License Agreement

LICENSE AGREEMENT
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THIS LICENSE AGREEMENT (the "Agreement") dated as of the 31st day of March, 2000, by and between by and between MICHAEL A. WATERS (the "Licensee"), residing at 372 N. Bateman Circle, Barrington Hills, Illinois and Blue Rhino Corporation, a Delaware corporation ("Licensor"), having its principal place of business at 104 Cambridge Plaza Drive, Winston-Salem, North Carolina.


W I T N E S S E T H:
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THAT, WHEREAS, Licensor purchased from Licensee the design of a certain gas heater for use in outdoor applications (the "Patio Heater") which is the subject of a applications for patents with the United States Patent & Trademark Office which are listed on Schedule A; and


WHEREAS, pursuant to the Asset Purchase Agreement dated as of March 31, 1999, among International Propane Products, LLC ("IPP"), and Licensee, as Seller, and Licensor, as Buyer (the "Purchase Agreement"), the Licensor has agreed to execute and deliver this Agreement; and


WHEREAS, Licensor has the right to grant licenses to make, use and vend Patio Heater and trade secret technology related to the production of Patio Heater, including the technology disclosed in the patent application and any related technology developed by Licensor hereafter (the "Trade Secret Technology"); and


WHEREAS, Licensee desires to acquire from Licensor a license to make, use and vend the Patio Heater and the Trade Secret Technology upon the terms and conditions herein set forth; and


NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto agree as follows:


1. Grant of License. After the occurrence of a Deficiency Event unless sooner terminated or modified as hereinafter provided, for a period during which a patent covering the Patio Heater provides to Licensor the exclusive right to make, use and vend the Patio Heater (the "Term"), Licensor hereby grants to Licensee the right and license (A) to manufacture, have manufactured, import, use and sell the Patio Heater throughout the United States, its territories, Canada and Mexico (the "Territory") and (B) to use the Trade Secret Technology for the sole purpose of manufacturing, having manufactured, using, and selling the Patio Heater in the Territory. Licensor agrees to apply for patents in the Territory and to maintain the patents during the Term.


2. Power to Sublicense. Licensor hereby grants Licensee the right and power, After the occurrence of any Deficiency Event, (as hereinafter defined), to issue sublicenses to manufacture inside or outside of the Territory and sell the Patio Heater throughout the


Territory and to disclose the Trade Secret Technology to such sublicensees during the Term, provided, however, that Licensee requires any such sublicensee, pursuant to a written agreement, to maintain the confidentiality of the Trade Secret Technology and use the Trade Secret Technology solely for the purpose of manufacturing the Patio Heater. Any such sublicense may be for all or any portion of the Territory and for all or less than the Term. Licensee shall promptly give reasonable notice to Licensor of any such sublicense and its basic terms and promptly provide Licensor with copies of any and all agreements relating thereto. As used herein a "Deficiency Event" is the first to occur of either (a) the failure of Blue Rhino to pay Deferred Purchase Price in the amount of the minimum required pursuant to the Purchase Agreement within thirty (30) days after notice from Waters that the same is due and payable or (b) the end of the Deferred Payment Term (as defined in the Purchase Agreement).


3. Royalties. In consideration of the license granted in this Agreement, Licensee agrees to pay to Licensor royalties ("Royalties") derived from sales of the Patio Heaters, whether by Licensee or by sublicensees, as hereinafter provided. The Royalties shall be one percent 1% of Net Sales as defined in the calculation of the Deferred Purchase Price under the Purchase Agreement except that Net Sales does not include sales to or at the direction of Licensor.


Licensee shall pay Licensor royalties pursuant hereto within thirty (30) days of the close of each and every calendar quarter of the Term, except that Licensee shall pay Licensor royalties for the last quarter of the year within ninety (90) days of the close of each and every calendar year of the Term, at which time adjustments, if any, to Net Profit and royalties will be made based on fiscal year end audited financial statements of the Licensee or, if audited financial statements are not prepared by an independent accountant, on the reviewed or compiled financial statements of the Licensee or its sublicensees. Licensee's royalty payments to Licensor shall be accompanied by a royalty report setting forth sales of the Patio Heater Net Sales for the appropriate period(s). Licensee will keep records showing the products sold or otherwise disposed of during the Term of this Agreement in such detail as to enable the amounts payable hereunder to be easily determined. Licensee shall also permit its books and records to be examined by Licensor up to twice annually to the extent necessary to verify the sales, Gross Profit, Fair Market Value, Cost of Good Sold, and royalty payments provided for herein. Such examination shall be made during normal business hours, at times convenient to Licensor and Licensee. In the event that such examination reveals an underpayment in the Royalties of more than 5%, Licensee shall pay Licensors' costs for such examination.


4. No Duty to Exploit the Technology. During the Term the Licensee shall have no duty to promote the sale and use of the Patio Heater or to sublicense any manufacturer to manufacture the Patio Heater.


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