EXHIBIT 10.5
MULTI-DRAW
CONVERTIBLE SECURED NOTE
------------------------
$635,000.00 February 12, 1998
FOR VALUE RECEIVED, Bison Valve, L.L.C., an Illinois limited liability
company (the "Company"), promises to pay to the order of Blue Rhino Corporation,
a Delaware corporation ("Blue Rhino"), at such place as Blue Rhino may from time
to time designate in writing, in lawful money of the United States of America
and in immediately available funds, the principal sum of Six Hundred Thirty-Five
Thousand and 00/lOOths Dollars ($635,000.00) (the "Principal") (also referred to
herein as the "Loan"), in accordance with the repayment provisions set forth
below, plus interest (calculated on the basis of a 360-day year), in accordance
with the interest payment provisions set forth below.
This Multi-Draw Convertible Secured Note (the "Note") evidences the Loan
made hereunder, and is secured by a collateral assignment of the Company's
rights under a certain License Agreement of even date (the "Security
Agreement").
1. Interest & Additional Principal. Interest shall accrue daily, commencing
as of the date of this Note, on the aggregate outstanding Principal due under
the Note at a per annum rate equal to nine and one-half percent (9.5%). Interest
on the outstanding Principal shall accrue from the date of this Note through the
fourth (4th) anniversary of the Note, at which time such accrued interest shall
convert into additional principal ("Additional Principal") which shall be
amortized over a twenty-four (24) month period. Interest thereafter on the
aggregate of the Principal and the Additional Principal for the next two (2)
years shall be paid monthly on the first day of each month beginning with the
first day of the first month following the fourth (4th) anniversary of this
Note. Interest on the Principal and Additional Principal shall accrue daily at a
per annum rate equal to nine and one-half percent (9.5%). Interest shall be
computed on the basis of a 360-day year and the actual number of days elapsed.
2. Disbursement & Repayment. disbursements of the Principal under this
Promissory Note shall be made as follows: (i) $635,000 to be disbursed on the
date of this Note. All disbursements of the Principal made under this
Promissory Note shall be amortized over a twenty-four (24) month period. Payment
of the Principal and Additional Principal shall be made in twenty-four (24)
equal monthly payments beginning on the first day of the first month following
the fourth (4th) anniversary of the Note, and on the first (1st) day of each
month thereafter. Final payment of all outstanding Principal,
Additional Principal and interest due and payable under this Note shall be due
on the first day of the seventy-second (72nd) month following the date of this
Note.
3. Default Rate. Any principal payments due under this Note not paid when
due, whether at stated maturity, by notice of repayment, by acceleration or
otherwise, shall, to the extent permitted by applicable law, thereafter bear
interest (compounded monthly and payable upon demand) at a rate which is 2% per
annum in excess of the rate of interest otherwise payable under this Note in
respect of such principal amount until such unpaid amount has been paid in full
(whether before or after judgment).
4. Prepayment. Principal under this Note may be prepaid after thirty (30)
days written notice from the Company to Blue Rhino. Interest under this Note may
be prepaid without notice at any time. All payments made hereunder shall be
applied first to interest and then to outstanding principal.
5. Payment on Holiday. If payment hereunder becomes due and payable on a
Saturday, Sunday, or legal holiday, under the laws of the State of Illinois, the
due date thereof shall be extended to the next succeeding business day.
6. Waiver of Demand and Presentment. Demand, presentment, protest,
diligence, notice of dishonor, and any other formality are hereby expressly
waived by the Company and any endorser or guarantor.
7. Conversion. The holder of this Note shall have the right, at such
holder's Option, to convert, subject to the terms, conditions and provisions of
this Note, the outstanding Principal and any Additional Principal due under this
Note, or any portion thereof, into units of common membership interest (the
"Units") at the price of (a) $1,000.00 ("Conversion Price") per unit at any
time, on demand. In the event any or all of the Principal or Additional
Principal due this Note is to be converted, the holder shall surrender this Note
to the Company at any time during usual business hours together with written
notice (hereinafter referred to as "Conversion Notice") that the holder elects
to convert this Note into Units in accordance with the provisions of this Note
and the Loan Agreement, and specifying the name or names in which the Units to
be issued upon such conversion shall be registered, together with the addresses
and social security numbers, in the case of natural persons, or federal employer
identification numbers, in the case of entities, of the persons so named, and,
if so required by the Company, accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company duly executed by the
registered holder or his attorney duly authorized in writing and the persons in
whose names the Units are to be issued.
In the event this Note is to be converted in part only, the Company shall,
upon surrender of this Note, execute and deliver to the holder thereof, at the
expense of the Company, a new Note in principal amount equal to the unconverted
portion of this Note. The Conversion Price and the number of Units (or other
securities or property) to be
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issued upon the conversion of the amounts due under this Note shall be subject
to adjustment from time to time upon the occurrence of certain events, as
provided in this Note. The Company shall be under no obligation to convert this
Note if the issuance of Units with respect thereto would violate any state or
federal securities laws. The holder shall, as a condition of any conversion,
make its own investigation into the financial condition of the Company and shall
jointly and severally represent and warrant with the persons to whom the Units
are to be issued (the "Transferee") that: (a) the Units that the Transferee
acquires are acquired for investment purposes, and not for resale, (b) the
Transferee can bear the economic risk of his, her or its investment in the Units
for an indefinite period of time, (c) that the Transferee's experience and
training in financial affairs is sufficient for the Transferee to evaluate the
risks of investing in and holding the Units, (d) the Transferee understands and
has agreed that there is then no public market for the Units and the Company is
not under any obligation to facilitate a public market, and (e) the Units may
not be transferred or sold without registration (with which the Company has no
obligation to participate or permit) or the availability of an exemption from
the registration requirements of applicable securities laws. The Units will
include an appropriate legend with restrictions on transfer contained in the
Company's certificate of incorporation and operating agreement which
restrictions shall include, among other requirements, the ability of the Company
to require an opinion of counsel that a proposed transfer does not violate
applicable state or federal securities laws prior to permitting any transfer.
a. Conversion Price.
i. Conversion Price. The "Conversion Price" shall be $1,000.00 per
Unit. In order to prevent dilution of the conversion rights granted pursuant to
this Note the Conversion Price will be subject to adjustment from time to time
will be pursuant to this Section 7. For purposes of this Section 7(a), the
Company shall be deemed to have issued, sold Units or granted a membership
interest in the Company as set forth in Section 7(b) below.
ii. Adjustment for Dilutive Events. If and whenever on or after the
date of this Note, the Company issues, sells grants a membership interest in, or
in accordance with Section 7(b) below is deemed to have issued, sold or granted
a membership in, the Company for consideration per Unit less than the Conversion
Price (the "Diluted Share Price") in effect immediately prior to the time of
such issue or sale (a "Dilutive Event"), then any conversion after the
occurrence of any such Dilutive Event shall be at a Conversion Price reduced so
that the Conversion Price in effect for conversions following the Dilutive Event
will equal the Diluted Share Price provided, however, that if the Company shall
have, at least fifteen days (15) prior to the Dilutive Event, offered to the
holder the opportunity to add to this Note the option to purchase a
proportionate share of the units proposed to be issued or sold in the Dilutive
Event (the "Dilutive Units") and the holder shall have declined or failed to
respond to such proposed sale, the Conversion Price shall not change. If the
holder exercises the
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opportunity to add to this note the option to purchase the Dilutive Units within
such fifteen day period, then, on the day of the closing of the proposed sale of
such units the holder shall loan to the Company an amount equal to the proposed
purchase price of such Dilutive Units pursuant to the terms of this note which
shall become additional Principal of this note, subject to all of the terms of
this note, and the conversion option shall include the Dilutive Units at the
proposed purchase price therefor. The proportionate share of any Units proposed
to be issued shall be determined by multiplying the number of Units proposed to
be issued by the quotient of the Units that would be issued to the holder if all
then outstanding Principal was converted at the then applicable conversion price
(the "Option Units") divided by the sum of the number of Units outstanding
immediately prior to such issuance plus the Option Units. As used in this
Section 7(a) and in Section 7(b) below, the term "Units" shall include Unit
Equivalents.
b. Issuance and Sale of Units. For purposes of determining the adjusted
Conversion Price pursuant to Section 7(a) above the following events shall be
deemed to be an issuance and sale of Units by the Company:
i. Issuance of Rights or Options. If (i) the Company in any manner
hereafter grants any rights or Options to subscribe for or to purchase Units or
any securities convertible into or exchangeable for Units or any other
membership interest in the Company (such rights or Options referred to herein as
"Options" and such convertible or exchangeable stock or securities referred to
herein as "Convertible Securities") and (ii) the Price Per Unit of the Units
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities is less than the Conversion Price in effect
immediately prior to the time of the granting of such Options then the Units
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities will be deemed to have been issued and sold by the
Company for such Price Per Unit. For the purposes of this Section 7(b)(i) the
"Price Per Unit" is determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration payable
to the Company upon exercise of all such Options, plus in the case of such
Options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange thereof, by
(ii) the total maximum number of Units issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options. No further adjustment of the
Conversion Price will be made when Convertible Securities are actually issued
upon the exercise of such Options or when Units is actually issued upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
ii. Issuance of Convertible Securities. If (i) the Company in any
manner issues or sells any Convertible Securities and (ii) the Price Per Unit of
Units issuable upon such conversion or exchange is less than the Conversion
Price in effect immediately prior to
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the time of such issue or sale then the Units issuable upon the conversion or
exchange of such Convertible Securities will be deemed to have been issued and
sold by the Company for such Price Per Unit. For the purposes of this Section
7(b)(ii), the "Price Per Unit" will be determined by dividing (i) the total
amount received or receivable by the Company as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (ii) the total maximum number of Units issuable upon the
conversion or exchange of all such Convertible Securities. No further adjustment
of the Conversion Price will be made when Units is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments to the Conversion Price had been or are to be made pursuant to
Section 7(b)(i) above, no further adjustment of the Conversion Price will be
made by reason of such issue or sale.
iii. Change in Option Price or Conversion Rate. If at any time there
is a change in (i) the purchase price provided for in any Options, (ii) the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or (iii) the rate at which any Convertible Securities
are convertible into or exchangeable for Units, then the Conversion Price in
effect at the time of such change will be readjusted to the Conversion Price
which would have been in effect had those Options or Convertible Securities
still outstanding at the time of such change provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
at the time such Options or Convertible Securities were initially granted,
issued or sold; provided that if such adjustment would result in an increase of
the Conversion Price then in effect, such adjustment will not be effective until
30 days after written notice thereof has been given by the Company to Blue
Rhino.
iv. Calculation of Consideration Received. If any Units, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor or the Price Per Unit, as the case
may be, will be deemed to be the net amount received or to be received,
respectively, by the Company therefor. In case any Units, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company or the non-cash
portion of the Price Per Unit, as the case may be, will be the fair value of
such consideration received or to be received, respectively, by the Company;
except where such consideration consists of securities, in which case the amount
of consideration received or to be received, respectively, by the Company will
be the Market Price thereof as of the date of receipt. If any Units, Options or
Convertible Securities are issued in connection with any merger in which the
Company is the surviving Company, the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving Company as is attributable to such Units, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash and securities will be determined jointly by the Company and
Blue Rhino. If such parties are
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unable to reach agreement within a reasonable period of time, the fair value of
such consideration will be determined by an independent appraiser jointly
selected by the Company and Blue Rhino.
v. Integrated Transactions. In case any Option is issued in connection
with the issuance or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Option by the parties thereto, the Option will be deemed to
have been issued for a consideration of $.01.
vi. Record Date. If the Company takes a record of the holders of Units
for the purpose of entitling them (i) to receive a dividend or other
distribution payable in Units, Options or in Convertible Securities or (ii) to
subscribe for or purchase Units, Options or Convertible Securities, then such
record date will be deemed to be the date of the issuance or sale of the Units
deemed to have been issued or sold upon the declaration of such dividend or upon
the making of such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
c. Subdivision or Combination of Units. If the Company at any time
subdivides one or more classes of its outstanding Units into a greater number of
Units, or decreases the percentage interest attributable to any Unit, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time combines one or more classes
of its outstanding Units into a smaller number of Units or increases the
percentage interest attributable to the Units, the Conversion Price in effect
immediately prior to such combination will be proportionately increased.
d. Organic Change. Prior to the consummation of any Organic Change, the
Company will make appropriate provisions (in form and substance satisfactory to
Blue Rhino) to insure that the holder of this Note will thereafter have the
right to acquire and receive, in lieu of or in addition to the Units immediately
theretofore acquirable and receivable upon the conversion of this Note, such
shares of stock, membership interests, partnership interests, securities or
assets as such holder would have received in connection with such Organic Change
if the holder had converted the entire principal balance of this Note
immediately prior to such Organic Change. In any such case, the Company will
make appropriate provisions (in form and substance satisfactory to Blue Rhino)
to insure that the provisions of this Section 7(d) will thereafter be applicable
to this Note (including, an immediate adjustment of the Conversion Price to the
value for the Units reflected by the terms of such Organic Change and a
corresponding immediate adjustment in the number of Units acquirable and
receivable upon conversion of this Note, if the value so reflected is less than
the Conversion Price in effect immediately prior to such Organic Change). The
Company will not effect any such Organic Change, unless prior to the
consummation thereof, the successor Company resulting from such Organic Change
assumes by written instrument (in form reasonably satisfactory to Blue Rhino),
the obligation to deliver to each such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
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e. Certain Limitations. Notwithstanding anything to the contrary contained
in this Note: (a) the total percentage of the Company's Units issued pursuant to
the Conversion Option shall not exceed sixty-five percent (65%) of the Company's
Units at the time that the Conversion Option is exercised, (b) the Conversion
Option may only be exercised once and shall terminate as to any Units subject to
the Conversion Option but not acquired upon its exercise or in the following
year pursuant to this paragraph, (c) the Conversion Option shall expire upon
acceleration of the obligations evidenced by this Note pursuant to Section 10
hereof, and (d) in the event that the Conversion Units to be issued upon
exercise of the Conversion Option would, if issued all in one year, cause a
termination of the Company for tax purposes the Company may reserve and issue on
the first business day of the next year the number of units the issuance of
which would have caused the termination for tax purposes if issued in the year
of the exercise of the Conversion Option. The Company shall remain indebted
pursuant to the terms of this Note for all Principal, Additional Principal and
interest not applied to the purchase of Units upon exercise of the Conversion
Option.
All other terms of this Note shall remain in full force and effect
following such an Organic Change. The provisions of this Section 7(d) shall
similarly apply to successive Organic Changes.
f. Notices.
i. Immediately upon any adjustment of the Conversion Price, the
Company shall give written notice thereof to the holder of this Note specifying
the Conversion Price in effect thereafter with respect to the particular holder.
ii. The Company shall give written notice to the holder of this Note
at least twenty (20) days prior to the date on which the Company closes its
books or takes a record for determining rights to vote with respect to any
Organic Change, change of control, change in ownership, fundamental change or
other reorganization, dissolution or liquidation. The Company shall also give
written notice to the holder of this Note at least twenty (20) days prior to the
date on which any Organic Change, change of control, change in ownership,
fundamental change or other reorganization, dissolution or liquidation shall
occur.
g. Certain other Events. The Company will not, by amendment of its
certificate of in Company or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issues 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 Note, 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 Blue Rhino from
dilution or other impairment. If any event occurs as to which the foregoing
provisions of this Section 7 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly protect the conversion rights of this Note in accordance
with the essential intent and principles of such provisions, then the Board of
Directors of the Company shall make such adjustments in the application of such
provisions,
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in accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of the Board of Directors of the Company,
to protect such conversion rights as aforesaid, but in no event shall any such
adjustment have the effect of increasing the Conversion Price or decreasing the
number of Units subject to purchase upon conversion of this Note.
h. Proceedings Prior to Any Action Requiring Adjustment. As a condition
precedent to the taking of any action which would require an adjustment pursuant
to this Section 7, the Company shall take any action which may be necessary,
including obtaining regulatory approvals or exemptions, in order that the
Company may thereafter validly and legally admit the holder of this Note as a
member of the Company with all rights and privileges of a member of the Company
pursuant to the limited liability company agreement of the Company upon
conversion of any amount owning under this Note.
i. Partial Conversion. Conversion of any portion of the principal balance
of this Note shall not relieve the Company of its obligation to pay any accrued
but unpaid interest on the portion of the principal balance of this Note so
converted. To the extent that any portion of this Note is not converted into
Units, such portion shall remain a secured debt of the Company payable in
accordance with the terms of this Note and the Loan Agreement.
8. Security. The obligations of the Company hereunder are secured by the
Security Agreement between the Company and Blue Rhino of even date herewith and
all other security agreements which may be made by or security interests in
property granted by the Company to Blue Rhino from time to time hereafter.
9. Events of Default. The occurrence of any one of the following events
shall constitute a default ("Event of Default") by the Company: (a) if the
Company fails to make any payment hereunder when due and fails to cure such non
payment within ten (10) days of notice of such non payment; (b) the Company
fails or neglects to perform, keep or observe any term, provision, condition,
covenant, warranty or representation contained in this Note or in the Security
Agreement or any other agreement or instrument securing the obligations
evidenced by this Note, which is required to be performed, kept or observed by
the Company and such failure continues for more than thirty days after notice
thereof; (c) if any of the Company's assets are attached, seized, subjected to a
writ of distress warrant, or are levied upon, or come within the possession any
receiver, trustee, custodian or assignee for the benefit of creditors and such
attachment, levy, writ or possession is not terminated within sixty (60) days of
the commencement thereof; (d) if a petition under the Bankruptcy Reform Act of
1978 or any similar law or regulation shall be filed by or against the Company
or if the Company shall make an assignment for the benefit of his creditors or
if any case or proceeding is filed by or against the Company for its dissolution
or liquidation, or if the Company is enjoined, restrained or in any way
prevented by court order or otherwise from conducting all or a material part of
his or its business affairs and such petition, assignment, case, proceeding or
order is not dismissed, terminated or vacated within sixty (60) days of
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the commencement or entry thereof; (e) the dissolution of the Company; and (f)
the failure of the Company within thirty (30) days of a request therefore by the
holder to elect nominees of the holder who constitute up to two-fifths (2/5) of
the Board of Directors of the holder or the removal without consent of the
holder of any directors so elected and (g) the failure of the Company to refrain
from the following actions without the affirmative vote of a director nominated
by the holder: (i) the sale, assignment or transfer of all or substantially all
of the assets of the Company, (ii) default under the License Agreement of even
date, (iii) the guarantee of the indebtedness of any third party, (iv) the
merger or consolidation with any third person or entity, (v) the purchase of
the equity securities of any third party or debt of any third party, other than
commercial paper issued by parties who are not affiliates of the Company, short
term obligations of governmental units of the United States or any state and
deposit accounts or certificates of deposit with any commercial bank insured by
the Federal Deposit Insurance Company, (vi) admission of any person as a member
of the Company other than the purchasers of Dilutive Units that the holder
elects not to include the Conversion Option and other units issued as a part of
the offering of Dilutive Units and purchasers of units at a price in excess of
the Conversion Price, (vii) the entry into a transaction with an affiliate of
any member of the Company except transactions that are upon fair and reasonable
terms at least as favorable to the Company as comparable transactions between
unrelated parties, (viii) the payment of bonuses to any employee during the
continuance of an Event of Default or after notice of a Default that remains
uncured, (ix) any change in the number of directors of the Company, (x)
amendment or alteration of the terms of the Company's LLC Operating Agreement,
(xi) issue any additional Units or admit any new members, or (xii) violation of
any of the affirmative covenants contained in Section 16 of this Note.
10. Remedies Upon Default. Upon any Event of Default under this Note, the
holder of this Note may, upon written notice to the Company, declare this Note
due and payable in full and exercise such other rights and remedies as are
available to the holder under the Loan Agreement or applicable law. In addition
upon the occurrence of a Default, unless and until cured within the applicable
cure period, the holder may refuse to make further disbursements hereunder.
If there is any Default under this Note, and this Note is placed in the
hands of an attorney for collection, or is collected through any court,
including any bankruptcy court, the Company promises to pay to the order of the
holder hereof such holder's reasonable attorneys' fees and court costs incurred
in collecting or attempting to collect or securing or attempting to secure this
Note or enforcing the holder's rights with respect to the Collateral, to the
extent allowed by the laws of the State of Illinois or any state in which any
Collateral is situated.
The holder of this Note may, with or without notice to any party, and
without affecting the obligations of any maker, surety, guarantor, endorser,
accommodation party, or any other party to this Note (i) extend the time for
payment of either principal or interest
9
from time to time, (ii) release or discharge any one or more parties liable on
this Note, (iii) suspend the right to enforce this Note with respect to any
persons, (iv) change, exchange, or release any property in which the holder has
any interest securing this Note, (v) justifiably or otherwise, encumber any of
the Collateral or suspend the right to enforce against any such Collateral, and
(vi) at any time it deems it necessary or proper, call for and, should it be
made available, accept, as additional security, the signature or signatures of
additional parties or a security interest in property of any kind or description
or both.
11. GOVERNING LAW. THIS NOTE HAS BEEN DELIVERED IN, AND SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICTS OF
LAW PROVISIONS THEREOF.
12. Maximum Interest. Any provision herein, or in the Loan Agreement, or
any other document executed or delivered in connection herewith or therewith, or
in any other agreement or commitment, whether written or oral, expressed or
implied, to the contrary notwithstanding, neither Blue Rhino nor any holder
hereof shall in any event be entitled to receive or collect, nor shall any
amounts received hereunder be credited, so that Blue Rhino or any holder hereof
shall be paid, as interest, a sum greater than the maximum amount permitted by
applicable law to be charged to the person primarily obligated to pay this Note
at the time in question. If any construction of this Note or the Loan Agreement,
or any and all other papers, agreements or commitments, indicate a different
right given to Blue Rhino or any holder hereof to ask for, demand, or receive
any larger sum as interest, such is a mistake in calculation or wording which
this clause shall override and control, it being the intention of the parties
that this Note, the Loan Agreement, and all other documents executed or
delivered in connection herewith shall in all ways comply with applicable law
and proper adjustments shall automatically be made accordingly.
13. FORUM. THE COMPANY AND HOLDER IRREVOCABLY AGREE THAT ALL LEGAL ACTIONS
OR PROCEEDINGS IN ANY MANNER OR RESPECT ARISING OUT OF OR RELATED TO THIS
PROMISSORY NOTE OR THE LOAN AGREEMENT, ANY AGREEMENTS OR DOCUMENTS DELIVERED TO
BLUE RHINO IN CONNECTION HEREWITH OR THEREWITH, OR THE COLLATERAL SHALL BE
BROUGHT AND LITIGATED ONLY IN COURTS HAVING SITUS WITHIN LAKE COUNTY ILLINOIS.
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14. Headings. The section headings and numbers are for convenience of
reference only, do not constitute a part of this Note and will not be deemed to
limit or otherwise affect any of the provisions hereof. References to sections,
unless otherwise indicated are references to sections hereof.
15. Notices. Except as otherwise provided in this Note, all notices
requests, consents, and other communications required or permitted under this
Note shall be in writing and signed by the party giving notice, and shall be
deemed to have been given when hand-delivered by personal delivery, or by
Federal Express or similar courier service or three (3) business days after
being deposited in the United States mail, registered or certified mail, with
postage prepaid, return receipt requested, addressed to the holder at the
address provided in the books of the Company for the payment of interest or
addressed to the Company c/o Bison Valve, L.L.C., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, or to such other address as either party
may designate for himself or itself by notice given to the other party from time
to time in accordance with the provisions of this Note.
16. Affirmative Covenants. The Company shall, until the Principal,
Additional Principal and interest under this Note have been paid or converted
pursuant to the Conversion Option:
(a) Prepare and keep books of account in accordance with generally
accepted accounting principles, consistently applied;
(b) Deliver to the holder within 120 days following the end of each
fiscal year of the Company financial statements including a
balance sheet and income statement, audited by certified public
accountants selected by the Company and reasonably approved by
the holder or, if the holder fails to approve three selections of
certified public accountants, one of the eight largest firms of
certified public accountants in the United States, as the Company
may select;
(c) Deliver to the holder within 45 days following the end of each
calendar month a balance sheet as of the last day or last
business day of such month and an income statement for such
month, unaudited, and certified by an employee of the Company to
have been prepared in accordance with generally accepted
accounting principles, consistently applied without the notes or
adjustments that would accompany an year end audited balance
sheet and income statement; and
(d) Not favor any customer over Blue Rhino Corporation and its
authorized distributors in pricing and delivery of OPD Valves, as
that term is used in the License Agreement.
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IN WITNESS WHEREOF, the undersigned has caused this Convertible Secured Note to
be executed as of the day and year first written above.
BISON VALVE, L.L.C.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its Chairman & CEO
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