, consents and approvals to (i) own its assets and carry on its
business as now being conducted and hereafter proposed to be conducted except
where the absence of any such license, authorization, consent or approval would
not reasonably be expected to have a Material Adverse Effect and (ii) execute,
deliver and perform its obligations under this Agreement, (c) is duly qualified
and is licensed and in good standing under the Laws of each jurisdiction where
its ownership, lease or operation of properties or the conduct of its business
requires such qualification or license except where the failure to so qualify,
be licensed or be in good standing, would not reasonably be expected to have a
Material Adverse Effect, and (d) is in compliance with all Laws except where the
failure to so comply would not reasonably be expected to have a Material Adverse
Effect.

         3.02 AUTHORIZATION OF AGREEMENT; NO CONFLICT. The execution, delivery
and performance by each Grantor of this Agreement have been duly authorized by
all necessary corporate or other organizational action, and do not and will not
(a) contravene the terms of any of such Grantor's Organization Documents; (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien under (other than the Security Interests and Permitted Liens), (i) any
Contractual Obligation to which such Grantor is a party which such conflict,
breach or contravention would not reasonably be expected to have a Material
Adverse Effect or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Grantor or its property is subject
which would reasonably be expected to have a Material Adverse Effect; or (c)
violate any Law which would reasonably be expected to have a Material Adverse
Effect.

         3.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS.

No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person is necessary
or required in connection with the execution, delivery or performance by, or
enforcement against, any Grantor of this Agreement, except (a) as may be
required by Laws affecting the offering and sale of securities generally, (b)
filings with the United States Copyright Office and/or the United States Patent
and Trademark Office and (c) filings under the UCC and/or the Assignment of
Claims Act. Each of the Grantors (x) has all Governmental Approvals required by
any applicable Law for it to conduct its business, each of which is in full
force and effect, is final and not subject to review on appeal and is not the
subject of any pending or, to the best of its knowledge, threatened attack by
direct or collateral proceeding, except where the absence of such Governmental
Approval would not reasonably be expected to have a Material Adverse Effect, (y)
is in compliance with each Governmental Approval applicable to it and in
compliance with all other applicable Laws relating to it or any of its
respective properties, in each case except where the failure to so comply would
not reasonably be expected to have a Material Adverse Effect and (z) has timely
filed all material reports, documents and other materials required to be filed
by it under all applicable Laws with any Governmental Authority and has retained
all material records and documents required to be retained by it under
applicable Law.

         3.04 BINDING EFFECT. This Agreement has been duly executed and
delivered by each Grantor. This Agreement constitutes a legal, valid and binding
obligation of each Grantor, enforceable against each Grantor in accordance with
its terms.



                                       7


         3.05 PERFECTED FIRST PRIORITY LIENS. Each financing statement naming
any Grantor as a debtor is in appropriate form for filing in the appropriate
filing offices of the states specified on Schedule 3.07. The Security Interests
granted pursuant to this Agreement (a) constitute valid perfected security
interests in all of the Collateral in favor of the Administrative Agent, for the
ratable benefit of itself and the Lenders, as collateral security for the
Obligations, enforceable in accordance with the terms hereof, against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Liens.

         3.06 TITLE, NO OTHER LIENS. Except for the Security Interests and
leases of Cylinder Inventory to third party distributors, each Grantor owns each
item of the Collateral free and clear of any and all Liens or claims other than
Permitted Liens. No financing statement under the UCC of any state which names a
Grantor as debtor or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of
itself and the Lenders, pursuant to this Agreement or in connection with
Permitted Liens. No Collateral is in the possession or Control of any Person
asserting any claim thereto or security interest therein, except that (a) the
Administrative Agent or its designee may have possession or Control of
Collateral as contemplated hereby, (b) a depositary bank may have Control of a
Deposit Account owned by a Grantor at such depositary bank and a Securities
Intermediary may have Control over a Securities Account owned by a Grantor at
such Securities Intermediary, in each case subject to the terms of any Deposit
Account Control Agreement or Securities Control Agreement, as applicable, in
favor of the Administrative Agent, and (c) a bailee, consignee, third party
distributors (pursuant to leases of Cylinder Inventory) or other Person may have
possession of the Collateral as contemplated by, and so long as, the applicable
Grantors have complied to the satisfaction of the Administrative Agent with the
applicable provisions of Section 4.06.

         3.07 STATE OF ORGANIZATION; LOCATION OF INVENTORY, EQUIPMENT AND
FIXTURES; OTHER INFORMATION.

         (a) Each Grantor was organized and remains organized under the laws of
the state identified on Schedule 3.07 under such Grantor's name. The taxpayer
identification number and Registered Organization number of each Grantor is set
forth on Schedule 3.07 under such Grantor's name.

         (b) All Collateral consisting of Inventory, Equipment and Fixtures
(whether now owned of hereafter acquired) is (or will be) located at the
locations identified on Schedule 3.07 (as such Schedule 3.07 may be updated from
time to time), except as otherwise permitted hereunder. Upon the request of the
Administrative Agent (a) no more than once per year if no Default or Event of
Default has occurred and is continuing and (b) at any time during the occurrence
and continuation of a Default or Event of Default, the Borrower shall promptly
furnish a list of all addresses where Inventory is located as of the date of
such request.

         (c) The mailing address, chief place of business, chief executive
office and office where each Grantor keeps its books and records relating to the
Accounts, Documents, General Intangibles, Instruments and Investment Property in
which it has any interest is located at the locations specified on Schedule 3.07
under such Grantor's name. No Grantor has any other



                                       8


places of business except those separately set forth on Schedule 3.07 under such
Grantor's name. No Grantor does business nor has done business during the past
five years under any trade name or fictitious business name except as disclosed
on Schedule 3.07 under such Grantor's name. Except as disclosed on Schedule 3.07
under such Grantors name, no Grantor has acquired assets from any Person, other
than assets acquired in the ordinary course of such Grantor's business, during
the past five years.

         3.08 ACCOUNTS. Each existing Account constitutes, and each hereafter
arising Account will constitute, the legally valid and binding obligation of the
applicable Account Debtor. The amount represented by each Grantor to
Administrative Agent as owing by each Account Debtor is, or will be, the correct
amount actually and unconditionally owing, except for customary discounts and
allowances where applicable. No Account Debtor has any defense, set-off, claim
or counterclaim against any Grantor that can be asserted against Administrative
Agent, whether in any proceeding to enforce Administrative Agent's rights in the
Collateral or otherwise except defenses, setoffs, claims or counterclaims that
are not, in the aggregate, material to the value of the Accounts. None of the
Accounts is, nor will any hereafter arising Account be, evidenced by a
promissory note or other Instrument other than a check. None of the Accounts
arises from a Government Contract.

         3.09 CHATTEL PAPER. Except as set forth on Schedule 3.09, as of the
date hereof, no Grantor holds any Chattel Paper in the ordinary course of its
business.

         3.10 3.10 COMMERCIAL TORT CLAIMS. As of the date hereof, all Commercial
Tort Claims owned by any Grantor are listed on Schedule 3.10.

         3.11 DEPOSIT ACCOUNTS. As of the date hereof, all Deposit Accounts
(including, without limitation, cash management accounts that are Deposit
Accounts) owned by any Grantor are listed on Schedule 3.11.

         3.12 INTELLECTUAL PROPERTY.

         (a) All United States Copyright registrations, Copyright applications,
issued Patents, Trademark registrations and Trademark applications owned by any
Grantor in its own name on the date hereof is listed on Schedule 3.12.

         (b) Except as set forth in Schedule 3.12 on the date hereof, none of
the Intellectual Property owned by any Grantor is the subject of any written
licensing or franchise agreement pursuant to which such Grantor is the licensor
or franchisor, except as could not reasonably be expected to have a Material
Adverse Effect.

         3.13 INVENTORY. Collateral consisting of Inventory is of good and
merchantable quality, free from any material defects. To the knowledge of each
Grantor, none of such Inventory is subject to any licensing, Patent, Trademark,
trade name or Copyright with any Person that restricts in any material respect
any Grantor's ability to manufacture and/or sell such Inventory. The completion
of the manufacturing process of such Inventory by a Person other than the
applicable Grantor would be permitted under any contract to which such Grantor
is a party or to which the Inventory is subject.



                                       9


         3.14 INVESTMENT PROPERTY; PARTNERSHIP/LLC INTERESTS.

         (a) As of the date hereof, all Investment Property (including, without
limitation, Securities Accounts and cash management accounts that are Investment
Property) and all Partnership/LLC Interests owned by any Grantor is listed on
Schedule 3.14.

         (b) All Investment Property and all Partnership/LLC Interests issued by
any Subsidiary Issuer to any Grantor (i) have been duly and validly issued and,
if applicable, are fully paid and nonassessable, (ii) are beneficially owned as
of record by such Grantor and (ii) constitute all the issued and outstanding
shares of all classes of the capital stock of such Subsidiary Issuer issued to
such Grantor.

         3.15 FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.

                                   ARTICLE IV.
                                    COVENANTS

         Until the Obligations shall have been paid in full and the Commitments
terminated, unless consent has been obtained in the manner provided for in
Section 7.01, each Grantor covenants and agrees that:

         4.01 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER INFORMATION.

         (a) Each Grantor shall maintain the Security Interest created by this
Agreement as a perfected Security Interest having at least the priority
described in Section 3.04 and shall defend such Security Interest against the
claims and demands of all Persons whomsoever.

         (b) Each Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection therewith as the Administrative Agent may reasonably request, all in
reasonable detail.

         4.02 MAINTENANCE OF INSURANCE.

         (a) Each Grantor will maintain, with financially sound and reputable
companies, insurance policies (i) insuring the Collateral against loss by fire,
explosion, theft, fraud and such other casualties, including business
interruption, as may be reasonably satisfactory to the Administrative Agent in
amounts and with deductibles at least as favorable as those generally maintained
by businesses of similar size engaged in similar activities (after giving effect
to any self-insurance in an amount not to exceed (a) $500,000 per each
occurrence and (b) $3,000,000 in the aggregate) and (ii) insuring such Grantor
and the Administrative Agent, for the ratable benefit of the Lenders, against
liability for hazards, risks and liability to persons and property relating to
the Collateral, in amounts and with deductibles at least as favorable as those
generally maintained by businesses of similar size engaged in similar
activities, such policies to be in such form and having such coverage as may be
reasonably satisfactory to the Administrative Agent and the Lenders (after
giving effect to any self-insurance in an amount not to exceed (a) $500,000 per
each occurrence and (b) $3,000,000 in the aggregate).



                                       10


         (b) All such insurance shall (i) name the Administrative Agent for the
ratable benefit of itself and the Lenders as loss payee (to the extent covering
risk of loss or damage to tangible property) and as an additional insured as its
interests may appear (to the extent covering any other risk), (ii) provide that
no cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least thirty (30) days after receipt by the
Administrative Agent of written notice thereof and (iii) be reasonably
satisfactory in all other respects to the Administrative Agent.

         (c) Upon the request of the Administrative Agent, each Grantor shall
deliver to the Administrative Agent and the Lenders periodic reports from a
reputable insurance broker with respect to the insurance referred to in this
Section 4.02.

         4.03 CHANGES IN LOCATIONS; CHANGES IN NAME OR STRUCTURE. No Grantor
will, except upon thirty (30) days' prior written notice to the Administrative
Agent and delivery to the Administrative Agent of (a) all additional financing
statements (executed if necessary for any particular filing jurisdiction) and
other instruments and documents reasonably requested by the Administrative Agent
to maintain the validity, perfection and priority of the Security Interests and
(b) if applicable, a written supplement to the Schedules of this Agreement:

                  (i) permit any Deposit Account (other than any Exempted
Deposit Account so long as no Default or Event of Default has occurred and is
continuing) to be held by or at a depositary bank other than the depositary bank
that held such Deposit Account as of the date hereof as set forth on Schedule
3.11;

                  (ii) permit any of the Inventory (other than Cylinder
Inventory, Inventory acquired pursuant to an acquisition permitted pursuant to
Section 8.02(a) of the Credit Agreement and any Inventory excluded from the
Borrowing Base, so long as no Default or Event of Default has occurred and is
continuing), Equipment or Fixtures to be kept at a location other than those
listed on Schedule 3.07, except as otherwise permitted hereunder;

                  (iii) permit any Investment Property (other than Certificated
Securities delivered to the Administrative Agent pursuant to Section 4.05 and,
so long as no Default or Event of Default has occurred and is continuing, any
Exempted Short Term Investment) to be held by or at a Securities Intermediary
the Securities Intermediary that held such Investment Property as of the date
hereof as set forth on Schedule 3.14;

                  (iv) change its jurisdiction of organization or the location
of its chief executive office from that identified on Schedule 3.07; or

                  (v) change its name, identity or corporate or organizational
structure to such an extent that any financing statement filed by the
Administrative Agent in connection with this Agreement would become misleading.

         4.04 REQUIRED NOTIFICATIONS. Each Grantor shall promptly notify the
Administrative Agent, in writing, of: (a) any Lien (other than the Security
Interests or Permitted Liens) on any of the Collateral which would adversely
affect the ability of the Administrative Agent to exercise any of its remedies
hereunder, (b) the occurrence of any other event which could reasonably be
expected to have a Material Adverse Effect on the aggregate value of the
Collateral or on the



                                       11


Security Interests, (c) any Collateral which, to the knowledge of such Grantor,
constitutes a Government Contract, and (d) the acquisition or ownership by such
Grantor of any (i) Commercial Tort Claim, (ii) Deposit Account, (iii) Investment
Property after the date hereof.

         4.05 4.05 DELIVERY COVENANTS. Each Grantor will deliver and pledge to
the Administrative Agent, for the ratable benefit of itself and the Lenders, all
Certificated Securities, Partnership/LLC Interests evidenced by a certificate,
negotiable Documents, Instruments, and Tangible Chattel Paper owned or held by
such Grantor, in each case, together with an Effective Endorsement and
Assignment and all Supporting Obligations, as applicable.

         4.06 CONTROL COVENANTS.

         (a) Each Grantor shall instruct (and otherwise use its reasonable
efforts) to cause (i) each depositary bank holding a Deposit Account (other than
any Exempted Deposit Account so long as no Default or Event of Default has
occurred and is continuing) owned by such Grantor and (ii) each Securities
Intermediary holding any Investment Property (other than a Short Term
Investment, so long as no Default or Event of Default has occurred and is
continuing) owned by such Grantor, to execute and deliver a control agreement,
sufficient to provide the Administrative Agent with Control of such Deposit
Account and otherwise in form and substance satisfactory to the Administrative
Agent (any such depositary bank executing and delivering any such control
agreement, a "Controlled Depositary", and any such Securities Intermediary
executing and delivering any such control agreement, a "Controlled
Intermediary"). In the event any such depositary bank or Securities Intermediary
refuses to execute and deliver such control agreement, the Administrative Agent,
in its sole discretion, may require the applicable Deposit Account and
Investment Property to be transferred to the Administrative Agent or a
Controlled Depositary or Controlled Intermediary, as applicable.

         (b) Each Grantor will take such actions and deliver all such agreements
as are requested by the Administrative Agent to provide the Administrative Agent
with Control of all Letter of Credit Rights and Electronic Chattel Paper owned
or held by such Grantor, including, without limitation, with respect to any such
Electronic Chattel Paper, by having the Administrative Agent identified as the
assignee of the Record(s) pertaining to the single authoritative copy thereof.

         (c) Each Grantor shall, with respect to any Collateral (other than
Collateral specifically subject to the provisions of Section 4.06(a) and Section
4.06(b)) in the possession or control of any consignee, warehouseman, bailee,
processor, or any other third party (other than Cylinder Inventory and related
display and sales racks in the possession or control of or consigned to Home
Depot Inc., Lowe's Companies, Inc., Sears, Roebuck and Co. (including, without
limitation, Orchard Supply), Wal-Mart Stores, Inc. (including, without
limitation, Sam's Club) or KMart Corporation or a carrier transporting Inventory
in the ordinary course of business) exceeding in value $10,000 at any one
location (such Collateral exceeding such amount, the "Excess Collateral"),
notify in writing such Person of the Security Interests created hereby, use its
reasonable efforts to obtain such Person's written agreement in writing to hold
all such Collateral for the Administrative Agent's account subject to the
Administrative Agent's instructions, and cause such Person to issue and deliver
to the Administrative Agent warehouse receipts, bills of lading or any similar
documents relating to such Collateral to the Administrative



                                       12


Agent's together with an Effective Endorsement and Assignment; provided that if
such Grantor is not able to obtain such agreement and cause the delivery of such
items, the Administrative Agent, in its sole discretion, may require such
Collateral or Excess Collateral, as applicable, to be moved to another location
specified thereby. Further, upon the request of the Administrative Agent, each
Grantor shall perfect and protect such Grantor's ownership interests in all
Inventory (other than Cylinder Inventory and other Inventory that is excluded
from the Borrowing Base so long as no Default or Event of Default has occurred
or is continuing) stored with a consignee against creditors of the consignee by
filing and maintaining financing statements against the consignee reflecting the
consignment arrangement filed in all appropriate filing offices, providing any
written notices required to notify any prior creditors of the consignee of the
consignment arrangement, and taking such other actions as may be appropriate to
perfect and protect such Grantor's interests in such inventory under Section
2-326, Section 9-103, Section 9 324 and Section 9-505 of the UCC or otherwise.
All such financing statements filed pursuant to this Section 4.06(c) shall be
assigned, on the face thereof, to the Administrative Agent, for the ratable
benefit of itself and the other Lenders.

         4.07 FILING COVENANTS. Pursuant to Section 9-509 of the UCC and any
other applicable Law, each Grantor authorizes the Administrative Agent to file
or record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such Grantor
in such form and in such offices as the Administrative Agent determines
appropriate to perfect the Security Interests of the Administrative Agent under
this Agreement and any financing or continuation statements under the UCC (or
other applicable Law) in effect in any jurisdiction with respect to the Security
Interests. Such financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
Collateral that describes such property in any other manner as the
Administrative Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the Security Interest in the
Collateral granted herein, including, without limitation, describing such
property as "all assets" or "all personal property." Further, a photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction. Grantor hereby authorizes, ratifies and confirms
all financing statements and other filing or recording documents or instruments
filed by Administrative Agent prior to the date of this Agreement.

         4.08 ACCOUNTS.

         (a) Other than in the ordinary course of business consistent with its
past practice, no Grantor will (i) grant any extension of the time of payment of
any Account, (ii) compromise or settle any Account for less than the full amount
thereof, (iii) release, wholly or partially, any Account Debtor, (iv) allow any
credit or discount whatsoever on any Account or (v) amend, supplement or modify
any Account in any manner that could, adversely affect the value thereof.

         (b) Each Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of any material Account.



                                       13


         (c) The Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and each Grantor shall furnish all such
assistance and information as the Administrative Agent may require in connection
with such test verifications. At any time and from time to time, upon the
Administrative Agent's request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to the
Administrative Agent -to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.

         4.09 INTELLECTUAL PROPERTY.

         (a) Except as could not reasonably be expected to have a Material
Adverse Effect, each Grantor (either itself or through licensees) (i) will
continue to use each registered Trademark (owned by such Grantor) and Trademark
for which an application (owned by such Grantor) is pending, to the extent
reasonably necessary to maintain such Trademark in full force free from any
claim of abandonment for non-use, (ii) will maintain products and services
offered under such Trademark at a level substantially consistent with the
quality of such products and services as of the date hereof, (iii) will not (and
not permit any licensee or sublicensee thereof to) do any act or knowingly omit
to do any act whereby such Trademark could reasonably be expected to become
invalidated or impaired in any way, (iv) will not do any act, or knowingly omit
to do any act, whereby any issued Patent owned by such Grantor would reasonably
be expected to become forfeited, abandoned or dedicated to the public, (v) will
not (and will not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any registered Copyright owned by such
Grantor or Copyright for which an application is pending (owned by such Grantor)
could reasonably be expected to become invalidated or otherwise impaired and
(vi) will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights may fall into the public domain.

         (b) Each Grantor will notify the Administrative Agent and the Lenders
promptly if it knows, or has reason to know, that any application or
registration relating to any Intellectual Property owned by such Grantor may
become forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court or
tribunal in any country) regarding such Grantor's ownership of, or the validity
of, any Intellectual Property owned by such Grantor or such Grantor's right to
register the same or to own and maintain the same, except where any such
forfeiture, abandonment, public dedication or adverse determination or
development would not reasonably be expected to have a Material Adverse Effect.

         (c) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within five (5) Business Days after the last
day of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may reasonably request to evidence the



                                       14


Administrative Agent's and the Lenders' security interest in any material
Copyright, Patent or Trademark and the goodwill and General Intangibles of such
Grantor relating thereto or represented thereby.

         (d) Each Grantor will take all reasonable and necessary steps, at such
Grantor's sole cost and expense, including, without limitation, in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of the
material Intellectual Property, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of incontestability.

         (e) In the event that any material Intellectual Property owned by a
Grantor is infringed, misappropriated or diluted by a third party, the
applicable Grantor shall (i) at such Grantor's sole cost and expense, take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns of such infringement, misappropriation or
dilution.

         4.10 INVESTMENT PROPERTY; PARTNERSHIP/LLC INTERESTS.

         (a) Without the prior written consent of the Administrative Agent, no
Grantor will (i) vote to enable, or take any other action to permit, any Issuer
to issue any Investment Property or Partnership/LLC Interests, except for such
those additional Investment Property or Partnership/LLC Interests that will be
subject to the Security Interest granted herein in favor of the Administrative
Agent (subject to the limitation thereon set forth in the proviso at the end of
Section 2.01), or (ii) enter into any agreement or undertaking restricting the
right or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any Investment Property or Partnership/LLC Interests or Proceeds
thereof. The Grantors will defend the right, title and interest of the
Administrative Agent in and to any Investment Property and Partnership/LLC
Interests against the claims and demands of all Persons whomsoever.

         (b) If any Grantor shall become entitled to receive or shall receive
(i) any Certificated Securities (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the
ownership interests of any Issuer, whether in addition to, in substitution of,
as a conversion of, or in exchange for, any Investment Property, or otherwise in
respect thereof, or (ii) any sums paid upon or in respect of any Investment
Property upon the liquidation or dissolution of any Issuer, such Grantor shall
accept the same as the agent of the Administrative Agent and the Lenders, hold
the same in trust for the Administrative Agent and the Lenders, segregated from
other funds of such Grantor, and promptly deliver the same to the Administrative
Agent in accordance with the terms hereof.

         4.11 EQUIPMENT. Each Grantor will maintain each item of Equipment in
good working order and condition (reasonable wear and tear and obsolescence
excepted), and in accordance with any manufacturer's manual, and will as quickly
as practicable provide all



                                       15


maintenance, service and repairs necessary for such purpose and will promptly
furnish to the Administrative Agent a statement respecting any material loss or
damage to any of the Equipment.

         4.12 VEHICLES. Upon the request of the Administrative Agent upon the
occurrence and during the continuance of an Event of Default, all applications
for certificates of title or ownership indicating the Administrative Agent's
first priority Lien on the Vehicle covered by such certificate, and any other
necessary documentation, shall be filed in each office in each jurisdiction
which the Administrative Agent shall deem reasonably advisable to perfect its
Liens on the Vehicles. Prior thereto, each certificate of title or ownership
relating to each Vehicle shall be maintained by the applicable Grantor in
accordance with applicable Law to reflect the ownership interest of such
Grantor.

         4.13 FURTHER ASSURANCES. Upon the request of the Administrative Agent
and at the sole expense of the Grantors, each Grantor will promptly and duly
execute and deliver, and have recorded, such further instruments and documents
and take such further actions as the Administrative Agent may reasonably request
for the purpose of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted, including, without limitation, (a)
with respect to Government Contracts, assignment agreements and notices of
assignment, in form and substance satisfactory to the Administrative Agent, duly
executed by any Grantors party to such Government Contract in compliance with
the Assignment of Claims Act (or analogous state applicable Law), and (b) all
applications, certificates, instruments, registration statements, and all other
documents and papers the Administrative Agent may reasonably request and as may
be required by law in connection with the obtaining of any consent, approval,
registration, qualification, or authorization of any Person deemed necessary or
appropriate for the effective exercise of any rights under this Agreement.

                                   ARTICLE V.
                               REMEDIAL PROVISIONS

         5.01 GENERAL REMEDIES. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the UCC or any
other applicable Law. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent may disclaim any
warranties of title, possession and quiet enjoyment. The Administrative Agent or
any Lender shall have the right upon any such public



                                       16


sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in any Grantor, which right or equity is
hereby waived and released. Each Grantor further agrees, at the Administrative
Agent's request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor's premises or elsewhere. To the extent permitted
by applicable Law, each Grantor waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder except to the extent any such claims,
damages, or demands result solely from the gross negligence or willful
misconduct of the Administrative Agent or any Lender, in each case against whom
such claim is asserted. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least ten (10) days before such sale or other disposition.

         5.02 SPECIFIC REMEDIES.

         (a) The Administrative Agent hereby authorizes each Grantor to collect
such Grantor's Accounts, under the Administrative Agent's direction and control;
provided that, the Administrative Agent may curtail or terminate such authority
at any time after the occurrence and during the continuance of an Event of
Default.

         (b) Upon the occurrence and during the continuance of an Event of
Default:

                  (i) the Administrative Agent may communicate with Account
Debtors of any Account subject to a Security Interest and upon the request of
the Administrative Agent, each Grantor shall notify (such notice to be in form
and substance satisfactory to the Administrative Agent) its Account Debtors that
such Accounts have been assigned to the Administrative Agent, for the ratable
benefit of itself and the Lenders;

                  (ii) each Grantor shall forward to the Administrative Agent,
on the last Business Day of each week, deposit slips related to all cash, money,
checks or any other similar items of payment received by the Grantor during such
week, and, if requested by the Administrative Agent, copies of such checks or
any other similar items of payment, together with a statement showing the
application of all payments on the Collateral during such week and a collection
report with regard thereto, in form and substance satisfactory to the
Administrative Agent;

                  (iii) whenever any Grantor shall receive any cash, money,
checks or any other similar items of payment relating to any Collateral
(including any Proceeds of any Collateral), such Grantor agrees that it will,
within one (1) Business Day of such receipt, deposit all such items of payment
into the Collateral Account or in a Deposit Account at Controlled Depositary,
until such Grantor shall deposit such cash, money, checks or any other similar
items of payment in the Collateral Account or in a Deposit Account at a
Controlled Depositary, such Grantor shall hold such cash, money, checks or any
other similar items of payment in trust for the Administrative Agent and Lenders
and as property of the Administrative Agent and Lenders, separate from the other
funds of such Grantor, and the Administrative Agent shall have the right to
transfer or direct the transfer of the balance of each Deposit Account to the
Collateral



                                       17


Account. All such Collateral and Proceeds of Collateral received by the
Administrative Agent hereunder shall be held by the Administrative Agent in the
Collateral Account as collateral security for all the Obligations and shall not
constitute payment thereof until applied as provided in Section 5.04.

                  (iv) the Administrative Agent shall have the right to receive
any and all cash dividends, payments or distributions made in respect of any
Investment Property, or Partnership/LLC Interests or other Proceeds paid in
respect of any Investment Property, or Partnership/LLC Interests, and any or all
of any Investment Property, or Partnership/LLC Interests shall be registered in
the name of the Administrative Agent or its nominee, and the Administrative
Agent or its nominee may thereafter exercise (A) all voting, corporate and other
rights pertaining to such Investment Property, or Partnership/LLC Interests at
any meeting of shareholders, partners or members of the relevant Issuers and (B)
any and all rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such Investment Property, or
Partnership/LLC Interests as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
Investment Property, or Partnership/LLC Interests upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate, partnership or company structure of any Issuer or upon the
exercise by any Grantor or the Administrative Agent of any right, privilege or
option pertaining to such Investment Property, or Partnership/LLC Interests, and
in connection therewith, the right to deposit and deliver any and all of the
Investment Property, or Partnership/LLC Interests with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it; but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and the Administrative Agent and the Lenders shall not be responsible for
any failure to do so or delay in so doing. In furtherance thereof, each Grantor
hereby authorizes and instructs each Issuer with respect to any Collateral
consisting of Investment Property and Partnership/LLC Interests to (i) comply
with any instruction received by it from the Administrative Agent in writing
that (A) states that an Event of Default has occurred and is continuing and (B)
is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) except as otherwise
expressly permitted hereby, pay any dividends, distributions or other payments
with respect to any Investment Property, or Partnership/LLC Interests directly
to the Administrative Agent; and

                  (v) the Administrative Agent shall be entitled to (but shall
not be required to): (A) do all acts which the Administrative Agent may deem
necessary or proper to protect its Security Interest granted hereunder, provided
such acts are not inconsistent with or in violation of the terms of any of the
Credit Agreement, of the other Loan Documents or applicable Law, and (B) sell,
assign or otherwise transfer any Collateral in accordance with the Credit
Agreement, the other Loan Documents and applicable Law.

         (c) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the relevant Grantor of
the Administrative Agent's intent to exercise its corresponding rights pursuant
to Section 5.02(b), each Grantor shall be permitted to receive all cash
dividends, payments or other distributions made in respect of any



                                       18


Investment Property and Partnership/LLC Interests, in each case paid in the
normal course of business of the relevant Issuer and consistent with past
practice, to the extent permitted in the Credit Agreement, and to exercise all
voting and other corporate, company and partnership rights with respect to any
Investment Property and Partnership/LLC Interests; provided that, no vote shall
be cast or other corporate, company and partnership right exercised or other
action taken which, in the Administrative Agent's reasonable judgment, would
impair the Collateral or which would result in a Default or Event of Default
under any provision of the Credit Agreement, this Agreement or any other Loan
Document.

         5.03 REGISTRATION RIGHTS.

         (a) [RESERVED.]

         (b) Each Grantor recognizes that the Administrative Agent may be unable
to effect a public sale of any or all the Restricted Securities Collateral, by
reason of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of any of the
Restricted Securities Collateral for the period of time necessary to permit the
Issuer thereof to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if such Issuer would agree
to do so.

         (c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Restricted Securities Collateral valid and binding and in
compliance with any and all other applicable Laws. Each Grantor further agrees
that a breach of any of the covenants contained in this Section 5.03 will cause
irreparable injury to the Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section 5.03 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Credit Agreement.

         5.04 APPLICATION OF PROCEEDS. At such intervals as may be agreed upon
by the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of the Collateral
or any Proceeds of the Collateral in payment in whole or in part of the
Obligations (after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements) in accordance with Section 9.03 of
the Credit Agreement. Any balance of such Proceeds remaining



                                       19


after shall be paid over to the Borrower, on behalf of the Grantors, or to
whomsoever (if such Person is not a Grantor) may be lawfully entitled to receive
the same. Only after (i) the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-610 and Section 9-615 of the UCC and (ii) the payment in full of the
Obligations and the termination of the Commitments, shall the Administrative
Agent account for the surplus, if any, to any Grantor, or to whomever may be
lawfully entitled to receive the same (if such Person is not a Grantor).

         5.05 WAIVER, DEFICIENCY. Except to the extent prohibited under
applicable Law (including Section 9-602 of the UCC), each Grantor waives and
agrees not to assert any rights or privileges which it may acquire under
Sections 9-210, 9-607, 9-608, 9-610, 9-615, 9-620, 9-621, 9-623, 9-624, 9-625 or
9-627 of the UCC. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Lender to collect such deficiency.

                                   ARTICLE VI.
                            THE ADMINISTRATIVE AGENT

         6.01 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.

         (a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, following the occurrence and during the continuance of an Event
of Default to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following upon the occurrence and continuation of an
Event of Default:

                  (i) in the name of such Grantor or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any Account
or with respect to any other Collateral and file any claim or take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any and
all such moneys due under any Account or with respect to any other Collateral
whenever payable;

                  (ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the Administrative
Agent's and the Lenders' security interest in_ such Intellectual Property and
the goodwill and General Intangibles of such Grantor relating thereto or
represented thereby;



                                       20


                  (iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance called
for by the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof,

                  (iv) execute, in connection with any sale provided for in this
Agreement, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and

                  (v) (A) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct; (B) ask or demand for, collect, and receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral; (C) sign and indorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) commence and prosecute
any suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (E) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral; (F)
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Administrative
Agent may deem appropriate; (G) assign any Copyright, Patent or Trademark (along
with the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), for such term or terms, on such conditions, and in such
manner, as the Administrative Agent shall in its sole discretion determine; and
(H) generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes, and do,
at the Administrative Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' Security Interests therein and to effect
the intent of this Agreement, all as fully and effectively as such Grantor might
do.

         (b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement in accordance with the provisions
of Section 6.01(a).

         (c) The expenses of the Administrative Agent incurred in connection
with actions taken pursuant to the terms of this Agreement, together with
interest thereon at a rate per annum equal to the Default Rate for Base Rate
Loans under the Credit Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by the relevant Grantor, shall be payable by such
Grantor to the Administrative Agent on demand.

         (d) Each Grantor hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof in accordance with Section 6.01(a). All
powers, authorizations and agencies contained in this Agreement are coupled with
an interest and are irrevocable until this Agreement is terminated and the
Security Interests created hereby are released.



                                       21


         6.02 DUTY OF ADMINISTRATIVE AGENT. The Administrative Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. Neither the Administrative Agent, any
Lender nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative Agent
and the Lenders hereunder are solely to protect the Administrative Agent's and
the Lenders' interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any Lender to exercise any such powers. The
Administrative Agent and the Lenders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.

         6.03 AUTHORITY OF ADMINISTRATIVE AGENT. Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement to make any inquiry respecting such authority.

                                  ARTICLE VII.
                                  MISCELLANEOUS

         7.01 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 11.01 of the Credit Agreement.

         7.02 NOTICES. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.02 of the Credit Agreement.

         7.03 NO WAIVER BY COURSE OF CONDUCT, CUMULATIVE REMEDIES. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 7.01), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default. No failure to exercise, nor any delay in
exercising on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative



                                       22


Agent or any Lender of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Administrative Agent
or such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.

         7.04 ENFORCEMENT EXPENSES, INDEMNIFICATION.

         (a) Each Grantor agrees to pay or reimburse each Lender and the
Administrative Agent for all its costs and expenses incurred in connection with
enforcing or preserving any rights under this Agreement and the other Loan
Documents to which such Grantor is a party, (including, without limitation, in
connection with any workout, restructuring, bankruptcy or other similar
proceeding) including, without limitation, the reasonable fees and disbursements
of counsel to each Lender and of counsel to the Administrative Agent.

         (b) Each Grantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes (in each case, subject to Section 4.01 of the Credit Agreement) which may
be payable or determined to be payable with respect to any of the Collateral or
in connection with any of the transactions contemplated by this Agreement.

         (c) Each Grantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from any and all liabilities, obligations, losses,
damages, penalties, costs and expenses in connection with actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement to the extent any Grantor would be required to do so pursuant
to Section 11.05 of the Credit Agreement.

         (d) The agreements in this Section 7.04 shall survive termination of
the Commitments and repayment of the Obligations and all other amounts payable
under the Credit Agreement and the other Loan Documents.

         7.05 GOVERNING LAW; CONSENT TO JURISDICTION.

         (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NORTH CAROLINA APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE
AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH
CAROLINA SITTING IN CHARLOTTE OR OF THE UNITED STATES FOR THE WESTERN DISTRICT
OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR AND
THE ADMINISTRATIVE AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GRANTOR AND THE
ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ANY



                                       23


OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH
GRANTOR AND THE ADMINISTRATIVE AGENT WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF SUCH STATE.

         7.06 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         7.07 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of each
Grantor (and shall bind all Persons who become bound as a Grantor to this
Collateral Agreement), the Administrative Agent and the Lenders and their
successors and assigns; provided that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent (given in accordance with Section
7.01).

         7.08 SET-OFF. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time pursuant
to Section 11.09 of the Credit Agreement, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or such
Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such Grantor
promptly of any such set-off and the



                                       24


application made by the Administrative Agent or such Lender of the proceeds
thereof; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Administrative Agent
and each Lender under this Section 7.07 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.

         7.09 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

         7.10 SEVERABILITY. Any provision of this Agreement or any other Loan
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision or the
remaining provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

         7.11 SECTION HEADING. The Section headings used in this Agreement are
for ,convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

         7.12 INTEGRATION. This Agreement and the other Loan Documents represent
the agreement of the Grantors, the Administrative Agent and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.

         7.13 ACKNOWLEDGEMENTS.

         (a) Each Grantor hereby acknowledges that: (i) it has been advised by
counsel in the negotiation, execution and delivery of this Agreement and the
other Loan Documents to which it is a party, (ii) neither the Administrative
Agent nor any Lender has any fiduciary relationship with or duty to any Grantor
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Grantors, on the one hand, and the
Administrative Agent and Lenders, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor, and (iii) no joint venture is
created hereby or by the other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby or thereby among the Lenders or among the
Grantors and the Lenders.

         (b) Each Issuer party to this Agreement acknowledges receipt of a copy
of this Agreement and agrees to be bound thereby and to comply with the terms
thereof insofar as such terms are applicable to it. Each Issuer agrees to
provide such notices to the Administrative Agent as may be necessary to give
full effect to the provisions of this Agreement.

         7.14 ADDITIONAL GRANTORS. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 7.15 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of a Joinder Agreement in form and
substance satisfactory to the Administrative Agent.



                                       25


         7.15 RELEASES.

         (a) At such time as the Obligations shall have been paid in full and
the Commitments have been terminated, the Collateral shall be released from the
Liens created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Grantor hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor following
any such termination, the Administrative Agent shall deliver to such Grantor any
Collateral held by the Administrative Agent hereunder, and execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination

         (b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. In the event that all the capital stock of any Grantor shall be
sold, transferred or otherwise disposed of in a transaction permitted by the
Credit Agreement, then, at the request of the Borrower and at the expense of the
Grantors, such Grantor shall be released from its. obligations hereunder;
provided that the Borrower shall have delivered to the Administrative Agent, at
least ten (10) Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Grantor and the terms of
the sale or other disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a certification by the
Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.


                           [Signature Pages to Follow]



                                       26


         IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Agreement to be executed under seal by their duly authorized officers, all as of
the day and year first written above.

                               BLUE RHINO CORPORATION, as Grantor


                               By:  /s/ Mark Castaneda
                                    -------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer

                               BLUE RHINO CONSUMER PRODUCTS, LLC,
                               as Grantor and Issuer


                               By:  /s/ Mark Castaneda
                                    -------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Manager

                               USA LEASING, L.L.C., as Grantor and Issuer

                               Blue Rhino Corporation, Manager


                               By:  /s/ Mark Castaneda
                                    -------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer

                               UNIFLAME, LLC, as Grantor and Issuer


                               By:  /s/ Mark Castaneda
                                    -------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Manager

                               CPD ASSOCIATES, INC., as Grantor and Issuer


                               By:  /s/ Mark Castaneda
                                    -------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Vice President


                           [Signature pages continue]





                                   UNIFLAME CORPORATION, as Grantor and Issuer


                                   By:  /s/ Kurt Gehsmann
                                        -----------------------------------
                                        Name:    Kurt Gehsmann
                                        Title:   Vice President


                                   UNI-ASIA, LTD., as an Issuer only

                                   By:  /s/ Malcolm R. McQuilken
                                        -----------------------------------
                                        Name:    Malcolm R. McQuilken
                                        Title:   CEO/President


                           [Signature Pages Continue]







                             BANK OF AMERICA, N.A.,
                             as Administrative Agent


                             By: /s/ Michael Brashler
                                 -----------------------------------------------
                                 Name:  Michael Brashler
                                 Title: Vice President and Senior Agency Officer






                                                                       EXHIBIT A
                                                         To Collateral Agreement

                         FORM OF PERFECTION CERTIFICATE

         Pursuant to a Credit Agreement dated as of November 20, 2002 (as
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
by and among BLUE RHINO CORPORATION, a North Carolina corporation (the
"Borrower"), the lenders who are or may become a party thereto, as Lenders, and
BANK OF AMERICA, N.A., a national banking association, as Administrative Agent
for the Lenders (the "Administrative Agent"), the Borrower has entered into the
Collateral Agreement, dated as of November 20, 2002 (as amended, supplemented or
otherwise modified, the "Collateral Agreement") in favor of the Administrative
Agent for the benefit of the Lenders.

         This Perfection Certificate is delivered pursuant to the Collateral
Agreement.

         Each Grantor hereby certifies to the Administrative Agent and each
Lender as follows:

         1. IDENTIFICATION INFORMATION.

         (a) The jurisdiction of incorporation, organization or formation of
each Grantor is as follows:

         (b) The location of the chief executive office of each Grantor is as
follows:(1)

         (c) The exact legal name of each Grantor as it appears in its [Articles
or Certificate of Incorporation] [Formation] [or] [other applicable document
evidencing formation] is as follows:

         (d) Except as set forth herein, no Grantor has changed its identity or
organizational structure in any way within the past five years.

         (e) The following is a list of all other names (including trade names
or similar appellations) used by any Grantor or any of their respective
divisions or other business units at any time during the past five years:

         (f) The taxpayer identification number of each Grantor is as follows:

         (g) The registered organization identification number(2) of each
Grantor is as follows:

- --------------

(1) For an organization which is not a registered organization (i.e. a general
partnership), the debtor's location is deemed to be its chief executive office.


(2) This is the number assigned to the registered organization by the Secretary
of State and is usually found on the time stamped copy of the organization
documents filed with the Secretary of State's office.



         2. CURRENT LOCATIONS.

         (a) The respective chief executive offices of each Grantor is located
at the following addresses:

         Grantor           Mailing Address           County and State
         -------           ---------------           ----------------

         (b) The following are the only locations at which any Grantor maintains
any books or records relating to any Accounts:

         Grantor           Mailing Address           County and State
         -------           ---------------           ----------------

         (c) The following are all the locations not identified above where the
Grantors maintain any Inventory or Equipment:

         Grantor           Mailing Address           County and State
         -------           ---------------           ----------------

         3. UNUSUAL TRANSACTIONS. Other than as set forth below, all Accounts
have been originated by the Grantors and all Inventory and Equipment have been
acquired by the Grantors in the ordinary course of business.

         4. RELIANCE. The undersigned acknowledges that the Administrative Agent
and the Lenders are entitled to rely and have, in fact, relied on the
information contained herein, and any successor or assign of the Agent or the
Lenders is entitled to rely on the information contained herein.

         IN WITNESS WHEREOF, the undersigned have executed this Perfection
Certificate, this _____ day of ____________________, ____.

                                     [GRANTOR]


                                     By:
                                        ----------------------------------------
                                     Name:
                                          --------------------------------------
                                     Title:
                                           -------------------------------------



                                      2

EX-10.4

                                                                    EXHIBIT 10.4

                            PATENT SECURITY AGREEMENT

         THIS PATENT SECURITY AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time, this "Agreement") is entered into as of
November 20, 2002 by BLUE RHINO CORPORATION, a Delaware corporation, CPD
ASSOCIATES, INC., a North Carolina corporation, and UNIFLAME CORPORATION, a
Delaware corporation (collectively, the "Grantors"), in favor of BANK OF
AMERICA, N.A., as Administrative Agent (the "Administrative Agent") under the
Credit Agreement (as defined below)

         The Grantors own certain patent and patent applications, including
those patents and patent applications listed on Schedule 1 annexed hereto, and
are parties to the patent licenses listed on Schedule 2 annexed hereto; and

         Pursuant to the terms of the Collateral Agreement dated of even date
herewith (as amended, restated, supplemented or otherwise modified from time to
time, the "Collateral Agreement"), between the Grantors and the Administrative
Agent, the Grantors have granted to the Administrative Agent a security interest
in certain assets of the Grantors, including all right, title and interest of
each of the Grantors in, to and under all Patent Collateral (as hereinafter
defined) as collateral security for the. prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations owing by Blue Rhino Corporation, as Borrower (the
"Borrower") under the Credit Agreement, dated of even date herewith (as amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), by and
among the Borrower, the Lenders party thereto and the Administrative Agent, and
the other Loan Documents described in the Credit Agreement. All capitalized
terms defined in the Credit Agreement or the Collateral Agreement and not
otherwise defined herein have the respective meanings provided for in the Credit
Agreement or the Collateral Agreement, as applicable.

         To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective Credit
Extensions to the Borrowers thereunder, each Grantor hereby agrees with the
Administrative Agent, for the ratable benefit of itself and the Lenders, as
follows:

         1. GRANT OF SECURITY INTEREST. Each Grantor does hereby grant to the
Administrative Agent a continuing security interest in all of such Grantor's
right, title and interest in, to and under all of the following (all of the
following items or types of property being herein collectively referred to as
the "Patent Collateral"), whether now existing or hereafter created or acquired,
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations:

                  (a) each Patent, including, without limitation, each Patent
referred to in Schedule 1, annexed hereto, together with any reissues,
continuations, divisions or extensions thereof;




                  (b) all Patent Licenses and other agreements providing the
Grantor with the right to use, or pursuant to which the Grantor provides the
right to use, any of the items described in Section 1(a), including each Patent
License referred to in Schedule 2; and

                  (c) all, products and proceeds of, and the rights associated
with, the foregoing, including, without limitation, any claim by any such
Grantor against third parties for past, present or future (i) infringement of
any Patent, including, without limitation, the Patents referred to in Schedule
1, the Patents issued with respect to the Patent applications or provisional
Patent applications referred to in Schedule 1 and, to the extent applicable, the
patents licensed under any Patent License, or (ii) breach or enforcement of any
Patent License.

         2. OTHER SECURITY INTERESTS. This security interest is granted in
conjunction with the security interests granted to the Administrative Agent
pursuant to the Collateral Agreement. Each Grantor hereby acknowledges and
affirms that the rights and remedies of the Administrative Agent with respect to
the security interest granted herein are without prejudice to, and are in
addition to, those set forth in the Collateral Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein. In the event that any provisions of this Agreement are deemed to
conflict with the Collateral Agreement, the provisions of the Collateral
Agreement shall govern.

         3. RESTRICTIONS ON FUTURE AGREEMENTS. Each Grantor agrees that until
all Obligations shall have been satisfied in full and the Credit Agreement shall
have been terminated, such Grantor will not, without the Administrative Agent's
prior written consent, enter into any agreement including, without limitation,
any license agreement, which is inconsistent with such Grantor's obligations
under this Agreement if such action would reasonably be expected to materially
adversely affect the fair market value of the Patent Collateral or the benefits
of this Agreement to the Administrative Agent, and such Grantor further agrees
that it will not take any action, or permit any action to be taken by others
subject to its control, including licensees, or fail to take any action, which
would materially adversely affect the validity or enforcement of the rights
transferred to the Administrative Agent under this Agreement.

         4. NEW PATENTS. Each Grantor represents and warrants to the
Administrative Agent that the Patents listed on Schedule 1 and the Patent
Licenses listed on Schedule 2 constitute all of the Patents now owned by or
licensed to such Grantor for which registrations have been issued or applied for
in the United States Patent and Trademark Office. If, before the Obligations
have been satisfied in full and the Credit Agreement terminated, the Grantor
shall obtain rights to any new patents, patent applications or provisional
Patent applications granted or filed in the United States or in any foreign
country, the provisions of Section 1 above shall automatically apply thereto and
the Grantor shall give to the Administrative Agent prompt written notice
thereof. The Grantor hereby authorizes the Administrative Agent to modify this
Agreement upon such written notice by amending Schedule 1 and Schedule 2 to
include any future patents, patent applications, provisional Patent applications
and license agreements which are Patents, as applicable, under Section 1 above
or under this Section 4.

         5. LENDERS NOT LIABLE. Neither the Administrative Agent nor any Lender
by virtue of this Agreement assumes any obligations whatsoever in respect of the
Patent Collateral




including, without limitations, any obligation to renew registrations of or
defend the validity or enforceability of the Patent Collateral.

         6. COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy) and all of said counterparts, taken together, shall be deemed to
constitute one and the same instrument.

         7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Grantors and shall inure to the benefit of the
Grantors, the Administrative Agent and the Lenders and their successors and
assigns; provided that no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent.




                            [Signature Pages Follow]





         IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed by its duly authorized officer thereunto, all as of the date first set
forth above.


                           BLUE RHINO CORPORATION,
                           as Grantor


                           By:  /s/ Mark Castaneda
                               -------------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                    Financial Officer


                           UNIFLAME CORPORATION, as Grantor


                           By:  /s/ Kurt Gehsmann
                                ------------------------------------------------
                                    Name:    Kurt Gehsmann
                                    Title:   Vice President


                           [Signature Pages Continue]





                                 ACKNOWLEDGMENT


STATE OF NORTH CAROLINA

COUNTY OF FORSYTH


         I, Abbye R. Caudle a Notary Public for said County and State, do hereby
certify that Mark Castaneda personally appeared before me this day and stated
that he is Exec. VP & CFO of BLUE RHINO CORPORATION and acknowledged the due
execution of the foregoing instrument.

         Witness my hand and official seal, this 13th day of November, 2002.

                                                      /s/ Abbye R. Caudle
                                             ----------------------------------
                                             Notary Public

My commission expires:

         9/26/04
- ---------------------------




                                 ACKNOWLEDGMENT


STATE OF NORTH CAROLINA

COUNTY OF FORSYTH


         I, Abbye R. Caudle a Notary Public for said County and State, do hereby
certify that Kurt Gehsmann personally appeared before me this day and stated
that he is Vice President of UNIFLAME CORPORATION and acknowledged the due
execution of the foregoing instrument.

         Witness my hand and official seal, this 13th day of November, 2002.

                                                      /s/ Abbye R. Caudle
                                             ----------------------------------
                                             Notary Public

My commission expires:

         9/26/04
- ---------------------------






Agreed and Accepted as of November 20, 2002.

BANK OF AMERICA, N.A.,
as Administrative Agent


By:  /s/ Michael Brashler
     -------------------------------
         Name:    Michael Brashler
         Title:   Vice President and Senior Agency Officer


                            [Acknowledgment Follows]






                                   Schedule 2
                                    to Patent
                               Security Agreement

EX-10.5

                                                                    EXHIBIT 10.5

                          TRADEMARK SECURITY AGREEMENT

         THIS TRADEMARK SECURITY AGREEMENT (as amended, restated, supplemented
or otherwise modified from time to time, this "Agreement") is entered into as of
November 20, 2002 by BLUE RHINO CORPORATION, a Delaware corporation, CPD
ASSOCIATES, INC., a North Carolina corporation, and UNIFLAME CORPORATION, a
Delaware corporation (collectively, the "Grantors"), in favor of BANK OF
AMERICA, N.A., as Administrative Agent (the "Administrative Agent") under the
Credit Agreement (as defined below).

         The Grantors own certain trademarks and service marks, including those
trademark registrations and trademark applications listed on Schedule 1 annexed
hereto, and are parties to the trademark licenses listed on Schedule 2 annexed
hereto; and

         Pursuant to the terms of the Collateral Agreement dated of even date
herewith (as amended, restated, supplemented or otherwise modified from time to
time, the "Collateral Agreement"), between the Grantors and the Administrative
Agent, the Grantors have granted to the Administrative Agent a security interest
in certain assets of the Grantors, including all right, title and interest of
each of the Grantors in, to and under all Trademark Collateral (as hereinafter
defined) as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations owing by Blue Rhino Corporation, as Borrower (the
"Borrower") under the Credit Agreement, dated of even date herewith (as amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), by and
among the Borrower, the Lenders party thereto and the Administrative Agent, and
the other Loan Documents described in the Credit Agreement. All capitalized
terms defined in the Credit Agreement or the Collateral Agreement and not
otherwise defined herein have the respective meanings provided for in the Credit
Agreement or the Collateral Agreement, as applicable.

         To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective Credit
Extensions to the Borrowers thereunder, each Grantor hereby agrees with the
Administrative Agent, for the ratable benefit of itself and the Lenders, as
follows:

         1. GRANT OF SECURITY INTEREST. Each Grantor does hereby grant to the
Administrative Agent a- continuing security interest in all of such Grantor's
right, title and interest in, to and under all of the following (all of the
following items or types of property being herein collectively referred to as
the "Trademark Collateral"), whether now existing or hereafter created or
acquired, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations:

                  (a) all Trademarks, including, without limitation, each
Trademark referred to in Schedule 1 annexed hereto together with any divisions
or renewals thereof;

                  (b) all Trademark Licenses and other agreements providing the
Grantor with the right to use, or pursuant to which such Grantor provides the
right to use, any of the items described in Section 1(a), including each
Trademark license referred to in Schedule 2 annexed hereto;




                  (c) all of the goodwill of the business connected with the use
of, and symbolized by, each item described in Section 1(a) or Section 1(b);

                  (d) the right to sue third parties for past, present or future
infringements of any Trademark Collateral described in Section 1(a) and, to the
extent applicable, Section 1(b); and

                  (e) all products and proceeds of, and the rights associated
with, the foregoing, including, without limitation, any claim by such Grantor
against third parties for past, present or future (i) infringement or dilution
of any Trademark or Trademark registration including, without limitation, the
Trademarks and Trademark registrations referred to in Schedule 1 annexed hereto,
the Trademark registrations issued with respect to the Trademark applications
referred to in Schedule 1 and the trademarks licensed under any Trademark
License, (ii) injury to the goodwill associated with the use of any such
Trademark, Trademark registration or trademark licensed under any Trademark
License, or (iii) breach or enforcement of any Trademark license.

         2. OTHER SECURITY INTERESTS. This security interest is granted in
conjunction with the security interests granted to the Administrative Agent
pursuant to the Collateral Agreement. Each Grantor hereby acknowledges and
affirms that the rights and remedies of the Administrative Agent with respect to
the security interest granted herein are without prejudice to, and are in
addition to, those set forth in the Collateral Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein. In the event that any provisions of this Agreement are deemed to
conflict with the Collateral Agreement, the provisions of the Collateral
Agreement shall govern.

         3. RESTRICTIONS ON FUTURE AGREEMENTS. Each Grantor agrees that until
all Obligations shall have been satisfied in full and the Credit Agreement shall
have been terminated, such Grantor will not, without the Administrative Agent's
prior written consent, enter into any agreement including, without limitation,
any license agreement, which is inconsistent with such Grantor's obligations
under this Agreement if such action would reasonably be expected to materially
adversely affect the fair market value of the Trademark Collateral or the
benefits of this Agreement to the Administrative Agent, and each Grantor further
agrees that it will not take any action, or permit any action to be taken by
others subject to its control, including licensees, or fail to take any action,
which would materially adversely affect the validity or enforcement of the
rights transferred to the Administrative Agent under this Agreement.

         4. NEW TRADEMARKS. Each Grantor represents and warrants to the
Administrative Agent that the Trademarks listed on Schedule 1 and the Trademark
Licenses listed on Schedule 2 constitute all of the Trademarks now owned by or
licensed to such Grantor for which registrations have been issued or applied for
in the United States Patent and Trademark Office. If, before the Obligations
have been satisfied in full and the Credit Agreement terminated, the Grantor
shall (i) obtain rights to any new trademarks, trademark registrations or
applications or tradenames used in the United States or in any foreign country
or (ii) become entitled to the benefit of any trademark application, trademark,
trademark registration or tradename used in the United States or in any foreign
country, the provisions of Section 1 above shall automatically apply thereto and
the Grantor shall give to the Administrative Agent prompt written notice
thereof. The Grantor hereby authorizes the Administrative Agent to modify this
Agreement



                                       2


upon such written notice by amending Schedule 1 and Schedule 2 to include any
future trademarks, trademark registrations, trademark applications, tradenames
and license agreements which are Trademarks, as applicable, under Section 1
above or under this Section 4.

         5. LENDERS NOT LIABLE. Neither the Administrative Agent nor any Lender
by virtue of this Agreement assumes any obligations whatsoever in respect of the
Trademark Collateral including, without limitations, any obligation to renew
registrations of or defend the validity, enforceability or distinctiveness of
the Trademark Collateral.

         6. COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy) and all of said counterparts, taken together, shall be deemed to
constitute one and the same instrument.

         7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Grantors and shall inure to the benefit of the
Grantors, the Administrative Agent and the Lenders and their successors and
assigns; provided that no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent.

                            [Signature Pages Follow]



                                       3



         IN WITNESS WHEREOF, the Grantors have caused this Trademark Security
Agreement to be duly executed by their duly authorized officer thereunto, all as
of the date first set forth above.

                           BLUE RHINO CORPORATION,
                           as Grantor


                           By:  /s/ Mark Castaneda
                                -----------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Executive Vice President and Chief
                                             Financial Officer


                           CPD ASSOCIATES, INC., as Guarantor


                           By:  /s/ Mark Castaneda
                                -----------------------------------------------
                                    Name:    Mark Castaneda
                                    Title:   Vice President


                           UNIFLAME CORPORATION, as Grantor

                           By:  /s/ Kurt Gehsmann
                                -----------------------------------------------
                                    Name:    Kurt Gehsmann
                                    Title:   Vice President

                           [Signature Pages Continue]



                                       4



                                 ACKNOWLEDGMENT



STATE OF NORTH CAROLINA

COUNTY OF FORSYTH

         I, Abbye R. Caudle, a Notary Public for said County and State, do
hereby certify that Mark Castaneda personally appeared before me this day and
stated that he is Exec. VP & CFO of BLUE RHINO CORPORATION and acknowledged the
due execution of the foregoing instrument.

         Witness my hand and official seal, this 13th day of November, 2002.

                                           /s/ Abbye R. Caudle
                                  ---------------------------------------
                                  Notary Public



My commission expires:

         9/26/04
- ------------------------


                                       5



                                 ACKNOWLEDGMENT



STATE OF NORTH CAROLINA

COUNTY OF FORSYTH

         I, Abbye R. Caudle, a Notary Public for said County and State, do
hereby certify that Mark Castaneda personally appeared before me this day and
stated that he is Vice President of CPD ASSOCIATES, INC. and acknowledged the
due execution of the foregoing instrument.

         Witness my hand and official seal, this 13th day of November, 2002.

                                           /s/ Abbye R. Caudle
                                  ---------------------------------------
                                  Notary Public



My commission expires:

         9/26/04
- ------------------------


                                       6



                                 ACKNOWLEDGMENT



STATE OF NORTH CAROLINA

COUNTY OF FORSYTH

         I, Abbye R. Caudle a Notary Public for said County and State, do hereby
certify that Kurt Gehsmann personally appeared before me this day and stated
that he is Vice President of UNIFLAME CORPORATION and acknowledged the due
execution of the foregoing instrument.

         Witness my hand and official seal, this 13th day of November, 2002.

                                           /s/ Abbye R. Caudle
                                  ---------------------------------------
                                  Notary Public



My commission expires:

         9/26/04
- ------------------------


                                       7



Agreed and Accepted as of November 20, 2002.

BANK OF AMERICA, N.A.,
  as Administrative Agent


By:  /s/ Michael Brashler
      --------------------------------------
         Name:    Michael Brashler
         Title:   Vice President and Senior Agency Officer


                            [Acknowledgment Follows]


                                       8



Schedule 1



- ----------------------- --------------------- -------------------- --------------------- --------------------
INTELLECTUAL              TRADEMARK            DATE OF FIRST USE       EFFECTIVE OR            STATUS
PROPERTY MARK               OWNER                 IN COMMERCE         FILING DATE OF
                                                                     REGISTRATION OR
                                                                       APPLICATION
- ----------------------- --------------------- -------------------- --------------------- --------------------
                                                                             
AMERICA'S               BLUE RHINO            April 20, 1999           May 6, 1999       Affidavit of use
CHOICE FOR              CORPORATION                                                      due after April
GRILL GAS               104 Cambridge                                                    10, 2006, but
                        Plaza Drive                                                      before April 10,
Reg. No.                Winston-Salem,                                                   2007; renewal due
2,443,339               NC 27104                                                         April 10, 2011
Registered: April
10, 2001
- ----------------------- --------------------- -------------------- --------------------- --------------------
BISON                   BLUE RHINO            February 24, 1998     September 1, 1998    Affidavit of use
                        CORPORATION                                                      due after July 13,
Reg. No.                104 Cambridge                                                    2004, but before
2,261,216               Plaza Drive                                                      July 13, 2005;
Registered July         Winston-Salem,                                                   renewal due July
13, 1999                NC 27104                                                         13, 2009.
- ----------------------- --------------------- -------------------- --------------------- --------------------
BISON Design            BLUE RHINO            February 24, 1998     September 1, 1998    Affidavit of use
                        CORPORATION                                                      due after July 13,
Reg. No.                104 Cambridge                                                    2004, but before
2,261,220               Plaza Drive                                                      July 13, 2005;
Registered July         Winston-Salem,                                                   renewal due July
13, 1999                NC 27104                                                         13, 2009.
- ----------------------- --------------------- -------------------- --------------------- --------------------
BLUE RHINO & Design     CPD ASSOCIATES, INC.  March 24, 1994           May 23, 1994      Renewal due June
                        104 Cambridge Plaza                                              13, 2005
Reg. No. 1,898,501      Drive
Registered: June 13,    Winston-Salem, NC
1995                    27104
- ----------------------- --------------------- -------------------- --------------------- --------------------
DURACLAY                BLUE RHINO            April 16, 1996          July 16, 1996      Affidavit of use
                        CORPORATION                                                      due after May 6,
Reg. No. 2,059,459      104 Cambridge Plaza                                              2002, but before
Registered May 6, 1997  Drive                                                            May 6, 2003;
                        Winston-Salem, NC                                                renewal due May 6,
                        27104                                                            2007.
- ----------------------- --------------------- -------------------- --------------------- --------------------
ENDLESS SUMMER          BLUE RHINO            September 2, 1998      August 25, 1998     Application
                        CORPORATION                                                      pending; Statement
Reg. No. 2,493,024      104 Cambridge Plaza                                              of Use accepted
Registered: September   Drive                                                            March 20, 2001,
25, 2001                Winston-Salem, NC                                                application will
                        27104                                                            register in due
                                                                                         course.
- ----------------------- --------------------- -------------------- --------------------- --------------------





- -----------------------  ------------------------------------------
INTELLECTUAL              DESCRIPTION OF GOODS AND
PROPERTY MARK               SERVICES/INT. CLASSES


- -----------------------  ------------------------------------------
                      
AMERICA'S                Propane gas (Int. 4); Metal propane gas
CHOICE FOR               cylinders (Int. 6); and exchanging and
GRILL GAS                refurbishing propane gas cylinders (Int.
                         37).
Reg. No.
2,443,339
Registered: April
10, 2001
- -----------------------  ------------------------------------------
BISON                    Manually operated valves made primarily
                         of metal for use on propane gas tanks
Reg. No.                 (Int. 6).
2,261,216
Registered July
13, 1999
- -----------------------  ------------------------------------------
BISON Design             Manually operated valves made primarily
                         of metal for use on propane gas tanks
Reg. No.                 (Int. 6).
2,261,220
Registered July
13, 1999
- -----------------------  ------------------------------------------
BLUE RHINO & Design      Propane gas (Int. 4) and metal propane
                         gas cylinders (Int. 6).
Reg. No. 1,898,501
Registered: June 13,
1995
- -----------------------  ------------------------------------------
DURACLAY                 Planters for gardening (Int. 21).

Reg. No. 2,059,459
Registered May 6, 1997


- -----------------------  ------------------------------------------
ENDLESS SUMMER           Portable Propane heaters (Int. 11).

Reg. No. 2,493,024
Registered: September
25, 2001


- -----------------------  ------------------------------------------




                                                                             
- ----------------------- --------------------- -------------------- --------------------- --------------------
ENDLESS SUMMER          CPD ASSOCIATES, INC.          N/A           February 14, 2001    Application pending
                        104 Cambridge Plaza
                        Drive
                        Winston-Salem, NC
                        27104
Serial No. 76/212,933


APPLICATION BEING
PROSECUTED BY
LAWRENCE J. CRAIN





                      
- -----------------------  ------------------------------------------
ENDLESS SUMMER           Propane gas; firewood and gelled alcohol
                         fuel
                         (Int. 4); Manually operated valves made
                         primarily of metal for use on propane
                         gas tanks; metal propane gas cylinders;
Serial No. 76/212,933    and metal goods namely metal trellises,
                         door stops, metal weather vanes,
                         freestanding tool racks, andirons,
APPLICATION BEING        baskets, hooks, log racks, fireplace
PROSECUTED BY            fenders, sculptures composed of
LAWRENCE J. CRAIN        non-precious metal, storage boxes (Int.
                         6); Hand tools, namely shovels, trowels,
                         rakes, hoes, pokers and tongs; barbecue
                         hand-tools and utensils, namely forks and
                         tongs (Int. 8); Portable electric heaters;
                         portable gas heaters; fireplace inserts
                         composed of andirons, artificial logs and
                         artificial embers fueled by gas,
                         electricity, or alcohol; gas pilots;
                         barbecue grills, replacement barbecue
                         burners and cooking grills; and fitted
                         and/or semi-fitted barbecue grill covers;
                         ornamental outdoor fountains; outdoor
                         fireplaces (Int. 11); Furniture and
                         articles, namely plant stands, garden
                         furniture, non-metal weather vanes,
                         free-standing non-metal tool racks,
                         fireplace screens, benches, magazine racks,
                         domestic fireplace bellows, hangers for
                         fireplace accessories; (Int. 20); Planters
                         for gardening; house wares and glass, namely
                         plant holders, flower pots and vases; wood
                         baskets, fireplace brushes, ash buckets, ash
                         bins, metal buckets/pots, teapots not of
                         precious metal; and barbecue hand-tools and
                         utensils, namely spatulas, scraping and
                         basting brushes; insect traps (Int. 21);
                         Distributorships featuring new, used and
                         reconditioned heaters; independent sales
                         representatives in the fields of new, used
                         and reconditioned heaters; wholesale and
                         retail sales and leasing of new, used and
                         reconditioned heaters (Int. 35); and
                         Installation, repair and maintenance of
                         heaters and leasing of heaters; exchanging
                         and refurbishing propane gas cylinders (Int.
                         37).
- -----------------------  ------------------------------------------






- ----------------------- --------------------- -------------------- --------------------- --------------------
                                                                             
ENDLESS SUMMER COMFORT  BLUE RHINO            September 2, 1998      August 25, 1998     Affidavit of use
                        CORPORATION                                                      due after January
                        104 Cambridge Plaza                                              16, 2006, but
                        Drive                                                            before January 16,
Reg. No. 2,421,880      Winston-Salem, NC                                                2007; renewal due
Registered: January     27104                                                            January 16, 2011.
16, 2001

- ----------------------- --------------------- -------------------- --------------------- --------------------
ENJOY OUTDOOR LIVING    BLUE RHINO                                     May 6, 1999       APPLICATION
- - LONGER                CORPORATION                                                      ABANDONED FOR
                        104 Cambridge Plaza                                              FAILURE TO FILE A
                        Drive                                                            STATEMENT OF USE
                        Winston-Salem, NC                                                EFFECTIVE NOVEMBER
                        27104                                                            26, 2000



- ----------------------- --------------------- -------------------- --------------------- --------------------
GARDEN ART              BLUE RHINO            January 1, 1997        August 18, 1995     Affidavit of use
                        CORPORATION                                                      due after
Reg. No. 2,191,603      104 Cambridge Plaza                                              September 22,
Registration No.        Drive                                                            2003, but before
September 22, 1998      Winston-Salem, NC                                                September 22,
                        27104                                                            2004; renewal due
                                                                                         September 22, 2008.







- ----------------------- --------------------- -------------------- --------------------- --------------------
GRILL AFICIONADO        CPD ASSOCIATES, INC.  N/A                   September 24, 2001   Affidavit of use
                        104 Cambridge Plaza                                              due - date TBD
Application No.         Drive
76/316,142              Winston-Salem, NC
                        27104
- ----------------------- --------------------- -------------------- --------------------- --------------------
GRILL GAS & Design      BLUE RHINO            September 7, 1999        May 6, 1999       Affidavit of use
                        CORPORATION                                                      due after May 22,
Reg. No. 2,454,250      104 Cambridge Plaza                                              2006, but before
Registered: May 22,     Drive                                                            May 22, 2007;
2001                    Winston-Salem, NC                                                renewal due May
                        27104                                                            22, 2011.
- ----------------------- --------------------- -------------------- --------------------- --------------------
HARMONY                 UNIFLAME                      N/A            October 18, 2000    Application
                        Corporation                                                      pending; non-final
Serial No. 76/148,835   1817 North Kenosha                                               action mailed
                        Road                                                             March 26, 2001
APPLICATION BEING       Zion, Illinois 60095
PROSECUTED BY
LAWRENCE J. CRAIN
- ----------------------- --------------------- -------------------- --------------------- --------------------




- -----------------------  ------------------------------------------
                      
ENDLESS SUMMER COMFORT   Distributorships featuring new, used,
                         and reconditioned heaters; independent
                         sales representatives in the fields of
                         new, used, and reconditioned heaters;
Reg. No. 2,421,880       wholesale and retail sales of new, used,
Registered: January      and reconditioned heaters (Int. 35); and
16, 2001                 Installation, repair, and maintenance of
                         heaters and leasing of heaters (Int. 37).
- -----------------------  ------------------------------------------
ENJOY OUTDOOR LIVING     Portable propane heaters (Int. 11);
- - LONGER                 Distributorships featuring new, used,
                         and reconditioned heaters; independent
                         sales representatives in the fields of
                         new, used, and reconditioned heaters;
                         wholesale and retail sales of new, used,
                         and reconditioned heaters (Int. 35); and
                         Installation, repair, and maintenance of
                         heaters and leasing of heaters (Int. 37).
- -----------------------  ------------------------------------------
GARDEN ART               Metal goods, namely, metal trellises,
                         door stops, metal weather vanes, and
Reg. No. 2,191,603       freestanding metal tool racks (Int. 6);
Registration No.         Hand tools, namely, shovels, trowels,
September 22, 1998       forks, rakes, and hoes (Int. 8);
                         Non-metallic building materials, namely,
                         non-metal trellises and wooden fencing
                         stays (Int. 19); Furniture and articles,
                         namely, plant stands; garden furniture,
                         non-metal weather vanes; free-standing
                         non-metal tool racks (Int. 20); and
                         Housewares and glass, namely, plant
                         holders, flower pots, and vases (Int.
                         21).
- -----------------------  ------------------------------------------
GRILL AFICIONADO         Propane Gas (Int. 4); Cooking utensils
                         (Int. 21); Educational services (Int.
Application No.          Class 41); Consulting Services (Class 42)
76/316,142

- -----------------------  ------------------------------------------
GRILL GAS & Design       Propane gas (Int. 4); Metal propane gas
                         cylinders (Int. 6); and exchanging and
Reg. No. 2,454,250       refurbishing propane gas cylinders (Int.
Registered: May 22,      37).
2001

- -----------------------  ------------------------------------------
HARMONY                  Giftware, including fountains, ceramics,
                         candles and candle holders (Int. 21).
Serial No. 76/148,835

APPLICATION BEING
PROSECUTED BY
LAWRENCE J. CRAIN
- -----------------------  ------------------------------------------





- ----------------------- --------------------- -------------------- --------------------- --------------------
                                                                             
RHINOTUFF               CPD ASSOCIATES, INC.    April 15, 1996      February 29, 1996    Affidavit of use
                        104 Cambridge Plaza                                              due after October
Reg. No. 2,102,712      Drive                                                            7, 2002, but
Registered: October     Winston-Salem, NC                                                before October 7,
7, 1997                 27104                                                            2003; renewal due
                                                                                         October 7, 2007.
- ----------------------- --------------------- -------------------- --------------------- --------------------
SHIPPINGSPOT            CPD ASSOCIATES, INC.          N/A          Filed April 23, 2001  Application pending
                        104 Cambridge Plaza
Serial No. 76/245,033   Drive
                        Winston-Salem, NC
                        27104
- ----------------------- --------------------- -------------------- --------------------- --------------------
SHIPPINGSPOT            CPD ASSOCIATES, INC.          N/A          Filed September 24,   Application pending
                        104 Cambridge Plaza                                2001
Design                  Drive
                        Winston-Salem, NC
Serial No. 76/316,141   27104
- ----------------------- --------------------- -------------------- --------------------- --------------------
SKEETERVAC              CPD ASSOCIATES, INC.          N/A          Filed April 5, 2002   Application pending
                        104 Cambridge Plaza
Application No.:        Drive
76/392,024              Winston-Salem, NC
                        27104
- ----------------------- --------------------- -------------------- --------------------- --------------------
TRI-SAFE                                        January 1, 1998       March 2, 1998      Affidavit of use
                                                                                         due after June 29,
Reg. No. 2,256,865      CPD ASSOCIATES, INC.                                             2004, but before
Registered: June 29,    104 Cambridge Plaza                                              June 29, 2005;
1999                    Drive                                                            renewal due June
                        Winston-Salem, NC                                                29, 2009.
Note - moved from       27104
Pederson Haupt to A&B
2.02
- ----------------------- --------------------- -------------------- --------------------- --------------------
UNIFLAME                BLUE RHINO                 June 1990         January 10, 1997    Affidavit of use
                        CORPORATION                                                      due after March 3,
Reg. No. 2,140,530      104 Cambridge Plaza                                              2003, but before
Registered March 3,     Drive                                                            March 3, 2004;
1998                    Winston-Salem, NC                                                renewal due March
                        27104                                                            3, 2008.
- ----------------------- --------------------- -------------------- --------------------- --------------------



- -----------------------  ------------------------------------------
                      
RHINOTUFF                Removable cylindrical plastic coverings
                         for protecting and labeling reusable gas
Reg. No. 2,102,712       cylinders (Int. 20).
Registered: October
7, 1997
- -----------------------  ------------------------------------------
SHIPPINGSPOT             Computer hardware and software (Int. 9);
                         Cooperative advertising and marketing
Serial No. 76/245,033    (Int. 35); Shipping enablement services;
                         packing and storing of goods and parcels
                         for transport and arranging for
                         transport with a carrier; (Int. 39);
                         Technical consulting services regarding
                         computer hardware and software (Int. 42).
- -----------------------  ------------------------------------------
SHIPPINGSPOT             Computer hardware and software (Int. 9);
                         Cooperative advertising and marketing
Design                   (Int. 35); Shipping enablement services;
                         packing and storing of goods and parcels
Serial No. 76/316,141    for transport and arranging for
                         transport with a carrier; (Int. 39);
                         Technical consulting services regarding
                         computer hardware and software (Int. 42).
- -----------------------  ------------------------------------------
SKEETERVAC               Propane devices for exterminating
                         insects (Int. Class 7).
Application No.:
76/392,024
- -----------------------  ------------------------------------------
TRI-SAFE                 Safety device in the nature of a floater
                         piece for use in propane cylinder valves
Reg. No. 2,256,865       to prevent overfilling of the propane
Registered: June 29,     cylinder (Int. 9).
1999

Note - moved from
Pederson Haupt to A&B
2.02
- -----------------------  ------------------------------------------
UNIFLAME                 Firewood and gelled alcohol fuel (Int.
                         4); Metal products, namely andirons,
Reg. No. 2,140,530       wood baskets, hooks, log racks,
Registered March 3,      freestanding tool racks, fireplace
1998                     fenders, sculptures composed of
                         non-precious metal, storage boxes (Int.
                         6); Hand tools, namely, shovels, pokers,
                         and tongs (Int. 8); Portable electric
                         heaters; fireplace inserts composed of
                         andirons, artificial logs and artificial
                         embers fueled by gas, electricity, or
                         alcohol; gas pilots; (Int. 11); Fire log
                         tote bags (Int. 18): Fireplace mantels
                         and fireplace surrounds (Int. 19);
                         Fireplace screens, benches, magazine
                         racks, domestic fireplace bellows,
                         hangers for fireplace accessories (Int.
                         20); Woodbaskets of wood, fireplace
                         brushes, ash buckets, ash bins, metal
                         buckets/pots, teapots not of precious
                         metal (Int. 21); Matches, matchboxes
                         composed of non-precious metal (Int. 34).
- -----------------------  ------------------------------------------




- ----------------------- --------------------- -------------------- --------------------- --------------------
                                                                             
UNIFLAME                UNIFLAME                      N/A             March 3, 1998      Application pending
                        Corporation
                        1817 North Kenosha
Serial No. 76/249,710   Road
                        Zion, Illinois 60095


- ----------------------- --------------------- -------------------- --------------------- --------------------
UNIGRILL                BLUE RHINO            February 1, 1997      November 20, 1996    Affidavit of use
                        CORPORATION                                                      due after May 4,
Reg. No. 2,243,212      104 Cambridge Plaza                                              2004, but before
Registered May 4, 1999  Drive                                                            May 4, 2005;
                        Winston-Salem, NC                                                renewal due May 4,
                        27104                                                            2009.

- ----------------------- --------------------- -------------------- --------------------- --------------------



- -----------------------  ------------------------------------------
                      
UNIFLAME                 Propane gas (Int. 4); Manually operated
                         valves made primarily of metal for use
                         on propane tanks; metal propane gas
Serial No. 76/249,710    cylinders; and metal goods, namely,
                         metal trellises, doorstops, metal
                         weather vanes, baskets (Int. 6); Hand tools,
                         namely, trowels, rakes and hoes; barbeque
                         hand tools and utensils, namely forks and
                         tongs (Int. 8); Portable gas heaters;
                         barbeque grills, replacement barbeque
                         burners and cooking grills; fitted and/or
                         semi-fitted barbeque grill covers;
                         ornamental outdoor fountains; outdoor
                         fireplaces (Int. 11); Furniture and
                         articles, namely plant stands, garden
                         furniture, non-metal weather vanes,
                         free-standing non-metal tool racks (Int.
                         20); Planters for gardening, housewares and
                         glass, namely, plant holders, flower pots,
                         and vases, barbeque hand tools and utensils,
                         namely spatulas, scraping and basting
                         brushes; insect traps (Int. 21);
                         Distributorships featuring new, used and
                         reconditioned heaters; independent sales
                         representatives in the files of new, used
                         and reconditioned heaters; wholesale and
                         retail sales and leasing of new, used and
                         reconditioned heaters (Int. 35); and
                         Installation, repair and maintenance of
                         heaters and leasing of heaters; exchange and
                         refurbishing propane gas cylinders (Int.
                         37).
- -----------------------  ------------------------------------------
UNIGRILL                 Barbecue grills; fitted and/or
                         semi-fitted barbecue grill covers  (Int.
Reg. No. 2,243,212       8); Barbecue hand-tools and utensils,
Registered May 4, 1999   namely, spatulas and scraping and
                         basting brushes (Int. 11); Barbecue
                         hand-tools and utensils, namely, forks,
                         and tongs  (Int. 21).
- -----------------------  ------------------------------------------






                                   Schedule 2
                                  to Trademark
                               Security Agreement


                                      None

EX-10.6

                                                                    EXHIBIT 10.6

                               FIRST AMENDMENT TO
                              INVESTMENT AGREEMENT

         THIS FIRST AMENDMENT TO INVESTMENT AGREEMENT (this "First Amendment")
is made as of November 20, 2002 by and among: (i) Blue Rhino Corporation, a
Delaware corporation (the "Company"), (ii) USA Leasing, L.L.C., a Delaware
limited liability company, Rhino Services, L.L.C., a Delaware limited liability
company, CPD Associates, Inc., a North Carolina corporation, Quickship, Inc., a
Delaware corporation, Uniflame Corporation, a Delaware corporation, Blue Rhino
Consumer Products, LLC, a Delaware limited liability company and Uniflame, LLC,
a Delaware limited liability company (collectively with the Company, the
"Borrowers"); and (iii) Allied Capital Corporation, a Maryland corporation
("Allied").

                                    RECITALS:

         A. Allied invested the aggregate sum of Fifteen Million Dollars
($15,000,000) in the Borrowers in exchange for certain debentures and a warrant
to purchase the common stock of the Company, pursuant to an Investment Agreement
among Allied and the Borrowers dated June 15, 2001 (the "Original Investment
Agreement;" as amended by this First Amendment and as further amended from time
to time, the "Investment Agreement").

         B. The Borrowers have now requested that Allied modify certain terms of
the Investment Agreement, and Allied has agreed subject to the terms and
conditions hereof.

         NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Allied and its
successors and assigns with respect to any of the Debentures or the Warrant, and
the Borrowers hereby agree as follows:

                  1. Definitions.

                  (a) All capitalized terms used herein without definition shall
have the meanings given to such terms in the Investment Agreement.

                  (b) Each of the following definitions set forth in Section 1.1
is hereby deleted in its entirety and amended and restated as follows:

         "Asset Disposition" means any sale, lease (other than operating leases
entered into in the ordinary course of business), transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any of its Subsidiaries, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition") of any assets of the Company or any of its
Subsidiaries other than (a) the sale or other disposition of obsolete,
uneconomical, negligible, worn-out or surplus assets in the ordinary course of
business and in a commercially reasonable manner (including but not limited to
equipment and intellectual property) so long as the proceeds from such sale or
other disposition are applied to replace or upgrade the assets of the Company or
its Subsidiaries or to repay the Senior Debt or amounts outstanding under the
Debentures, (b) the sale of Inventory in




the ordinary course of business for fair value and on an arms'-length basis, (c)
the sale, lease, transfer or other disposition of assets in connection with a
Permitted Reorganization; (d) the sale, lease transfer or other disposition of
assets from the Company or any of its Subsidiaries to any Credit Party; (e) the
Non-Propane Products Divestiture; provided that both before and after giving
effect to such disposition (i) no Default or Event of Default has occurred and
is continuing and (ii) the Company shall have demonstrated pro forma compliance
with the financial covenants set forth in Section 6.12; (f) dispositions by the
Company or any Subsidiary thereof, of assets acquired in connection with a
Permitted Acquisition that the Company or such Subsidiary intended to sell at
the time of such Permitted Acquisition; provided that (i) such assets were
identified in writing to the Holders at the time of such Permitted Acquisition
and (ii) the aggregate fair market value of such assets does not exceed fifteen
percent (15%) of the aggregate consideration paid in connection with such
Permitted Acquisition and (iii) so long as the proceeds from such sale or other
disposition are applied to repay the Senior Debt or amounts outstanding under
the Debentures; or (g) the sale, lease, transfer or other disposition of assets
in any Fiscal Year having a book value, in the aggregate with all other assets
(except assets which are excluded under clauses (a) through (f) above) sold,
leased, transferred or disposed of during such Fiscal Year, not to exceed
$1,000,000 so long as the proceeds from such sale or other disposition are
applied to repay the Senior Debt or amounts outstanding under the Debentures.

         "Fixed Charge Ratio" means, as of the date of determination, the ratio
of (a) aggregate EBITDA of the Company for the immediately preceding four (4)
fiscal quarter period ending on, or most recently ended prior to, such date of
determination plus Consolidated Rental Expenses of the Company during such
period less the sum of (i) Maintenance Capital Expenditures made during such
period and (ii) cash income taxes (federal, state, local and foreign) paid
during such period to (b) the sum of (i) all scheduled payments of principal
made with respect to Indebtedness during such period, (ii) Interest Expense paid
in cash during such period, (iii) dividends paid in cash by the Company paid
during such period and (iv) Consolidated Rental Expenses of the Company during
such period.

         "Funded Indebtedness" means, as of any date of determination, for any
Person on a consolidated basis, the sum of the following of such Person and its
Subsidiaries (determined in accordance with GAAP on a Consolidated basis and
without duplication): (a) the outstanding principal amount of all obligations,
whether current or long-term, for borrowed money (including Obligations
hereunder) and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, (b) all direct obligations arising
under letters of credit (including standby and commercial), bankers'
acceptances, bank guaranties, surety bonds and similar instruments, (c) all
obligations in respect of the deferred purchase price of property or services
(other than accrued liabilities and all trade accounts payable in the ordinary
course of business), including, without limitation, all purchase money
Indebtedness, (d) Attributable Indebtedness in respect of capital leases and
Synthetic Lease Obligations, (e) without duplication, all Guarantees with
respect to outstanding Indebtedness of the types specified in clauses (a)
through (d) above of Persons other than such Person or any of its Subsidiaries,
and (g) all Indebtedness of the types referred to in clauses (a) through (f)
above of any partnership or joint venture (other than a joint venture that is
itself a corporation or limited liability company) in which such Person or a
Subsidiary is a general partner or joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person or such Subsidiary."



                                       2


         "Indebtedness" means, with respect to any Person at the time of any
determination (in each case determined in accordance with GAAP on a Consolidated
basis and without duplication), all obligations, contingent or otherwise, of
such Person which should be classified upon the balance sheet of such Person as
liabilities, but in any event including: (a) all obligations of such Person for
borrowed money; (b) all obligations of such Person upon which interest charges
are customarily paid or accrued; (c) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments; (d) all obligations of such
Person' under conditional sale or other title retention agreements relating to
property or assets purchased by such Person; (e) all obligations of such Person
issued or assumed as the deferred and unpaid purchase price of property or
services (excluding all accrued liabilities and all trade accounts payable
incurred in the ordinary course of business that are not past due and which are
classified as short term liabilities in accordance with GAAP); (f) all
obligations of others secured by (or having an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed; (g)
all Guarantee Obligations by such Person of Indebtedness of others; (h) all
Capital Lease Obligations and Synthetic Lease Obligations of such Person; (i)
all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements; (j) all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any Capital
Stock in such Person or any other Person; (k) all obligations of such Person,
actual or contingent, as an account party in respect of letters of credit or
similar facilities and bankers' acceptances; and (1) all obligations of any
partnership or joint venture as to which such Person is or may become personally
liable to the extent such obligations are deemed to be liabilities under GAAP.

         "Interest Expense" means, with respect to any Person and for any
specified period, the sum of the following of such Person and its Subsidiaries
for such period (in each case determined in accordance with GAAP on a
Consolidated basis and without duplication): (i) all interest paid, accrued or
scheduled to be paid in respect of any Funded Indebtedness (excluding original
issue discount); (ii) the portion of rent expense of such Person and its
Subsidiaries with respect to such period under conditional sale contracts,
Capital Leases, Synthetic Lease Obligations and other title retention agreements
that is treated as interest in accordance with GAAP; (iii) commissions,
discounts and other fees and charges with respect to letters of credit and
bankers' acceptance financings to the extent required by GAAP; and (iv) the
amount of net settlement obligations under interest rate protection agreements
respecting interest rate management and relating to the spread between the fixed
interest rate under such agreements and the floating interest rate hedged
thereby.

         "Senior Credit Facility" means that certain Credit Agreement, by and
among the Company, Bank of America, N.A., as Administrative Agent Swing Line
Lender and Letter of Credit Issuer, and the other lenders party thereto, dated
as of November 20, 2002, as the same may be amended, supplemented or otherwise
modified from time to time and any agreement or agreements renewing, replacing,
restating or refinancing all or any of the debt or commitments thereunder or any
notes or agreements otherwise evidencing any Senior Debt, but only in each case
to the extent the Indebtedness thereunder continues to constitute Senior Debt as
provided in the definition thereof.



                                       3


         "Senior Debt" means all of the following: (a) the aggregate principal
indebtedness advanced from time to time under the Senior Credit Facility up to a
maximum aggregate principal amount that shall not exceed $60,000,000 (as reduced
by all payments and prepayments of principal outstanding under term loans made
under such Senior Credit Facility and by the permanent reduction of the
revolving credit facilities established under such Senior Credit Facility, (b)
all interest accrued and accruing on the aggregate principal outstanding under
the Senior Credit Facility from time to time (including, without limitation, any
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
any Credit Party, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding); (c) all other reasonable fees or
monetary obligations owed under the Senior Credit Facility; and (d) all
reasonable costs incurred by the Senior Lenders under the Senior Credit Facility
in commencing or pursuing any enforcement action(s) with respect to the amounts
described in clauses (a) through (c), including attorneys' fees and
disbursements. "Senior Debt" shall also include all amendments, modifications,
renewals, replacements, restatements and refinancings of the foregoing, in whole
or in part, provided such amendments, modifications, renewals, replacements,
restatements or refinancings do not (i) increase the interest rate or default
rate payable on any component thereof by more than 2% over the interest rate or
default rate, respectively, that is applicable thereto on the date hereof, (ii)
extend the final maturity of the Senior Debt beyond August 1, 2006, (iii)
provide for any annual principal amortization payment in excess of the Permitted
Annual Amortization Amount, (iv) include additional financial covenants or amend
any of the financial covenants set forth in the Senior Credit Facility to render
such covenants more restrictive, other than additional financial covenants
identical to those set forth in Section 6.12 hereof that are no more than 15%
more restrictive as such financial covenants or (v) amend any provisions set
forth in the Senior Credit Facility which expressly permit the prepayment of the
Junior Debt to render such provisions more restrictive.

                  (c) The definition of "Borrower's Business" is hereby amended
to include the distribution and sale of propane fuel products of any type.

                  (d) The following new definitions are hereby added to Section
1.1 of the Investment Agreement in proper alphabetical order to read as follows:

         "Attributable Indebtedness" means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a Capital Lease.

         "Consolidated Rental Expense" shall mean, for any period, for a Person
and its Subsidiaries on a consolidated basis, the operating lease expense of
such Person and its Subsidiaries determined in accordance with GAAP for leases
with an initial term greater than one year, as disclosed in the notes to the
consolidated financial statements of such Person and its Subsidiaries.



                                       4


         "First Amendment" means the First Amendment to Investment Agreement
dated as of November __, 2002.

         "Maintenance Capital Expenditures" means, for any period, an amount
equal to: (a) depreciation expense for the Company and its Subsidiaries, on a
consolidated basis, during such period, multiplied by, (b) 0.50.

         "Non-Propane Products Divestiture" means one or more sales by UniFlame
Corporation and/or QuickShip, Inc., wholly-owned Subsidiaries of the Company, of
certain assets relating to their respective non-propane fueled products lines of
business.

         "Permitted Distributorship Acquisition" means the proposed purchase by
the Company and its Subsidiaries of approximately 10 of its independent
distributors for a total consideration of approximately $22,700,000 (plus an
amount of assumed liabilities and accruals not to exceed $10,000,000 in the
aggregate), of which approximately $19,000,000 will be made in the form of
common stock of the Company; provided that both before and after giving effect
to such acquisition (i) no Default or Event of Default has occurred and is
continuing and (ii) the Company shall have demonstrated pro forma compliance
with the financial covenants set forth in Section 6.12.

         "Synthetic Lease Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

                  2. Closing Conditions. The obligations of Allied to enter into
this First Amendment and to perform its obligations hereunder are subject to the
satisfaction of the following conditions on or prior to the date hereof:

                  (a) The representations and warranties set forth herein shall
be true and correct on and as of the date hereof.

                  (b) The Credit Parties shall be in compliance with all the
terms and provisions set forth herein and in each other Investment Document on
their part to be observed or performed, and at the time of and immediately after
the date hereof, no Event of Default or Default or event or condition that,
after the giving of notice, passage of time, failure to cure or all of the
foregoing would constitute an Event of Default, shall have occurred and be
continuing.

                  (c) Allied shall have received the following items:

                           (i) this First Amendment, duly executed by the
Borrowers;

                           (ii) the Amended and Restated Debentures, duly
executed by the parties thereto, in form and substance satisfactory to Allied;

                           (iii) a copy of the Credit Agreement of even date
among the Company, Bank of America, N.A., as Administrative Agent Swing Line
Lender and Letter of Credit Issuer,



                                       5


and the other lenders party thereto, dated as of November 20, 2002 (the "New
Credit Agreement"), duly executed by the parties thereto;

                           (iv) all fees and expenses due and payable under the
Investment Documents, as amended hereby, on or prior to the date hereof,
including without limitation, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrowers under Section 7 of
this First Amendment; and

                           (v) such other documents, instruments and information
as Allied may reasonably request.

                  (d) All conditions to the effectiveness of the New Credit
Agreement, other than execution and delivery of this Amendment, shall be
satisfied in full and the New Credit Agreement shall be in full force and effect
upon and immediately after execution and delivery of this Amendment.

                  3. Amendments to Investment Agreement. The Original Investment
Agreement is hereby modified as follows:

                  (a) Section 4.27 of the Investment Agreement is hereby deleted
in its entirety and amended and restated as follows:

                           "SECTION 4.27. Insurance. The Company has made
available to Allied insurance certificates and accurate and complete copies of
the insurance binders or policies for all of the insurance maintained by the
Company or any of its Subsidiaries as listed on Schedule 4.27. The Company and
its Subsidiaries have insurance in such amounts and covering such risks and
liabilities as may be reasonable and prudent (after giving effect to any self
insurance in an amount not to exceed (a) $500,000 per each occurrence and (b)
$3,000,000 in the aggregate). Such insurance is in full force and effect and all
premiums have been duly paid."

                  (b) Section 6.2 of the Investment Agreement is hereby deleted
in its entirety and amended and restated as follows:

                           "SECTION 6.2. Insurance. Each of the Credit Parties
will keep its and each of its Subsidiaries' insurable properties adequately
insured at all times by financially sound and reputable insurers (after giving
effect to any self insurance in an amount not to exceed (a) $500,000 per each
occurrence and (b) $3,000,000 in the aggregate); maintain such other insurance
to such extent and against such risks as is reasonable and prudent and as may
otherwise be reasonably required by the Holders, including commercial general
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by it, hazard insurance and business interruption
insurance; and maintain such other insurance as may be required by law."

                  (c) Section 6.9 of the Investment Agreement is hereby deleted
in its entirety an amended and restated as follows:



                                       6


                           "SECTION 6.9. Environmental Provisions. The Credit
Parties shall defend, indemnify and hold harmless the Holders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, dines liabilities,
settlements, damages, costs and expenses of whatever kind or nature, known or
unknown contingent or otherwise, arising out of, or in any way relating to the
presence of Hazardous Materials, or the violation of, noncompliance with or
liability under any Environmental Law: applicable to the operations of the
Credit Parties or their Subsidiaries, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing directly result from the gross negligence or willful
misconduct of the party seeking indemnification therefor."

                  (d) Section 6.12(a) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(a) Funded Leverage Ratio. For the fiscal quarter
ending October 31, 2002 and for each fiscal quarter ending thereafter, a Funded
Leverage Ratio for the immediately preceding four (4) quarter period then ended
shall not be more than the ratio set forth below for such date:

- --------------------------------------------------------------------------------
                    QUARTERS ENDING                        RATIO
- --------------------------------------------------------------------------------
October 31, 2002 through April 30, 2003                 3.00 to 1.0
- --------------------------------------------------------------------------------
July 31, 2003 and thereafter                            2.40 to 1.0
- --------------------------------------------------------------------------------

                  (e) Section 6.12(b) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(b) Fixed Charge Coverage Ratio. For the fiscal
quarter ending October 31, 2002 and for each fiscal quarter ending thereafter, a
Fixed Charge Coverage Ratio for the immediately preceding four (4) quarter
period then ended shall not be less than 1.0 to 1.0."

                  (f) Sections 6.12(c) and (d) of the Investment Agreement are
hereby deleted in their entirety.

                  (g) Section 7.1(a)(xii) of the Investment Agreement is hereby
deleted in its entirety.

                  (h) Section 7.1(a)(xiii) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(xiii) Capital Lease Obligations, Synthetic Lease
Obligations and purchase money Indebtedness for equipment acquired in the
ordinary course of the Borrowers' Business incurred after the date of the First
Amendment not to exceed $1,000,000 in the aggregate outstanding at any time."



                                       7


                  (i) Section 7.1 (a)(xv) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(xv) Indebtedness not otherwise permitted by the
foregoing paragraphs of this Section 7.1; provided that at the time or creation,
incurrence or assumption thereof and at any time thereafter, the aggregate
principal amount of such Indebtedness shall not exceed $1,000,000."

                  (j) Section 7.4(e) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(e) loans and advances, to employees in the ordinary
course of the business of such Credit Party and its Subsidiaries as presently
conducted in the aggregate amount of all such Investments under this clause (e)
not to exceed $500,000 at any one time outstanding;"

                  (k) Section 7.4(h) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(h) Investments in the R4 Technical Center; provided
that any such Investments made after the date hereof shall not exceed $1,000,000
in the aggregate.

                  (l) Section 7.4(j) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(j) additional Investments (other than additional
Investments in the R4 Technical Center which is exclusively provided for under
Section 7.4(h) above); provided that any such Investments made after the date
hereof shall not exceed $1,000,000 in the aggregate; and"

                  (m) Section 7.6(a) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(a) No Credit Party shall, nor permit any of its
Subsidiaries to, declare or pay any Restricted Payments (other than a dividend
or distribution of any shares of its common stock and dividends paid-in-kind to
preferred stockholders); provided, however, that, any Subsidiary of a Credit
Party may declare and pay a Restricted Payment to such Credit Party (and, in the
case of a Restricted Payment by a non-Wholly-Owned Subsidiary, to the Company
and any Subsidiary and to each other owner of Capital Stock or other equity
interests of such Subsidiary on a pro rata basis based on their relative
ownership interest). Notwithstanding anything herein to the contrary, but
subject to the provisions of Section 2.7, (i) the Company may redeem or
repurchase its Common Stock from officers, employees and directors of any Credit
Party (or their estates) upon the termination of employment of any such Person
or from service providers pursuant to equity incentive agreement or arrangements
upon termination of their services to the Company or pursuant to agreements
entered into to evidence grants or awards or other compensation under any stock
option plan, stock purchase plan, management incentive plan, consulting
agreement or other contract or arrangement approved by the Board; provided that
(A) no Default or Event of Default is then in existence or would otherwise arise
therefrom,



                                       8


and (B) the aggregate amount of all cash paid in respect of all such shares so
redeemed or repurchased does not exceed $1,000,000 in any fiscal year of the
Company or $3,000,000 in the aggregate from and after the Closing Date, and (ii)
so long as no Default or Event of Default is then in existence or would
otherwise arise therefrom, the Credit Parties may make cash Restricted Payments
to the Company, if the Company promptly uses such proceeds for the purposes
described in clause (i) above."

                  (n) Section 7.10 of the Investment Agreement is hereby deleted
in its entirety and amended and restated as follows:

                           "Without the prior written consent of the Holders, no
Credit Party shall, nor permit its Subsidiaries to, acquire any Capital Stock or
assets of any Person (other than a Credit Party or a Subsidiary thereof or
pursuant to a Permitted Reorganization or a Permitted Distributorship
Acquisition) for aggregate consideration in excess of $2,000,000 per acquisition
or $10,000,000 in the aggregate for all such acquisitions occurring after the
Closing Date to which the Holders have not consented. To the extent that
consideration is paid, in whole or in part, in shares of the Company's Capital
Stock or securities convertible, exchangeable or exercisable into shares of the
Company's Capital Stock, such securities shall be valued in the same manner as
they are valued for such acquisition."

                  (o) Section 8.1(g) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(g) any default is declared or otherwise occurs
(after giving effect to any applicable notice and/or grace periods) under the
Senior Debt or any other Indebtedness of the Credit Parties in excess of
$1,000,000 (including the Senior Credit Facility), either (i) which is in the
payment of any amount due thereunder when and as the same becomes due and
payable or (ii) pursuant to which the lenders of such Indebtedness have
accelerated the maturity thereof;"

                  (p) Section 8.1(i) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(i) final non-appealable judgments for the payment
of money in excess of $1,000,000 individually or in the aggregate to the extent
not fully paid or discharged (excluding any portion thereof that is covered by
an insurance policy issued by an insurance company of recognized standing and
creditworthiness) is rendered against any Credit Party, and the same shall
remain undischarged for a period of 30 consecutive days during which execution
is not effectively stayed, or any action is legally taken by a judgment creditor
to levy upon assets or properties of any Credit Party to enforce any such
judgment; or"

                  (q) Section 8.1(j) of the Investment Agreement is hereby
deleted in its entirety and amended and restated as follows:

                           "(j) an ERISA Event occurs that in the opinion of the
Holders, when taken together with all other such ERISA Events, could reasonably
be expected to result in liability of any Credit Party and its ERISA Affiliates
in an aggregate amount exceeding $1,000,000;"



                                       9


                  4. Representations and Warranties. To induce the Holders to
execute and deliver this First Amendment, the Company hereby reaffirms all
covenants, representations, and warranties made in the Investment Agreement and
the other Investment Documents to the extent the same are not amended hereby and
agree that all such covenants, representations, and warranties shall be deemed
to have been remade as of the date of this Amendment. Any such representations
and warranties made as of the Closing Date shall be made as of the date hereof.
Any default by the Company in its warranties and representations made in this
Amendment shall constitute an additional Event of Default under the Investment
Agreement, as amended hereby.

                  5. Joinder. Each of Blue Rhino Consumer Products, LLC and
Uniflame, LLC (the "New Credit Parties") hereby joins the Investment Agreement
and the Debentures as a joint and several obligor thereunder and party thereto,
subject to the terms and provisions thereof. Each New Credit Party hereby
unconditionally and expressly agrees to become, by execution and delivery of
this Agreement does become, and assumes, jointly and severally, each and every
one of the obligations of, a "Borrower" under and as defined in the Investment
Agreement and the Debentures. In addition, each New Credit Party makes each and
every representation and warranty of a Borrower set forth in the Investment
Agreement as of the date hereof except for those representations and warranties
that relate to a prior date. Without limitation of the foregoing or of anything
in the Investment Agreement or the Debentures, by such execution and delivery
hereof each New Credit Party does become fully, jointly and severally liable, as
a Borrower, for the payment of the Obligations as defined in the Investment
Agreement and the Debentures. As provided for in Section 7.8(a) of the
Investment Agreement, each New Credit Party joins as a Borrower under the
Investment Agreement as if such New Credit Party had been an original party to
the Investment Agreement and the Debentures. Each New Credit Party agrees to
cooperate with the Holders and execute such further instruments and documents as
the Holders shall reasonably request to effect, to the reasonable satisfaction
of the Holders, the purposes hereof.

                  6. Consent. The Holders hereby consent to the execution and
delivery of the New Credit Agreement and each of the Loan Documents (as defined
herein) by the Borrowers and acknowledge that the Indebtedness evidenced thereby
does not constitute a "Covered Financing" under Section 6.13. The Holders
further acknowledge that the execution and delivery thereof shall not constitute
a violation of Section 7.15 of the Investment Agreement. The parties hereto
understand and agree that this consent shall be effective only with respect to
the New Credit Agreement executed and delivered on the date hereof and only with
respect to Sections 6.13 and 7.15 of the Investment Agreement. This consent
shall not be deemed to constitute a consent to or waiver of any other term,
provision or condition of the Investment Agreement or to prejudice any right or
remedy that the Holders may now have or may have in the future under or in
connection with any of the Investment Documents.

                  7. Acknowledgments by the Borrowers. The Borrowers acknowledge
and agree with the Holders that as of the date hereof, the aggregate principal
amount of the Obligations owing by the Borrowers to Allied under the Investment
Agreement is $15,000,000, and all such Obligations are due and owing by the
Borrowers to Allied in accordance with the Investment Documents and without any
defense, deduction, offset, or counterclaim of any nature (all of which are
hereby waived).



                                       10


                  8. Reference to and Effect Upon Investment Agreement. Each
reference in the Investment Agreement to "this Agreement," "hereunder,"
"hereof," or words of like import shall hereafter mean and be a reference to the
Investment Agreement, as amended hereby and from time to time. Each reference in
the Investment Agreement to the "Investment Documents" shall hereafter include
this First Amendment and mean and be a reference to the Investment Documents, as
amended hereby and from time to time. Except as specifically amended hereby, the
Investment Agreement, the other Investment Documents, and each and every term
and provision thereof shall remain in full force and effect and are hereby
ratified and confirmed. The execution, delivery, and effectiveness of this First
Amendment shall not operate as a waiver of any right, power, or remedy of Allied
under the Investment Agreement or the other Investment Documents or constitute a
waiver of any provision of the Investment Agreement or the other Investment
Documents.

                  9. Fees and Expenses of Allied. On or prior to the date
hereof, the Borrowers shall pay all reasonable fees and expenses incurred by
Allied in connection with the preparation, negotiation, execution, and delivery
of this First Amendment and any related documents, including, without
limitation, the reasonable fees and expenses of Allied's counsel and
out-of-pocket expenses.

                  10. Release. The Borrowers acknowledge that the Holders have
fulfilled all of its obligations under the Investment Agreement and hereby
release and forever discharge the Holders and their representatives, agents,
employees, attorneys, successors, directors, officers, parents, affiliates,
assigns, and subsidiaries (collectively the "Released Parties") of, to, and from
any and all claims, defenses, actions, causes of action, suits, controversies,
agreements, provisions, and demands in law or in equity, known or unknown
(collectively, the "Claims") which the Borrowers ever had, now have, or may have
arising from or relating to the Investment Documents, against or related to the
Released Parties, through the date of this First Amendment. The Borrowers agree
to assume the risk of any and all unknown, unanticipated or misunderstood claims
which are released hereby.

                  11. Miscellaneous.

                  (a) Entire Agreement; Integration Clause. This First Amendment
and the other Investment Documents set forth the entire agreements and
understandings of the parties hereto with respect to this transaction, and as
such supersede any prior agreements, whether written or oral, regarding the
matters described herein.

                  (b) No Oral Modification or Waivers. The terms herein may not
be modified or waived orally, but only by an instrument in writing signed by the
party against which enforcement of the modification or waiver (as the case may
be) is sought.

                  (c) Governing Law. This First Amendment is governed by, and
interpreted and construed in accordance with, the internal laws of the State of
Maryland (without regard to its conflicts of law principles).



                                       11


                  (d) Headings. The headings of the paragraphs and
sub-paragraphs of this First Amendment are inserted for convenience only and
shall not be deemed to constitute a part of this First Amendment or the other
Investment Documents.

                  (e) Severability. To the extent any provision herein violates
any applicable law, that provision shall be considered void and the balance of
this First Amendment shall remain unchanged and in full force and effect.

                  (f) Counterparts. This First Amendment may be executed in as
many counterpart copies as may be required. It shall not be necessary that the
signature of, or on behalf of, each party appear on each counterpart, but it
shall be sufficient that the signature of, or on behalf of, each party appear on
one or more of the counterparts. All counterparts shall collectively constitute
a single agreement. It shall not be necessary in any proof of this First
Amendment to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties.



                          (signatures begin next page)


                                       12



         IN WITNESS WHEREOF, the undersigned have executed and delivered this
First Amendment as of the date first above written.

                            COMPANY:

                            BLUE RHINO CORPORATION

                            By:  /s/Mark Castaneda             (SEAL)
                                 ------------------------------------
                                     Name:    Mark Castaneda
                                     Title:  Executive Vice President and Chief
                                     Financial Officer

                            OTHER BORROWERS:

                            USA LEASING, L.L.C.
                            By:      Blue Rhino Corporation, as Manager

                            By:  /s/Mark Castaneda             (SEAL)
                                -------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                     Financial Officer

                            RHINO SERVICES, L.L.C.
                            By:      Blue Rhino Corporation, as Manager

                            By:  /s/ Mark Castaneda            (SEAL)
                                 ------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                     Financial Officer

                            CPD ASSOCIATES, INC.

                            By:  /s/ Mark Castaneda            (SEAL)
                                 ------------------------------------
                                     Name:    Mark Castaneda
                                     Title:   Vice President

                            QUICKSHIP, INC.

                            By:      /s/ Mark Castaneda                 (SEAL)
                               -----------------------------------------------
                                     Name: Mark Castaneda
                                     Title:  Assist. Secretary/Treasurer

            SIGNATURE PAGE TO FIRST AMENDMENT TO INVESTMENT AGREEMENT



                                       13


                            UNIFLAME CORPORATION

                            By:  /s/ Kurt Gehsmann             (SEAL)
                                 ------------------------------------
                                     Name:    Kurt Gehsmann
                                     Title:   Vice President and Treasurer

                            BLUE RHINO CONSUMER PRODUCTS, LLC

                            By:      Blue Rhino Corporation, as Manager

                            By:  /s/ Mark Castaneda    (SEAL)
                                 ----------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                              Financial Officer


                            UNIFLAME, LLC

                            By:      Blue Rhino Corporation, as Manager

                            By:  /s/ Mark Castaneda    (SEAL)
                                 ----------------------------
                                     Name:    Mark Castaneda
                                     Title:   Executive Vice President and Chief
                                     Financial Officer


                            ALLIED:

                            ALLIED CAPITAL CORPORATION

                            By:      /s/ Thomas H. Westbrook   (SEAL)
                               --------------------------------
                                     Name:  Thomas H. Westbrook
                                     Title:  Managing Director



            SIGNATURE PAGE TO FIRST AMENDMENT TO INVESTMENT AGREEMENT



                                       14

EX-10.7

                                                                    EXHIBIT 10.7

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "AGREEMENT") is dated as of
December 20, 2002 among Blue Rhino Corporation, a Delaware corporation (the
"COMPANY"), and the purchasers identified on the signature pages hereto (each, a
"PURCHASER" and collectively, the "PURCHASERS").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), the Company desires to issue and sell to the Purchasers,
and the Purchasers, severally and not jointly, desire to purchase from the
Company, securities of the Company as more fully described in this Agreement.

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

                                   ARTICLE I

                                  DEFINITIONS

         1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:

                  "ADDITIONAL INVESTMENT RIGHTS" means, collectively, the
Additional Investment Rights issued and sold under this Agreement, in the form
of Exhibit A.

                  "AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule
144 under the Securities Act. With respect to a Purchaser, any investment fund
or managed account that is managed on a discretionary basis by the same
investment manager as such Purchaser will be deemed to be an Affiliate of such
Purchaser.

                  "BENEFICIAL OWNERSHIP" means beneficial ownership as
determined pursuant to Rule 13d-3 of the Exchange Act.

                  "BUSINESS DAY" means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

                  "CHANGE OF CONTROL" means the occurrence of any of the
following in one or a series of related transactions: (i) an acquisition after
the date hereof by an individual or legal entity or "group" (as described in
Rule 13d-5(b)(1) under the Exchange Act) of more than one-half of the voting
rights or equity interests in the Company; (ii) a replacement of more than
one-half of the members of the Company's board of directors that is not approved
by a majority of those individuals who are members of the board of directors on
the date hereof (or other directors previously approved by a majority of such
individuals); (iii) a merger or consolidation of the Company or a sale of more
than one-half of the assets of the Company in one or a series of related
transactions, unless following such transaction or series of transactions, the
holders of the Company's securities prior to the first such transaction continue
to hold at least two-thirds of the voting rights and equity interests of the
surviving entity or acquirer; (iv) a recapitalization, reorganization or other
transaction involving the Company or any Subsidiary that constitutes or results
in a transfer of more than one-half of the voting rights or equity interests in
the Company to Persons other than holders of the Company's voting securities
prior to such transaction; (v) consummation of a "Rule 13e-3 transaction" as
defined in Rule 13e-3 under the Exchange Act with respect to the Company, or
(vi) the execution by the Company or its controlling shareholders of an
agreement providing for or reasonably likely to result in any of the foregoing
events.



                  "CLOSING" means the closing of the purchase and sale of the
Shares and the Additional Investment Rights pursuant to Section 2.1.

                  "CLOSING DATE" means the earlier of (i) the date on which the
Purchasers deliver the purchase price set forth in Section 2.2(b) to the
Company, and (ii) the date on which the Purchasers deliver the purchase price
set forth in Section 2.2(b) to the Company Counsel in accordance with Section
2.2(c) except that if, in accordance with Section 2.2(c), the purchase price set
forth in Section 2.2(b) is not released to the Company and is returned to the
Purchasers, no Closing Date shall have occurred.

                  "CLOSING PRICE" means, for any date, the price determined by
the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on an Eligible Market or any other national securities
exchange, the closing price per share of the Common Stock for such date (or the
nearest preceding date) on the primary Eligible Market or exchange on which the
Common Stock is then listed or quoted; (b) if prices for the Common Stock are
then quoted on the OTC Bulletin Board, the closing bid price per share of the
Common Stock for such date (or the nearest preceding date) so quoted; (c) if
prices for the Common Stock are then reported in the "Pink Sheets" published by
the National Quotation Bureau Incorporated (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent closing bid
price per share of the Common Stock so reported; or (d) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by Purchasers holding a majority of the
Securities.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the common stock of the Company, par
value $0.001 per share.

                  "COMMON STOCK EQUIVALENTS" means, collectively, Options and
Convertible Securities.

                  "COMPANY COUNSEL" means Womble Carlyle Sandridge and Rice
PLLC, counsel to the Company.

                  "CONVERTIBLE SECURITIES" means any stock or securities (other
than Options) convertible into or exercisable or exchangeable for Common Stock.

                  "EFFECTIVE DATE" means the date that the Registration
Statement is first declared effective by the Commission.

                  "ELIGIBLE MARKET" means any of the New York Stock Exchange,
the American Stock Exchange, the NASDAQ National Market or the NASDAQ SmallCap
Market.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

                  "FILING DATE" means January 19, 2003.

                  "LIEN" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.

                  "LOSSES" means any and all losses, claims, damages,
liabilities, settlement costs and expenses, including, without limitation, costs
of preparation and reasonable attorneys' fees.

                  "OPTIONS" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.

                  "PERSON" means any individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or any court or other federal, state, local or other governmental
authority or other entity of any kind.


                                       2



                  "PER UNIT PURCHASE PRICE" means $15.79.

                  "PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement or any
amendment to the Registration Statement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.

                  "PURCHASER COUNSEL" means Proskauer Rose LLP, counsel to the
Purchasers, or, in lieu thereof, any other single counsel selected by the
Purchasers hereunder.

                  "REGISTRABLE SECURITIES" means any Common Stock (including
Underlying Shares) issued or issuable pursuant to the Transaction Documents,
together with any securities issued or issuable upon any stock split, dividend
or other distribution, recapitalization or similar event with respect to the
foregoing.

                  "REGISTRATION STATEMENT" means the registration statement
required to be filed under Article VI, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

                  "REQUIRED EFFECTIVENESS DATE" means March 20, 2003.

                  "RULE 144," "RULE 415," and "RULE 424" mean Rule 144, Rule 415
and Rule 424, respectively, promulgated by the Commission pursuant to the
Securities Act, as such Rules may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

                  "SECURITIES" means the Shares, the Additional Investment
Rights and the Underlying Shares.

                  "SHARES" means an aggregate of 1,000,000 shares of Common
Stock, which are being issued and sold to the Purchasers at the Closing.

                  "SUBSIDIARY" means, except as such term is used in Section
3.1, any subsidiary, as defined in Rule 1-02(x) of Regulation S-X promulgated by
the Commission, of the Company, and with respect to Section 3.1, any significant
subsidiary as defined in Rule 1-02(w) of Regulation S-X promulgated by the
Commission, of the Company.

                  "TRADING DAY" means (a) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, (b) if the Common
Stock is not then listed or quoted and traded on any Eligible Market, then a day
on which trading occurs on the NASDAQ National Market (or any successor
thereto), or (c) if trading ceases to occur on the NASDAQ National Market (or
any successor thereto), any Business Day.

                  "TRADING MARKET" means the Nasdaq National Market or any other
Eligible Market, or any national securities exchange, on which the Common Stock
is then listed or quoted.

                  "TRANSACTION DOCUMENTS" means this Agreement, the Additional
Investment Rights and the Transfer Agent Instructions.

                  "TRANSFER AGENT INSTRUCTIONS" means the Irrevocable Transfer
Agent Instructions, in the form of Exhibit D, executed by the Company and
delivered to and acknowledged in writing by the Company's transfer agent.


                                       3


                  "UNDERLYING SHARES" means the shares of Common Stock issuable
upon exercise of the Additional Investment Rights.

                  "UNIT" means one Share and an Additional Investment Right to
acquire 0.33 of a share of Common Stock.

                                   ARTICLE II

                                PURCHASE AND SALE

         2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Units indicated below such Purchaser's name on the signature page
of this Agreement at the Per Unit Purchase Price. The Closing shall take place
at the offices of Purchaser Counsel immediately following the execution hereof,
or at such other location or time as the parties may agree.

         2.2 Closing Deliveries.

                  (a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:

                           (i) one or more stock certificates, free and clear of
         all restrictive and other legends (except as expressly provided in
         Section 4.1(b) hereof), evidencing such number of Shares equal to the
         number of Units indicated below such Purchaser's name on the signature
         page of this Agreement, registered in the name of such Purchaser;

                           (ii) an Additional Investment Right, registered in
         the name of such Purchaser, pursuant to which such Purchaser shall have
         the right to acquire such number of Underlying Shares indicated below
         such Purchaser's name on the signature page of this Agreement, on the
         terms set forth therein;

                           (iii) a legal opinion of Company Counsel, in the form
         of Exhibit B, executed by such counsel; and

                           (iv) duly executed Transfer Agent Instructions
         acknowledged by the Company's transfer agent.

                  (b) At the Closing, each Purchaser shall deliver or cause to
be delivered to the Company an amount equal to the Per Unit Purchase Price
multiplied by the number of Units indicated below such Purchaser's name on the
signature page of this Agreement, in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing to such
Purchaser by the Company for such purpose.

                  (c) Notwithstanding anything to the contrary in this
Section 2.2, in the event that the Company cannot deliver all of the items set
forth in Section 2.2(a) above, each Purchaser shall instead deliver the purchase
price set forth in Section 2.2(b) to the Company Counsel, to be held by the
Company Counsel in escrow on behalf of the Purchasers. Upon confirmation from
the Purchaser Counsel of receipt by the Purchasers of all the items set forth in
Section 2.2(a) above (which may be in writing or via email), the Company Counsel
shall release the escrow funds to the Company. In the event all of the items set
forth in Section 2.2(a) are not delivered to the Purchasers within one Trading
Day after the Closing Date, the Purchasers shall have the right to demand that
the Company Counsel release the escrow funds to the Purchasers. The Company
Counsel hereby acknowledges and agrees to act as escrow agent in accordance with
this Section 2.2(c). The Company Counsel (i) shall be entitled to rely on any
written or email communication received from the Purchaser Counsel without any
requirement to ascertain that the person(s) who have executed or conveyed such
communication are authorized to do so or are the persons named therein or
otherwise to pass upon any requirements of such communication that may be
essential for


                                       4


its validity and (ii) shall not be liable for any acts or omissions of any kind
any unless caused by its own gross negligence or willful misconduct.


                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as of the date hereof as
follows:

                  (a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in
Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital
stock or comparable equity interests of each Subsidiary free and clear of any
Lien and all the issued and outstanding shares of capital stock or comparable
equity interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.

                  (b) Organization and Qualification. Each of the Company and
the Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not, individually or in the aggregate, (i) adversely affect the legality,
validity or enforceability of any Transaction Document, (ii) have or result in a
material adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiaries, taken as a whole on a
consolidated basis, or (iii) adversely impair the Company's ability to perform
fully on a timely basis its obligations under any of the Transaction Documents
(any of (i), (ii) or (iii), a "Material Adverse Effect").

                  (c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of the
Transaction Documents has been (or upon delivery will be) duly executed by the
Company and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, to general principles of equity and to limitations on the rights to
indemnity and contribution that exist by virtue of public policy.

                  (d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of the Company's or any Subsidiary's
certificate or articles of incorporation, bylaws or other organizational or
charter documents, (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, except to the extent that such conflict, default or termination right
could not reasonably be expected to have a Material Adverse Effect or (iii)
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company


                                       5


or a Subsidiary is subject (including federal and state securities laws and
regulations and the rules and regulations of any self-regulatory organization to
which the Company or its securities are subject) or by which any property or
asset of the Company or a Subsidiary is bound or affected.

                  (e) Issuance of the Securities. The Securities (including the
Underlying Shares) are duly authorized and, when issued and paid for in
accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens (except for
restrictions under federal and state securities laws) and shall not be subject
to preemptive rights or similar rights of stockholders that have not been
waived. The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable upon exercise of the
Additional Investment Rights.

                  (f) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock, options and other securities
of the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth in
Schedule 3.1(f). All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable and have been issued in compliance
with all applicable securities laws. Except as disclosed in Schedule 3.1(f),
there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common
Stock, or securities or rights convertible or exchangeable into shares of Common
Stock. The Company has outstanding warrants to purchase an aggregate of
2,223,199 shares of Common Stock, which were issued in 3 different transactions,
that contain certain anti-dilution or price adjustment provisions, and the
exercise price or strike price of all such warrants as of the date hereof is
$3.8685. The issue and sale of the Securities (including the Underlying Shares)
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities. To the knowledge of the Company,
except as specifically disclosed in Schedule 3.1(f) or as reflected in the SEC
Reports, no Person or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by
agreement with or by obligation binding upon the Company, beneficial ownership
of in excess of 5% of the outstanding Common Stock, ignoring for such purposes
any limitation on the number of shares of Common Stock that may be owned at any
single time.

                  (g) SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law to file such
material) (the foregoing materials (together with any materials filed by the
Company under the Exchange Act, whether or not required) being collectively
referred to herein as the "SEC Reports" and, together with this Agreement and
the Schedules to this Agreement, the "Disclosure Materials") on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension. The Company has
delivered to each Purchaser true, correct and complete copies of all SEC Reports
filed after the filing on December 16, 2002 of the Company's Form 10-Q for the
quarter ending October 31, 2002. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may be otherwise specified in
such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments and the absence of
footnotes. All material agreements to which the Company or any Subsidiary is a
party or to which the property or assets of the Company or any Subsidiary are
subject are included as part of or specifically identified in the SEC Reports,
to the extent required under the Exchange Act.


                                       6


                  (h) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports or in Schedule 3.1(h), (i) there has been no event,
occurrence or development that, individually or in the aggregate, has had or
that will result in a Material Adverse Effect, (ii) the Company has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock, and (v) the Company has not issued any equity securities
to any officer, director or Affiliate, except pursuant to existing Company
stock-based plans.

                  (i) Absence of Litigation. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries that, if adversely determined, would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

                  (j) Compliance. Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as would not, individually or in the aggregate, have or result in a
Material Adverse Effect.

                  (k) Title to Assets. Except as disclosed on Schedule 3.1(k),
the Company and the Subsidiaries have good and marketable title in fee simple to
all real property owned by them, respectively, that is material to the
respective businesses of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them, respectively, that is
material to the respective businesses of the Company and the Subsidiaries, in
each case free and clear of all Liens other than Liens that do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries. Any real or personal property and facilities held under lease by
the Company and the Subsidiaries are held under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such properties by the Company and
the Subsidiaries and with which the Company and the Subsidiaries are in
compliance.

                  (l) Certain Fees. Except for the fees described in Schedule
3.1(l), all of which are payable to registered broker-dealers, no brokerage or
finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
this Agreement, and the Company has not taken any action that would cause any
Purchaser to be liable for any such fees or commissions.

                  (m) Private Placement. Neither the Company nor any Person
acting on the Company's behalf has sold or offered to sell or solicited any
offer to buy the Securities by means of any form of general solicitation or
advertising. Neither the Company nor any of its Affiliates nor any person acting
on the Company's behalf has, directly or indirectly, at any time within the past
six months, made any offer or sale of any security or solicitation of any offer
to buy any security under circumstances that would (i) eliminate the
availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant to the
Transaction Documents to be integrated with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder approval provisions,
including, without limitation, under the rules and regulations of any Trading
Market. The


                                       7


Company is not, and is not an Affiliate of, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended. The Company is not a
United States real property holding corporation within the meaning of the
Foreign Investment in Real Property Tax Act of 1980.

                  (n) Form S-3 Eligibility. The Company is eligible to register
its Common Stock for resale by the Purchasers using Form S-3 promulgated under
the Securities Act.

                  (o) Listing and Maintenance Requirements. The Company has not,
in the two years preceding the date hereof, received notice (written or oral)
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

                  (p) Registration Rights. Except as described in Schedule
3.1(p), the Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority that
have not been satisfied.

                  (q) Application of Takeover Protections. There is no control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company's charter documents or the laws of its state of incorporation that is or
could become applicable to any of the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights under
the Transaction Documents, including, without limitation, as a result of the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities.

                  (r) Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or their
agents or counsel with any information that constitutes material nonpublic
information. The Company understands and confirms that each of the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's reports filed under the
Exchange Act are incorporated into each effective registration statement filed
by the Company under the Securities Act), except, until such time as the press
release is issued as contemplated by Section 4.6, the execution of this
Agreement. The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2.

                  (s) Acknowledgment Regarding Purchasers' Purchase of
Securities. The Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Purchaser or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Purchasers'
purchase of the Securities. The Company further represents to each Purchaser
that the Company's decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.

                  (t) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are required for use in connection with their
respective businesses as described in the SEC Reports and that the failure to so
have would have a Material Adverse Effect (collectively, the "Intellectual
Property Rights"). Neither the Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person. To the


                                       8


knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights.

                  (u) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.

                  (v) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the
failure to possess such permits would not, individually or in the aggregate,
have or result in a Material Adverse Effect ("Material Permits"), and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.

                  (w) Transactions With Affiliates and Employees. Except as set
forth in SEC Reports filed at least two days prior to the date hereof, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.

                  (x) Solvency. Based on the financial condition of the Company
as of the Closing Date, (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).

                  (y) Internal Accounting Controls. The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

         3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:

                  (a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Shares and the Additional Investment Rights hereunder has been duly authorized
by all necessary action on the part of such


                                       9


Purchaser. This Agreement has been duly executed and delivered by such Purchaser
and constitutes the valid and binding obligation of such Purchaser, enforceable
against it in accordance with its terms.

                  (b) Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof other than, subject to the provisions of this Agreement, pursuant to an
effective registration statement under the Securities Act or an available
exemption from such registration and in compliance with all applicable federal
and state securities laws. Such Purchaser understands and agrees that: (i) the
offer and sale of the Securities have not been registered under the Securities
Act by reason of the exemption from the registration provisions of the
Securities Act provided by Section 4(2) thereof and Rule 506 promulgated
thereunder, the availability of which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of such Purchaser's
representations, warranties and covenants as expressed herein; (ii) the Company
is relying on such Purchaser's representations, warranties and covenants in
offering and selling the Securities hereunder; and (iii) the Securities may not
be transferred by such Purchaser except pursuant to an effective registration
statement under the Securities Act or an available exemption from such
registration and in compliance with all applicable federal and state securities
laws. Subject to compliance with the foregoing, nothing contained herein shall
be deemed a representation or warranty by such Purchaser to hold Securities for
any period of time. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute or otherwise transfer any
of the Securities.

                  (c) Purchaser Status. At the time such Purchaser was offered
the Shares and the Additional Investment Rights, it was, and at the date hereof
it is, an "accredited investor" as defined in Rule 501(a) under the Securities
Act because it is an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, partnership
or limited liability company, not formed for the specific purpose of acquiring
any of the Securities, with total assets in excess of $5,000,000.

                  (d) Experience of such Purchaser. Such Purchaser has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment. The Purchaser understands that its investment in the Securities
involves a high degree of risk.

                  (e) Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded: (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.

                  (f) Residency. Such Purchaser is domiciled in the jurisdiction
set forth immediately below such Purchaser's name on the signature page hereof.


                                   ARTICLE IV

                         OTHER AGREEMENTS OF THE PARTIES

         4.1 Transfer Restrictions.


                                       10


                  (a) In connection with any transfer of Securities other than
pursuant to an effective registration statement or to the Company or pursuant to
Rule 144(k), except as otherwise expressly set forth herein, the transferor,
shall provide to the Company an opinion of counsel selected by the transferor,
the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the Securities Act or applicable state securities laws. Notwithstanding the
foregoing, the Company hereby consents to and agrees to register on the books of
the Company and with its transfer agent, without any such legal opinion, any
transfer of Securities by a Purchaser to an Affiliate of such Purchaser,
provided that the transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act and delivers to the
Company a written statement in which it makes such representations and
certification as set forth in Sections 3.2(b), (c), (d), and (e).

                  (b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of the following legend on any certificate
evidencing Securities:

         [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
         SECURITIES ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE
         SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
         STATE IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
         APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED
         OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
         THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
         ALL APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING,
         THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
         SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
         ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH
         SECURITIES.

Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act, (ii) if such Securities
are eligible for sale under Rule 144, including, but not limited to, Rule
144(k), or (iii) if such legend is not required under the Securities Act. The
Company shall cause its counsel to issue the legal opinion included in the
Transfer Agent Instructions to the Company's transfer agent on (or within one
Trading Day after) the Effective Date. Following the Effective Date or at such
earlier time as a legend is no longer required for certain Securities, the
Company will no later than three Trading Days following the delivery by a
Purchaser to the Company or the Company's transfer agent of a legended
certificate representing such Securities (and all other documents reasonably
required by the Company or its transfer agent in connection therewith), deliver
or cause to be delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to any transfer agent
of the Company that enlarge the restrictions on transfer set forth in this
Section.

                  (c) The Company acknowledges and agrees that a Purchaser may
from time to time pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement or other loan or
financing arrangement secured by the Securities and, if required under the terms
of such agreement, loan or arrangement, such Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties (subject to any
restrictions on transfer applicable to such pledgees or secured parties pursuant
to applicable law). Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of the pledgee, secured party or pledgor
shall be required in connection therewith. Further, no notice shall be required
of such pledge. At the appropriate Purchaser's expense, the Company will execute
and deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders in the Prospectus.


                                       11


         4.2 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any Purchaser, the Company shall deliver to
such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with paragraph (c) of Rule 144 such information as is required for
the Purchasers to sell the Securities under Rule 144. The Company further
covenants that it will take such further action as any holder of Securities may
reasonably request to satisfy the provisions of Rule 144 applicable to the
issuer of securities relating to the sale of securities pursuant to Rule 144.

         4.3 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that it knows or should know would
be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers or that it knows or should know would be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any
Trading Market.

         4.4 Reservation of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents, the Company
shall promptly take such actions as may be required to increase the number of
authorized shares.

         4.5 Subsequent Placements.

                  (a) From the date hereof until the Effective Date, the Company
will not, directly or indirectly, offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or the Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life and
under any circumstances, convertible into or exchangeable or exercisable for
Common Stock or Common Stock Equivalents.

                  (b) The restrictions contained in paragraph (a) of this
Section 4.5 shall not apply to (A) any issuance of Common Stock or grant of
Options to employees, officers, directors of or consultants or advisors to the
Company, in each case, pursuant to a stock-based plan duly approved by the
Company's board of directors; (B) the issuance of securities in connection with
a joint venture or development agreement or strategic partnership or similar
agreement approved by the Company's board of directors, a primary purpose of
which is not to raise equity capital; (C) upon exercise, conversion or exchange
of any Common Stock Equivalents described in Schedule 3.1(f) (provided that such
exercise or conversion occurs in accordance with the terms thereof, without
amendment or modification); or (D) in connection with a transaction involving a
sale of a Subsidiary or a line of business not resulting in a Change of Control.


         4.6 Securities Laws Disclosure; Publicity. The Company shall, on the
Closing Date, issue a press release reasonably acceptable to the Purchasers
disclosing material terms of the transactions contemplated hereby. On or before
the first Trading Day following the Closing Date, the Company shall file a
Current Report on Form 8-K with the Commission (the "8-K Filing") describing the
terms of the transactions contemplated by the Transaction Documents and, to the
extent required by the Exchange Act, including as exhibits to such Current
Report on Form 8-K this Agreement and the form of Additional Investment Rights,
in the form required by the Exchange Act. Thereafter, the Company shall use its
best efforts to timely file any filings and notices required by the Commission
or applicable law that relate principally to the Sale of Securities provided for
herein and provide copies thereof to the Purchasers promptly after filing. The
Company shall promptly provide the Purchasers with a copy of any filing or
dissemination of any disclosure required by this paragraph for their review. The
Company and the Purchasers shall


                                       12


consult with each other in issuing the 8-K Filing or any press releases that
relate principally to the Sale of Securities provided for herein, and neither
party shall issue any such press release or 8-K Filing without the prior consent
of the other, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or filing. Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except to
the extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure. The
Company shall not, and shall cause each of its Subsidiaries and its and each of
their respective officers, directors, employees and agents not to, provide any
Purchaser with any material nonpublic information regarding the Company or any
of its Subsidiaries from and after the issuance of the press release
contemplated in the first sentence of this Section 4.6 without the express
written consent of such Purchaser, and the Purchaser shall not request any such
material nonpublic information unless it expressly acknowledges in advance in
writing that it is requesting material nonpublic information. In the event of a
breach of the foregoing covenant by the Company, any of its Subsidiaries, or any
of its or their respective officers, directors, employees and agents, in
addition to any other remedy provided herein or in the Transaction Documents, a
Purchaser shall have the right to make a public disclosure, in the form of a
press release, public advertisement or otherwise, of such material nonpublic
information without the prior approval by the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees or agents, if, and
only if, the Company (i) has acknowledged in writing that such information
constitutes material nonpublic information and (ii) does not publicly disclose
such information within two Trading Days following receipt of notification of
the breach of the foregoing covenant. No Purchaser shall have any liability to
the Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, shareholders or agents for any such disclosure made in
compliance with the preceding sentence.

         4.7 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder to promptly repay (in full, to the extent the
proceeds are sufficient) amounts outstanding under the Senior Subordinated
Debenture dated June 15, 2001 payable to Allied Capital Corporation and the
remainder for working capital purposes and not to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.

         4.8 Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling person, employee or agent of a Purchaser
or any of its Affiliates (a "Related Person") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of the transactions contemplated by the Transaction Documents (other than
relating to the Registration Statement, Prospectus or other matter covered by
the indemnity in Article VI hereof), the Company will indemnify and hold
harmless such Purchaser or Related Person for its reasonable legal and other
expenses (including the reasonable costs of any investigation, preparation and
travel) and for any Losses incurred in connection therewith, if and as such
expenses or Losses are actually incurred, excluding only Losses that arise out
of or result directly from such Purchaser's or Related Person's gross negligence
or willful misconduct. In addition, the Company shall indemnify and hold
harmless each Purchaser and Related Person from and against any and all Losses,
if and as actually incurred, arising out of or relating to any breach by the
Company of any of the representations, warranties or covenants made by the
Company in this Agreement or any other Transaction Document. The conduct of any
Proceedings for which indemnification is available under this paragraph shall be
governed by Section 6.4(c) below. The indemnification obligations of the Company
under this paragraph shall be in addition to any liability that the Company may
otherwise have and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Purchasers and
any such Related Persons. The Company also agrees that neither the Purchasers
nor any Related Persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the transactions contemplated by the Transaction Documents,
except to the extent that any Losses incurred by the Company arise out of or
result directly from the gross negligence or willful misconduct of the
applicable Purchaser or Related Person in connection with such transactions or
arise out of or relate to any breach by a Purchaser of any of the
representations, warranties or covenants made by a Purchaser in this Agreement
or any other Transaction Document. If the Company breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or reimburse the Purchasers on demand for all costs of collection and
enforcement (including reasonable attorneys fees and expenses) actually incurred
and


                                       13


reasonably documented. Without limiting the generality of the foregoing, the
Company specifically agrees to reimburse the Purchasers on demand for all
actually incurred and reasonably documented costs of enforcing the
indemnification obligations in this paragraph.


                                   ARTICLE V

                                   CONDITIONS

         The provisions of this Article V shall apply only if the Closing Date
is after the date hereof.

         5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction or waiver by such Purchaser, at or before the Closing, of each
of the following conditions:

                  (a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date; and

                  (b) Performance. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing.

         5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:

                  (a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date; and

                  (b) Performance. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Purchasers at or prior to the Closing.

                                   ARTICLE VI

                               REGISTRATION RIGHTS

         6.1 Shelf Registration

                  (a) As promptly as reasonably practicable, and in any event on
or prior to the Filing Date, the Company shall prepare and file with the
Commission a "Shelf" Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith as to which Purchasers holding a majority of the
Registrable Securities may consent) and shall contain (except if otherwise
directed by Purchasers holding a majority of the Registrable Securities) the
"Plan of Distribution" attached hereto as Exhibit C.

                  (b) The Company shall use its best efforts to cause the
Registration Statement to be declared effective by the Commission as promptly as
possible after the filing thereof, but in any event prior to the Required
Effectiveness Date, and shall use its best efforts to keep the Registration
Statement continuously effective under the Securities Act until the date each
Purchaser named herein on the Closing Date can sell all of its Securities
without


                                       14


restriction pursuant to Rule 144(k) or such earlier date when all Registrable
Securities covered by such Registration Statement have been sold publicly (the
"Effectiveness Period").

                  (c) The Company shall notify each Purchaser promptly (and in
any event within one Business Day) after receiving notification from the
Commission that the Registration Statement has been declared effective.

                  (d) Upon the occurrence of any Event (as defined below) and on
every monthly anniversary thereof until the applicable Event is cured, as
partial relief for the damages suffered therefrom by the Purchasers (which
remedy shall not be exclusive of any other remedies available under this
Agreement, at law or in equity), the Company shall pay to each Purchaser an
amount in cash, as liquidated damages and not as a penalty, equal to 1.0% of the
aggregate purchase price paid by such Purchaser hereunder. The payments to which
a Purchaser shall be entitled pursuant to this Section 6.1(d) are referred to
herein as "Event Payments." Any Event Payments payable pursuant to the terms
hereof shall apply on a pro-rata basis for any portion of a month prior to the
cure of an Event. In the event the Company fails to make Event Payments in a
timely manner, such Event Payments shall bear interest at the rate of 1.5% per
month (prorated for partial months) until paid in full.

                  (e) For such purposes, each of the following shall constitute
an "Event":

                           (i) the Registration Statement is not filed on or
         prior to the Filing Date or is not declared effective on or prior to
         the Required Effectiveness Date;

                           (ii) after the Effective Date and during the
         Effectiveness Period, a Purchaser is not permitted to sell Registrable
         Securities under the Registration Statement (or a subsequent
         registration statement filed in replacement thereof) for any reason for
         more than seven Trading Days (whether or not consecutive);

                           (iii) the Common Stock is not listed or quoted on
         any, or is suspended from trading on all, Eligible Markets for a period
         of four Trading Days (which need not be consecutive Trading Days);

                           (iv) the Company fails to have available a sufficient
         number of authorized but unissued and otherwise unreserved shares of
         Common Stock available to issue Underlying Shares upon any exercise of
         the Additional Investment Rights.

                  (f) The Company shall not, prior to the Effective Date of the
Registration Statement, prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than one or more
registration statements on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued in connection with any acquisition of any entity or business or equity
securities issuable in connection with a stock option or other employee benefit
plan.

         6.2 Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:

                  (a) Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish to the
Purchasers and Purchaser Counsel copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Purchasers and
Purchaser Counsel, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file a Registration Statement or any such Prospectus or any amendments
or supplements thereto to which Purchasers holding a majority of the Registrable
Securities shall reasonably object; provided that, notwithstanding anything
herein to the contrary, pending resolution of the


                                       15


Purchasers' objection and the subsequent filing of such Registration Statement
or Prospectus (or amendment or supplement thereto) within a reasonable time
following such resolution, no Event shall be deemed to occur.

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement and, as so
supplemented or amended, to be filed pursuant to Rule 424; (iii) use its best
efforts to respond as promptly as reasonably practicable, and within ten days,
to any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and, as promptly as reasonably practicable
after receipt of written request from any Purchaser, provide such Purchaser true
and complete copies of all correspondence from and to the Commission relating to
the Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Purchasers thereof set forth in the Registration Statement,
as may be amended, or in such Prospectus, as may be supplemented.

                  (c) Notify the Purchasers of Registrable Securities to be sold
under the Registration Statement and Purchaser Counsel as promptly as reasonably
practicable, and (if requested by any such Person) confirm such notice in
writing no later than one Trading Day thereafter, of any of the following
events: (i) any Registration Statement or any post-effective amendment is
declared effective; (ii) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings for
that purpose; (iii) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for
sale in any jurisdiction, or the initiation or threat of any Proceeding for such
purpose; or (iv) the financial statements included in any Registration Statement
become ineligible for inclusion therein or the Company has knowledge that any
statement made in any Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference is untrue in any
material respect or that a revision to a Registration Statement, Prospectus or
other document is required so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

                  (d) Use its best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
any Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as reasonably practicable.

                  (e) Furnish to each Purchaser and Purchaser Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after receipt of written request from such
Purchaser or Purchaser Counsel after the filing of such documents with the
Commission.

                  (f) Promptly deliver to each Purchaser and Purchaser Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. Subject to the terms hereof, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Purchasers in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

                  (g) (i) In the time and manner required by each Trading
Market, if at all, prepare and file with such Trading Market an additional
shares listing application covering all of the Registrable Securities; (ii) take
all steps necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as reasonably practicable thereafter;
(iii) to the extent available to the Company, provide to the Purchasers evidence
of


                                       16


such listing; and (iv) maintain the listing of such Registrable Securities on
each such Trading Market or another Eligible Market.

                  (h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Purchasers and Purchaser Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Purchaser requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to take any and all
other actions necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided that the Company shall not be required to qualify generally to do
business as a foreign corporation in any jurisdiction where it is not so
qualified or to execute a general consent to service of process in effecting
such registration or qualification (or exemption therefrom).

                  (i) Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by this Agreement and
consistent with applicable law, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and, if after the Effective
Date, registered in such names as any such Purchasers may request.

                  (j) Upon the occurrence of any event described in Section
6.2(c)(iv), as promptly as reasonably practicable, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

                  (k) Cooperate with any due diligence investigation undertaken
by the Purchasers in connection with the sale of Registrable Securities,
including, without limitation, by making available any documents and
information; provided that no Purchaser will request material nonpublic
information unless it acknowledges in advance in writing that it is doing so,
and the Company will not deliver or make available to any Purchaser material
nonpublic information unless such Purchaser specifically so requests in writing.

                  (l) If Holders of a majority of the Registrable Securities
being offered pursuant to a Registration Statement select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, by providing customary legal opinions, comfort letters and
indemnification and contribution obligations.

                  (m) Comply with all applicable rules and regulations of the
Commission.

         6.3 Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities), (c) messenger, telephone and delivery expenses, (d)
fees and disbursements of counsel for the Company and up to $10,000 in the
aggregate for a single Purchaser Counsel for the Purchasers, (e) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, and (f) all
listing fees to be paid by the Company to the Trading Market. Notwithstanding
the foregoing, each Purchaser shall pay all selling commissions, brokerage fees
and stock transfer taxes, if any, applicable to the Registrable Securities sold
by such Purchaser.

         6.4 Indemnification


                                       17


                  (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, the officers, directors, partners, members, agents and employees
of each Purchaser, each Person who controls any such Purchaser (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, members, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from
and against any and all Losses, as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except to the extent, but only to the
extent, that (i) such untrue statements, alleged untrue statements, omissions or
alleged omissions arise out of or result directly from (A) information regarding
such Purchaser furnished in writing to the Company by such Purchaser expressly
for use in connection therewith or (B) information relating to such Purchaser or
such Purchaser's proposed method of distribution of Registrable Securities that
is in conformity with the "Plan of Distribution" attached hereto as Exhibit C or
was reviewed and expressly approved in writing by such Purchaser expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto or (ii) in the case of an occurrence of
an event of the type specified in Section 6.2(c)(ii)-(iv), such Purchaser uses
an outdated or defective Prospectus after the Company has notified such
Purchaser in writing that the Prospectus is outdated or defective and prior to
the receipt by such Purchaser of the Advice contemplated in Section 6.5. The
Company shall notify the Purchasers promptly of the institution or actual threat
of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.

                  (b) Indemnification by Purchasers. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents and employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses arising out of any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising out of any
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading to the extent, but only to the extent, that (i) such untrue
statement or omission arises out of or results directly from any information (A)
furnished in writing by such Purchaser to the Company specifically for use in
connection with such Registration Statement or such Prospectus or with any
amendment or supplement thereto or (B) based upon information relating to such
Purchaser or such Purchaser's proposed method of distribution of Registrable
Securities that is in conformity with the "Plan of Distribution" attached hereto
as Exhibit C or was reviewed and expressly approved in writing by such Purchaser
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (ii) in the case of an
occurrence of an event of the type specified in Section 6.2(c)(ii)-(iv), such
Purchaser uses an outdated or defective Prospectus after the Company has
notified such Purchaser in writing that the Prospectus is outdated or defective
and prior to the receipt by such Purchaser of the Advice contemplated in Section
6.5. In no event shall the liability of any selling Purchaser hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Purchaser upon the sale of the Registrable Securities giving rise to such
indemnification obligation.

                  (c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that such failure shall have
materially prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses;


                                       18


or (ii) the Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (iii) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

                  All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is subsequently ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is judicially determined
and not subject to appeal or review that such Indemnified Party is not entitled
to indemnification hereunder).

                  (d) Contribution. If a claim for indemnification under Section
6.4(a) or (b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6.4(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6.4(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.4(d), no Purchaser
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Purchaser from the sale
of the Registrable Securities subject to the Proceeding exceeds the amount of
any damages that such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

         6.5 Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(ii), (iii) or (iv), such Purchaser will discontinue disposition of such
Registrable Securities under the Registration Statement until such Purchaser's
receipt of the copies of the


                                       19


supplemented Prospectus and/or amended Registration Statement contemplated by
Section 6.2(j), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.

         6.6 No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Purchasers in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other than
the Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right to any of its security
holders.

         6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with a stock option or other employee
benefit plan, then the Company shall send to each Purchaser written notice of
such determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.

                                   ARTICLE VII

                                  MISCELLANEOUS

         7.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third Business Day following the date of this Agreement;
provided that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

         7.2 Fees and Expenses. At the Closing, the Company shall pay to
Mainfield Enterprises, Inc. an aggregate of $55,000 for their legal fees and
expenses incurred in connection with its due diligence and its due diligence and
the preparation and negotiation of the Transaction Documents. In lieu of the
foregoing payment, Mainfield Enterprises, Inc. may retain such amount at the
Closing or require the Company to pay such amount directly to Purchaser Counsel.
Except as expressly set forth in the Transaction Documents to the contrary, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all transfer agent fees, stamp taxes and other
taxes and duties levied in connection with the issuance of the Securities.

         7.3 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company and the
Purchasers will execute and deliver such further documents as may be reasonably
requested in order to give effect to the intention of the parties under the
Transaction Documents.

         7.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the


                                       20


Trading Day following the date of deposit with a nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The addresses and facsimile numbers for such notices and
communications are those set forth on the signature pages hereof, or such other
address or facsimile number as may be designated in writing hereafter, in the
same manner, by any such Person.

         7.5 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and Purchasers holding (or, in the case of an amendment prior to
the Closing Date, committing to hold) a majority of the Securities or, in the
case of a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Purchasers under Article VI and that does not directly or indirectly
affect the rights of other Purchasers may be given by Purchasers holding at
least a majority of the Registrable Securities to which such waiver or consent
relates.

         7.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

         7.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser is
permitted to assign or transfer, and assigns or transfers, any Securities,
provided such transferee delivers a statement to the Company in which it agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers."

         7.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.

         7.9 Governing Law; Venue; Waiver Of Jury Trial. The Corporate Laws Of
The State Of Delaware Shall Govern All Issues Concerning The Relative Rights Of
The Company And Its Stockholders AND All Questions Concerning The Construction,
Validity, Enforcement And Interpretation Of This Agreement. THE COMPANY Hereby
Irrevocably Submits To The Exclusive Jurisdiction Of The State And Federal
Courts Sitting In The STATE OF DELAWARE For The Adjudication Of Any Dispute
BROUGHT BY ANY PURCHASER Hereunder, In Connection Herewith Or With Any
Transaction Contemplated Hereby Or Discussed Herein (Including With Respect To
The Enforcement Of Any Of The Transaction Documents), And Hereby Irrevocably
Waives, And Agrees Not To Assert In Any Suit, Action Or ProceedinG BROUGHT BY
ANY PURCHASER, Any Claim That It Is Not Personally Subject To The Jurisdiction
Of Any Such Court, That Such Suit, Action Or Proceeding Is Improper. Each
purchaser HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN DELAWARe, for the adjudication of any dispute
brought by the company hereunder, in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of the transaction documents), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding brought by the
company, any claim that it is not personally subject to the jurisdiction of any
such court or that such suit, action or proceeding is improper. Each party
Hereby Irrevocably Waives Personal Service Of Process And Consents To Process
Being Served In Any Such Suit, Action Or Proceeding By Mailing A Copy Thereof
Via Registered Or Certified Mail Or Overnight Delivery (With Evidence Of
Delivery) To Such Party At The Address In Effect For Notices To It Under This
Agreement And Agrees That Such Service Shall Constitute Good And Sufficient
Service Of Process And Notice Thereof. Nothing Contained Herein


                                       21


Shall Be Deemed To Limit In Any Way Any Right To Serve Process In Any Manner
Permitted By Law. The Company Hereby Waives All Rights To A Trial By Jury.

         7.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and/or
exercise of the Securities, as applicable.

         7.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

         7.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         7.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.

         7.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and, if requested, customary and
reasonable indemnity. If any Purchaser seeks a new certificate or instrument
under such circumstances, it shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third party costs as
the Company may prescribe.

         7.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

         7.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser hereunder or pursuant to the Additional Investment
Rights or any Purchaser enforces or exercises its rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company by a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

         7.17 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or


                                       22


event occurring after the date hereof and before the Closing Date, each
reference herein to a number of shares or a price per share shall be amended to
appropriately account for such event.

         7.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.


                           [SIGNATURE PAGES TO FOLLOW]





                                       23




         IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.



                                    BLUE RHINO CORPORATION



                                    By:     /s/ Mark Castaneda
                                            ------------------------------------
                                    Name:   Mark Castaneda
                                    Title:  Chief Financial Officer

                                    Address for Notice:

                                    104 Cambridge Plaza Drive
                                    Winston-Salem, North Carolina 27104
                                    Facsimile No.:  (336) 659-6750
                                    Telephone No.: (336) 659-6755
                                    Attn: Mark Castaneda, Chief Financial
                                          Officer



         With a copy to:            Womble Carlyle Sandridge & Rice, PLLC
                                    One West Fourth Street
                                    Winston-Salem, North Carolina 27101
                                    Facsimile No.: (336) 726-6906
                                    Telephone No.: (336) 721-3634
                                    Attn:  Peter A. Zorn, Esq.


Consented and Acknowledged
with respect to Section 2.2 (c) only

WOMBLE CARLYLE SANDRIDGE
& RICE PLLC


By:      /s/ Peter Zorn
         ------------------------
Name:    Peter Zorn
Title:   Of Counsel


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]


                                       24



                                    MAINFIELD ENTERPRISES, INC.



                                    By:     /s/ Avi Vigder
                                            ------------------------------------
                                    Name:   Avi Vigder
                                    Title:  Authorized Signatory

                                    Domicile:  British Virgin Islands

                                    Number of Units: 600,000

                                    Underlying Shares subject to
                                         Additional Investment Rights:  198,000

                                    Address for Notice:

                                    Mainfield Enterprises, Inc.
                                    c/o Avi Vigder
                                    660 Madison Avenue
                                    New York, New York 10022
                                    Facsimile No.:  (212) 651-9010
                                    Telephone No.:  (212) 651-9000


         With a copy to:            Proskauer Rose LLP
                                    1585 Broadway
                                    New York, New York 10036-8299
                                    Facsimile No.:  (212) 969-2900
                                    Telephone No.:  (212) 969-3000
                                    Attn:  Adam J. Kansler, Esq.



                                       25




                                    SMITHFIELD FIDUCIARY LLC



                                    By:     /s/ Adam J. Chill
                                            ---------------------------
                                    Name:   Adam J. Chill
                                    Title:  Authorized Signatory

                                    Domicile: Cayman Islands

                                    Number of Units: 400,000

                                    Underlying Shares subject to
                                         Additional Investment Rights:  132,000

                                    Address for Notice:

                                    Smithfield Fiduciary LLC
                                    c/o Highbridge Capital Management, LLC
                                    9 West 57th Street, 27th Floor
                                    New York, New York 10019
                                    Facsimile No.:  (212) 751-0755
                                    Telephone No.:  (212) 287-4720
                                    Attn:  Adam J. Chill



                                       26




Exhibits:
- --------

A        Form of Additional Investment Right
B        Opinion of Company Counsel
C        Plan of Distribution
D        Transfer Agent Instructions

[These exhibits are omitted. Blue Rhino Corporation will furnish supplementally
a copy of any omitted exhibit to the Commission upon request.]



                                       27

EX-10.8

                                                                    EXHIBIT 10.8

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.



                             BLUE RHINO CORPORATION

                           ADDITIONAL INVESTMENT RIGHT

Additional Investment Right No. [  ]                   Dated:  December 20, 2002

         Blue Rhino Corporation, a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, [Name of Holder] or its registered assigns
(the "HOLDER"), is entitled to purchase from the Company up to a total of [ ]
shares of common stock, $0.001 par value per share (the "COMMON STOCK"), of the
Company (each such share, an "ADDITIONAL INVESTMENT RIGHT SHARE" and all such
shares, the "ADDITIONAL INVESTMENT RIGHT SHARES") at an exercise price equal to
$[ ] per share (as adjusted from time to time as provided in Section 9, the
"EXERCISE PRICE"), at any time and from time to time from and after the earlier
of (i) 90 days after the Closing Date, and (ii) the Effective Date (such earlier
date, the "TRIGGER DATE"), and through and including the 90th Trading Day
following the Effective Date (the "EXPIRATION DATE"), subject to the following
terms and conditions. This Additional Investment Right (this "ADDITIONAL
INVESTMENT RIGHT") is one of a series of similar additional investment rights
issued pursuant to that certain Securities Purchase Agreement, dated as of the
date hereof, by and among the Company and the Purchasers identified therein (the
"PURCHASE AGREEMENT"). All such additional investment rights are referred to
herein, collectively, as the "ADDITIONAL INVESTMENT RIGHTS."

         1. Definitions. In addition to the terms defined elsewhere in this
Additional Investment Right, capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement.

         2. Registration of Additional Investment Right. The Company shall
register this Additional Investment Right, upon records to be maintained by the
Company for that purpose (the "ADDITIONAL INVESTMENT RIGHT REGISTER"), in the
name of the Holder (which shall include



the initial Holder or, as the case may be, any registered assignee to which this
Additional Investment Right is permissibly assigned hereunder from time to
time). The Company may deem and treat the registered Holder as the absolute
owner of this Additional Investment Right for the purpose of any exercise
hereof, any distribution in respect hereof and for all other purposes.

         3. Registration of Transfers. The Company shall register the assignment
and transfer of any portion of this Additional Investment Right in the
Additional Investment Right Register, only upon (i) surrender of this Additional
Investment Right, with the Form of Assignment attached hereto duly completed and
signed, and (ii) if the registration statement is not effective, (x) if the
assignment or transfer is not to an Affiliate of such Holder, delivery of an
opinion of counsel reasonably satisfactory to the Company, to the effect that
the transfer of such portion of this Additional Investment Right may be made
pursuant to an available exemption from the registration requirements of the
Securities Act and all applicable state securities or blue sky laws and (y) if
the assignment or transfer is to an Affiliate of such Holder, delivery by the
transferee of a written statement to the Company certifying that the transferee
is an Affiliate of the Holder and an "accredited investor" as defined in Rule
501(a) under the Securities Act and making the representations and
certifications as set forth in Sections 3.2(b), (c) and (d) of the Purchase
Agreement, in each case, to the Company at its address specified in the Purchase
Agreement. Upon any such registration, a new additional investment right to
purchase Common Stock, in substantially the form of this Additional Investment
Right (any such new additional investment right, a "NEW ADDITIONAL INVESTMENT
RIGHT"), evidencing the portion of this Additional Investment Right so
transferred shall be issued to the transferee and a New Additional Investment
Right evidencing the remaining portion of this Additional Investment Right not
so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Additional Investment Right by the transferee shall be
deemed the acceptance by such transferee of all of the rights and obligations in
respect of the New Additional Investment Right that the Holder has in respect of
this Additional Investment Right.

         4. Exercise and Duration of Additional Investment Right.

         (a) This Additional Investment Right shall be exercisable by the
registered Holder at any time and from time to time on or after the Trigger Date
and through and including the Expiration Date. At 6:30 P.M., New York City time
on the Expiration Date, the portion of this Additional Investment Right not
exercised prior thereto shall be and become void and of no value and this
Additional Investment Right shall be terminated and no longer outstanding.

         (b) The Holder may exercise this Additional Investment Right by
delivering to the Company (i) an exercise notice, in the form attached hereto
(the "EXERCISE NOTICE"), completed and duly signed, and (ii) payment of the
Exercise Price for the number of Additional Investment Right Shares as to which
this Additional Investment Right is being exercised, and the date such items are
delivered to the Company (as determined in accordance with the notice provisions
hereof) is an "EXERCISE DATE." The delivery by (or on behalf of) the Holder of
the Exercise Notice and the applicable Exercise Price as provided above shall
constitute the Holder's certification to the Company that its representations
contained in Section 3.2(b), (c) and (d) of the Purchase Agreement are true and
correct as of the Exercise Date as if remade in their entirety


                                       2


(or, in the case of any assignee Holder that is not a party to the Purchase
Agreement, such assignee Holder's certification to the Company that such
representations are true and correct as to such assignee Holder as of the
Exercise Date). The Holder shall not be required to deliver the original
Additional Investment Right in order to effect an exercise hereunder. Execution
and delivery of the Exercise Notice shall have the same effect as cancellation
of the original Additional Investment Right and issuance of a New Additional
Investment Right evidencing the right to purchase the remaining number of
Additional Investment Right Shares.

         5. Delivery of Additional Investment Right Shares.

         (a) Upon exercise of this Additional Investment Right, the Company
shall promptly (but in no event later than three Trading Days after the Exercise
Date) issue or cause to be issued and cause to be delivered to or upon the
written order of the Holder and in such name or names as the Holder may
designate (provided that, if the Registration Statement is not effective and the
Holder directs the Company to deliver a certificate for the Additional
Investment Right Shares in a name other than that of the Holder or an Affiliate
of the Holder, it shall deliver to the Company on the Exercise Date an opinion
of counsel reasonably satisfactory to the Company to the effect that the
issuance of such Additional Investment Right Shares in such other name may be
made pursuant to an available exemption from the registration requirements of
the Securities Act and all applicable state securities or blue sky laws or, if
the transferee is an Affiliate of the Holder, the statement set forth in Section
3(ii)(y) in lieu of such opinion), a certificate for the Additional Investment
Right Shares issuable upon such exercise, free of restrictive legends unless a
registration statement covering the resale of the Additional Investment Right
Shares and naming the Holder as a selling stockholder thereunder is not then
effective and the Additional Investment Right Shares are not freely transferable
without volume restrictions pursuant to Rule 144 under the Securities Act. The
Holder, or any Person so designated by the Holder to receive Additional
Investment Right Shares, shall be deemed to have become holder of record of such
Additional Investment Right Shares as of the Exercise Date. The Company shall,
upon the written request of the Holder, use its best efforts to deliver
Additional Investment Right Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions.

         (b) This Additional Investment Right is exercisable either in its
entirety or, from time to time, for a portion of the number of Additional
Investment Right Shares. Upon surrender of this Additional Investment Warrant
following one or more partial exercises, the Company shall issue or cause to be
issued, at its expense, a New Additional Investment Warrant evidencing the right
to purchase the remaining number of Additional Investment Warrant Shares, if
requested in writing by the Holder.

         (c) The provisions of this Section 5(c) are expressly subject to the
last sentence of Section 5(a). In addition to any other rights available to a
Holder, if the Company fails to deliver to the Holder a certificate representing
Additional Investment Right Shares on the date on which delivery of such
certificate is required by this Additional Investment Right, such Holder may
notify the Company via facsimile, mail or any other written means of its failure
to deliver the certificate (a "DELIVERY FAILURE NOTICE"). If the Company fails
to deliver to the Holder a certificate representing Additional Investment Right
Shares by the third Trading Day


                                       3


after delivery of the Delivery Failure Notice by the Holder and if, after such
third Trading Day after the delivery of the Delivery Failure Notice the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Additional Investment
Right Shares that the Holder anticipated receiving from the Company (a
"BUY-IN"), then the Company shall, within three Trading Days after the Holder's
request and in the Holder's discretion, either (i) pay cash to the Holder in an
amount equal to the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the "BUY-IN
PRICE"), at which point the Company's obligation to deliver such certificate
(and to issue such Additional Investment Right Shares) shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a certificate or
certificates representing such Additional Investment Right Shares and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of Additional Investment Right Shares, times (B)
the Closing Price on the third Trading Day after the Exercise Date.

         (d) The Company's obligations to issue and deliver Additional
Investment Right Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other Person. Nothing herein shall limit the Holder's right to
pursue any other remedies available to it hereunder, at law or in equity,
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing Additional Investment Right Shares upon exercise of
the Additional Investment Right as required pursuant to the terms hereof.

         6. Charges, Taxes and Expenses. Issuance and delivery of certificates
for shares of Common Stock upon exercise of this Additional Investment Right
shall be made without charge to the Holder for any issue or transfer tax,
withholding tax, transfer agent fee or other incidental tax or expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the registration of any certificates for Additional Investment Right Shares
or Additional Investment Rights in a name other than that of the Holder. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Additional Investment Right or receiving
Additional Investment Right Shares upon exercise hereof.

         7. Replacement of Additional Investment Right. If this Additional
Investment Right is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Additional
Investment Right, a New Additional Investment Right, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and, if requested, customary and reasonable indemnity. If the Holder
seeks a New Additional Investment Right under such circumstances, it shall also
comply with such other reasonable


                                       4


regulations and procedures and pay such other reasonable third party costs as
the Company may prescribe.

         8. Reservation of Additional Investment Right Shares. The Company
covenants that it will at all times reserve and keep available out of its
authorized but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Additional Investment Right Shares upon exercise
of this Additional Investment Right as herein provided, the number of Additional
Investment Right Shares which are then issuable and deliverable upon the
exercise in full of this Additional Investment Right, free from preemptive
rights or any other contingent purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of Section 9). The Company
covenants that all Additional Investment Right Shares so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly authorized and
issued, fully paid and nonassessable. Each of the Company and the Holder will
take all such action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable law
or regulation or of any requirements of any securities exchange or automated
quotation system upon which the Common Stock may be listed.

         9. Certain Adjustments. The Exercise Price and number of Additional
Investment Right Shares issuable upon exercise of this Additional Investment
Right are subject to adjustment from time to time as set forth in this Section
9.

         (a) Stock Dividends and Splits. If the Company, at any time while this
Additional Investment Right is outstanding, (i) pays a stock dividend on its
Common Stock or otherwise makes a distribution on any class of capital stock
that is payable in shares of Common Stock, (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, or (iii) combines outstanding
shares of Common Stock into a smaller number of shares, then in each such case
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clauses (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination.

         (b) Pro Rata Distributions. If the Company, at any time while this
Additional Investment Right is outstanding, distributes to holders of Common
Stock (i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph), (iii) rights
or warrants to subscribe for or purchase any security, or (iv) any other asset
(in each case, "DISTRIBUTED PROPERTY"), then, upon any exercise of the
Additional Investment Right that occurs after the record date fixed for
determination of stockholders entitled to receive such distribution, the Holder
shall be entitled to receive, in addition to the Additional Investment Right
Shares otherwise issuable upon such exercise (if applicable), the Distributed
Property distributed in respect of one share of Common Stock to holders of
Common Stock as of such record date times the number of Additional Investment
Right Shares for which the Holder exercises this Additional Investment Right
(appropriately


                                       5


adjusted for any stock splits, combination or similar event between such record
date and such exercise).

         (c) Fundamental Transactions. If, at any time while this Additional
Investment Right is outstanding, (i) the Company effects any merger or
consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (iii) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares of Common
Stock covered by Section 9(a) above) (in any such case, a "FUNDAMENTAL
TRANSACTION"), then the Holder shall have the right thereafter to receive, upon
exercise of this Additional Investment Right, the same amount and kind of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of the number of Additional Investment
Right Shares then issuable upon exercise in full of this Additional Investment
Right (the "ALTERNATE CONSIDERATION"). The aggregate Exercise Price for this
Additional Investment Right will not be affected by any such Fundamental
Transaction, but the Company shall apportion such aggregate Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any exercise of this Additional
Investment Right following such Fundamental Transaction. At the Holder's
request, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a New Additional Investment Right
consistent with the foregoing provisions and evidencing the Holder's right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (c) and that
the Additional Investment Right (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. If any Fundamental Transaction constitutes or results in a Change
of Control, then at the request of the Holder delivered before the 90th day
after such Fundamental Transaction (or, if earlier, before the Expiration Date),
the Company (or any such successor or surviving entity) will purchase the
Additional Investment Warrant from the Holder for a purchase price, payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Additional Investment Warrant on the date
of such request.

         (d) Number of Additional Investment Right Shares. Simultaneously with
any adjustment to the Exercise Price pursuant to paragraph (a) of this Section,
the number of Additional Investment Right Shares that may be purchased upon
exercise of this Additional Investment Right shall be increased or decreased
proportionately, so that after such adjustment


                                       6


the aggregate Exercise Price payable hereunder for the increased or decreased
number of Additional Investment Right Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.

         (e) Calculations. All calculations under this Section 9 shall be made
to the nearest cent or the nearest share, as applicable. The number of shares of
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company; provided that such shares, upon
disposition to a third party, shall then be considered outstanding.

         (f) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will, at the written
request of the Holder, promptly compute such adjustment in accordance with the
terms of this Additional Investment Right and prepare a certificate setting
forth such adjustment, including a statement of the adjusted Exercise Price and
adjusted number or type of Additional Investment Right Shares or other
securities issuable upon exercise of this Additional Investment Right (as
applicable), describing the transactions giving rise to such adjustments and
showing in reasonable detail the facts upon which such adjustment is based, and
deliver a copy of each such certificate to the Holder and to the Company's
Transfer Agent.

         (g) Notice of Corporate Events. If, while this Additional Investment
Right is outstanding, the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common
Stock, including, without limitation, any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any Subsidiary pro
rata to the holders of Common Stock, (ii) authorizes or approves, enters into
any agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least 10 Trading Days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.

         10. Payment of Exercise Price. The Holder shall pay the Exercise Price
in immediately available funds.

         11. Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Additional Investment Right (or otherwise
in respect hereof) shall be limited to the extent necessary to ensure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% (the "MAXIMUM PERCENTAGE") of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise).


                                       7


For such purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. Each delivery of an Exercise Notice hereunder will constitute a
representation by the Holder that it has evaluated the limitation set forth in
this paragraph and determined that issuance of the full number of Additional
Investment Right Shares requested in such Exercise Notice is permitted under
this paragraph. The Company's obligation to issue shares of Common Stock in
excess of the limitation referred to in this Section shall be suspended (and,
except as provided below, shall not terminate or expire notwithstanding any
contrary provisions hereof) until such time, if any, as such shares of Common
Stock may be issued in compliance with such limitation; provided that, if, as of
6:30 p.m., New York City time on the Expiration Date, the Company has not
received written notice that the shares of Common Stock may be issued in
compliance with such limitation, the Company's obligation to issue such shares
shall terminate. By written notice to the Company, the Holder may waive the
provisions of this Section or increase or decrease the Maximum Percentage to any
other percentage specified in such notice, but (i) any such waiver or increase
will not be effective until the 61st day after such notice is delivered to the
Company, and (ii) any such waiver or increase or decrease will apply only to the
Holder and not to any other holder of Additional Investment Rights.

         12. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Additional Investment Right Shares on the exercise
of this Additional Investment Right. If any fraction of a Additional Investment
Right Share would, except for the provisions of this Section, be issuable upon
exercise of this Additional Investment Right, the number of Additional
Investment Right Shares to be issued will be rounded up to the nearest whole
share.

         13. Notices. Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of deposit with a nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address and facsimile numbers for such notices or
communications shall be as set forth in the Purchase Agreement.

         14. Additional Investment Right Agent. The Company shall serve as
additional investment right agent under this Additional Investment Right. Upon
30 days' notice to the Holder, the Company may appoint a new additional
investment right agent. Any corporation into which the Company or any new
additional investment right agent may be merged or any corporation resulting
from any consolidation to which the Company or any new additional investment
right agent shall be a party or any corporation to which the Company or any new
additional investment right agent transfers substantially all of its corporate
trust or stockholder services business shall be a successor additional
investment right agent under this Additional


                                       8


Investment Right without any further act. Any such successor additional
investment right agent shall promptly cause notice of its succession as
additional investment right agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Additional
Investment Right Register.

         15. Restrictions on Transfers. From the date of the initial exercise of
this Additional Investment Right (if any) until the six (6) month anniversary of
such initial exercise, the Holder agrees that it shall maintain Beneficial
Ownership of at least a number of shares of Common Stock equal to the number of
Additional Investment Right Shares purchased under this Additional Investment
Right.

         16. Miscellaneous.

         (a) Subject to the restrictions on transfer set forth on the first page
hereof and in Section 15, this Additional Investment Right may be transferred or
assigned by the Holder; provided that the Company's obligation to register such
transfer or assignment and right to recognize the registered Holder as the
absolute owner hereof shall be as set forth in Section 3 and Section 2,
respectively. This Additional Investment Right may not be assigned by the
Company except to a successor in the event of a Fundamental Transaction. This
Additional Investment Right shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Additional Investment Right shall be
construed to give to any Person other than the Company and the Holder any legal
or equitable right, remedy or cause of action under this Additional Investment
Right. This Additional Investment Right may be amended only in writing signed by
the Company and the Holder, or their respective successors and assigns.

         (b) The Company will not, by amendment of its governing documents or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Additional Investment Right, 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 Holder against
impairment. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any Additional Investment Right Shares above
the amount payable therefor on such exercise, (ii) will take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Additional Investment Right
Shares on the exercise of this Additional Investment Right, and (iii) will not
close its stockholder books or records in any manner which interferes with the
timely exercise of this Additional Investment Right.

         (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THE CORPORATE LAWS OF
THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF
THE COMPANY AND ITS STOCKHOLDERS AND ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS ADDITIONAL INVESTMENT RIGHT.
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE STATE OF DELAWARE FOR THE ADJUDICATION OF ANY
DISPUTE


                                       9


HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY
OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT
IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

         (d) The headings herein are for convenience only, do not constitute a
part of this Additional Investment Right and shall not be deemed to limit or
affect any of the provisions hereof.

         (e) In case any one or more of the provisions of this Additional
Investment Right shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Additional
Investment Right shall not in any way be affected or impaired thereby and the
parties will attempt in good faith to agree upon a valid and enforceable
provision which shall be a commercially reasonable substitute therefor and, upon
such agreement, shall incorporate such substitute provision in this Additional
Investment Right.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]


                                       10



         IN WITNESS WHEREOF, the Company has caused this Additional Investment
Right to be duly executed by its authorized officer as of the date first
indicated above.


                                            BLUE RHINO CORPORATION


                                            By: ____________________
                                            Name: __________________
                                            Title: _________________


                                       11




                             FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Additional Investment Right)

To:  Blue Rhino Corporation

The undersigned is the Holder of Additional Investment Right No. _______ (the
"ADDITIONAL INVESTMENT RIGHT") issued by Blue Rhino Corporation, a Delaware
corporation (the "COMPANY"). Capitalized terms used herein and not otherwise
defined have the respective meanings set forth in the Additional Investment
Right.

1.       The Additional Investment Right is currently exercisable to purchase a
         total of ______________ Additional Investment Right Shares.

2.       The undersigned Holder hereby exercises its right to purchase
         _________________ Additional Investment Right Shares pursuant to the
         Additional Investment Right.

3.       The holder shall pay the sum of $____________ to the Company in
         accordance with the terms of the Additional Investment Right.

4.       Pursuant to this exercise, the Company shall deliver to the holder
         _______________ Additional Investment Right Shares in accordance with
         the terms of the Additional Investment Right.

5.       Following this exercise, the Additional Investment Right shall be
         exercisable to purchase a total of ______________ Additional Investment
         Right Shares.



Dated:_______________, _____        Name of Holder:

                                    (Print)________________________________

                                    By: ___________________________________
                                    Name: _________________________________
                                    Title: ________________________________

                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Additional Investment Right)




                               FORM OF ASSIGNMENT

 [To be completed and signed only upon transfer of Additional Investment Right]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Additional Investment Right to purchase ____________ shares of Common Stock of
Blue Rhino Corporation to which the within Additional Investment Right relates
and appoints ________________ attorney to transfer said right on the books of
Blue Rhino Corporation with full power of substitution in the premises.



Dated:_______________, _____


                                    __________________________________________
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Additional Investment Right)

                                    __________________________________________
                                    Address of Transferee

                                    __________________________________________
                                    __________________________________________





In the presence of:


_____________________________

EX-10.9

                                                                    EXHIBIT 10.9

                     [Letterhead of Blue Rhino Corporation]


                                  March 5, 2003

Smithfield Fiduciary LLC
c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New York, New York 10019

Mainfield Enterprises, Inc.
c/o Avi Vigder
660 Madison Avenue
New York, New York 10022

Gentlemen:

         Reference is made to (i) the Securities Purchase Agreement dated as of
December 20, 2002 (the "SPA") among Blue Rhino Corporation (the "Company") and
Smithfield Fiduciary LLC and Mainfield Enterprises, Inc. (together, the
"Purchasers") and (ii) the Additional Investment Rights of even date therewith
executed by the Company in favor of each of the Purchasers (the "Additional
Investment Rights" and, together with the SPA, the "Investment Documents"). The
purpose of this letter is to document our agreement to modify certain terms of
the SPA and the Additional Investment Rights pursuant to Section 7.5 of the SPA
and Section 16(a) of each Additional Investment Right.

         For good and valuable consideration, the receipt and sufficiency of
which the undersigned parties hereby acknowledge, the undersigned parties agree
that, notwithstanding anything to the contrary contained in the SPA, the
Additional Investment Rights or elsewhere: (i) the Company may use the net
proceeds from the sale of the Securities (as defined therein) thereunder to
repay amounts outstanding under its Senior Subordinated Debenture dated June 15,
2001 payable to Allied Capital Corporation, for general working capital, for any
other corporate purpose or in any combination of the foregoing, except that the
Company may not use the proceeds to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation; (ii) the
term "Expiration Date," as used and in the Additional Investment Rights, shall
mean October 1, 2003; and (iii) the Investment Documents shall be deemed amended
to be consistent with the foregoing.

          This letter agreement may be executed in two or more counterparts,
transmitted by facsimile or otherwise, each of which shall be deemed an original
and all of which taken together shall constitute a single instrument. This
letter agreement shall be governed by the laws of the state of Delaware.

         Please confirm your agreement with the foregoing by signing the
enclosed copy of this letter and returning it to the Company (to the attention
of Mark Castaneda, Chief Financial Officer).

                        [signatures follow on next page]







                                                   Sincerely,

                                                   BLUE RHINO CORPORATION

                                                   By: /s/ Mark Castaneda
                                                       -------------------------
                                                           Name: Mark Castaneda
                                                           Title: CFO


Acknowledged and agreed:

MAINFIELD ENTERPRISES, INC.

By: /s/ Eldad Gal
    --------------------------------
        Name: Eldad Gal
        Title: Authorized Signatory


SMITHFIELD FIDUCIARY LLC

By: /s/ Adam J Chill
    --------------------------------
        Name: Adam J Chill
        Title: Authorized Signatory

EX-10.10

                                                                   EXHIBIT 10.10

                             BLUE RHINO CORPORATION

                     AMENDED AND RESTATED STOCK OPTION PLAN
                           FOR NON-EMPLOYEE DIRECTORS
               (AS AMENDED AND RESTATED THROUGH FEBRUARY 21, 2003)



                             BLUE RHINO CORPORATION

                     AMENDED AND RESTATED STOCK OPTION PLAN
                           FOR NON-EMPLOYEE DIRECTORS
               (AS AMENDED AND RESTATED THROUGH FEBRUARY 21, 2003)

         This Amended and Restated Stock Option Plan for Non-Employee Directors
amends and restates in its entirety as of February 21, 2003, that certain Stock
Option Plan for Non-Employee Directors of Blue Rhino Corporation, which was
originally effective on May 18, 1998 and previously amended and restated as of
December 30, 1998, May 17, 2001 and October 31, 2001.

         SECTION 1. PURPOSE. The purpose of the Stock Option Plan for
Non-Employee Directors (the "Plan") is to attract and retain persons of
exceptional ability to serve as members of the Board of Directors of Blue Rhino
Corporation (the "Company"), and to align the interests of the Company's
non-employee directors with that of the stockholders in enhancing the value of
the Company's capital stock. This purpose will be carried out through the
granting of nonqualified stock options (individually, an "option," and
collectively, "options") to eligible non-employee directors of the Company.

         SECTION 2.        ADMINISTRATION.

                  (a)      The Plan shall be administered by the Board of
         Directors of the Company (the "Board" or the "Board of Directors"),
         unless the Board delegates all or part of its discretion to administer
         the Plan to the Compensation Committee of the Board or such successor
         committee of the Board that is designated by the Board to administer
         the Plan (collectively, the "Committee"). The Committee shall be
         comprised of such number of "non-employee directors," as such term is
         defined in Rule 16b-3 adopted under the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), as may be necessary to comply
         with Rule 16b-3, unless otherwise determined by the Board. For the
         purposes herein, the Board, and, upon delegation of authority to the
         Committee, the Committee, shall be referred to herein collectively as
         the "Administrator."

                  (b)      Any action of the Administrator may be taken by a
         written instrument signed by all of the members of the Board or the
         Committee, as the case may be, and any action so taken by written
         consent shall be as fully effective as if it had been taken by a
         majority of the members at a meeting duly held and called. Subject to
         the provisions of the Plan, the Administrator shall have full and final
         authority, in its discretion, to establish, amend and rescind rules and
         regulations for the administration of the Plan; to construe and
         interpret the Plan, the rules and regulations, and the agreements
         evidencing options granted under the Plan; and to make all other
         determinations deemed necessary or advisable for administering the
         Plan. Notwithstanding any other provision herein, (i) the Administrator
         also shall have authority, in its discretion, to accelerate the date
         that any option which was not otherwise exercisable or vested shall
         become exercisable or vested in whole or in part, and (ii) the
         Administrator shall also have authority, in its discretion, to extend
         the period during which an option may be exercised. To the extent, if
         any,



         necessary to comply with Rule 16b-3, provisions in SECTION 6 of the
         Plan relating to the grant of options following the annual meeting of
         stockholders of the Company, and the amount, price and timing of such
         options, shall not be subject to the discretion of the Administrator or
         any other person. No member of the Administrator shall be liable for
         any action or determination made in good faith with respect to the
         Plan. The Administrator may delegate to an officer or officers of the
         Company the authorization to execute and deliver on behalf of the
         Company any document or instrument required to be delivered under this
         Plan.

         SECTION 3.        TYPE OF OPTIONS. Options granted pursuant to the Plan
shall be nonstatutory options which are not intended to meet the requirements of
SECTION 422 of the Internal Revenue Code of 1986, as amended (the "Code").

         SECTION 4.        ELIGIBILITY. Directors of the Company who, at the
time of grant, are not employees or officers of the Company ("Eligible
Directors") shall be eligible to participate in the Plan. Each Eligible Director
to whom options are granted shall be referred to herein as a "Participant" in
the Plan.

         SECTION 5.        SHARES AVAILABLE UNDER THE PLAN. Subject to
adjustment as provided in SECTION 10 below, an aggregate of 400,000 shares of
the Company's Common Stock, par value $0.001 (the "Common Stock"), shall be
available for issuance pursuant to the provisions of the Plan. Such shares may
be authorized and unissued shares or may be shares issued and thereafter
acquired by the Company. If an option granted under the Plan shall expire or
terminate for any reason without having been exercised in whole or in part, the
unpurchased shares subject to such option shall again be available for
subsequent option grants under the Plan.

         SECTION 6.        AUTOMATIC GRANT OF OPTIONS.

                  (a)      Annual Grants.

                           (i)      On December 30, 1998 each Eligible Director
                  shall receive an option to purchase 8,000 shares of Common
                  Stock. During the period commencing with the first annual
                  meeting of stockholders to occur after December 30, 1998 and
                  ending October 30, 2001, each Eligible Director of the Company
                  shall receive an annual option grant to purchase 4,000 shares
                  of Common Stock. Commencing October 31, 2001, and thereafter,
                  each Eligible Director shall receive an annual option grant to
                  purchase 12,000 shares of Common Stock. Except as provided in
                  SECTION 6(b), the date of grant of an option (the "Grant
                  Date") shall be December 30, 1998 with respect to the options
                  granted on that date and the first business day after each
                  subsequent annual meeting of the stockholders with respect to
                  the options granted on such subsequent dates.

                           (ii)     Notwithstanding the provisions of SECTION
                  6(a) herein, in the event that a Participant fails to attend
                  four Board meetings between the Grant Date and the date of the
                  next annual meeting of the stockholders of the Company,

                                       2



                  the Participant shall forfeit options to purchase one-fourth
                  (1/4) of the shares subject to the particular option for each
                  meeting less than four which the Participant attends during
                  such period; provided, however, that in the event the
                  Participant fails to attend at least two Board meetings
                  between the Grant Date and the date of the next annual
                  meeting, the Participant shall forfeit all options granted to
                  him or her on the previous Grant Date under this SECTION 6(a).
                  Participation by conference telephone or by other
                  telecommunications equipment will be deemed attendance at a
                  Board meeting for the purpose of receiving options under this
                  SECTION 6(a).

                  (b)      Committee Meeting Grants. Commencing with the date of
the 2001 Annual Meeting of Stockholders, and thereafter, each Eligible Director
who serves on the Board's Executive Committee, Audit Committee and/or
Compensation Committee (each, a "Committee"), shall receive an option for 1,000
shares of Common Stock for each meeting of the respective Committee(s) on which
the Eligible Director serves at which such Eligible Director is in attendance.
The last business day of each of the Company's fiscal quarters shall be a Grant
Date for options under this SECTION 6(b), and, on each such Grant Date, an
option shall be granted to each Eligible Director who served on a Committee at
any time during the quarter then ending based on the number of Committee
meetings attended by such Eligible Director during such quarter. Participation
by telephone conference or by other telecommunications equipment will be deemed
attendance at a Committee meeting for the purpose of receiving options under
this SECTION 6(b). Options granted pursuant to SECTION 6(b) shall not be subject
to the forfeiture provisions of SECTION 6(a)(ii).

         SECTION 7.        TERMS AND CONDITIONS OF OPTIONS.

         7.1      Exercise and Term of Options.

                  (a)      Each option granted under the Plan shall be
         exercisable at the rate of one-third (1/3) per year commencing on the
         first anniversary of the Grant Date, such that the option shall become
         exercisable in full on the third anniversary of each Grant Date,
         subject to the provisions of SECTION 7.1(b) and SECTION 9 hereof.
         Options granted under the Plan shall expire ten years from the date on
         which the option is granted, unless terminated earlier in accordance
         with the Plan.

                  (b)      Notwithstanding the provisions of SECTION 7.1(a)
         above, an option granted to any Participant shall become immediately
         exercisable in full upon the first to occur of:

                           (i)      The death of the Participant, in which case
                  the option may be exercised by the Participant's executor or
                  administrator, or if not so exercised, by the legatees or
                  distributees of his or her estate or by such other person or
                  persons to whom the Participant's rights under the option
                  shall pass by will or by the applicable laws of descent and
                  distribution;

                                       3



                           (ii)     Such time as the Participant ceases to be a
                  director of the Company by reason of his or her permanent
                  disability (as determined by the Administrator);

                           (iii)    Such time as the Participant ceases to be a
                  director of the Company as a result of retirement from the
                  Board of Directors on or after attaining age 65; or

                           (iv)     Such time as a Participant ceases to be
                  eligible to participate in this Plan by reason of his or her
                  becoming an employee of the Company or any of its
                  subsidiaries.

                  (c)      In the event a Participant ceases to be a director of
         the Company by reason of death as described in SECTION 7.1(b)(i), any
         option granted to such Participant hereunder shall expire 90 days from
         the date the Participant ceases to be a director of the Company, but in
         no event later than the day preceding the tenth anniversary of the
         Grant Date of such option.

                  (d)      In the event that the Participant ceases to be a
         director of the Company due to disability, retirement or becoming an
         employee of the Company or a subsidiary as described in SECTIONS
         7.1(b)(ii) through (iv), and after his or her option has become
         exercisable in whole or in part, such option shall remain exercisable
         in whole or in part, as the case may be, in accordance with the terms
         hereof for a period of 30 days from the date the Participant ceases to
         be a director, but in no event later than the day preceding the tenth
         anniversary of the Grant Date of such option.

                  (e)      In the event that the services of a Participant as a
         director of the Company terminate for a reason other than due to death,
         disability, retirement or becoming an employee of the Company as
         provided in SECTION 7.1(b)(i) through (iv) above, then his options
         shall terminate at the time of his termination of service; provided,
         however, that no portion of the option may be exercised later than the
         day preceding the tenth anniversary of the Grant Date of such option.

         7.2      Exercise Price. The exercise price of each share of Common
Stock subject to an option shall be the "Fair Market Value" of a share of Common
Stock on the Grant Date of the option. "Fair Market Value" means the value
determined on the basis of the good faith determination of the Administrator,
without regard to whether the Common Stock is restricted or represents a
minority interest, pursuant to the applicable method described below:

                  (a)      If the Common Stock is listed on a national
         securities exchange or quoted on The NASDAQ Stock Market ("NASDAQ"),
         the "Fair Market Value" shall be the closing price per share of the
         Common Stock on the date on which the option is granted or other
         determination is made (each, a "valuation date") or the most recent
         trading date preceding the valuation date for which such information is
         available, as reported by the principal national exchange on which such
         shares are traded (in the case of an exchange) or by the NASDAQ, as the
         case may be;

                                       4



                  (b)      If the Common Stock is not listed on a national
          securities exchange or quoted on the NASDAQ, but is actively traded in
         the over-the-counter market, the "Fair Market Value" shall be the
         average of the closing bid and asked prices for the Common Stock on the
         valuation date, or the most recent trading date preceding the valuation
         date for which such quotations are reported; and

                  (c)      If, on the relevant date, the Common Stock is not
         publicly traded or reported as described in SECTION 7.2(a) or (b)
         herein, the "Fair Market Value" shall be determined in good faith by
         the Administrator.

         7.3      Payment of Exercise Price; Tax Withholding.

                  (a)      Subject to the terms and conditions of the Plan, an
         option granted hereunder shall, to the extent then exercisable, be
         exercisable in whole or in part by giving written notice to the
         Company's Secretary stating the number of shares with respect to which
         the option is being exercised, accompanied by payment in full for such
         shares.

                  (b)      An option may be exercised by providing payment (i)
         in cash or check and (ii) if approved by the Administrator, payment in
         full or in part may also be made (A) by delivering Common Stock already
         owned by the Participant having a total Fair Market Value on the date
         of such delivery equal to the Option Price; (B) by authorizing the
         Company to retain shares of Common Stock which would otherwise be
         issuable upon exercise of the Option having a total Fair Market Value
         on the date of delivery equal to the Option Price; (C) by the delivery
         of cash by a broker-dealer to whom the Participant has submitted a
         notice of exercise (in accordance with Part 220, Chapter II, Title 12
         of the Code of Federal Regulations, so-called "cashless" exercise); or
         (D) by any combination of the foregoing. No shares of Common Stock will
         be issued until full payment therefor has been made.

                  (c)      The Participant shall pay the Company an amount
         sufficient to cover withholding required by law for any federal, state,
         local or foreign taxes, if any, in connection with an exercise of
         options herewith. A Participant may elect in lieu of paying cash to
         deliver shares of Common Stock or direct the Company that shares of
         Common Stock be withheld to satisfy required tax withholding and such
         shares shall be valued at the Fair Market Value as of the exercise date
         and the Administrator shall determine the timing and other terms and
         conditions in which the use of shares of Common Stock to satisfy tax
         withholding may take place.

         7.4      Rights as a Stockholder. No person will have any rights of a
stockholder as to shares of Common Stock subject to an option until, after
proper exercise of the option or other action required, such shares have been
recorded on the Company's official stockholder records as having been issued or
transferred. Upon exercise of the option or any portion thereof, the Company
will have thirty (30) days in which to issue the shares, and the Participant
will not be treated as a stockholder for any purpose whatsoever prior to such
issuance. No adjustment will be made for cash dividends or other rights for
which the record date is prior to the date such

                                       5



shares are recorded as issued or transferred in the Company's official
stockholder records, except as provided herein or in an option agreement.

         7.5      Documentation of Option Grants. Option grants shall be
evidenced by written instruments prescribed by the Administrator from time to
time. The instruments may be in the form of agreements to be executed by both
the Participant and the president or any vice president of the Company or in the
form of certificates, letters or similar instruments, which need not be executed
by the Participant but acceptance of which will evidence agreement to the terms
of the grant.

         7.6      Nontransferability of Options. Except as otherwise provided in
this SECTION 7.6, no option granted under the Plan shall be assignable or
transferable by the Participant to whom it is granted, either voluntarily or by
operation of law, except (a) by will or the laws of descent and distribution or
(b) to the extent permitted by the Administrator in a manner consistent with the
registration provisions of the Securities Act of 1933, as amended (the
"Securities Act"), during the lifetime of the Participant, to (i) the spouse or
lineal descendants of the Participant ("Immediate Family Members"), (ii) a trust
or trusts maintained for the exclusive benefit of the Participant and/or such
Immediate Family Members, or (iii) a limited partnership or limited liability
company in which the only partners or members are the Participant and/or such
Immediate Family Members, formed for estate planning purposes; provided, that
(y) the stock option agreement or any amendment thereto executed by the
Administrator pursuant to which such option is granted must expressly provide
for the transferability in a manner consistent with this SECTION, and (z)
subsequent transfers of a transferred option shall be prohibited (except as
otherwise provided in this SECTION 7.6), and except that distributions may be
made to the Participant and/or such Immediate Family members from trusts, family
limited partnerships or family limited liability companies described herein).
Following a transfer permitted herein, any such option shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, provided, that for the purposes of SECTIONS 7.3 and 7.4 of this Plan,
the term "Participant" shall be deemed to refer to the permitted transferee with
respect of the options so transferred. The events contained in SECTIONS 7.1(b),
7.1(c) 7.1(d) and 7.1(e) shall continue to be applied with respect to the
original Participant, and transferred options shall expire at or after the date
the original Participant ceases to be a director of the Company as provided in
SECTIONS 7.1(c), 7.1(d) and 7.1(e) and shall otherwise be exercisable by the
transferee only to the extent and for the periods specified in SECTIONS 7.1 and
7.3.

         7.7      Approvals. The effectiveness of the Plan and any options
granted hereunder are subject to the approval of the Plan by affirmative vote of
a majority of the shares of the Common Stock present in person or by proxy and
entitled to vote at an annual or special meeting of the stockholders or by
written consent as provided in the Company's charter or by-laws. In the event
that the Plan is not approved by the stockholders, the Plan and any options
granted hereunder shall be void as of no effect.

         The Company's obligation to sell and deliver shares of Common Stock
under the Plan is subject to the approval of any governmental authority required
in connection with the authorization, issuance or sale of the Common Stock.

                                       6



         SECTION 8.        REGULATORY COMPLIANCE AND LISTING. The issuance or
delivery of any shares of stock subject to exercisable options hereunder may be
postponed by the Administrator for such period as may be required to comply with
any applicable requirements under federal securities laws, any applicable
listing requirements of any national securities exchange or similar organization
or any requirements under any law or regulation applicable to the issuance or
delivery of such shares. The Company shall not be obligated to issue or deliver
any such shares if the issuance or delivery thereof would constitute a violation
of any provision of any law or of any regulation of any governmental authority
or any rule of any national securities exchange or similar organization.

         SECTION 9.        CHANGE IN CONTROL. Notwithstanding anything to the
contrary in the Plan, the following shall apply to all outstanding options
granted under the Plan:

         9.1      Definitions. The following definitions shall apply to this
SECTION 9:

                  (a)      A "Change in Control" shall mean:

                           (i)      The acquisition by any individual entity or
                  group (within the meaning of SECTION 13(d)(3) or 14(d)(2) of
                  the 1934 Act) or beneficial ownership (within the meaning of
                  Rule 13d-3 promulgated under the 1934 Act) of 50% or more of
                  the combined voting power of the then outstanding voting
                  securities of the Company entitled to vote generally in the
                  election of directors (the "Outstanding Voting Securities");
                  provided, however, that the following acquisitions shall not
                  constitute a Change of Control: (A) any acquisition directly
                  from the Company or any of its subsidiaries, (B) any
                  acquisition by the Company or any of its subsidiaries, (C) any
                  acquisition by any employee benefit plan (or related trust)
                  sponsored or maintained by the Company or any of its
                  subsidiaries, (D) any acquisition by any corporation with
                  respect to which, following such acquisition, more than 50%
                  of, respectively, the then outstanding shares of common stock
                  of such corporation and the combined voting power of the then
                  outstanding voting securities of such corporation entitled to
                  vote generally in the election of directors is then
                  beneficially owned, directly or indirectly, by individuals,
                  entities or groups who were the beneficial owners,
                  respectively, of at least 50% of the Outstanding Voting
                  Securities immediately prior to such acquisition in
                  substantially the same proportions as their ownership,
                  immediately prior to such acquisition, of the Outstanding
                  Voting Securities, or (E) the acquisition by any individual,
                  entity or group which on the date this Plan was adopted by the
                  Board owned 50% or more of the Outstanding Voting Securities.

                           (ii)     Approval by the stockholders of the Company
                  of a reorganization, merger or consolidation, in each case,
                  with respect to which all or substantially all of the
                  individuals and entities who were the beneficial owners,
                  respectively, of the Outstanding Voting Securities immediately
                  prior to such reorganization, merger or consolidation do not,
                  following such reorganization, merger or consolidation,
                  beneficially own, directly or indirectly, more than 50% of the
                  combined voting

                                       7



                  power of the then outstanding voting securities entitled to
                  vote generally in the election of directors, as the case may
                  be, of the corporation resulting from such reorganization,
                  merger or consolidation in substantially the same proportions
                  as their ownership, immediately prior to such reorganization,
                  merger or consolidation, of the Outstanding Voting Securities;
                  or

                           (iii)    Approval by the stockholders of the Company
                  of (A) a complete liquidation or dissolution of the Company or
                  (B) the sale or other disposition of all or substantially all
                  of the assets of the Company other than to a corporation, with
                  respect to which following such sale or other disposition,
                  more than 50% of, respectively, the then outstanding shares of
                  common stock of such corporation and the combined voting power
                  for the then outstanding voting securities of such corporation
                  entitled to vote generally in the election of directors is
                  then beneficially owned, directly or indirectly, by all or
                  substantially all of the individuals and entities who were the
                  beneficial owners, respectively, of the Outstanding Voting
                  Securities immediately prior to such sale or other disposition
                  in substantially the same proportion as their ownership,
                  immediately prior to such sale or other disposition, of the
                  Outstanding Voting Securities.

                  (b)      "CIC Price" shall mean the higher of (i) the highest
         price paid for a share of Common Stock in the transaction or series of
         transactions pursuant to which a Change in Control of the Company shall
         have occurred, or (ii) the highest reported sales price of a share of
         Common Stock during the 60-day period immediately preceding the date
         upon which the event constituting a Change in Control shall have
         occurred.

         9.2      Acceleration of Vesting and Payment of Stock Options.

                  (a)      Upon the occurrence of an event constituting a Change
         in Control, all options outstanding on such date shall become 100%
         vested and exercisable and shall be repurchased by the Company by
         making a cash payment to the Participant for such options as soon as
         may be practicable. Upon such payment, such stock options shall be
         canceled.

                  (b)      The amount of cash to be paid to a Participant shall
         be determined by multiplying the number of shares subject to the
         Participant's outstanding options by the difference between the
         exercise price per share and the CIC Price, if higher.

                  (c)      Notwithstanding SECTION 9.2(a) and 9.2(b) herein, if
         the exercise price of options held by a Participant exceeds the CIC
         Price or the Fair Market Value on the date on which the first event
         constituting a Change in Control (as defined in SECTION 9.1 herein)
         occurs, as the case may be, such option shall be 100% vested and
         exercisable but shall not be canceled.

         SECTION 10.       ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION.
In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
distribution with respect to holders of the

                                       8



Common Stock (other than normal cash dividends), automatic adjustment shall be
made in the number and kind of shares as to which outstanding options or
portions thereof then unexercised shall be exercisable and in the available
shares set forth in SECTION 5 hereof, to the end that the proportionate interest
of the option holder shall be maintained as before the occurrence of such event.
Such adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share. Automatic adjustment
shall also be made in the number and kind of shares subject to options
subsequently granted under the Plan.

         SECTION 11.       NO RIGHT TO REELECTION. Nothing in the Plan shall be
deemed to create any obligation on the part of the Board to nominate any
non-employee director for reelection by the Company's stockholders, nor confer
upon any non-employee director the right to remain a member of the Board for any
period of time or at any particular rate of compensation.

         SECTION 12.       AMENDMENT AND TERMINATION.

                  (a)      The Board may amend, modify or terminate the Plan at
         any time and from time to time; provided, however, that unless required
         by law, no such amendment or modification shall (i) materially
         adversely affect any right or obligation with respect to any
         outstanding option without the consent of the holder of the option, or
         (ii) unless previously approved by the stockholders, increase the
         number of shares of Common Stock available for grants as provided in
         SECTION 5 hereof other than an adjustment pursuant to SECTION 10
         hereof. In addition, no such amendment shall, unless previously
         approved by the stockholders (where such approval is necessary to
         satisfy then applicable requirements of federal securities laws, the
         Code or rules of any stock exchange on which the Company's Common Stock
         is listed) (i) in any manner affect the eligibility requirements set
         forth in SECTION 4 hereof, (ii) increase the number of shares of Common
         Stock subject to any option, (iii) change the purchase price of the
         shares of Common Stock subject to any option, (iv) extend the period
         during which options may be granted under the Plan, or (v) materially
         increase the benefits to Participants under the Plan.

                  (b)      Unless earlier terminated by the Board of Directors,
         or the shares reserved under the Plan shall have all been committed for
         options granted pursuant to the Plan, the Plan shall terminate on
         December 31, 2008; provided, however, that options which are granted on
         or before this date shall remain exercisable in accordance with their
         respective terms after the termination of the Plan.

         SECTION 13.       SUCCESSORS AND ASSIGNS. The Plan shall be binding on
all successors and permitted assigns of a Participant, including but not limited
to, the estate of such Participant and the executor, administrator or trustee of
such estate, the guardian or legal representative of the Participant.

         SECTION 14.       GOVERNING LAW. The validity, construction and effect
of the Plan and any action taken or relating to the Plan shall be determined in
accordance with the laws of

                                       9



the State of Delaware, without regard to the principles of conflicts of laws,
and applicable federal law.

         SECTION 15.       SECTION 16(B) COMPLIANCE. It is the intention of the
Company that transactions by Eligible Directors under the Plan shall comply with
Rule 16b-3 under the Exchange Act. If any Plan provision is later found not to
be in compliance with SECTION 16 of the Exchange Act, then, unless the
Administrator shall determine otherwise, the provision shall be deemed null and
void or otherwise construed in such a manner as to enable transactions under the
Plan to meet the requirements of Rule 16b-3 or any successor rule.

                                       10



         IN WITNESS WHEREOF, this Amended and Restated Stock Option Plan for
Non-Employee Directors, as further amended and restated effective as of February
21, 2003, has been executed in behalf of the Company.

                                  BLUE RHINO CORPORATION

                                  By:  /S/ BILLY D. PRIM
                                       -----------------------------------------

                                           Billy D. Prim
                                           President and Chief Executive Officer

Attest:

/s/ Mark Castaneda
- ---------------------------------
Mark Castaneda
Secretary

[Corporate Seal]

                                       11

EX-99.1

                                                                    Exhibit 99.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report on Form 10-Q of Blue Rhino
Corporation (the "Company") for the period ending January 31, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Billy D. Prim, Chairman and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The
Sarbanes-Oxley Act of 2002, that:

         (1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

                                           /s/ Billy D. Prim

                                           Billy D. Prim
                                           Chairman and Chief Executive Officer
                                           March 13, 2003

EX-99.2

                                                                    Exhibit 99.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report on Form 10-Q of Blue Rhino
Corporation (the "Company") for the period ending January 31, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Mark Castaneda, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley
Act of 2002, that:

         (1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

                                           /s/ Mark Castaneda

                                           Mark Castaneda
                                           Chief Financial Officer
                                           March 13, 2003