COLLATERAL ASSIGNMENT OF LICENSE AGREEMENT

EXHIBIT 10.6



COLLATERAL ASSIGNMENT OF LICENSE AGREEMENT

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THIS COLLATERAL ASSIGNMENT OF LICENSE AGREEMENT ("Agreement") made as of this 12th day of February, 1998 by Bison Valve, L.L.C., an Illinois limited liability company, having its principal place of business at 782 Church Road, Elgin, Illinois 60123 ("Borrower"), in favor of Blue Rhino Corporation, a Delaware corporation, with its principal place of business located at 104 Cambridge Plaza Drive, Winston-Salem, North Carolina 27104 ("Lender"):



R E C I T A L S:

- - - - - - - -



A. Borrower desires to borrow from the Lender and Lender desires to lend to Borrower $630,000 pursuant to the terms of that certain Multi-Draw Convertible Secured Promissory Note (the "Note") made by Borrower in favor of the Lender of even date herewith.



B. Borrower is the licensee pursuant to that certain License Agreement ("License Agreement") between the Borrower and Michael Waters ("Licensor") of even date herewith, a copy of which is attached hereto as Exhibit A, pursuant to which the Borrower has an exclusive license to make, use and vend a small cylinder service valve and overfill prevention device designed by the Licensor.



C. To provide collateral security for the obligations ("Obligations") of the Borrower to the Lender under the Note, the Borrower desires to assign to and grant a security interest in the Borrower's rights under the License Agreement and all other now existing or hereafter acquired intellectual property of the Borrower.



NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower agrees as follows:



1. Grant of Security Interest. To secure payment and performance of all

-------------------------- liabilities and obligations of the Borrower under the terms of the Note, Borrower hereby:



a. grants to Lender a continuing security interest in and to all

right, title and interest of Borrower in, to and under the License

Agreement. The rights granted to Lender pursuant to the terms hereof shall

include, but not be limited to, the right upon the occurrence of an Event

of Default and during the continuation thereof to enforce all of Borrower's

rights under the License Agreement and all representations, warranties,

covenants, indemnifications of Licensor under the License Agreement.



b. mortgages, hypothecates and transfers to Lender the entire right,

title and interest of Borrower in and to all inventions of products related

to the categories listed on

Exhibit B hereto, including all of the trademarks, tradenames, tradedress,

copyrights and patents of Borrower covering products of a type listed on

Exhibit B, whether registered or unregistered, now owned or existing, or

hereafter acquired or arising, including all goodwill associated with any

of the above; and



(1) all patent, copyright or trademark applications therefor,



(2) all renewals of any patent, copyright or trademark therefor,



(3) all income, royalties, damages and payments now and

hereafter due and/or payable with respect thereto, including, without

limitation, damages and payments for past or future infringements

thereof,



(4) the right to sue for past, present and future infringements

thereof;



(5) all rights corresponding thereto throughout the world; and



(6) all improvements thereto; and



(7) all proceeds thereof.



c. grants to Lender a continuing Security Interest in and to all

right, title and interest of the Borrower in any tooling, molds, designs,

patterns, drawings or computer code used to produce any product licensed

under the License Agreement or described on Exhibit B.



2. Restrictions on Future Agreements. Borrower agrees that until the

--------------------------------- Obligations shall have been satisfied in full and the Note shall have been terminated, Borrower will not, without Lender's prior written consent, which shall not be unreasonably withheld, enter into any agreement (for example, a license agreement or sub-license agreement) which is inconsistent with Borrower's obligations under this Agreement, and Borrower 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 affect the validity or enforcement of the rights transferred to Lender under this Agreement other than the delivery of molds, dies, designs, patterns, drawings or computer code which are subject to the security interests granted pursuant to this agreement to manufacturers located outside of the United States for the purpose of producing the product related thereto.



3. New Trademarks, Copyrights and Patents. Borrower represents and

-------------------------------------- warrants that it has neither owns or holds any registered copyrights, trademarks and patents. If, before the Obligations shall have been satisfied in full, Borrower shall (i) obtain rights to any registered



- 2 - trademarks, registered copyrights or registered patents for products of a type set forth on Exhibit A, or (ii) become entitled to the benefit of any registered trademark, registered copyright or registered patent for a product of a type set forth on Exhibit B, the provisions of paragraph 1 above shall automatically apply thereto and Borrower shall give to Lender written notice thereof on each anniversary of the date hereof. Borrower agrees to execute all documents reasonably necessary to record or preserve Lender's interest in all such trademarks, copyrights and patents added as additional collateral security, pursuant to this paragraph 3. Notwithstanding anything to the contrary set forth herein, the Borrower shall not have any duty to register or record any patent, trademark or copyright in any jurisdiction outside of the United States.



4. Term. The term of this Agreement shall extend until the Obligations

---- have been paid in full.



5. Events of Default. The occurrence of any of the following shall

------------------ constitute an "Event of Default" hereunder:



a. A default by Borrower in the observance or performance of any obligation, covenant, condition or agreement hereof, which is not cured within thirty (30) days after written notice thereof to Borrower unless such default impairs the first priority security interest of the Lender granted pursuant to paragraph 1, in which case such default shall be deemed and Event of Default without provision for cure or notice (however the failure to maintain the Borrower's first priority security interest in any collateral located outside of the United States for the purpose of producing goods on behalf of the Borrower shall not be deemed and Event of Default); or



b. Any representation or warranty made by Borrower herein which is not true and correct in any material respect as of the date hereof; or



c. An "Event of Default" under the Note or License Agreement which shall not be cured within any applicable grace period.



6. Lender's Rights.

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



a. Upon the occurrence of any Event of Default hereunder, Lender shall have the right (but not the obligation), without demand on Borrower: (1) to declare all sums evidenced or secured by the Note and this Agreement immediately due and payable; (2) to exercise any and all rights and remedies provided under this Agreement and the Note as well as such remedies as may be available at law or in equity, including, without limitation, all rights and remedies of a "secured party" under the Illinois Uniform Commercial Code ("Code"), and (3) to correct any such default in such manner and to such extent as Lender may deem necessary or desirable to protect the security hereof, including specifically, without limitation, the right (but not the obligation) to appear in and defend any action or proceeding purporting to affect the



- 3 - security hereof or the rights or powers of Lender, and also the right (but not the obligation) to perform and discharge each and every obligation, covenant, condition and agreement of Borrower under the License Agreement or to make any application for patent, copyright, trademark or other intellectual rights registration, with any federal, state or foreign agency or registry, and, in exercising any such powers, to pay necessary costs and expenses, employ counsel and incur and pay reasonable attorneys fees and expenses. Lender shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability under the License Agreement, by reason of this Agreement, or to make any application for patent, trademark, copyright or the registration of any intellectual property right on behalf of the Borrower or Lender.



b. That at any time after the occurrence of an Event of Default, Lender may, at its option and without regard to the adequacy of security for the indebtedness hereby secured, either in person or by agent, with or without bringing any action or proceeding, or by a receiver to be appointed by a court at any time hereafter, enforce for its own benefit the License Agreement, and utilize the property licensed thereunder. The exercise of any rights under this Agreement shall not be deemed to cure or waive any default under this Agreement or the Note, or waive, modify or affect any notice of default under this Agreement or the Note, or invalidate any act done pursuant to such notice.



c. That the Licensor upon written notice from Lender of the occurrence of an Event of Default, shall be and is hereby authorized by Borrower to perform as required under the License Agreement for the benefit of Lender in accordance with the terms and conditions thereof without any obligation to determine whether or not such an Event of Default has in fact occurred.



7. Duties of Borrower. Borrower shall cause any patent, copyright,

------------------ trademark or patent, copyright or trademark application which is subject to the License or the security interest granted pursuant to this Agreement to contain or have filed in the appropriate office a notice of the security interest granted pursuant to this Agreement.



8. Waivers. No course of dealing between Borrower and Lender, nor any

------- failure to exercise, nor any delay in exercising, on the part of Lender, any right, power or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.



9. Severability. The provisions of this Agreement are severable, and if

------------ any clause or provision shall be held invalid and unenforceable in whole or part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and s ...