EXHIBIT 10.2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY SATISFACTORY TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW
THE TERMS OF THIS NOTE, INCLUDING SECTION 2(e)(viii) HEREOF. THE PRINCIPAL
AMOUNT AND THE INTEREST THEREON REPRESENTED BY THIS NOTE MAY BE LESS THAN THE
AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 2(e)(viii) OF THIS
NOTE.
CONVERTIBLE NOTE
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_______ __, ______ $____________
FOR VALUE RECEIVED, BLUE RHINO CORPORATION, a Delaware corporation (the
"Company"), hereby promises to pay to the order of __________________ or
registered assigns ("Holder") the principal amount of ___________________
Dollars ($________________), on [INSERT date which is 2 years after Issuance
Date] (the "Maturity Date"), and to pay interest ("Interest") on the unpaid
principal balance hereof at the rate of 5.0% per annum from the date hereof (the
"Issuance Date") until the same becomes due and payable, whether at maturity or
upon acceleration or by conversion or redemption in accordance with the terms
hereof or otherwise. Interest on this Note shall commence accruing on the
Issuance Date and shall be computed on the basis of a 365-day year and actual
days elapsed and shall be payable at the time of optional or mandatory
conversion or redemption of the principal to which such interest relates in
accordance with Section 1 hereof. Any amount of interest on this Note which is
not paid when due shall bear interest at the rate of 18% per annum from the date
thereof until the same is paid ("Default Interest").
1. Payments of Principal and Interest. All payments of principal and
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interest on this Note (to the extent such principal and/or interest is not
converted into Common Stock in accordance with the terms hereof) shall be made
in lawful money of the United States of America by wire transfer of immediately
available funds to such account as the Holder may from time to time designate by
written notice in accordance with the provisions of this Note. Whenever any
amount expressed to be due by the terms of this Note is due on any day which is
not a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day and, in the case of any interest payment
date which is not the date on which this Note is paid in full, the extension of
the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. For purposes of this Note, "Business
Day" shall mean any day other than a Saturday, Sunday or a day on which
commercial banks in The City of New York are authorized or required by law or
executive order to remain closed. Each capitalized term used herein, and not
otherwise defined, shall have the meaning ascribed thereto in the Securities
Purchase Agreement, dated September __, 1999, pursuant to which this Note and
the Other Notes (as defined below) were originally issued (the "Securities
Purchase Agreement"). This Note and the Other Notes issued by the Company
pursuant to the Securities Purchase Agreement are collectively referred to in
this Note as the "Notes."
2. Conversion of Notes. This Note shall be convertible into shares of the
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Company's common stock, par value $.001 per share (the "Common Stock"), on the
terms and conditions set forth in this Section 2.
(a) Certain Defined Terms. For purposes of this Note, the following
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terms shall have the following meanings:
(i) "Additional Amount" means, with respect to any principal
amount of Notes, the sum of (A) accrued and unpaid Interest on such
principal amount and (B) Default Interest, if any, on the interest
referred to in the immediately preceding clause (A).
(ii) "Closing Bid Price" means, for any security as of any date,
the last closing bid price for such security on the Principal Market
(as defined below) as reported by Bloomberg Financial Markets
("Bloomberg"), or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last
closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for such security
by Bloomberg, the last closing trade price of such security as
reported by Bloomberg, or, if no last closing trade price is reported
for such security by Bloomberg, the average of the bid prices of any
market makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc. If the Closing Bid Price cannot
be calculated for such security on such date on any of the foregoing
bases, the Closing Bid Price of such security on such date shall be
the fair market value as mutually determined by the Company and the
Holders of the Notes. If the Company and the Holders of the Notes are
unable to agree upon the fair market value of the Common Stock, then
such dispute shall be resolved pursuant to Section 2(e)(iii) below
with the term "Closing Bid Price" being substituted for the
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term "Market Price." All such determinations to be appropriately
adjusted for any stock dividend, stock split or other similar
transaction during such period.
(iii) "Conversion Price" means, as of any Conversion Date (as
defined below) or other date of determination, the product of the
Conversion Percentage and the Weighted Average Price of the Common
Stock (the "Daily Market Price"), provided that in no event shall the
Conversion Price exceed the Fixed Conversion Price, each in effect as
of such date and subject in each case to adjustment as provided
herein.
(iv) "Conversion Percentage" means 95%, subject to adjustment as
provided herein.
(v) "Weighted Average Price" means, for any security as of any
date, the dollar volume-weighted average price for such security on
the Principal Market (as reported by Bloomberg through its "Volume at
Price" function) or, if the Principal Market is not the principal
securities exchange or trading market for such security, the dollar
volume-weighted average price of such security on the principal
securities exchange or trading market where such security is listed or
traded (as reported by Bloomberg through its "Volume at Price"
function), or if the foregoing do not apply, the dollar volume-
weighted average price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported
for such security by Bloomberg, the average of the bid prices of each
of the market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Weighted
Average Price cannot be calculated for such security on such date on
any of the foregoing bases, the Weighted Average Price of such
security on such date shall be the fair market value as mutually
determined by the Company and the Holders of the Notes. If the
Company and the Holders of the Notes are unable to agree upon the fair
market value of the Common Stock, then such dispute shall be resolved
pursuant to Section 2(e)(iii) below. All such determinations to be
appropriately adjusted for any stock dividend, stock split or other
similar transaction during such period.
(vi) "Conversion Amount" means the sum of (A) the principal
amount of this Note to be converted, redeemed or otherwise with
respect to which this determination is being made and (B) the
Additional Amount with respect to such principal amount, provided that
the Company has not elected to pay such Additional Amount in cash as
described in Section 2(c)(ii).
(vii) "Fixed Conversion Price" means, with respect to any Note,
as of any Conversion Date or other date of determination, $20.00,
subject to adjustment as provided herein.
(viii) "Holders" means the holders of this Note and the Other
Notes.
(ix) "Issuance Date" means, with respect to each Note, the date
of issuance of the applicable Note.
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(x) "Maturity Date" means the date which is two (2) years
after the Issuance Date of this Note, subject to extension pursuant to
Section 2(e)(vii).
(xi) "Market Price" means, with respect to any security, that
price which shall be computed as the arithmetic average of the Closing
Bid Prices for such security during the 10 consecutive trading days
immediately preceding such date of determination. All such
determinations shall be appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period.
(xii) "Other Notes" means the convertible notes, other than this
Note, issued by the Company pursuant to the Securities Purchase
Agreement.
(xiii) "Person" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
(xiv) "Principal Market" means the Nasdaq National Market.
(xv) "Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.
(xvi) "Convertible Securities" means any stock or securities
(other than Options) directly or indirectly convertible into or
exchangeable for Common Stock.
(b) Holder's Conversion Right; Mandatory Conversion. Subject to the
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provisions of Sections 2(d) and 6, at any time or times on or after the Issuance
Date (as defined below), the Holder shall be entitled to convert any part of the
outstanding and unpaid Conversion Amount of this Note into fully paid and
nonassessable shares of Common Stock in accordance with Section 2(d), at the
Conversion Rate (as defined below). If any Conversion Amount of this Note
remains outstanding on the Maturity, then, pursuant to Section 2(e)(vii), all of
such Conversion Amount shall be converted at the Conversion Rate as of such date
in accordance with Section 2(d) or redeemed by the Company. The Company shall
not issue any fraction of a share of Common Stock upon any conversion. All
shares of Common Stock (including fractions thereof) issuable upon conversion of
this Note by the Holder shall be aggregated for purposes of determining whether
the conversion would result in the issuance of a fraction of a share of Common
Stock. If, after the aforementioned aggregation, the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company shall round
such fraction of a share of Common Stock up or down to the nearest whole share.
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(c) Conversion.
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(i) Conversion Rate. The number of shares of Common Stock
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issuable upon conversion of a Conversion Amount of this Note pursuant to
Section 2(b) shall be determined according to the following formula (the
"Conversion Rate"):
Conversion Amount
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Conversion Price
(ii) Cash Payment of Additional Amount. Subject to the notice
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provisions of this Section 2(c)(ii), upon conversion pursuant to Sections
2(b) or 2(e)(vii), the Company shall have the right to elect to pay the
Additional Amount in cash, in lieu of conversion to Common Stock. If the
Company elects to pay the Additional Amount in cash, such cash shall be
paid simultaneously with the delivery to the Holder of the certificates
representing the Common Stock issuable upon conversion in accordance with
Section 2(e)(ii). In order to exercise its right to pay any Additional
Amount in cash, the Company must advise each Holder of the Notes in writing
(the "Cash Payment Notice") that the Additional Amount shall be paid in
cash until such time as the Company shall terminate the Cash Payment Notice
by providing at least five (5) Business Days prior written notice of such
termination (the "Termination Notice"). The Cash Payment Notice shall set
forth the effective date of the Cash Payment Notice, which date shall be at
least five (5) Business Days after the date the Cash Payment Notice is
deemed to have been delivered pursuant to Section 25. The Termination
Notice shall be effective on the fifth Business Day after the date the
Termination Notice is deemed to have been delivered pursuant to Section 25
unless a later date shall be specified in the Termination Notice.
(d) Limitations on Beneficial Ownership. The Company shall not effect
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any conversion of this Note and no Holder shall have the right to convert
any portion of this Note pursuant to Section 2(b) to the extent that after
giving effect to such conversion such Person (together with such Person's
affiliates) would beneficially own in excess of 4.99% of the outstanding
shares of the Common Stock following such conversion. For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned
by a Person and its affiliates shall include the number of shares of Common
Stock issuable upon conversion of this Note with respect to which the
determination of such sentence is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (i) conversion of
the remaining, nonconverted portion of this Note beneficially owned by such
Person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein
beneficially owned by such Person and its affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 2(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended. For purposes of this Section
2(d), in determining the number of outstanding shares Common Stock a Holder
may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company's most recent Form
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10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral request
of the Holder, the Company shall immediately confirm orally and in writing
to the Holder the number of shares Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined
after giving effect to exercises of Warrants (as defined in the Securities
Purchase Agreement) and conversions of the Notes by the Holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.
(e) Mechanics of Conversion. The conversion of this Note shall be
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conducted in the following manner:
(i) Holder's Delivery Requirements. To convert this Note into
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shares of Common Stock on any date (the "Conversion Date"), the Holder
hereof shall (A) transmit by facsimile (or otherwise deliver), for
receipt on or prior to 11:59 p.m., Eastern Time on such date, a copy
of a fully executed notice of conversion in the form attached hereto
as Exhibit I (the "Conversion Notice") to the Company with a copy
thereof to the Company's designated transfer agent (the "Transfer
Agent") and (B) if required by Section 2(e)(viii), surrender to a
common carrier for delivery to the Company as soon as practicable
following such date the original Note being converted (or an
indemnification undertaking with respect to such Note in the case of
its loss, theft or destruction).
(ii) Company's Response. Upon receipt by the Company of a copy
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of a Conversion Notice, the Company (1) shall immediately send, via
facsimile, a confirmation of receipt of such Conversion Notice to such
Holder and the Transfer Agent, which confirmation shall constitute an
instruction to the Transfer Agent to process such Conversion Notice in
accordance with the terms herein and (2) on or before the second
Business Day following the date of receipt by the Company of such
Conversion Notice (the "Share Delivery Date"), (A) issue and deliver
to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder or its designee, for the number
of shares of Common Stock to which the Holder shall be entitled, or
(B) provided the Transfer Agent is participating in The Depository
Trust Company ("DTC") Fast Automated Securities Transfer Program, upon
the request of the Holder, credit such aggregate number of shares of
Common Stock to which the Holder shall be entitled to the Holder's or
its designee's balance account with DTC through its Deposit Withdrawal
Agent Commission system. Subject to Section 2(e)(viii), if less than
the Conversion Amount of this Note is submitted for conversion, then
the Company shall, as soon as practicable and in no event later than
three Business Days after receipt of the Note (the "Note Delivery
Date") and at its own expense, issue and deliver to the Holder a new
Note for the outstanding principal amount not converted.
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(iii) Dispute Resolution. In the case of a dispute as to the
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determination of the Market Price or the arithmetic calculation of the
Conversion Rate, the Company shall instruct the Transfer Agent to
issue to the Holder the number of shares of Common Stock that is not
disputed and shall submit the disputed determinations or arithmetic
calculations to the Holder via facsimile within one (1) Business Day
of receipt of such Holder's Conversion Notice. If such Holder and the
Company are unable to agree upon the determination of the Market Price
or arithmetic calculation of the Conversion Rate within one (1)
Business Day of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall within one (1)
Business Day submit via facsimile (A) the disputed determination of
the Market Price to an independent, reputable investment bank selected
by the Company and approved by the Holders of the Notes representing a
majority of the Conversion Amounts of the Notes then outstanding or
(B) the disputed arithmetic calculation of the Conversion Rate to the
Company's independent, outside accountant. The Company shall cause
the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the
Holders of the results no later than forty-eight (48) hours from the
time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as the
case may be, shall be binding upon all parties absent manifest error.
(iv) Record Holder. The person or persons entitled to receive
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the shares of Common Stock issuable upon a conversion of this Note
shall be treated for all purposes as the record Holder or Holders of
such shares of Common Stock as of the close of business on the
Conversion Date.
(v) Company's Failure to Timely Convert.
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(A) Void Conversion Notice; Adjustment to Conversion Price.
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If for any reason the Holder has not received all of the shares
of Common Stock prior to the tenth (10th) Business Day after the
expiration of the Share Delivery Date with respect to a
conversion of this Note, then the Holder, upon written notice to
the Company, may void its Conversion Notice with respect to, and
retain or have returned, as the case may be, any principal amount
of this Note that has not been converted pursuant to such
Holder's Conversion Notice; provided that the voiding of a
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Holder's Conversion Notice shall not effect the Company's
obligations to make any payments which have accrued prior to the
date of such notice pursuant to Section 2(e)(v)(A) or otherwise.
Thereafter, the Fixed Conversion Price of the principal amount of
this Note returned or retained by the Holder for failure to
timely convert shall be adjusted to the lesser of (I) the Fixed
Conversion Price as in effect on the date on which the Holder
voided the Conversion Notice and (II) the lowest Closing Bid
Price during the period beginning on the Conversion Date and
ending on the date such Holder voided the Conversion Notice,
subject to further adjustment as provided in this Note.
(B) Redemption. If for any reason the Holder has not
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received all of the shares of Common Stock prior to the tenth
(10th) Business Day after the Share Delivery Date with respect
to a conversion of this Note (a "Conversion Failure"), then the
Holder, upon written notice to the Company, may require that the
Company redeem all of the Conversion Amount of this Note,
including the Conversion Amount previously submitted for
conversion and with respect to which the Company has not
delivered shares of Common Stock, in accordance with Section 3.
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(vi) Pro Rata Conversion and Redemption. In the event the
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Company receives a Conversion Notice from more than one Holder of the
Notes for the same Conversion Date and the Company can convert some,
but not all, of the Notes submitted for conversion, the Company shall
convert from each Holder electing to have Notes converted at such time
a pro rata amount of such Holder's Conversion Amount submitted for
conversion based on the principal amount of the Notes submitted for
conversion on such date by such Holder relative to the Conversion
Amount of all Notes submitted for conversion on such date.
(vii) Mandatory Conversion or Redemption at Maturity. If any
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Conversion Amount of this Note remains outstanding on the Maturity
Date, then all of Conversion Amount, at the Company's option, either
(i) shall be converted at the Conversion Price for the Common Stock as
of such date as if the Holder had given the Conversion Notice on the
Maturity Date (a "Maturity Date Mandatory Conversion"), or (ii) shall
be redeemed as of such date (a "Maturity Date Mandatory Redemption")
for an amount in cash equal to the Conversion Amount on the Maturity
Date (the "Maturity Date Redemption Price"). The Company shall be
deemed to have elected a Maturity Date Mandatory Redemption unless it
delivers written notice to the Holder at least 20 Business Days prior
to the Maturity Date of its election to effect a Maturity Date
Mandatory Conversion. If the Company elects a Maturity Date Mandatory
Redemption, then on the Maturity Date the Company shall pay to each
the Holder outstanding on the Maturity Date, by wire transfer of
immediately available funds, an amount equal to the Maturity Date
Redemption Price. If the Company elects a Maturity Date Mandatory
Redemption and shall fail to redeem all of the Conversion Amount of
this Note outstanding on the Maturity Date by payment of the Maturity
Date Redemption Price, then in addition to any remedy the Holder may
have under this Note, the Securities Purchase Agreement and the
Registration Rights Agreement, the Holder shall have the option to
require the Company to convert any or all of the Conversion Amount
that the Company elected to redeem under this Section 2(e)(vii) and
for which the Maturity Date Redemption Price (together with any
interest thereon) has not been paid into the number of shares of
Common Stock the Holder would have received if the Holder had given a
Conversion Notice for such Conversion Amount on the Maturity Date.
(viii) Book-Entry. Notwithstanding anything to the contrary set
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forth herein, upon conversion of any portion of this Note in
accordance with the terms hereof, the Holder thereof shall not be
required to physically surrender this Note to the Company unless the
full Conversion Amount represented by this Note is being converted.
The Holder and the Company shall maintain records showing the
Conversion Amount so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the Holder and
the Company, so as not to require physical surrender of this Note upon
each such conversion. In the event of any dispute or discrepancy,
such records of the Company shall be controlling and determinative in
the absence of manifest error. Notwithstanding
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the foregoing, if this Note is converted as aforesaid, the Holder may
not transfer this Note unless the Holder first physically surrenders
this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note of like tenor,
registered as the Holder may request, representing in the aggregate
the remaining Conversion Amount represented by this Note. The Holder
and any assignee, by acceptance of a this Note or such new Note,
acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of any portion of this Note, the
Conversion Amount (including the principal of this Note) represented
by this Note may be less than the principal amount and the accrued
interest set forth on the face hereof.
(f) Taxes. The Company shall pay any and all taxes that may be
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payable with respect to the issuance and delivery of Common Stock upon the
conversion of Notes.
(g) Adjustments to Conversion Price -- Dilution and Other Events. In
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addition to any other adjustments provided herein, the Conversion Price
will be subject to adjustment from time to time as provided in this Section
2(g).
(i) Adjustment of Fixed Conversion Price upon Subdivision or
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Combination of Common Stock. If the Company at any time subdivides
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(by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Fixed Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced.
If the Company at any time combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the Fixed Conversion
Price in effect immediately prior to such combination will be
proportionately increased.
(ii) Holder's Right of Alternative Variable Conversion Price
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Following Issuance of Convertible Securities. If the Company in any
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manner issues or sells Convertible Securities or Options that are
convertible into or exchangeable for Common Stock at a price which
varies or may vary with the market price of the Common Stock,
including by way of periodic resets to a fixed price (each of the
formulations for such variable price being herein referred to as, a
"Variable Price"), and such Variable Price is not calculated using the
same formula used to calculate the Daily Market Price in effect
immediately prior to the time of such issue or sale, the Company
shall provide written notice thereof via facsimile and overnight
courier to each Holder of the Notes ("Variable Notice") on the date of
issuance of such Convertible Securities or Options. From and after
the date the Company issues any such Convertible Securities with a
Variable Price, the Holder shall have the right, but not the
obligation, in its sole discretion to substitute a Variable Price for
the Daily Market Price upon conversion of any part of the Notes by
designating in the Conversion Notice delivered upon conversion of such
Notes that solely for purposes of such conversion the Holder is
relying on a Variable Price rather than the Daily Market Price then in
effect. The Holder's election to
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rely on a Variable Price for a particular conversion of Notes shall
not obligate the Holder to rely on a Variable Price for any future
conversions of Notes.
(iii) Adjustment of Conversion Price for Registration Statement
Failures. If (A) the registration statement (the "Registration
Statement") covering the resale of the shares of Common Stock issuable
upon conversion of the Notes required to be filed by the Company
pursuant to the Registration Rights Agreement is not filed with the
SEC by the applicable Filing Deadline (as defined in the Registration
Rights Agreement) or declared effective by the SEC on or before the
applicable Effectiveness Deadline (as defined in the Registration
Rights Agreement) or (B) after the Registration Statement has been
declared effective by the SEC, sales cannot be made pursuant to the
Registration Statement (whether because of a failure to keep the
Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement,
to register sufficient shares of Common Stock or otherwise), then, as
partial relief for the damages to the Holder of this Note by reason of
any of the foregoing events (which remedy shall not be exclusive of
any other remedies available at law or in equity), the Conversion
Percentage in effect at such time shall be reduced by a number of
percentage points equal to the sum of (A) 1.0, if the Registration
Statement is not filed with the SEC by the applicable Filing Deadline,
plus (B) 1.0, if the Registration Statement is not effective by the
applicable Effectiveness Deadline, plus (C) the product of .05 and the
sum of (w) the number of days after the Filing Deadline that the
relevant Registration Statement has not been filed with the SEC, (x)
the number of days after the applicable Effectiveness Deadline that
the Registration Statement has not been declared effective by the SEC,
and (y) the number of days that sales cannot be made pursuant to the
Registration Statement in accordance with the Registration Rights
Agreement after the Registration Statement has been declared
effective.
(iv) Adjustment of Conversion Price for Company's Failure to
Timely Convert. If within five (5) Business Days after the Company's
receipt of a facsimile or other copy of the Conversion Notice the
Company shall fail to issue a certificate to the Holder or credit the
Holder's balance account with DTC for the number of shares of Common
Stock to which such Holder is entitled upon such Holder's conversion
of this Note or, subject to Section 2(e)(viii), the Company shall fail
to issue a new Note representing the principal amount to which such
Holder is entitled, if any, pursuant to Section 2(e)(ii), in addition
to all other available remedies which such Holder may pursue hereunder
and under the Securities Purchase Agreement (including indemnification
pursuant to Section 8 thereof), the Conversion Percentage in effect at
such time and applying to the Conversion Amount of the Note for which
shares of Common Stock have failed to be delivered and/or for which a
new Note has not been delivered shall be reduced by a number of
percentage points equal to the product of (A) 0.5 and (B) the sum of
(I) the number of days after the Share Delivery Date such conversion
is not timely effected and (II) the number of days after the Note
Delivery Date such new Note is not delivered.
(v) Notices.
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(A) Immediately upon any adjustment of the Conversion
Price, the Company will give written notice thereof to each
Holder of the Notes setting forth in reasonable detail, and
certifying, the calculation of such adjustment.
(B) The Company will give written notice to each Holder
of the Notes at least ten (10) days prior to the date on which
the Company closes its books or takes a record (I) with respect
to any dividend or distribution upon the Common Stock, (II) with
respect to any pro rata subscription offer to Holders of Common
Stock or (III) for determining rights to vote with respect to any
Organic Change (as defined in Section 4(a)), dissolution or
liquidation, provided that such information shall be made known
to the public prior to or in conjunction with such notice being
provided to each such Holder.
(C) The Company will also give written notice to each
Holder of the Notes at least ten (10) days prior to the date on
which any Organic Change, dissolution or liquidation will take
place, provided that such information shall be made known to the
public prior to or in conjunction with such notice being provided
to each such Holder.
3. Redemption at Option of Holder.
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(a) Redemption Option Upon Triggering Event. In addition to all other
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rights of the Holder contained herein, after a Triggering Event (as defined
below), the Holder shall have the right, at the Holder's option, to require
the Company to redeem all or a portion of this Note at a price equal to the
greater of (i) 120% of the Conversion Amount and (ii) the product of (A)
the Conversion Rate for the Conversion Amount to be redeemed in effect at
such time as such Holder delivers a Notice of Redemption at Option of Buyer
(as defined below) and (B) the Weighted Average Price of the Common Stock
on the date immediately preceding such Triggering Event on which the
Principal Market, or the market or exchange where the Common Stock is then
traded, is open for trading ("Redemption Price"); provided, however, for a
Triggering Event resulting pursuant to Sections 3(b)(vi) or 3(b)(viii)
below, the holder shall only have the right to redeem that portion of the
Note which the Company would not be obligated to convert pursuant to
Section 12 if the entire Conversion Amount of the Note were converted as of
the applicable date of determination (without regard to any limitation on
conversion).
(b) "Triggering Event". A "Triggering Event" shall be deemed to have
------------------
occurred at such time as any of the following events:
-11-
(i) the failure of the Registration Statement to be declared
effective by the SEC on or prior to the date that is 20 days after the
applicable Effectiveness Deadline (as defined in the Registration
Rights Agreement);
(ii) while the Registration Statement is required to be
maintained effective pursuant to the terms of the Registration Rights
Agreement, the effectiveness of the Registration Statement lapses for
any reason (including, without limitation, the issuance of a stop
order) or is unavailable to the Holder for sale of all of such
Holder's Registrable Securities (as defined in the Registration Rights
Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of
five consecutive trading days.
(iii) the suspension from trading or failure of the Common Stock
to be listed on The Nasdaq National Market or The New York Stock
Exchange, Inc. or The American Stock Exchange, Inc. for a period of
five consecutive trading days or for more than an aggregate of 10
trading days in any 365-day period;
(iv) the Company's or the Transfer Agent's notice to any Holder
of Notes, including by way of public announcement, at any time, of its
intention not to comply with a request for conversion of any Notes
into shares of Common Stock that is tendered in accordance with the
provisions of the Notes;
(v) a Conversion Failure (as defined in Section 2(e)(v)(B));
(vi) if the Company fails to hold a meeting of its stockholders
for the purpose of approving the issuance of the Conversion Shares
upon conversion of the Notes and the Warrant Shares (as defined in the
Securities Purchase Agreement) upon exercise of the Warrants in
accordance with Section 4(k) of the Securities Purchase Agreement and
the applicable laws and the rules and regulations of the Nasdaq
National Market on or prior to January 31, 2000, or such a meeting of
stockholders is held on or prior to January 31, 2000 but the
stockholders fail to approve of such proposal, then the earlier to
occur of (A) April 30, 2000 and (B) the date on which the Company
receives a Conversion Notice and shall not be obligated to issue the
shares of Common Stock issuable upon such conversion due to the
provisions of Section 12.
(vii) the Company breaches any representation, warranty, covenant
or other term or condition of the Securities Purchase Agreement, the
Registration Rights Agreement, the Warrants, this Note or any other
agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated thereby and hereby,
except to the extent that such breach would not have a Material
Adverse Effect (as defined in Section 3(a) of the Securities Purchase
Agreement) and except, in the case of a breach of a covenant which is
curable, only if such breach continues for a period of at least 10
days.
-12-
(viii) upon the Company's receipt of a Conversion Notice, the
Company shall not be obligated to issue shares of Common Stock
issuable upon such conversion due to the provisions of Section 12.
(c) Mechanics of Redemption at Option of Buyer. Within one (1)
------------------------------------------
Business Day after the occurrence of a Triggering Event, the Company shall
deliver written notice thereof via facsimile and overnight courier ("Notice
of Triggering Event") to each Holder of the Notes. At any time after the
earlier of the Holder's receipt of a Notice of Triggering Event and the
Holder becoming aware of a Triggering Event, the Holder may require the
Company to redeem all of such Holder's Notes by delivering written notice
thereof via facsimile and overnight courier ("Notice of Redemption at
Option of Buyer") to the Company, which notice shall include the date that
such notice was given and to the extent such notice is given upon the
occurrence of a Triggering Event pursuant to Sections 3(b)(iii), 3(b)(v),
3(b)(vii) and 3(b)(viii) the date which is 120 days after the date that
such notice is given (which period shall be referred to as "Payment Block
Period") provided that each Notice of Redemption at Option of Buyer may
only be sent during the period beginning on the date of the occurrence of
the Triggering Event and ending on the later of the date which is (i) 45
days after the date on which such Holder received a Notice of Triggering
Event from the Company with respect to such event and (ii) the date on
which such Triggering Event is cured, which Notice of Redemption at Option
of Buyer shall indicate the Conversion Amount of the Notes that the Holder
is electing to redeem. Each Buyer hereby agrees to use its best efforts to
deliver to the Bank (as defined below) a Notice of Redemption at Option of
Buyer promptly after sending such notice to the Company. Such notice shall
be sent to the Bank by facsimile at (336) 721-4099 or at such other number
provided to such Buyer by the Bank in writing at least five (5) Business
Days prior to such Buyer's sending of a Notice of Redemption at Option of
Buyer, provided, however, that the failure of such Buyer to send such
notice to the Bank shall in no way limit or affect such Buyer's rights or
remedies under this Note.
(d) Payment of Redemption Price. Upon the Company's receipt of a
---------------------------
Notice(s) of Redemption at Option of Buyer from any Holder of Notes, the
Company shall immediately notify each Holder of Notes by facsimile of the
Company's receipt of such notices. The Company shall deliver the applicable
Redemption Price to the Holder within (A) five (5) Business Days after the
Company's receipt of a Notice of Redemption at Option of Buyer for
redemptions pursuant to Sections 3(b)(i), 3(b)(ii), 3(b)(iv) and 3(b)(vi)
and (B) one (1) Business Day after the expiration of the Payment Block
Period for redemptions pursuant to Sections 3(b)(iii), 3(b)(v), 3(b)(vii)
and 3(b)(viii); provided that the Holder's Notes shall have been so
delivered to the Transfer Agent. If more than one Holder of Notes submits
Notes for redemption and the Company is unable to redeem all of the Notes
submitted for redemption, the Company shall redeem a pro rata amount from
each Holder of Notes based on the Conversion Amount represented by the
Notes submitted for redemption by such Holder relative to the aggregate
Conversion Amounts of all Notes for redemption by all Holders of Notes.
(e) Void Redemption. In the event that the Company does not pay the
---------------
Redemption Price within the time period set forth in Section 3(d), at any
time thereafter and until the Company pays such unpaid applicable
Redemption Price in full, the Holder shall have the option (the "Void
Optional Redemption Option") to, in lieu of redemption, require the Company
to promptly return to the Holder the Note that was submitted for redemption
by such Holder under this Section 3 and for which the applicable Redemption
Price (together with any interest thereon) has not been paid, by sending
written notice thereof to the Company via facsimile (the "Void Optional
Redemption Notice"). Upon the Company's receipt of such Void Optional
Redemption Notice, (i) the Notice of Redemption at Option of Buyer shall be
null and void with respect to that portion of the Note subject to the Void
Optional Redemption Notice, and (ii) the Company shall immediately return
the Note subject to the Void Optional Redemption Notice, and (iii) the
Fixed Conversion Price of such portion of the Note shall be adjusted to the
lesser of (A) the Conversion Price as in effect on the date on which the
Void Optional Redemption
-13-
Notice is delivered to the Company and (B) the lowest Closing Bid Price
during the period beginning on the date on which the Notice of Redemption
at Option of Buyer is delivered to the Company and ending on the date on
which the Void Optional Redemption Notice is delivered to the Company.
(f) Disputes; Miscellaneous. In the event of a dispute as to the
-----------------------
determination of the Weighted Average Price, the Closing Bid Price or the
arithmetic calculation of the Redemption Price, such dispute shall be
resolved pursuant to Section 2(e)(iii) above with the term "Closing Bid
Price" being substituted for the term "Weighted Average Price" and the term
"Redemption Price" being substituted for the term "Conversion Rate". The
Holder's delivery of a Void Optional Redemption Notice and exercise of its
rights following such notice shall not effect the Company's obligations to
make any payments which have accrued prior to the date of such notice. In
the event of a redemption pursuant to this Section 3 of less than all of
the Conversion Amount of this Note, the Company shall promptly cause to be
issued and delivered to the Holder a new Note representing the remaining
Conversion Amount which has not been redeemed.
4. Other Rights of Holders.
-----------------------
(a) Reorganization, Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person or
other transaction which is effected in such a way that Holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic Change." Prior to the consummation of any (i) sale of all
or substantially all of the Company's assets to an acquiring Person or (ii)
other Organic Change following which the Company is not a surviving entity, the
Company will secure from the Person purchasing such assets or the successor
resulting from such Organic Change (in each case, the "Acquiring Entity") a
written agreement (in form and substance satisfactory to the Holders of the
Notes representing a majority of the Conversion Amounts of the Notes then
outstanding) to deliver to the Holder in exchange for this Note, a security of
the Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Note, and satisfactory to the Holders the Notes
representing a majority of the Conversion Amounts of the Notes then outstanding.
Prior to the consummation of any other Organic Change, the Company shall make
appropriate provision (in form and substance satisfactory to the Holders of
Notes representing a majority of the Conversion Amounts of the Notes then
outstanding) to insure that each of the Holders will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the
shares of Common Stock immediately theretofore acquirable and receivable upon
the conversion of this Note such shares of stock, securities or assets that
would have been issued or payable in such Organic Change with respect to or in
exchange for the number of shares of Common Stock which would have been
acquirable and receivable upon the conversion of this Note as of the date of
such Organic Change (without taking into account any limitations or restrictions
on the convertibility of this Note).
-14-
(b) Optional Redemption Upon Change of Control. In addition to the
------------------------------------------
rights of the Holder under Section 4(a), upon a Change of Control (as defined
below) of the Company the Holder shall have the right, at the Holder's option,
to require the Company to redeem all or a portion of the Conversion Amount
represented by this Note equal to the Conversion Amount ("Change of Control
Redemption Price"). No sooner than 15 days nor later than 10 days prior to the
consummation of a Change of Control, but not prior to the public announcement of
such Change of Control, the Company shall deliver written notice thereof via
facsimile and overnight courier (a "Notice of Change of Control") to the Holder.
At any time during the period beginning after receipt of a Notice of Change of
Control (or, in the event a Notice of Change of Control is not delivered at
least 10 days prior to a Change of Control, at any time on or after the date
which is 10 days prior to a Change of Control) and ending on the date of such
Change of Control, the Holder may require the Company to redeem all or a portion
of the Conversion Amount of this Note then outstanding by delivering written
notice thereof via facsimile and overnight courier (a "Notice of Redemption Upon
Change of Control") to the Company, which Notice of Redemption Upon Change of
Control shall indicate (i) the Conversion Amount the Holder is submitting for
redemption, and (ii) the applicable Change of Control Redemption Price, as
calculated pursuant to Section this Section 4(b). Upon the Company's receipt of
a Notice(s) of Redemption Upon Change of Control from any Holder of Notes, the
Company shall promptly, but in no event later than one (1) Business Day
following such receipt, notify the Holder of this Note by facsimile of the
Company's receipt of such Notice(s) of Redemption Upon Change of Control. The
Company shall deliver the applicable Change of Control Redemption Price
simultaneous with the consummation of the Change of Control; provided that, if
required by Section 2(e)(viii), this Note shall have been so delivered to the
Company. Payments provided for in this Section 4(b) shall have priority to
payments to other stockholders in connection with a Change of Control. For
purposes of this Section 4(b), "Change of Control" means (i) the consolidation,
merger or other business combination of the Company with or into another Person
(other than (A) a consolidation, merger or other business combination in which
Holders of the Company's voting power immediately prior to the transaction
continue after the transaction to hold, directly or indirectly, the voting power
of the surviving entity or entities necessary to elect a majority of the members
of the board of directors (or their equivalent if other than a corporation) of
such entity or entities, or (B) pursuant to a migratory merger effected solely
for the purpose of changing the jurisdiction of incorporation of the Company),
(ii) the sale or transfer of all or substantially all of the Company's assets,
or (iii) a purchase, tender or exchange offer made to and accepted by the
Holders of more than the 50% of the outstanding shares of Common Stock.
(c) Purchase Rights. If at any time the Company grants, issues or
---------------
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record Holders of any class of
Common Stock (the "Purchase Rights"), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this
Note (without taking into account any limitations or restrictions on the
convertibility of this Note) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights,
-15-
or, if no such record is taken, the date as of which the record Holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.
5. Redemption at the Company's Election. At any time or times during the
------------------------------------
period beginning on the Issuance Date and ending on and including the date which
is 549 days after such Issuance Date, the Company shall have the right, in its
sole discretion, to require that some or all of the outstanding Conversion
Amount of the outstanding Notes issued on such Issuance Date be redeemed
("Redemption at Company's Election") for consideration equal to the Conversion
Amount of such Notes to be redeemed on the Company Election Redemption Date (as
defined below) (the "Company's Election Redemption Price"); provided that the
Conditions to Redemption at the Company's Election (as set forth below) are
satisfied. The Company shall exercise its right to Redemption at Company's
Election by providing each Holder of Notes issued on such Issuance Date written
notice ("Notice of Redemption at Company's Election") at least 15 Business Days
but not more than 20 Business Days prior to the date of consummation of such
redemption ("Company's Election Redemption Date"). If the Company elects to
require redemption of some, but not all, of the Conversion Amount of the Notes
issued on the Issuance Date then outstanding, the Company shall require
redemption of the pro rata amount from each Holder of such Notes based on the
principal amount of Notes purchased by such Holder on the Issuance Date relative
to the aggregate principal amount of all Notes purchased on such Issuance Date
(such amount with respect to the Holder being referred to herein as its "Pro
Rata Redemption Amount"). The Notice of Redemption at Company's Election shall
indicate (x) the Conversion Amount of the Notes the Company has elected to
redeem from all Holders of Notes, (y) the Company's Election Redemption Date,
and (z) each Holder's pro rata share of Conversion Amounts of the Notes selected
for redemption as determined in accordance with the immediately preceding
sentence. If the Company has exercised its right of Redemption at Company's
Election and the conditions of this Section 5, including the Conditions to
Redemption at Company's Election, have been satisfied, then each Holder's Pro
Rata Redemption Amount shall be redeemed as of the Company's Election Redemption
Date by payment by the Company to each Holder of the Notes of the Company's
Election Redemption Price. If required by Section 2(e)(viii), all Holders of
the Notes shall thereupon and within two (2) Business Days after the Company's
Election Redemption Date or such earlier date as the Company and each Holder of
Notes mutually agree, surrender all Notes being redeemed on such date to the
Company. If the Company fails to pay the full Company's Election Redemption
Price with respect to this Note then the Redemption at Company's Election shall
be null and void with respect to this Note and the Holder shall be entitled to
all the rights of a Holder of outstanding Notes. "Conditions to Redemption at
the Company's Election" means the following conditions: (i) during the period
beginning on the Issuance Date and ending on and including the Company's
Election Redemption Date, the Company shall have delivered Conversion Shares
upon conversion of the Notes to the Holders of the Notes on a timely basis as
set forth in Section 2(e)(ii) of this Note; (ii) on each day during the period
beginning 30 days prior to the date of Notice of Redemption at Company's
Election and ending on and including the Company's Election Redemption Date the
Registration Statement shall be effective and available for the sale of at least
all of the Registrable Securities (as defined in the Registration Rights
Agreement); (iii) on each day during the period beginning 30 days prior to the
date of Notice of Redemption at Company's Election and ending on and including
the Company's Election Redemption Date, the Common Stock is designated for
quotation on the Nasdaq National
-16-
Market or listed on The New York Stock Exchange, Inc. and is not suspended from
trading (excluding suspensions of not more than one day resulting from business
announcements by the Company); and (iv) during the period beginning on the
Issuance Date and ending on and including the Company's Election Redemption
Date, there shall not have occurred a Triggering Event (which in the case of a
Triggering Event pursuant to Section 3(d)(vii) hereof, has not been cured or
waived) or an event that with the passage of time would constitute a Triggering
Event, assuming it is not cured. Notwithstanding the above, but subject to
Section 2(d) and Section 7, the Holder may convert any Conversion Amount
(including Conversion Amounts selected for redemption) into Common Stock
pursuant to Section 2(a) on or prior to the date immediately preceding the
Company's Election Redemption Date. If the Company fails to timely pay any
Company's Election Redemption Price in accordance with this Section 5, then the
Company shall not be permitted to submit another Notice of Redemption at
Company's Election without the prior written consent of the Holders of the Notes
representing at least two-thirds (2/3) of the Conversion Amounts of the Notes
then outstanding.
6. Conversion at the Company's Election. On any date during the period
------------------------------------
beginning on the date which is 30 days after the Registration Statement has been
declared effective by the SEC and ending on the date which is 549 days after the
Issuance Date of this Note, the Company shall have the right, in its sole
discretion, to require that all or portion of the outstanding Conversion Amount
of this Note be converted ("Company's Conversion Election") at the applicable
Conversion Rate; provided that the Conditions to Conversion at the Company's
Election (as set forth below) are satisfied. The Company shall exercise its
right to Company's Conversion Election by providing each Holder of the Notes
written notice ("Company's Conversion Election Notice") on such date by
facsimile and overnight courier. The date on which each of the Holders of the
Notes issued on the Issuance Date receives the Company's Conversion Election
Notice is referred to in this Note as the "Company's Conversion Election Notice
Date"). If the Company elects to require conversion of some, but not all, of
the Conversion Amounts of the Notes issued on the Issuance Date then
outstanding, the Company shall require conversion of the pro rata amount from
each Holder of such Notes based on the principal amount of Notes purchased by
such Holder on the Issuance Date relative to the aggregate principal amount of
all Notes purchased on such Issuance Date (such amount with respect to the
Holder being referred to herein as its "Pro Rata Conversion Amount"). The
Company's Conversion Election Notice shall indicate (x) the Conversion Amount of
Notes held by each Holder of Notes the Company has selected for conversion, (y)
the date selected by the Company for conversion ("Company's Election Conversion
Date"), which date shall be not less than 20 or more than 60 Business Days after
the Company's Conversion Election Notice Date, and (z) each Holder's pro rata
share of Conversion Amounts of the Notes selected for conversion as determined
in accordance with the immediately preceding sentence. Subject to the
satisfaction of all the conditions of this Section 6, on the Company's Election
Conversion Date the Holder of this Note will be deemed to have submitted a
Conversion Notice in accordance with Section 2(e)(i) for a Conversion Amount
equal to the result of (a) the Holder's Pro Rata Conversion Amount, minus (b)
the Conversion Amount of this Note converted by the Holder during the Company's
Mandatory Conversion Period (as defined below); provided, however, in no event
shall the Holder be required to convert a Conversion Amount during any Company's
Mandatory Conversion Period into a number of shares of Common Stock in excess of
the pro rata amount (determined
-17-
in the same manner as the Pro Rata Conversion Amount above) of 15% of the
trading volume of the Common Stock on the Principal Market (as reported by
Bloomberg) during the Company's Mandatory Conversion Period. The Company may
terminate a Conversion at Company's Election prior to the Company's Election
Conversion Date with respect to Conversion Amounts not submitted for conversion
prior to the effective date of such termination by delivering written notice
("Company's Mandatory Conversion Period Termination Notice") to each Holder of
Notes issued on the Issuance Date at least five Business Days prior to the
effective date of such termination, provided that the Company has not previously
delivered two Company's Mandatory Conversion Period Termination Notices.
"Conditions to Conversion at the Company's Election" means the following
conditions: (i) on each day during the period beginning the date the SEC
declares the Registration Statement registering the Registrable Securities
effective and ending on and including the Company's Election Conversion Date,
the Registration Statement shall be effective and available for the sale of no
less than all of the Registrable Securities; (ii) on each day during the period
beginning on the Issuance Date and ending on and including the Company's
Election Conversion Date, the Common Stock is designated for quotation on the
Nasdaq Market or listed on The New York Stock Exchange, Inc. and shall not have
been suspended from trading on such exchanges nor shall delisting or suspension
by such exchanges have been threatened either (A) in writing by such exchanges
or (B) by falling below the minimum listing maintenance requirements of such
exchanges; (iii) during the period beginning on the Issuance Date and ending on
and including the Company's Election Conversion Date, there shall not have
occurred (A) an event constituting a Change of Control or a Triggering Event,
(B) an event that with the passage of time and without being cured would
constitute a Triggering Event, or (C) the public announcement of a pending
Change of Control which has not be abandoned or terminated; (iv) the aggregate
Conversion Amounts of the Notes issued on the Issuance Date selected for
conversion by the Company as reflected in the Company's Conversion Election
Notice is at least $300,000; (v) during the period beginning on the Issuance
Date and ending on and including the Company's Election Conversion Date, the
Company shall have delivered shares of Common Stock upon conversion of the this
Note and upon exercise of the Warrants to the Holder on a timely basis as set
forth in Section 2(e)(ii) of this Note and Sections 2(a) and 2(b) of the
Warrants, respectively; and (vi) the Company otherwise has satisfied its
obligations and is not in default under this Note, the Securities Purchase
Agreement, the Warrants and the Registration Rights Agreement. "Company's
Mandatory Conversion Period" means, with respect to any Company's Conversion
Election, the period beginning on and including the earlier of (i) the Company's
Conversion Election Notice Date and ending on and including the Company's
Election Conversion Date and (ii) the effective date of a Company's Mandatory
Conversion Period Termination Notice, which effective date shall not be fewer
than five (5) Business Days after each of the Holder of the Notes receipt of
such Notes.
7. Restrictions on Conversions. The right of a Holder to convert this
---------------------------
Note pursuant to Section 2(a) shall be limited as set forth below. Subject to
the exceptions described below, without the prior consent of the Company, the
Holder shall not be entitled to convert any Conversion Amount of this Note
during the period beginning on the Issuance Date of this Note and ending on and
including the date which is 548 days after such Issuance Date. Notwithstanding
the foregoing, the conversion restrictions set forth in this Section 7 shall not
apply: (a) during a Company's Mandatory Conversion Period, but only with
respect to the
-18-
Conversion Amount set forth in a Company's Election Conversion Notice for the
Holder with respect to such Company Mandatory Conversion Period; (b) on and
after any date on which the Common Stock is not listed or quoted on the Nasdaq
National Market or The New York Stock Exchange, Inc. or has been suspended from
trading on any such exchange (excluding suspensions of not more than one day
resulting from business announcements by the Company), or any such delisting or
suspension is threatened or pending either (I) in writing by such exchanges or
(II) by falling below the minimum listing maintenance requirements of such
exchanges; (c) on or after any date on which there shall have occurred an event
constituting a Change of Control, a Triggering Event or an Event of Default or
an event that with the passage of time and without being cured would constitute
a Triggering Event or an Event of Default; (d) on or after any date on which
there shall have been an announcement of a pending Change of Control; (e) on or
after any date on which the Company issues or sells or is deemed to have issued
or sold any Convertible Securities that are convertible into or exercisable or
exchangeable for shares of Common Stock at a Variable Price, unless such
Variable Price is subject to a minimum price, which minimum price is not subject
to adjustment and is greater than the Fixed Conversion Price; (f) on or after
any date on which the Company fails to pay the Company's Election Redemption
Price for any portion of this Note in a timely manner in accordance with a
Redemption at Company's Election pursuant to Section 5; (g) on or after the date
the Company issues or sells any shares of Common Stock or any Convertible
Securities or Options (other than (A) upon conversion of the Notes or the
Warrants, (B) in connection with any employee or directors benefit plan which
has been approved by the Board of Directors of the Company, pursuant to which
the Company's securities may be issued to any employee, officer or director for
services provided to the Company, (C) options issued prior to the Issuance Date
under the Company's "distributor option plan" approved by the board of directors
of the Company, (D) up to 156,704 options issued after the Issuance Date under
the Company's "distributor option plan" approved by the board of directors of
the Company, provided such options are not issued to affiliates of the Company
and the exercise price of such options is not less than the market price of the
Common Stock on the date of issuance of such options, (E) the issuance of Common
Stock or warrants to purchase Common Stock as consideration for an acquisition
which shall be disclosed on a Form 8-K prior to or concurrent with the Form 8-K
required to be filed pursuant to Section 4(l) of the Securities Purchase
Agreement disclosing the Securities Purchase Agreement and the related
transactions, (F) a firm commitment, underwritten public offering, provided that
within three days of the closing of such underwritten public offering the
Company will have delivered to the Holder a Notice of Redemption at Company's
Election requiring the Company to redeem the remaining outstanding Conversion
Amount of such Holder's Note and the Company shall have fulfilled all of its
obligations under Section 5 within 20 Business Days of delivering such Notice of
Redemption of Company Election, with respect to a Conversion Amount of this Note
equal to the lesser of (I) the Holder's pro rata amount (determined as in
Section 6) of the consideration received by the Company in connection with such
issuance or sale and (II) the Conversion Amount of this Note then outstanding,
and (G) the issuance of up to 500,000 shares of the Company's Common Stock as
consideration in a merger or consolidation or for the acquisition of a business,
product, license or other asset by the Company, provided that the issuance price
of such shares of Common Stock is not less than the market price of the Common
Stock on the date of issuance; (h) on and after January 31, 2000 if the Company
fails to hold a meeting of its Stockholders for the purpose of approving the
issuance of the Conversion Shares upon conversion of the Notes and the Warrant
Shares (as defined in the Securities Purchase
-19-
Agreement) upon exercise of the Warrants in accordance with Section 4(k) of the
Securities Purchase Agreement and the applicable laws and the rules and
regulations of the Nasdaq National Market on or prior to January 31, 2000, or
such a meeting of stockholders is held on or prior to such date but the
stockholders fail to approve of such proposal; or (i) on and after the date
which is 15 months after the Initial Closing Date if there remains outstanding
at least 75% of the aggregate original principal amounts of all Notes issued by
the Company pursuant to this Agreement and the Company's unrestricted cash, as
reflected on the balance sheet included in the Company's most recent Form 10-Q,
is less than the aggregate Conversion Amounts of all Notes outstanding on the
date which is 15 months after the Initial Closing Date, then with respect to a
Conversion Amount equal to 25% of the aggregate original principal amounts (plus
accrued interest thereon) of the Notes issued to the Holder of this Note
pursuant to the Securities Purchase Agreement.
8. Reservation of Shares. The Company shall, so long as any principal
---------------------
amount of the Note is outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Notes, such number of shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all of the principal
amount of the Notes then outstanding; provided that the number of shares of
Common Stock so reserved shall at no time be less than 200% of the number of
shares of Common Stock for which the principal amount of the Notes are at any
time convertible. The initial number of shares of Common Stock reserved for
conversions of the Notes and each increase in the number of shares so reserved
shall be allocated pro rata among the Holders of the Notes based on the
principal amount of the Notes held by each Holder at the time of issuance of the
Notes or increase in the number of reserved shares, as the case may be. In the
event a Holder shall sell or otherwise transfer any of such Holder's Notes, each
transferee shall be allocated a pro rata portion of the number of reserved
shares of Common Stock reserved for such transferor. Any shares of Common Stock
reserved and allocated to any Person which ceases to hold any Notes shall be
allocated to the remaining Holders, pro rata based on the principal amount of
the Notes then held by such Holders.
9. Voting Rights; Rank. Holders shall have no voting rights, except as
-------------------
required by law, including but not limited to the General Corporation Law of the
State of Delaware, and as expressly provided in this Note. Payments of
principal and interest and other payments due under this Note, except as
otherwise provided herein, shall rank pari passu with and shall not be
subordinated to any other unsecured debt obligations of the Company.
10. Restriction on Redemption and Cash Dividends. Until all of the
--------------------------------------------
Conversion Amount of this Note has been converted, redeemed or otherwise
satisfied as provided herein, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, its capital
stock without the prior express written consent of the Holders of Notes
representing at least fifty-one percent (51%) of the Conversion Amount of the
Notes then outstanding, except for payments on convertible securities of the
Company outstanding on the Issuance Date pursuant to the terms of such
convertible securities as in effect on the Issuance Date.
-20-
11. Restriction on Hedging Activity. Subject to the exceptions described
-------------------------------
below, during the period beginning on the Initial Closing Date (as defined in
the Securities Purchase Agreement) and ending on the date which is 549 days
after the Initial Issuance Date, neither such Buyer nor any of its affiliates
shall engage, directly or indirectly, in any transaction constituting a "short
sale" (as defined in rule 3b-3 of the Securities Exchange Act of 1934, as
"Short Sales"); provided, however, that the Holder and its affiliates are
entitled to engage in transactions which constitute Short Sales to the extent
that following such transaction the aggregate short position of the Holder and
its affiliates does not exceed the sum of (a) the number shares of Common Stock
equal to the number of shares of Common Stock the Holder and its affiliates have
the right to acquire upon exercise of the Warrants held by the Holder and its
affiliates (without regard to any limitations on exercises of the Warrants),
plus (b) during the period beginning the first day of a Company Mandatory
Conversion Period and ending on and including the date which is last day of such
Company Mandatory Conversion Period, that number of shares of Common Stock equal
to the quotient of (i) the Conversion Amount set forth in a Company's Notice of
Mandatory Conversion for such Holder and its affiliates with respect to such
Company Mandatory Conversion Period, divided by (ii) 95% of the average of the
Weighted Average Price of the Common Stock on each trading day during the period
beginning on the first day of such Company Mandatory Conversion Period and
ending on and including the earlier of (A) the last trading day of such Company
Mandatory Conversion Period and (B) the date as of which the determination is
being made for purposes of this Section 11. Notwithstanding the foregoing, the
restriction on Short Sales set forth in the first sentence of this Section 11
shall not apply (I) on and after the first date on which there shall have
occurred a Triggering Event or an event that with the passage of time would
constitute a Triggering Event, assuming it is not cured, (II) on and after
January 31, 2000, if the Company fails to hold a meeting of its stockholders for
the purpose of approving the issuance of the Conversion Shares upon conversion
of the Notes and the Warrant Shares upon exercise of the Warrants in accordance
with Section 4(k) of the Securities Purchase Agreement and the applicable laws
and the rules and regulations of the Nasdaq National Market on or prior to
January 31, 2000, or such a meeting of stockholders is held on or prior to such
date but the stockholders fail to approve of such proposal and (III) on or after
any date on which the Company issues or sells or is deemed to have issued or
sold any Convertible Securities that are convertible into or exercisable or
exchangeable for shares of Common Stock at a Variable Price, unless such
Variable Price is subject to a minimum price, which minimum price is not subject
to adjustment and is greater than the Fixed Conversion Price.
12. Limitation on Number of Conversion Shares. The Company shall not be
-----------------------------------------
obligated to issue any shares of Common Stock upon conversion of this Note if
the issuance of such shares of Common Stock would exceed that number of shares
of Common Stock which the Company may issue upon Conversion of this Note (the
"Exchange Cap") without breaching the Company's obligations under the rules or
regulations of the Principal Market, or the market or exchange where the Common
Stock is then traded, except that such limitation shall not apply in the event
that the Company (a) obtains the approval of its stockholders as required by the
applicable rules of the Principal Market, or the market or exchange where the
Common Stock is then traded, (or any successor rule or regulation) for issuances
of Common Stock in excess of such amount, or (b) obtains a written opinion from
outside counsel to the Company that such approval is not
-21-
required, which opinion shall be reasonably satisfactory to the Holders of a
majority of the principal amount of the Notes then outstanding. Until such
approval or written opinion is obtained, or such action is taken by the required
number of Holders of the Notes, no purchaser of Notes pursuant to the Securities
Purchase Agreement (the "Purchasers") shall be issued, upon conversion of this
Note, shares of Common Stock in an amount greater than the product of (i) the
Exchange Cap amount multiplied by (ii) a fraction, the numerator of which is the
principal amount of the Notes issued to such Purchaser pursuant to the
Securities Purchase Agreement and the denominator of which is the aggregate
principal amount of all Notes issued to the Purchasers pursuant to the
Securities Purchase Agreement (the "Cap Allocation Amount"). In the event that
any Purchaser shall sell or otherwise transfer any of such Purchaser's Notes,
the transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount. In the event that any Holder of Notes, shall convert all of
such Holder's Notes into a number of shares of Common Stock which, in the
aggregate, is less than such Holder's Cap Allocation Amount, then the difference
between such Holder's Cap Allocation Amount and the number of shares of Common
Stock actually issued to such Holder shall be allocated to the respective Cap
Allocation Amounts of the remaining Holders of Notes on a pro rata basis in
proportion to Conversion Amount of Notes then held by each such Holder.
13. Reissuance of Notes. Subject to Section 2(e)(viii) in the event of a
-------------------
conversion or redemption pursuant to this Note of less than all of the
Conversion Amount represented by this Note, the Company shall promptly cause to
be issued and delivered to the Holder, upon tender by the Holder of the Note
converted or redeemed, a new note of like tenor representing the remaining
principal amount of this Note which has not been so converted or redeemed.
14. Defaults and Remedies.
---------------------
(a) Events of Default. An "Event of Default" is: (i) default for
-----------------
thirty (30) days in payment of interest or Default Interest on this Note on
or after the Maturity Date; (ii) default in payment of the principal amount
of this Note when and as due; (iii) failure by the Company for thirty (30)
days after notice to it to comply with any other material provision of this
Note; (iv) any default under or acceleration prior to maturity of any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed
of at least $500,000 by the Company or for money borrowed the repayment of
at least $500,000 of which is guaranteed by the Company, whether such
indebtedness or guarantee now exists or shall be created hereafter, (v) if
the Company pursuant to or within the meaning of any Bankruptcy Law; (A)
commences a voluntary case; (B) consents to the entry of an order for
relief against it in an involuntary case; (C) consents to the appointment
of a Custodian of it or for all or substantially all of its property; (D)
makes a general assignment for the benefit of its creditors; or (E) admits
in writing that it is generally unable to pay its debts as the same become
due; or (vi) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (1) is for relief against the Company in an
involuntary case; (2) appoints a Custodian of the Company or for all or
substantially all of its property; or (3) orders the liquidation of the
Company or any subsidiary, and the order or decree remains unstayed and in
effect for ninety (90) days. The Term "Bankruptcy
-22-
Law" means Title 11, U.S. Code, or any similar Federal or State Law for the
relief of debtors. The term "Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
(b) Remedies. If an Event of Default occurs and is continuing, the
--------
Holder of this Note may declare all of this Note, including any interest
and Default Interest and other amounts due, to be due and payable
immediately, except that in the case of an Event of Default arising from
events described in clauses (iv) and (v) of Section 13(a), this Note shall
become due and payable without further action or notice. Holder may not
enforce the provisions of this Section 14 except as provided in this
Section 14. In addition to any remedy such Holder of the Notes may have
under this Note and the Securities Purchase Agreement, such unpaid amount
shall bear interest at the rate of 1.5% per month (prorated for partial
months) until paid in full
15. Vote to Change the Terms of Notes. This Note and any provision
----------------------------------
hereof may only be amended by an instrument in writing signed by the Company and
Holders of a majority of the aggregate Conversion Amount of the Notes then
outstanding. The term "Note" and all reference thereto, as used throughout this
instrument, shall mean this instrument (and the other Notes issued pursuant to
the Securities Purchase Agreement) as originally executed, or if later amended
or supplemented, then as so amended or supplemented.
16. Lost or Stolen Notes. Upon receipt by the Company of evidence
--------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Note, and, in the case of loss, theft or destruction, of an indemnification
undertaking by the Holder to the Company in a form reasonably acceptable to the
Company and, in the case of mutilation, upon surrender and cancellation of the
Notes, the Company shall execute and deliver new notes of like tenor and date;
provided, however, the Company shall not be obligated to re-issue notes if the
Holder contemporaneously requests the Company to convert such remaining
principal amount into Common Stock.
17. Payment of Collection, Enforcement and Other Costs. If: (i) this Note
--------------------------------------------------
is placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding; or (ii) an attorney is
retained to represent the Holder of this Note in any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors'
rights and involving a claim under this Note.
18. Cancellation. After all principal and accrued interest at any time
------------
owed on this Note has been paid in full, this Note shall automatically be deemed
canceled, shall be surrendered to the Company for cancellation and shall not be
reissued.
19. Note Exchangeable for Different Denominations. This Note is
---------------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in principal amounts of at least $100,000)
containing the same terms and conditions and representing in the aggregate the
principal amount of this Note, and each such new Note will represent such
portion of such principal amount as is designated by the Holder at the time of
such
-23-
surrender. The date the Company initially issues this Note will be deemed to be
the "Issuance Date" hereof regardless of the number of times a new Note shall be
issued.
20. Waiver of Notice. To the extent permitted by law, the Company hereby
----------------
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.
21. Governing Law. This Note shall be construed and enforced in
-------------
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the laws of
the State of New York, without giving effect to provisions thereof regarding
conflict of laws.
22. Remedies, Characterizations, Other Obligations, Breaches and
------------------------------------------------------------
Injunctive Relief. The remedies provided in this Note shall be cumulative and
- -----------------
in addition to all other remedies available under this Note, at law or in equity
(including a decree of specific performance and/or other injunctive relief), no
remedy contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit a Holder's
right to pursue actual damages for any failure by the Company to comply with the
terms of this Note. The Company covenants to each Holder of Notes that there
shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holders of the Notes
and that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the
Holders of the Notes shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.
23. Specific Shall Not Limit General; Construction. No specific provision
----------------------------------------------
contained in this Note shall limit or modify any more general provision
contained herein. This Note shall be deemed to be jointly drafted by the
Company and all Holders and shall not be construed against any person as the
drafter hereof.
24. Failure or Indulgence Not Waiver. No failure or delay on the part of
--------------------------------
this Note in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
25. Notices. Whenever notice is required to be given under this Note,
-------
unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement.
-24-
26. Subordination Provisions Generally.
----------------------------------
(a) Subject to the provisions of this Section 26 and Section 27
hereof, this Note is hereby made and declared to be subject and subordinate to
the prior payment in full of all indebtedness of the Company and or USA Leasing,
LLC (the "Lessor") to Bank of America, N.A. (formerly, NationsBank, N.A.) (the
"Bank") pursuant to that certain loan agreement dated as of December 31, 1998
between the Company and the Bank as amended by the amendment to loan agreement
dated June 14, 1999, and that certain loan agreement dated December 31, 1998
between the Lessor and the Bank (the "Loan Agreement") whether now existing or
hereafter incurred, including, without limitation, all principal (up to but not
exceeding Twenty-Five Million Dollars ($25,000,000)), accrued interest
(including interest accruing after the date on which the Company becomes subject
to any federal or state debtor relief statute, whether or not recoverable
against the Company or the Lessor), collection costs and other fees or expenses
incurred by the Bank in connection therewith, (collectively, the "Senior Debt").
The Bank may, at any time, in its discretion, renew, modify, or extend the time
for payment of all or any portion of the Senior Debt, or waive or release any
collateral which may be held therefor, or enter into any other agreement with
the Company and or the Lessor as Bank may deem desirable, all without any notice
to or any assent from the Holder and without in any way affecting Bank's rights
hereunder, providing, however, that the Bank shall not, either through
amendment, waiver, or separate agreement exceed the existing maximum debt limit
of $25,000,000 under the Senior Debt.
(b) Subject to the provisions set forth in Section 27 below limiting
the extent of the subordination provisions set forth herein, the Holder
hereof agrees that:
(i) it will not ask, demand, sue for, take, receive or accept any
payment in cash of or under this Note;
(ii) it will not exercise any right or option hereunder to redeem
in cash all or any part of this Note at or prior to the maturity
hereof, unless and until the Senior Debt shall have been fully and
indefeasibly paid and discharged; and
(iii) if any payment is received by the Holder on account of
this Note prior to such full payment of this Note, such payment shall
be held in trust by
-25-
the Holder for the benefit of the Bank, and shall be delivered to the Bank
in kind (with any necessary indorsement or instrument of transfer) to be
applied to the Senior Debt.
(c) Upon the distribution of any of the Company's assets, whether by
reason of sale, reorganization, liquidation, dissolution, arrangement,
bankruptcy, receivership, assignment for the benefit of creditors,
foreclosure or otherwise, the Bank shall be entitled to receive payment in
full of the Senior Debt prior to the payment of all or any part of this
Note. Bank is hereby irrevocably appointed attorney-in-fact for the Holder
for the purpose of making, presenting, filing and voting such proofs of
claim against the Company on account of all or any part of this the
indebtedness represented by this Note as Bank deems advisable, but, such
power of attorney does not include, nor is it intended to include, any
ability of the Bank to amend the terms of this Note or exercise any of the
conversion rights set forth herein.
(d) So long as the Senior Debt is outstanding, the Holder will not,
without the prior written consent of the Bank commence or join with any
other creditor in commencing any bankruptcy, reorganization or insolvency
proceeding against the Company, unless the Bank has already commenced such
a proceeding or the Company has voluntarily initiated its own such
proceeding.
(e) The subordination of this Note is continuing and irrevocable, and
is binding upon and enforceable against the Company, the Holder, and their
successors and assigns, and shall extend to and for the benefit of the
Bank, and any other holder of the Senior Debt. The Company acknowledges
that any attempted or purported termination by the Company of the
subordination provisions of this Note shall constitute a default under the
Senior Debt. Any Note that renews, replaces, substitutes for or supercedes
this Note, in whole or in part, and any modification or amendment hereof,
shall be deemed to be subject to the subordination provisions set forth
hereinabove, and the Company agrees that is will not issue any such Note,
or modify or amend this Note, without the prior written approval of the
Bank.
27. Limitations on Subordination Provisions Generally. The subordination
provisions set forth in Section 26 above are limited to the extent set forth in
this Section 27:
(a) Each of the Company and the Holder may exercise any conversion
right or option under this Note pursuant to which all or any portion of the
Conversion Amount of this Note may be converted to Common Stock of the
Company.
(b) The subordination provisions set forth in Section 26 above shall
not, and are not intended to, prohibit the Holder of this Note from giving
the Company notice of the occurrence of an Event of Default, a Triggering
Event or of the intention of the Holder to convert all or a portion of the
balance due under this Note into Common
-26-
Stock.
(c) Notwithstanding the subordination provisions set forth in Section
26 above, upon the occurrence of a Triggering Event under Sections 3(b)(i),
3(b)(ii), 3(b)(iv) or 3(b)(vi), the Holder may give a Notice of Redemption
at Option of Buyer and the Holder shall be entitled to exercise all of its
remedies hereunder, and the Company shall honor its obligations under this
Note, including, without limitation, its obligations under Section 3
hereof. The Holder shall be entitled to retain for its own account,
without regard to the subordination provisions set forth herein and without
any obligation to account to the Bank, any amounts paid to the Holder by
the Company pursuant to Section 3 hereof as a result of such Triggering
Events or without any obligation to hold in trust for the Bank, any such
amounts so received.
(d) Notwithstanding the subordination provisions set forth in Section
26 above, upon the occurrence of a Triggering Event under Sections
3(b)(iii), 3(b)(v), 3(b)(vii) or 3(b)(viii), the Holder may give a Notice
of Redemption at Option of Buyer. Any amounts received by the Holder during
such Payment Block Period shall be subject to the provisions of Section 26
above. Upon the expiration of any Payment Block Period, and so long as the
Company is not the subject of any bankruptcy or insolvency proceeding, the
Holder shall be entitled to receive any amounts paid by the Company
hereunder without any obligation to account to the Bank for any such
amounts or without any obligation to hold in trust for the Bank, any such
amounts so received.
-27-
* * * * *
-28-
IN WITNESS WHEREOF, the Company has caused this Note to be signed by
___________________, its ___________________________, as of the ____ day of
____________, ______.
BLUE RHINO CORPORATION
By:___________________________
Name:_________________________
Title:________________________
EXHIBIT I
BLUE RHINO CORPORATION
CONVERSION NOTICE
Reference is made to the Note issued by Blue Rhino Corporation (the "Company").
In accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note, indicated
below into shares of Common Stock, par value $.001 per share (the "Common
Stock"), of the Company as of the date specified below.
Date of Conversion: _________________________________________
Aggregate Conversion Amount to be converted: _________________________
Note no(s). of Note to be converted: _________________________________
Please confirm the following information:
Conversion Price: _______________________________________________
Number of shares of Common Stock to be issued: ________________________
Is the alternative Daily Market Price being relied on pursuant to Section
2(g)(ii) of the Note? (check one) YES ____ No ____
Please issue the Common Stock into which the Note is being converted and, if
applicable, any check drawn on an account of the Company in the following name
and to the following address:
Issue to: ___________________________________
___________________________________
___________________________________
Facsimile Number: ___________________________________
Authorization: ___________________________________
By: _______________________________
Title: ____________________________
Dated: ___________________________________
Account Number:
(if electronic book entry transfer): ___________________________________
Transaction Code Number
(if electronic book entry transfer): ___________________________________
ACKNOWLEDGMENT
--------------
The Company hereby acknowledges this Conversion Notice and hereby directs
[TRANSFER AGENT] to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated ___________ ___, 1999
from the Company and acknowledged and agreed to by [TRANSFER AGENT].
BLUE RHINO CORPORATION
By: __________________________
Name:
Title: