Limited Liability Company Agreement

EXHIBIT 10.24


LIMITED LIABILITY COMPANY AGREEMENT
OF
R4 TECHNICAL CENTER - NORTH CAROLINA, LLC


THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") of R4 Technical Center - North Carolina, LLC, a Delaware limited liability company (the "Company") is effective as of April 28, 2000 by and among Blue Rhino Corporation, a Delaware corporation ("BRC"), Manchester Tank & Equipment Co., a Delaware corporation ("Manchester") and Platinum Propane, L.L.C., a Delaware limited liability company ("Platinum"), one of BRC's distributors, and such other distributors of BRC as shall from time to time become a party hereto in accordance with the terms hereof.


RECITALS


WHEREAS, BRC and Manchester entered into a letter of intent dated October 21, 1999 which was extended by amendment for the formation of a joint venture to operate an automated propane grill cylinder bottling and refurbishing plant; and


WHEREAS, BRC, Manchester and Platinum have agreed to contribute an aggregate of $7 million to the joint venture; and


WHEREAS, BRC has from time to time advanced funds on behalf of the joint venture for construction and other costs associated with the automated grill cylinder bottling and refurbishing plant; and


WHEREAS, BRC and Manchester desire to formalize their joint venture by forming the Company and entering into this Agreement; and


WHEREAS, the Members hereby desire to set forth the rights and obligations of the Members and the Managers and operate this limited liability company in accordance with the terms of, and subject to the conditions set forth in, this Agreement.


COVENANTS


In consideration of the mutual covenants and agreements hereinafter set forth, the parties hereby agree as follows:


ARTICLE I


Section 1.1 Definitions. When used in this Agreement the following terms shall have the meanings set forth below:


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"Act" means the Delaware Limited Liability Company Act, 6 Del.C.ss.18-101, et seq., as amended from time to time.


"Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person; for purposes of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise.


"Agreement" means this Limited Liability Company Agreement, as from time to time amended.


"Assignee" means a person to whom an interest in the Company has been transferred in accordance with the provisions of this Agreement but who has not been admitted as a substitute or additional Member.


"Available Cash" means, with respect to any fiscal year, the sum of (i) all cash receipts of the Company during such fiscal year (excluding for this purpose Capital Contributions and Member Loans), and (ii) all reductions made by the Board of Managers during such fiscal year for reserves established as hereinafter provided, less the sum of (i) all cash operating expenditures and all cash debt service payments (including payments of principal, interest and penalties, if any), and (ii) all additions to reserves during such fiscal year deemed reasonably appropriate by the Board of Managers, including reserves for capital expenditures, working capital and contingent liabilities.


"Bankruptcy" has the meaning given it in Section 18-101 of the Act.


"Board of Managers" mean the five (5) Managers of the Company elected pursuant to Section 8.2. Any action taken by the Board of Managers shall require the approval of four of the Managers.


"Capital Account" of a Member means the Capital Account established for such Member under Section 4.5.


"Capital Contribution" means, with respect to any Member or Assignee, the amount of cash and the net fair market value of any property other than cash contributed by the Member or Assignee (or its predecessor in interest) to the Company in exchange for Units.


"Capital Expenditure" means an expenditure by the Company that is over $1,000 and depreciated for longer than one (1) year.


"Change in Control" means, with respect to a Member or an Assignee, (a) any sale or transfer of all or substantially all of the assets of such Person, (b) any sale or transfer (other than


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to an Affiliate) of over (i) 40.1% of the voting interests of such Person in a transaction or series of transactions to another Person or its Affiliates or (ii) 30% of the voting interests of such Person in a transaction or series of transactions to another Person or its Affiliates that manufacture propane gas cylinders, (c) except for any transaction, including a reorganization, in which Manchester remains beneficially owned by McWane, Inc. or its subsidiaries, (i) any merger, consolidation, recapitalization or other transaction in which the Member is not the surviving entity or (ii) which will result in more than 49% of the voting equity interests of the Member being owned of record or beneficially by Persons other than the holders of such voting equity interests immediately prior to such transaction, (d) the death of any Member who is an individual or sole proprietorship, (e) such Member makes an assignment for the benefit of creditors, (f) such Member files a voluntary petition in bankruptcy, (g) such Member is adjudged a bankrupt or insolvent, or has entered against him an order for relief in any bankruptcy or insolvency proceeding, (h) such Member files a petition or answer seeking for himself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, or (i) such Member seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of all or any substantial part of the properties of a Member, or (j) in the case of BRC, in the event Bank of America or any successor in interest thereto forecloses upon or otherwise attempts to exercise its rights as a secured creditor with respect to the Membership Interest or Units which are pledged to Bank of America by BRC. Notwithstanding anything to the contrary herein, the issuance of additional common stock by BRC through a public offering shall not be deemed to be a Change in Control; provided however, that if through such public offering the provisions of Section (b)(i) or (ii) of this definition are met, a Change of Control shall have occurred.


"Code" means the Internal Revenue Code of 1986, as amended.


"Company" means the limited liability company continued pursuant to this Agreement and the limited liability company continuing the business of this Company in the event of dissolution as herein provided.


"Company Minimum Gain" has the meaning of "partnership minimum gain" as set forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.


"Construction Contract" means that certain contract dated February 26, 1999, as amended, by and between BRC and Landmark Construction, which shall be assigned by BRC to the Company and assumed by the Company. The Construction Contract is attached hereto as Exhibit A.


"Covered Capacities" has the meaning ascribed to it in Section 8.7.


"Depreciation" means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its


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adjusted basis for Federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis.


"Dissolution" of a Member which is not a natural person means that such Member has terminated its existence, wound up its affairs and dissolved in accordance with applicable laws.


"Distribution" means, with respect to any Member, the amount of cash and the Gross Asset Value of any property (other than cash) distributed by the Company to the Member in respect of the Member's Units.


"Distributor Member" means Platinum and any other party that succeeds to Platinum's Membership Interest pursuant to and in accordance with the provisions of this Agreement.


"Distributors" means Platinum and the other distributors of BRC that shall from time to time become Members of the Company in accordance with this Agreement.


"Equipment Contract" means that certain contract dated February 26, 1999, as amended, by and between BRC and Provencale D' Automation Et De Mecanique, which shall be assigned by BRC to the Company and assumed by the Company. The Equipment Contract is attached hereto as Exhibit B.


"Gross Asset Value" means, with respect to any asset, the adjusted basis for Federal income tax purposes of such asset, except as follows:


(i) The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair market
value of such asset, as determined by the Board of Managers.


(ii) The Gross Asset Value of all Company assets shall be
adjusted to equal their respective gross fair market values, as
determined by the Board of Managers in a manner that is consistent
with the provisions of Code Section 7701(g), as of the following
times: (a) the acquisition of an additional interest in the Company by
any new or existing Member in exchange for more than a de minimis
Capital Contribution; (b) the distribution by the Company to a Member
of more than a de minimis amount of property as consideration for an
interest in the Company; and (c) the liquidation of the Company within
the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury
Regulations; provided, however, that adjustments pursuant to clauses
(a) and (b) above shall be made only if the Board of Managers
reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Members;


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(iii) The Gross Asset Value of any Company asset
distributed to any Member shall be the gross fair market value, as
determined by taking Code Section 7701(g) into account, of such asset
on the date of distribution as determined by the Board of Managers;
and


(iv) The Gross Asset Value of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Section 734(b) or Section 743(b) of
the Code, but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations and Section 5.4(b);
provided, however, that Gross Asset Value shall not be adjusted
pursuant to this Subsection (iv) to the extent the Board of Managers
determines that an adjustment pursuant to Subsection (ii) hereof is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Subsection.


If the Gross Asset Value of an asset has been determined or adjusted pursuant to clauses (i), (ii) or (iv), above, such Gross Asset Value shall thereafter be adjusted in the same manner as would the asset's basis for federal income tax purposes except that in lieu of regular depreciation, the Company shall take deductions for Depreciation.


"Majority Interest" means, with respect to any group of Members as of any particular time, Members in such group whose Units at such time exceed one-half of the outstanding Units of all Members in such group at such time. If no distinction is made with respect to the group of Units used in the context so used, the term Majority Interest shall mean as of any particular time, Members whose Units at such time exceed one-half of the outstanding Units of all Members owning Units at such time.


"Managers" means, as of any particular time, the five (5) members of the Board of Managers.


"Members" mean BRC, Manchester, Platinum and other parties as shall from time to time become a Member of the Company in accordance with the terms of this Agreement.


"Membership Interest" means a Member's entire right, title and interest in the Units owned by such Member and may include a Member's right to share in the Profits and Losses, the right to receive distributions of Company assets and the right to participate in the management of the business and affairs of the Company, to the extent permitted by this Agreement, including the right to vote on, consent to, or otherwise participate in any decision or action of or by the Members granted pursuant to this Agreement and the Act.


"Member Nonrecourse Debt" has the meaning set forth in Section 1.704-2(b)(4) of the Treasury Regulations.


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"Member Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(i)(2) of the Treasury Regulations.


"Officers" mean the persons selected to offices of the Company by the Board of Managers pursuant to Section 8.3.


"Other Business Entity" has the meaning given it in Section 18-209 of the Act.


"Person" means an individual, corporation, partnership, limited liability company, association, trust, joint venture, unincorporated organization, other entity or group.


"Profits" or "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:


(i) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits
or Losses pursuant to this definition shall be added to such taxable
income or loss;


(ii) any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Section 705(a)(2)(B) expenditures
pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be subtracted from such taxable
income or loss;


(iii) in the event the Gross Asset Value of any Company
asset is adjusted pursuant to (ii) or (iv) of the definition of "Gross
Asset Value," the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for
purposes of computing Profits or Losses;


(iv) gain or loss resulting from any disposition of any
property of the Company with respect to which gain or loss is
recognized for Federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs
from its Gross Asset Value; and


(v) in lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such fiscal year or other period, computed in accordance with the
definition of "Depreciation."


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"Super Majority Interest" means, as of any particular time, Members whose Units at such time exceed two thirds of the outstanding Units of all Members owning Units at such time.


"Transfer" means any transaction by which a Member assigns all or part of its Units or any interest therein, voluntarily or involuntarily, by operation of law or otherwise and whether or not for value, to any other Person, and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange, transfer or other form of disposition.


"Treasury Regulations" means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time.


"Units" or "Membership Units" refers to the interest of a Member or an Assignee in the Profits, Losses, income, deductions and credits of the Company and Distributions by the Company. The number of Units held by each person admitted to the Company as a Member and by each Assignee shall be as set forth on Schedule 1 hereto, as amended from time to time.


ARTICLE II


Section 2.1 Formation of Company. The Members hereby have formed a limited liability company pursuant to the Act and the provisions of this Agreement and, for that purpose, have caused the Certificate of Formation to be prepared, executed and filed with the Secretary of State of Delaware on December 14, 1999. Except as herein otherwise expressly stated, the rights and liabilities of the Members shall be as provided in the Act.


Section 2.2 Company Name. The business of the Company shall be conducted under the name "R4 Technical Center - North Carolina, LLC" or under such other name as the Board of Managers may from time to time determine.


Section 2.3 Purposes of Company. The Company is organized for the purpose of financing, developing, and operating an automated propane grill cylinder bottling and refurbishing plant and to engage in any other lawful act for which a limited liability company may be organized under the Act.


Section 2.4 Company Property. Title to Company property shall be held in the name of the Company or its nominee.


Section 2.5 Registered Office; Principal Place of Business. The name of the Company's registered agent for service of process is The Corporation Trust Company, and the address of the Company's registered office in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801. The principal place of business of the Company shall be at 1309 Buck Shoals Road, Hamptonville, North Carolina. The Board of Managers may change the


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Company's registered agent or the location of the Company's registered office or principal place of business as the Board of Managers may from time to time determine.


Section 2.6 Qualifications in Other Jurisdictions. The Board of Managers shall cause the Company to be qualified, formed or registered under assumed or fictitious names statutes or similar laws in any jurisdiction in which the Company transacts business. The Board of Managers, as an authorized person, within the meaning of the Act, may execute, deliver and file any certificates and any amendments and/or restatements thereof necessary for the Company to do business in a jurisdiction in which the Company may wish to conduct such business. The Board of Managers shall prepare, execute and cause to be filed such original or amended certificates evidencing the formation and operation of the Company whenever the same may be required under the laws of any states where the Company may do business.


ARTICLE III


Section 3.1 Term of Company. Subject to the provisions of Article IX, the term of the Company commenced upon the filing of the Certificate of Formation in the office of the Secretary of State of the State of Delaware, and shall continue until dissolved in accordance with this Agreement.


ARTICLE IV


Section 4.1 Capital Contributions of the Members. The initial Capital Contribution of BRC shall consist of assets, construction and equipment costs and start-up costs, the Construction Contract and the Equipment Contract which shall have an aggregate value of $3,430,000 as shown on the attached Exhibit C with complete supporting documentation of such value. Manchester's initial Capital Contribution shall be $3,500,000 in cash. Platinum's initial Capital Contribution shall be $70,000 in cash. Schedule 1 attached hereto shows the Capital Contribution and number of Units held by each Member. Any Capital Contribution made by Members hereinafter admitted shall be added to Schedule 1.


Section 4.2 Loans by Members.


(i) As of the date of this Agreement, BRC has made loans to the Company in excess of its initial Capital Contribution of $3,430,000 in the amount of $3,312,822.88 of which $3,312,822.88 shall be paid by the Company to BRC on the date hereof.


(ii) From time to time, at the request of the Board of Managers, the Members may make loans to the Company ("Member Loans") upon terms and conditions as approved by the Board of Managers.


Section 4.3 Withdrawal and Return of Capital. No Member shall have the right to withdraw or to demand a return of any of its Capital Contribution, other than upon dissolution


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and winding up of the Company in accordance with the terms of Section 9.3. Any return of such Capital Contribution shall be made solely from the assets of the Company (including the Capital Contributions of the Members) and only in accordance with the terms hereof, and no Member shall have personal or other liability for the return of any other Member's Capital Contribution. Under circumstances requiring a return of any Capital Contribution, no Member shall have the right to receive property other than cash except as may be specifically provided herein, and to the extent any monies which any Member is entitled to receive pursuant to Article VI hereof or any other provision of this Agreement would constitute a return of capital, each of the Members consents to the withdrawal of such capital.


Section 4.4 Interest on Capital. No interest shall accrue or be paid on any Capital Contribution made to the Company.


Section 4.5 Capital Accounts. The Company shall create upon its books and records a capital account ("Capital Account") for each Member and Assignee (and such Assignee will be referred to as a "Member" solely for purposes of reference with respect to Capital Accounts, allocations of Company Profits and Losses and Distributions) which shall be maintained in accordance with the following provisions:


(i) To each Member's Capital Account there shall be
credited such Member's Capital Contributions, such Member's
distributive share of Profits and any items in the nature of income or
gain which are specially allocated pursuant to Section 5.2, 5.3, or
5.4, the amount of any Company liabilities which are assumed by such
Member or which are secured by any property distributed to such
Member, and the Member's share of any increase in Gross Asset Value
pursuant to its definition.


(ii) To each Member's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any property
distributed to such Member pursuant to any provision of this
Agreement, such Member's distributive share of Losses and any items in
the nature of deductions or losses which are specially allocated
pursuant to Section 5.2, 5.3 or 5.4, and the amount of any liabilities
of such Member which are assumed by the Company or which are secured
by any property contributed by such Member to the Company, and the
Member's share of any decrease in Gross Asset Value pursuant to its
definition.


(iii) In the event all or a portion of an interest in the
Company is transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred interest.


(iv) In determining the amount of any liability for
purposes of clauses (i) and (ii), above, there shall be taken into
account Section 752(c) of the Code and any other applicable provisions
of the Code and Treasury Regulations.


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The foregoing provisions of Section 4.5 and the other
provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with the Regulations Section
1.704-1(b) and shall be interpreted and applied in a manner consistent
with such Regulations. In the event the Board of Managers determines
that it is prudent to modify the manner in which Capital Accounts, or
any debits or credits thereto (including, without limitation, debits
or credits relating to liabilities that are secured by contributed or
distributed property, or that are assumed by the Company or its
Members), are computed in order to comply with such Regulations, the
Board of Managers may make such modification, provided it is not
likely to have a material effect on the amounts distributable to any
Member upon the dissolution of the Company, or upon the termination of
such Member's interest in the Company.


Section 4.6 Additional Capital.


(a) No Member shall be required to contribute any additional capital to the Company.


(b) If the Company proposes to issue any Units or rights to acquire such Units (the "Offered Units"), the Company will first offer to sell to each Member holding Units a portion of such Offered Units equal to the quotient determined by dividing (1) the number of Units held (directly or indirectly) by such Member by (2) the total number of Units outstanding. Each Member will be entitled to purchase such Units at the offered price and on the terms as determined by the Board of Managers.


(i) In order to exercise its purchase rights hereunder, a
Member must, within 15 days after receipt of written notice from the
Company describing in reasonable detail the Offered Units, the
purchase price thereof, the payment terms and such Member's percentage
allotment, deliver a written notice to the Company describing its
election hereunder.


(ii) If all of the Offered Units are not fully subscribed
by the Members, the remaining Offered Units will be reoffered by the
Company to the Members purchasing their full allotment upon the terms
set forth in this paragraph, except that such Members must exercise
their purchase rights within five (5) days after receipt of such
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