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."


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"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.


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"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 Sub ...