FERRELLGAS PARTNERS L P
OMNIBUS AMDT AMGT 2 12/15/99
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>OMNIBUS AMDT AMGT 2 12/15/99
<TEXT>


                        OMNIBUS AMENDMENT AGREEMENT NO. 2

                           Dated as of April 18, 2000




                                  in respect of
                           THERMOGAS TRUST NO. 1999-A
                             PARTICIPATION AGREEMENT
                           LEASE INTENDED AS SECURITY
                                 LOAN AGREEMENT
                       Each dated as of December 15, 1999

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











<PAGE>

                                TABLE OF CONTENTS
<TABLE>

SECTION                    HEADING                                                                              PAGE

<S>                         <C>                                                                                   <C>
SECTION 1.                 AMENDMENT OF ORIGINAL AGREEMENTS.......................................................2

       Section 1.1.        Amendments to Participation Agreement..................................................2

ARTICLE V                  COVENANTS OF LESSEE AND GUARANTOR......................................................6

       Section 5.1.        Financial Statements...................................................................6
       Section 5.2.        Certificates; Other Information........................................................7
       Section 5.3.        Notices................................................................................8
       Section 5.4.        Preservation of Corporate or Partnership Existence, Etc................................9
       Section 5.5.        Maintenance of Property................................................................9
       Section 5.6.        Insurance..............................................................................9
       Section 5.7.        Payment of Obligations.................................................................9
       Section 5.8.        Compliance with Laws..................................................................10
       Section 5.9.        Inspection of Property and Books and Records..........................................10
       Section 5.10.       Environmental Laws....................................................................10
       Section 5.11.       Use of Proceeds.......................................................................10
       Section 5.12.       Financial Covenants...................................................................10
       Section 5.13.       Trading and Supply Policies...........................................................11
       Section 5.14.       Other General Partner Obligations.....................................................11
       Section 5.15.       Monetary Judgments....................................................................12
       Section 5.16.       Designation With Respect to Subsidiaries..............................................12
       Section 5.17.       Limitation on Liens...................................................................13
       Section 5.18.       Asset Sales...........................................................................15
       Section 5.19.       Consolidations and Mergers............................................................16
       Section 5.20.       Acquisitions..........................................................................17
       Section 5.21.       Limitation on Indebtedness............................................................17
       Section 5.22.       Transactions with Affiliates..........................................................18
       Section 5.23.       Use of Proceeds.......................................................................19
       Section 5.24.       Use of Proceeds - Ineligible Securities...............................................19
       Section 5.25.       Contingent Obligations................................................................19
       Section 5.26.       Joint Ventures........................................................................19
       Section 5.27.       Lease Obligations.....................................................................19
       Section 5.28.       Restricted Payments...................................................................20
       Section 5.29.       Prepayments of Subordinated Indebtedness..............................................22
       Section 5.30.       Dividend and Other Payment Restrictions Affecting Subsidiaries........................22
       Section 5.31.       Change in Business....................................................................23
       Section 5.32.       Accounting Changes....................................................................23
       Section 5.33.       Limitation on Sale and Leaseback Transactions.........................................23
       Section 5.34.       [Intentionally Omitted]...............................................................23
       Section 5.35.       Amendments of Organization Documents or Certain Debt Agreements.......................23
       Section 5.37.       Operations through Subsidiaries.......................................................24
       Section 5.38.       Operations of MLP.....................................................................24
       Section 5.39.       Miscellaneous.........................................................................24
       Section 5.40.       Accounting Principles.................................................................25
       Section 1.2.        Amendments to Loan Agreement..........................................................37
       Section 1.3.        Amendments to Loan Agreement..........................................................40

SECTION 2.                 REPRESENTATIONS OF THE LESSEE.........................................................40


SECTION 3.                 AUTHORIZATION AND DIRECTION...........................................................40


SECTION 4.                 EFFECTIVENESS.........................................................................40


SECTION 5.                 FEES AND EXPENSES.....................................................................41


SECTION 6.                 MISCELLANEOUS.........................................................................41

       Section 6.1.        Construction..........................................................................41
       Section 6.2.        References............................................................................41
       Section 6.3.        Headings and Table of Contents........................................................41
       Section 6.4.        Counterparts..........................................................................42
       Section 6.5.        Governing Law.........................................................................42
</TABLE>


<PAGE>


                        OMNIBUS AMENDMENT AGREEMENT NO. 2

         THIS OMNIBUS AMENDMENT AGREEMENT NO. 2 dated as of April 18, 2000 (this
"Amendment")  is  among  FERRELLGAS,  LP, a  Delaware  limited  partnership  (as
successor in interest to Thermogas  L.L.C., a Delaware limited liability company
("Thermogas"),  pursuant to the hereinafter  defined Assumption  Agreement) (the
"Lessee"),  FERRELLGAS,  INC., a Delaware  corporation (the "General  Partner"),
FIRST SECURITY BANK, NATIONAL  ASSOCIATION,  a national banking association,  in
its  individual  capacity and in its capacity as  certificate  trustee under the
Trust Agreement  referred to below (the "Certificate  Trustee"),  FIRST SECURITY
TRUST COMPANY OF NEVADA, a Nevada banking corporation (the "Agent"), the Persons
named  on  Schedule  I  hereto,  as  Certificate  Purchasers  (the  "Certificate
Purchasers")  and the  Persons  named on  Schedule  II hereto,  as Lenders  (the
"Lenders").


                                    RECITALS:

          A.  Capitalized  terms used herein and not  otherwise  defined  herein
shall have the respective meanings set forth in the Participation  Agreement (as
hereinafter defined and as amended hereby).

          B. Thermogas,  The Williams Companies,  Inc., a Delaware  corporation,
the Certificate Trustee,  the Agent, Banc of America Leasing & Capital,  LLC, as
the original  Certificate  Purchaser and the original  Lender,  have  heretofore
entered into that certain Participation Agreement dated as of December 15, 1999,
as amended by that certain Omnibus  Amendment  Agreement dated as of February 4,
2000  ("Amendment No. 1") (as so amended by Amendment No. 1, the  "Participation
Agreement").

          C. Thermogas and the Certificate  Trustee have heretofore entered into
that  certain  Lease  Intended  as Security  dated as of December  15, 1999 (the
"Lease").

          D. The  Certificate  Trustee,  the Agent and Banc of America Leasing &
Capital,  LLC, as the original Lender, have heretofore entered into that certain
Loan Agreement  dated as of December 15, 1999, as amended by Amendment No. 1 (as
so amended by Amendment No. 1, the "Loan Agreement").

          E. Pursuant to that certain Assumption  Agreement dated as of December
15,  1999 (the  "Assumption  Agreement"),  the  Lessee  has  assumed  all of the
obligations of Thermogas under the Operative Documents.

          F. The Lessee,  the General  Partner,  the  Certificate  Trustee,  the
Agent,  the  Certificate  Purchasers  and the  Lenders  now  desire to amend the
Participation  Agreement,  the Lease and the Loan Agreement  (collectively,  the
"Agreements") in the respects, but only in the respects, hereinafter set forth.

         NOW,  THEREFORE,  the Lessee,  the  General  Partner,  the  Certificate
Trustee, the Agent, the Certificate Purchasers and the Lenders, in consideration
of good and  valuable  consideration  the  receipt and  sufficiency  of which is
hereby acknowledged, do hereby agree as follows:

SECTION 1.           AMENDMENT OF AGREEMENTS.

     Section 1.1. Amendments to Participation  Agreement. (a) Section 4.1 of the
Participation Agreement shall be and is hereby amended as follows:

     (i) Section  4.1(a) shall be and is hereby  amended and restated to read as
follows:

     "(a) Corporate or Partnership Existence and Power. The General Partner, the
MLP, Lessee and each of the Restricted Subsidiaries:

     (i) is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation;

                                    (ii) has the  power  and  authority  and all
                           governmental licenses,  authorizations,  consents and
                           approvals to own its assets, carry on its business as
                           now  being  or as  proposed  to be  conducted  and to
                           execute,  deliver,  and perform its obligations under
                           the Operative Documents;

                                    (iii)  is  duly   qualified   as  a  foreign
                           corporation  or  partnership  and is licensed  and in
                           good  standing  under  the laws of each  jurisdiction
                           where its  ownership,  lease or operation of property
                           or  the  conduct  of  its  business   requires   such
                           qualification  or license or where the  failure so to
                           qualify could reasonably be expect to have a Material
                           Adverse Effect; and

                                    (iv)  is in  compliance  with  all  material
                           Requirements  of Law,  except where the failure to so
                           comply  could not  reasonably  be  expected to have a
                           Material Adverse Effect."

                  (ii) Sections  4.1(b),  (c), (d), (i) and (n) shall be and are
         hereby  amended  by  deleting  all  references   therein  to  the  term
         "Subsidiary"  and  substituting  in place thereof the term  "Restricted
         Subsidiary".

     (iii) Section 4.1(g)(iv) shall be and is hereby amended and restated in its
entirety to read as follows:

                           "(iv)  No  pension  Plan  has  any  Unfunded  Pension
                  Liability that could reasonably be expected to have a Material
                  Adverse Effect."

     (iv)  Section  4.1(k)  shall be and is hereby  amended and  restated in its
entirety to read as follows:

                           "(k)   Financial    Condition.    (i)   The   audited
                  consolidated  financial  statements  of the  General  Partner,
                  Lessee,  the MLP and their respective  Subsidiaries dated July
                  31, 1999 and the unaudited  consolidated  financial statements
                  of the General Partner,  Lessee,  the MLP and their respective
                  Subsidiaries  dated  January 31, 2000,  in each case  together
                  with  the  related   consolidated   statements  of  income  or
                  operations, shareholders' equity and cash flows for the fiscal
                  periods ended on those respective dates:

                           (A)   were   prepared   in   accordance   with   GAAP
                     consistently applied throughout the period covered thereby,
                     except as otherwise  expressly  noted  therein,  subject to
                     ordinary, good faith year end audit adjustments;

                           (B) fairly present the financial  condition of Lessee
                     and its  Subsidiaries as of the date thereof and results of
                     operations for the period covered thereby; and

                           (C)  show  all   material   indebtedness   and  other
                     liabilities,  direct  or  contingent,  of  Lessee  and  its
                     consolidated Subsidiaries as of the date thereof, including
                     liabilities for taxes,  material commitments and Contingent
                     Obligations  (except that since such date Lessee (x) issued
                     $184,000,000  aggregate  principal amount of the 2000 Notes
                     and (y)  repaid  in full  and  irrevocably  terminated  the
                     commitments  under its  $183,000,000  credit  facility with
                     BofA).

                                    (ii) Since January 31, 2000,  there has been
                             no Material Adverse Effect.

                                    (iii) The General  Partner,  the MLP, Lessee
                             and each of the other  Subsidiaries  of Lessee  are
                             each  Solvent,  both before and after giving effect
                             to the  consummation  of each  of the  transactions
                             contemplated by the Operative Documents."

     (v)  Section  4.1(o)  shall be and is hereby  amended  and  restated in its
entirety to read as follows:

                                    "(o)  Copyrights,  Patents,  Trademarks  and
                             Licenses,    Etc.   Lessee   and   the   Restricted
                             Subsidiaries  own or are licensed or otherwise have
                             the  right to use all of the  patents,  trademarks,
                             service marks, trade names, copyrights, contractual
                             franchises,  authorizations  and other  rights that
                             are reasonably necessary for the operation of their
                             respective  businesses,  without  conflict with the
                             rights  of  any  other  Person,  except  for  those
                             patents,  trademarks,  service marks,  trade names,
                             copyrights, contractual franchises,  authorizations
                             and other  rights  the  failure  of which to obtain
                             could not reasonably be expected to have a Material
                             Adverse Effect. To the best knowledge of Lessee, no
                             slogan  or  other  advertising   device,   product,
                             process, method,  substance, part or other material
                             now employed,  or now  contemplated to be employed,
                             by Lessee or any  Restricted  Subsidiary  infringes
                             upon any rights held by any other Person.  No claim
                             or  litigation  regarding  any of the  foregoing is
                             pending  or,  to  the  best  knowledge  of  Lessee,
                             threatened,  and  no  patent,  invention,   device,
                             application,  principle or any statute,  law, rule,
                             regulation,  standard or code is pending or, to the
                             knowledge  of Lessee,  proposed,  which,  in either
                             case,  could  reasonably  be  expected  to  have  a
                             Material Adverse Effect."

     (vi)  Section  4.1(p)  shall be and is hereby  amended and  restated in its
entirety to read as follows:

                                    "(p) Subsidiaries and Affiliates. Lessee (i)
                             has no Subsidiaries or other Affiliates  except (A)
                             those  specifically  disclosed  in  Schedule  IV of
                             Ominibus  Amendment  Agreement  No.  2  as  of  the
                             Effective Date (B) one or more SPEs  established in
                             connection with Accounts Receivable Securitizations
                             permitted  by  Section  5.21,  (C)  Restricted  and
                             Unrestricted Subsidiaries established in compliance
                             with   Section   5.37   and  (D)   Joint   Ventures
                             established   in   compliance   with  Section  5.26
                             subsequent to the Effective  Date,  and (ii) has no
                             equity  investments  in any  corporation  or entity
                             other   than  (A)   Subsidiaries   and   Affiliates
                             disclosed  in  subsection  (i)  above and (B) other
                             Permitted Lessee Investments."

     (vii)  Section  4.1(q)  shall be and is hereby  amended and restated in its
entirety to read as follows:

                                    "(q) Insurance. The properties of Lessee and
                             the  Restricted   Subsidiaries   are  insured  with
                             financially sound and reputable insurance companies
                             not  Affiliates of Lessee,  in such  amounts,  with
                             such  deductibles  and  covering  such risks as are
                             customarily carried by companies engaged in similar
                             businesses   and  owning   similar   properties  in
                             localities  where  Lessee or each  such  Subsidiary
                             operates  and  consistent  with the practice of the
                             Lessee and the  Restricted  Subsidiaries  as of the
                             Effective Date."

     (viii)  Section  4.1(t) shall be and is hereby  amended and restated in its
entirety to read as follows:

                                    "(t) Fixed Price Supply  Contracts.  None of
                             Lessee   and   its    Subsidiaries    (other   than
                             Non-Recourse   Subsidiaries)  is  a  party  to  any
                             contract for the supply of propane or other product
                             except  where  (a) the  purchase  price is set with
                             reference to a spot index or indices  substantially
                             contemporaneously with the delivery of such product
                             or (b) delivery of such propane or other product is
                             to be  made  no  more  than  two  years  after  the
                             purchase price is agreed to."

     (ix)  Section  4.1(w)  shall be and is hereby  amended and  restated in its
entirety to read as follows:

                                    "(w) Year 2000.  Lessee and its Subsidiaries
                             have  reviewed the areas within their  business and
                             operations  which could have been or could continue
                             to be adversely affected by the "Year 2000 Problem"
                             (that is, the risk that computer  applications used
                             by  Lessee  and its  Subsidiaries  may be unable to
                             recognize  and  perform   properly   date-sensitive
                             functions  involving certain dates prior to and any
                             date on or after  December 31, 1999).  Accordingly,
                             Lessee  and  its  Subsidiaries   have  developed  a
                             program to address such related problems,  and have
                             made  related   appropriate   inquiry  of  material
                             suppliers   and  vendors.   To  date,  no  problems
                             connected  with the Year 2000 Problem have occurred
                             which have had a Material  Adverse Effect on Lessee
                             or its Subsidiaries. Although some problems related
                             to  the  Year  2000   Problem  may  remain  as  yet
                             undetected,  the Borrower  believes that,  based on
                             such review and  program,  the "Year 2000  Problem"
                             will not have a Material Adverse Effect."

         (b)  Article V of the  Participation  Agreement  shall be and is hereby
amended and restated in its entirety to read as follows:




                                   "ARTICLE V

                               COVENANTS OF LESSEE

         Section 5.1.  Financial  Statements.  Lessee shall deliver to Agent, in
form  and  detail  satisfactory  to  Agent  and the  Required  Participants  and
consistent  with the form and detail of  financial  statements  and  projections
provided to Agent by Lessee and its Affiliates  prior to the Delivery Date, with
sufficient copies for each Participant:

                   (a) as soon as  available,  but not later than 100 days after
         the end of each fiscal year (commencing with the fiscal year ended July
         31, 2000), a copy of the audited  consolidated  balance sheet of Lessee
         and  its  Subsidiaries  as at the  end of such  year  and  the  related
         consolidated   statements  of  income  or   operations,   partners'  or
         shareholders'  equity and cash flows for such  year,  setting  forth in
         each case in comparative form the figures for the previous fiscal year,
         and accompanied by the opinion of a  nationally-recognized  independent
         public accounting firm ("Independent Auditor") which report shall state
         that  such  consolidated   financial   statements  present  fairly  the
         financial  position for the periods  indicated in conformity  with GAAP
         applied on a basis consistent with prior years.  Such opinion shall not
         be  qualified  or limited in any  manner,  including  on account of any
         limitation on it because of a restricted or limited  examination by the
         Independent  Auditor  of  any  material  portion  of  Lessee's  or  any
         Subsidiary's records;

                   (b) as soon as  available,  but not later  than 45 days after
         the end of each of the first three fiscal  quarters of each fiscal year
         (commencing  with the fiscal  quarter ended April 30, 2000),  a copy of
         the unaudited consolidated balance sheet of Lessee and its Subsidiaries
         as of the end of such quarter and the related  consolidated  statements
         of income,  partners'  or  shareholders'  equity and cash flows for the
         period  commencing  on the first day and ending on the last day of such
         quarter,  and certified by a Responsible  Officer as fairly presenting,
         in accordance with GAAP (subject to ordinary, good faith year-end audit
         adjustments),  the financial  position and the results of operations of
         Lessee and the Subsidiaries;

                   (c) as soon as  available,  but not later than 100 days after
         the end of each  fiscal  year  (commencing  with the first  fiscal year
         during  all or any part of  which  Lessee  had one or more  Significant
         Subsidiaries),  a copy of an unaudited  consolidating  balance sheet of
         Lessee and its  Subsidiaries as at the end of such year and the related
         consolidating  statement of income,  partners' or shareholders'  equity
         and cash flows for such year,  certified  by a  Responsible  Officer as
         having been  developed and used in connection  with the  preparation of
         the financial statements referred to in subsection 5.1(a);

                   (d) as soon as  available,  but not later  than 45 days after
         the end of each of the first three fiscal  quarters of each fiscal year
         (commencing  with the first  fiscal  quarter  during all or any part of
         which Lessee had one or more Significant  Subsidiaries),  a copy of the
         unaudited  consolidating balance sheets of Lessee and its Subsidiaries,
         and the  related  consolidating  statements  of  income,  partners'  or
         shareholders'  equity and cash flows for such quarter, all certified by
         a Responsible  Officer as having been  developed and used in connection
         with  the  preparation  of  the  financial  statements  referred  to in
         subsection 5.1(b);

                   (e) as soon as  available,  but not later  than 60 days after
         the end of each fiscal year (commencing with the fiscal year ended July
         31,  2000),  projected  consolidated  balance  sheets of Lessee and its
         Subsidiaries  as at the end of each of the  current and  following  two
         fiscal years and related projected  consolidated  statements of income,
         partners' or  shareholders'  equity and cash flows for each such fiscal
         year, including therein a budget for the current fiscal year, certified
         by a  Responsible  Officer as having  been  developed  and  prepared by
         Lessee in good faith and based upon  Lessee's  best  estimates and best
         available information; and

                   (f) as soon as  available,  but not later than 100 days after
         the end of each fiscal year of the General Partner (commencing with the
         fiscal year ended July 31, 2000),  a copy of the unaudited (or audited,
         if available)  consolidated balance sheets of the General Partner as of
         the end of such fiscal year and the related consolidated  statements of
         income,  shareholders'  equity  and cash  flows for such  fiscal  year,
         certified by a Responsible Officer as fairly presenting,  in accordance
         with GAAP, the financial  position and the results of operations of the
         General Partner and its Subsidiaries (or, if available,  accompanied by
         an  opinion  of an  Independent  Auditor  as  described  in  subsection
         5.1(a)).

     Section 5.2.  Certificates;  Other  Information.  Lessee  shall  furnish to
Agent, with sufficient copies for each Participant:

                   (a)   concurrently   with  the  delivery  of  the   financial
         statements  referred to in  subsection  5.1(a),  a  certificate  of the
         Independent  Auditor stating that in making the  examination  necessary
         therefor no knowledge  was obtained of any Lease Default or Lease Event
         of Default, except as specified in such certificate;

                   (b)   concurrently   with  the  delivery  of  the   financial
         statements  referred  to in  subsections  5.1(a) and (b), a  Compliance
         Certificate  executed  by a  Responsible  Officer  with  respect to the
         periods covered by such financial  statements  together with supporting
         calculations and such other supporting detail as Agent and the Required
         Participants shall require;

                   (c) promptly,  copies of all financial statements and reports
         that Lessee,  the General  Partner,  the MLP or any Subsidiary sends to
         its partners or  shareholders,  and copies of all financial  statements
         and regular,  periodic or special reports  (including  Forms 10-K, 10-Q
         and 8-K) that Lessee or any Affiliate of Lessee,  the General  Partner,
         the MLP or any Subsidiary may make to, or file with, the SEC; and

                   (d)  promptly,  such  additional  information  regarding  the
         business,  financial  or  corporate  affairs  of  Lessee,  the  General
         Partner,  the MLP or any  Subsidiary  as Agent,  at the  request of any
         Participant, may from time to time request.

         Section 5.3.    Notices.  Lessee shall promptly notify Agent:

     (a) of the occurrence of any Lease Default or Lease Event of Default;

                   (b) of any matter  that has  resulted  or may  reasonably  be
         expected to result in a Material  Adverse Effect,  including (i) breach
         or non-performance  of, or any default under, a Contractual  Obligation
         of Lessee,  the General  Partner,  the MLP or any Subsidiary;  (ii) any
         dispute,  litigation,  investigation,  proceeding or suspension between
         Lessee,  the  General  Partner,  the  MLP or  any  Subsidiary  and  any
         Governmental  Authority;  or (iii) the commencement of, or any material
         development  in, any  litigation or proceeding  affecting  Lessee,  the
         General Partner,  the MLP or any Subsidiary,  including pursuant to any
         applicable  Environmental  Laws, in each case to the extent that any of
         the foregoing has resulted or may reasonably be expected to result in a
         Material Adverse Effect;

                   (c) of any of the  following  events  affecting  Lessee,  the
         General Partner, the MLP or any Subsidiary, together with a copy of any
         notice with respect to such event that may be required to be filed with
         a  Governmental  Authority and any notice  delivered by a  Governmental
         Authority to such Person with respect to such event:

                            (i)     an ERISA Event;

     (ii) if any of the  representations and warranties in Section 4.1(g) ceases
to be true and correct;

     (iii) the adoption of any new Pension Plan or other Plan subject to Section
412 of the Code;

                           (iv) the adoption of any  amendment to a Pension Plan
                  or other  Plan  subject to  Section  412 of the Code,  if such
                  amendment  results in a material  increase in contributions or
                  Unfunded Pension Liability; or

     (v) the  commencement  of  contributions  to any Pension Plan or other Plan
subject to Section 412 of the Code; and

                   (d)  of  any  material  change  in  accounting   policies  or
         financial  reporting  practices  by Lessee  or any of its  consolidated
         Subsidiaries.

         Each  notice  under  this  Section  shall be  accompanied  by a written
statement by a  Responsible  Officer  setting  forth  details of the  occurrence
referred to therein,  and stating what action  Lessee or any affected  Affiliate
proposes  to take with  respect  thereto  and at what time.  Each  notice  under
subsection  5.3(a)  shall  describe  with  particularity  any and all clauses or
provisions of this Agreement or other Operative Document that have been breached
or violated.

     Section 5.4. Preservation of Corporate or Partnership  Existence,  Etc. The
General  Partner  and Lessee  shall,  and  Lessee  shall  cause each  Restricted
Subsidiary to:

                   (a)  preserve  and  maintain  in full  force and  effect  its
         partnership or corporate  existence and good standing under the laws of
         its state or jurisdiction of  organization or  incorporation  except in
         connection with transactions permitted by Section 5.19;

                   (b)  preserve  and  maintain  in full  force and  effect  all
         material  governmental  rights,  privileges,  qualifications,  permits,
         licenses and franchises necessary or desirable in the normal conduct of
         its  business  except in  connection  with  transactions  permitted  by
         Section  5.19 and sales of assets  permitted  by Section  5.18,  except
         where the failure to so preserve or maintain such governmental  rights,
         privileges, qualifications,  permits, licenses and franchises could not
         reasonably be expected to have a Material Adverse Effect;

                   (c) preserve its business  organization and goodwill,  except
         where the failure to so preserve its business  organization or goodwill
         could not reasonably be expected to have a Material Adverse Effect; and

                   (d)  preserve  or  renew  all  of  its  registered   patents,
         trademarks,  trade names and service  marks,  the  non-preservation  of
         which could reasonably be expected to have a Material Adverse Effect.

         Section 5.5. Maintenance of Property.  Lessee shall maintain, and shall
cause each  Restricted  Subsidiary  to  maintain,  and preserve all its property
which is used or useful in its  business in good  working  order and  condition,
ordinary wear and tear excepted. Lessee and each Restricted Subsidiary shall use
the standard of care typical in the industry in the operation and maintenance of
its facilities. Lessee shall maintain the Units in accordance with the Lease.

         Section 5.6.  Insurance.  Lessee shall  maintain,  and shall cause each
Restricted  Subsidiary  to  maintain,   with  financially  sound  and  reputable
independent  insurers,  insurance  with respect to its  properties  and business
against  loss or damage of the kinds  customarily  insured  against  by  Persons
engaged in the same or similar  business,  of such types and in such  amounts as
are  customarily  carried under  similar  circumstances  by such other  Persons.
Lessee shall insure the Units in accordance with the Lease.

         Section 5.7.  Payment of  Obligations.  Lessee and the General  Partner
shall,  and shall cause each Restricted  Subsidiary to, pay and discharge as the
same shall  become due and  payable  (except to the extent the failure to so pay
and  discharge  could not  reasonably  be  expected  to have a Material  Adverse
Effect), all their respective obligations and liabilities, including:

                   (a) all tax liabilities, assessments and governmental charges
         or levies  upon it or its  properties  or  assets,  unless the same are
         being  contested in good faith by appropriate  proceedings and adequate
         reserves in accordance  with GAAP are being  maintained by Lessee,  the
         General Partner or such Subsidiary;

                   (b) all lawful claims which, if unpaid, would by law become a
         Lien upon its property,  unless such claims are being contested in good
         faith by appropriate  proceedings  and adequate  reserves in accordance
         with GAAP are being  maintained by Lessee,  the General Partner or such
         Subsidiary; and

                   (c)  all  Indebtedness,  as and  when  due and  payable,  but
         subject to any subordination  provisions contained in any instrument or
         agreement evidencing such Indebtedness.

         Section 5.8. Compliance with Laws. Lessee shall comply, and shall cause
each  Restricted  Subsidiary  to  comply  with  all  Requirements  of Law of any
Governmental  Authority having  jurisdiction over it or its business  (including
the Federal Fair Labor Standards  Act),  except such as may be contested in good
faith or as to which a bona fide  dispute  may exist or the  failure of which to
comply with could not reasonably be expected to have a Material Adverse Effect..

         Section 5.9. Inspection of Property and Books and Records. Lessee shall
maintain and shall cause each  Subsidiary to maintain proper books of record and
account,  in which  full,  true and  correct  entries  in  conformity  with GAAP
consistently  applied  shall be made of all financial  transactions  and matters
involving  the assets and business of Lessee and such  Subsidiary.  Lessee shall
permit,  and  shall  cause  each  Subsidiary  to  permit,   representatives  and
independent  contractors of Agent or any Participant to visit and inspect any of
their respective  properties,  to examine their respective corporate,  financial
and operating records,  and make copies thereof or abstracts  therefrom,  and to
discuss their  respective  affairs,  finances and accounts with their respective
directors,  officers, and independent public accountants,  all at the expense of
Lessee and at such reasonable times during normal business hours and as often as
may be reasonably desired,  upon reasonable advance notice to Lessee;  provided,
however,  when a Lease Event of Default exists Agent or any  Participant  may do
any of the foregoing at the expense of Lessee at any time during normal business
hours and without advance notice.

        Section 5.10.  Environmental  Laws.  Lessee shall,  and shall cause each
Restricted  Subsidiary  to,  conduct its  operations  and keep and  maintain its
property  in material  compliance  with all  Environmental  Laws,  except  where
failure to comply with such  Environmental Laws could not reasonably be expected
to have a Material Adverse Effect.

        Section 5.11. Use of Proceeds. Lessee shall use the proceeds of the sale
of the Units,  the  Certificates  and the Notes for working capital purposes and
other general  partnership  purposes,  in each case not in  contravention of any
Requirement of Law or of any Operative Document.

        Section 5.12.    Financial Covenants.

         (a) Leverage  Ratio.  Lessee shall  maintain as of the last day of each
fiscal quarter a Leverage Ratio equal to or less than (i) 5.10 to 1.00 as of the
last day of each fiscal quarter  ending on or prior to July 31, 2000,  (ii) 5.25
to 1.00 as of the last day of each fiscal quarter ending after July 31, 2000 and
on or prior to January  31,  2001,  and (iii) 4.75 to 1.00 as of the last day of
each fiscal  quarter ending after January 31, 2001. For purposes of this Section
5.12(a),  (x) Funded Debt and Synthetic Lease Obligations shall be calculated as
of the last day of such fiscal quarter and (y)  Consolidated  Cash Flow shall be
calculated  for the  most  recently  ended  four  consecutive  fiscal  quarters,
provided,  however,  that  prior to or  concurrently  with  each  delivery  of a
Compliance  Certificate  pursuant  to  Section  5.02(b),  Lessee  may  elect  to
calculate  Consolidated  Cash Flow for the most recently ended eight consecutive
fiscal quarters (in which case Consolidated Cash Flow shall be divided by two).

         (b) Interest Coverage Ratio. Lessee shall maintain,  as of the last day
of each  fiscal  quarter of Lessee,  an Interest  Coverage  Ratio for the fiscal
period  consisting of such fiscal  quarter and the three  immediately  preceding
fiscal quarters of at least (i) 2.25 to 1.00 for each such period of four fiscal
quarters  ending on or prior to January 31, 2001 and (ii) 2.50 to 1.00 each such
period of four fiscal quarters ending after January 31, 2001.

        Section 5.13.  Trading and Supply  Policies.  Lessee and its  Affiliates
shall comply with Lessee's trading position policy and supply inventory position
policy as in effect as of the Effective Date; provided, however, that Lessee and
its Affiliates may, during any period of four consecutive  fiscal quarters,  (a)
increase  the loss limits  specified  in either the  trading  position or supply
inventory position policy by up to 100% of the amount of such limit as in effect
as of the Effective Date and (b) increase the volume limits  specified in either
of such policies on the number of barrels of a single product or of all products
in the  aggregate  by up to 100% of each  such  number  as in  effect  as of the
Effective Date.

        Section 5.14. Other General Partner Obligations. (a) The General Partner
shall cause  Lessee to pay and perform  each of its  Obligations  when due.  The
General Partner acknowledges and agrees that it is executing this Agreement as a
principal  as well as the  general  partner  on behalf of  Lessee,  and that its
obligations  hereunder as general  partner are full recourse  obligations to the
same extent as those of Lessee.

         (b) The General Partner  represents,  warrants and covenants that it is
Solvent,  both  before  and  after  giving  effect  to the  consummation  of the
transactions  contemplated by the Operative  Documents,  and that it will remain
Solvent until all Obligations  hereunder and under the other Operative Documents
shall have been repaid in full.

         (c) The General  Partner,  for so long as it is the general  partner of
Lessee,  (i) agrees that its sole business will be to act as the general partner
of Lessee,  the MLP and any further  limited  partnership of which Lessee or the
MLP is, directly or indirectly,  a limited  partner and to undertake  activities
that are  ancillary or related  thereto  (including  being a limited  partner in
Lessee), (ii) shall not enter into or conduct any business or incur any debts or
liabilities  except in connection  with or incidental to (A) its  performance of
the activities required or authorized by the partnership agreement of the MLP or
the   Partnership   Agreement  or  described  in  or  contemplated  by  the  MLP
Registration  Statement,  and (B) the  acquisition,  ownership or disposition of
partnership  interests  in Lessee  or  partnership  interests  in the MLP or any
further  limited  partnership  of  which  Lessee  or the  MLP  is,  directly  or
indirectly,  a limited  partner,  except that,  notwithstanding  the  foregoing,
employees of the General  Partner may perform  services  for Ferrell  Companies,
Inc. and its Affiliates.

         (d) The General Partner agrees that,  until all  Obligations  hereunder
and under the other  Operative  Documents shall have been repaid in full and all
commitments  shall have terminated,  it will not exercise any rights it may have
(at law, in equity,  by contract or otherwise) to terminate,  limit or otherwise
restrict (whether through repurchase or otherwise and whether or not the General
Partner  shall remain a general  partner in Lessee) the ability of Lessee to use
the name "Ferrellgas".

         (e) The General Partner shall not take any action or refuse to take any
reasonable  action the effect of which,  if taken or not taken,  as the case may
be,  would be to cause  Lessee to be  treated  as an  association  taxable  as a
corporation  or otherwise to be taxed as an entity other than a partnership  for
federal income tax purposes.

        Section 5.15.  Monetary  Judgments.  If one or more  judgments,  orders,
decrees  or  arbitration  awards is  entered  against  Lessee or any  Restricted
Subsidiary  involving in the  aggregate a material  liability (to the extent not
covered by  independent  third-party  insurance as to which the insurer does not
dispute coverage other than through a standard  reservation of rights letter) as
to any single or related series of transactions,  incidents or conditions,  then
Lessee shall maintain adequate reserves for such amount in accordance with GAAP.
Such  amount so  reserved  shall be treated as  establishment  of a reserve  for
purposes of calculating Available Cash hereunder.

        Section 5.16.  Designation With Respect to Subsidiaries.  (a) Lessee may
designate any Restricted Subsidiary or newly acquired or formed Subsidiary as an
Unrestricted  Subsidiary or any  Unrestricted  Subsidiary  or newly  acquired or
formed  Subsidiary  as  a  Restricted  Subsidiary,   in  each  case  subject  to
satisfaction of each of the following conditions:

                  (i)  immediately  before  and  after  giving  effect  to  such
designation, no Default or Event of Default shall exist and be continuing;

                 (ii) after giving effect to such  designation,  Lessee would be
permitted to incur at least $1 of additional Indebtedness in accordance with the
provisions of Section 5.21;

                (iii) in the case of a designation  of a Restricted  Subsidiary,
such Restricted Subsidiary shall have executed and delivered to Agent a Guaranty
and Lessee shall otherwise be in compliance with Section 5.37;

                 (iv) in the case of a designation as an Unrestricted Subsidiary
(including  the  designation  of a  Restricted  Subsidiary  as  an  Unrestricted
Subsidiary),  (x) if such designation were deemed to constitute a sale by Lessee
or any Restricted  Subsidiary of all the assets of the Subsidiary so designated,
such  sale  would  be in  compliance  with  of  Section  5.18  and  (y) if  such
designation  (and all other prior  designations  of Restricted  Subsidiaries  or
newly acquired or formed Subsidiaries as Unrestricted  Subsidiaries) were deemed
to constitute an Investment by Lessee or any Restricted Subsidiary in respect of
all the assets of the  Subsidiary  so  designated,  such  Investment  would be a
Permitted Lessee Investment,  in each case with the net proceeds of such sale or
the amount of such  Investment  being deemed to equal the net book value of such
assets in the case of a  Restricted  Subsidiary  or the cost of  acquisition  or
formation in the case of a newly acquired or formed Subsidiary; and

                  (v) in the case of a designation of a Restricted Subsidiary as
an Unrestricted  Subsidiary,  such Restricted  Subsidiary shall not have been an
Unrestricted Subsidiary prior to being designated a Restricted Subsidiary.

         (b)  Lessee  shall  deliver  to Agent and each  Participant,  within 20
Business Days after any such designation, a certificate of a Responsible Officer
stating the effective  date of such  designation  and stating that the foregoing
conditions  have been  satisfied.  Such  certificate  shall be  accompanied by a
schedule  setting  forth in  reasonable  detail the  calculations  demonstrating
compliance with such conditions, where appropriate.

         (c) In the case of the designation of any Unrestricted  Subsidiary as a
Restricted  Subsidiary,  such new Restricted  Subsidiary shall be deemed to have
made or acquired all Investments  owned by it and incurred all  Indebtedness and
other obligations owing by it and all Liens to which it or any of its properties
are subject, on the date of such designation.

        Section  5.17.  Limitation  on Liens.  Lessee  shall not,  and shall not
suffer or permit any  Restricted  Subsidiary to,  directly or indirectly,  make,
create,  incur,  assume or suffer to exist any Lien upon or with  respect to any
part of its property or sell any of its accounts  receivable,  whether now owned
or  hereafter  acquired,  other  than (x) in the case of the  Units or the other
Lessee Collateral, Permitted Liens, and (y) in the case of any other property of
Lessee or such Subsidiary, the following ("Permitted Encumbrances"):

     (a) Liens  existing  on the  Effective  Date set forth in  Schedule  III to
Omnibus Amendment Agreement No. 2;

                   (b) Liens in favor of Lessee or Liens to secure  Indebtedness
         of a Restricted Subsidiary to Lessee or a Wholly-Owned Subsidiary;

                   (c) Liens on property  of a Person  existing at the time such
         Person is merged into or  consolidated  with  Lessee or any  Restricted
         Subsidiary,  provided  that such Liens were in  existence  prior to the
         contemplation of such merger or consolidation  and do not extend to any
         assets other than those of the Person merged into or consolidated  with
         Lessee;

                   (d) Liens on property existing at the time acquired by Lessee
         or  any  Restricted  Subsidiary,  provided  that  such  Liens  were  in
         existence  prior to the  contemplation  of such  acquisition and do not
         extend to any assets other than those of the Person acquired;

                   (e) Liens on any property or asset  acquired by Lessee or any
         Restricted  Subsidiary in favor of the seller of such property or asset
         and construction  mortgages on property,  in each case,  created within
         six months after the date of  acquisition,  construction or improvement
         of such  property or asset by Lessee or such  Subsidiary  to secure the
         purchase price or other  obligation of Lessee or such Subsidiary to the
         seller of such  property or asset or the  construction  or  improvement
         cost of such  property  in an amount up to 80% of the total cost of the
         acquisition,  construction  or  improvement  of such property or asset;
         provided  that in each  case  such  Lien  does not  extend to any other
         property or asset of Lessee and its Subsidiaries;

                   (f) Liens incurred or pledges and deposits made in connection
         with  worker's  compensation,  unemployment  insurance and other social
         security  benefits  and Liens to secure the  performance  of  statutory
         obligations,  surety  or  appeal  bonds,  performance  bonds  or  other
         obligations  of a like nature,  in each case,  incurred in the ordinary
         course of business;

                   (g) Liens for taxes,  assessments or governmental  charges or
         claims that are not yet delinquent or that are being  contested in good
         faith by  appropriate  proceedings  promptly  instituted and diligently
         concluded,  provided that any reserve or other appropriate provision as
         shall be  required  in  conformity  with  GAAP  shall  have  been  made
         therefor;

                   (h) Liens  imposed  by law,  such as  mechanics',  carriers',
         warehousemen's,  materialmen's,  and vendors'  Liens,  incurred in good
         faith in the  ordinary  course of business  with respect to amounts not
         yet  delinquent  or  being  contested  in  good  faith  by  appropriate
         proceedings if a reserve or other  appropriate  provisions,  if any, as
         shall be required by GAAP shall have been made therefor;

                   (i)  zoning  restrictions,  easements,  licenses,  covenants,
         reservations,  restrictions  on  the  use of  real  property  or  minor
         irregularities of title incident thereto that do not, in the aggregate,
         materially  detract  from the value of the  property  or the  assets of
         Lessee or any of its Subsidiaries or impair the use of such property in
         the operation of the business of Lessee or any of its Subsidiaries;

                   (j) Liens of landlords or  mortgages  of  landlords,  arising
         solely by operation of law, on fixtures and movable property located on
         premises  leased by Lessee or any of its  Subsidiaries  in the ordinary
         course of business;

                   (k)  Liens  incurred  and  financing   statements   filed  or
         recorded,  in each case with  respect to  personal  property  leased by
         Lessee and its  Subsidiaries  in the ordinary course of business to the
         owners of such personal  property which are either (i) operating leases
         (including,  without  limitation,  Synthetic  Leases)  or (ii)  capital
         leases to the  extent  (but only to the  extent)  permitted  by Section
         5.21;  provided,  that in each case  such  Lien does not  extend to any
         other property or asset of Lessee and its Subsidiaries;

                   (l) judgment  Liens to the extent that such  judgments do not
         cause or constitute a Lease Default or Lease Event of Default;

                   (m) Liens  incurred  in the  ordinary  course of  business of
         Lessee or any Restricted Subsidiary with respect to obligations that do
         not exceed  $5,000,000 in the aggregate at any one time outstanding and
         that (i) are not incurred in connection  with the borrowing of money or
         the  obtaining  of advances or credit  (other than trade  credit in the
         ordinary  course  of  business)  and  (ii)  do  not  in  the  aggregate
         materially  detract from the value of the property or materially impair
         the  use  thereof  in the  operation  of  business  by  Lessee  or such
         Subsidiary;

                   (n)  Liens  securing   Indebtedness   incurred  to  refinance
         Indebtedness that has been secured by a Lien otherwise  permitted under
         this Agreement,  provided that (i) any such Lien shall not extend to or
         cover  any  assets  or  property  not  securing  the   Indebtedness  so
         refinanced and (ii) the refinancing  Indebtedness  secured by such Lien
         shall have been  permitted to be incurred under Section 5.21 hereof and
         shall not have a  principal  amount in  excess of the  Indebtedness  so
         refinanced;

                   (o) any  extension or renewal,  or  successive  extensions or
         renewals,  in whole or in part,  of  Liens  permitted  pursuant  to the
         foregoing  clauses (a) through (n);  provided that no such extension or
         renewal Lien shall (i) secure more than the amount of  Indebtedness  or
         other  obligations  secured by the Lien being so extended or renewed or
         (ii) extend to any  property or assets not subject to the Lien being so
         extended or renewed;

                   (p)  Liens in favor of the  Administrative  Agent  under  the
         Credit  Agreement,  any  Issuing  Bank and the Credit  Agreement  Banks
         relating to the Cash  Collateralization  of Lessee's  obligations under
         the Credit Agreement or Liens created by the Operative Documents; and

                   (q) Liens securing  Indebtedness of an SPE in connection with
         an  Accounts  Receivable   Securitization  permitted  by  Section  5.21
         (including the filing of any related financing statements naming Lessee
         as the  debtor  thereunder  in  connection  with the  sale of  accounts
         receivable by Lessee to such SPE in connection  with any such permitted
         Accounts Receivable Securitization); provided that the aggregate amount
         of  accounts  receivable  subject  to all such  Liens  shall at no time
         exceed  133%  of the  amount  of  Accounts  Receivable  Securitizations
         permitted to be outstanding under such Section 5.21.

        Section 5.18. Asset Sales. Lessee shall not, and shall not permit any of
the Restricted  Subsidiaries to, (i) sell, lease, convey or otherwise dispose of
any  assets  (including  by way of a  sale-and-leaseback)  other  than  sales of
inventory  in the  ordinary  course of business  consistent  with past  practice
(provided  that the  sale,  lease,  conveyance  or other  disposition  of all or
substantially all of the assets of Lessee shall be governed by the provisions of
Section 5.19 hereof and not by the  provisions  of this Section  5.18),  or (ii)
issue or sell Equity Interests of any of its Subsidiaries, in the case of either
clause (i) or (ii) above, whether in a single transaction or a series of related
transactions,  (A) that have a fair  market  value in  excess  of the  lesser of
$10,000,000  or the  amount  (which  amount  is  equal to  $5,000,000  as of the
Effective  Date) specified in Section 4.10 of the 1996 Indenture as amended from
time to time (such  lesser  amount,  the  "Applicable  Amount"),  or (B) for net
proceeds in excess of the "Applicable Amount" (each of the foregoing,  an "Asset
Sale"),  unless (X) Lessee (or the  Restricted  Subsidiary,  as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the board of directors of the General
Partner (and, if applicable, the audit committee of such board of directors) set
forth in a certificate  signed by a Responsible  Officer and delivered to Agent)
of the  assets  sold  or  otherwise  disposed  of and  (Y) at  least  80% of the
consideration  therefor  received by Lessee or such Subsidiary is in the form of
cash;  provided,  however,  that the amount of (1) any  liabilities (as shown on
Lessee's  or  such  Subsidiary's  most  recent  balance  sheet  or in the  notes
thereto),  of Lessee or any Subsidiary (other than liabilities that are by their
terms  subordinated in right of payment to the  Obligations  hereunder and under
the other  Operative  Documents)  that are assumed by the transferee of any such
assets  and (2) any notes or other  obligations  received  by Lessee or any such
Subsidiary from such transferee that are immediately converted by Lessee or such
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash  for  purposes  of this  provision;  and  provided,  further,  that the 80%
limitation  referred  to in this clause (Y) shall not apply to any Asset Sale in
which the cash portion of the consideration  received  therefrom,  determined in
accordance  with the  foregoing  proviso,  is equal to or greater  than what the
after-tax  proceeds  would  have  been had such  Asset  Sale  complied  with the
aforementioned 80% limitation.  Notwithstanding the foregoing, Asset Sales shall
not be deemed to include (w) sales or transfers of accounts receivable by Lessee
to an SPE and by an SPE to any other  Person  in  connection  with any  Accounts
Receivable Securitization permitted by Section 5.21 (provided that the aggregate
amount of such accounts  receivable that shall have been transferred to and held
by all  SPEs at any  time  shall  not  exceed  133% of the  amount  of  Accounts
Receivable  Securitizations permitted to be outstanding under Section 5.21), (x)
any  transfer  of assets by  Lessee  or any of its  Subsidiaries  to Lessee or a
Restricted  Subsidiary,  (y) any  transfer  of  assets  by  Lessee or any of its
Subsidiaries  to any  Person  in  exchange  for other  assets  used in a line of
business  permitted  under  Section 5.31 and having a fair market value not less
than that of the assets so transferred  and (z) any transfer of assets  pursuant
to  a   Permitted   Lessee   Investment   or   any   sale-leaseback   (including
sale-leasebacks   involving   Synthetic   Leases)  permitted  by  Section  5.33.
Notwithstanding  the foregoing,  Lessee may not sell, lease, convey or otherwise
dispose of any Unit except as permitted by the Lease.

        Section  5.19.   Consolidations  and  Mergers.   (a)  Lessee  shall  not
consolidate  or merge  with or into  (whether  or not  Lessee  is the  surviving
Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially   all  of  its  properties  or  assets  in  one  or  more  related
transactions,  to another Person unless (i) Lessee is the surviving  Person,  or
the Person  formed by or surviving  any such  consolidation  or merger (if other
than Lessee) or to which such sale, assignment,  transfer,  lease, conveyance or
other disposition shall have been made is a corporation or partnership organized
or  existing  under the laws of the  United  States,  any state  thereof  or the
District  of  Columbia;  and (ii) the  Person  formed by or  surviving  any such
consolidation  or merger  (if other  than  Lessee) or Person to which such sale,
assignment,  transfer,  lease,  conveyance or other  disposition shall have been
made assumes all the  Obligations  of Lessee under this  Agreement and the other
Operative  Documents  pursuant to an assumption  agreement in a form  reasonably
satisfactory to Agent; (iii) immediately after such transaction no Lease Default
or Lease Event of Default  exists;  and (iv)  Lessee or any Person  formed by or
surviving any such  consolidation or merger, or to which such sale,  assignment,
transfer,  lease, conveyance or other disposition shall have been made (A) shall
have Consolidated Net Worth  (immediately after the transaction but prior to any
purchase  accounting  adjustments  resulting from the  transaction)  equal to or
greater than the  Consolidated  Net Worth of Lessee  immediately  preceding  the
transaction  and (B) shall,  at the time of such  transaction  and after  giving
effect thereto, be permitted to incur at least $1.00 of additional  Indebtedness
pursuant to the Leverage Ratio test set forth in Section 5.12(a).

         (b) Lessee  shall  deliver to Agent  prior to the  consummation  of the
proposed  transaction  pursuant  to the  foregoing  paragraph  (a) an  officers'
certificate  to the  foregoing  effect  signed by a  Responsible  Officer and an
opinion of counsel  satisfactory to Agent stating that the proposed  transaction
complies with this Agreement.  Agent,  Certificate  Trustee and the Participants
shall be entitled  to  conclusively  rely upon such  officer's  certificate  and
opinion of counsel.

         (c)  Upon  any  consolidation  or  merger,  or  any  sale,  assignment,
transfer,  lease, conveyance or other disposition of all or substantially all of
the assets of Lessee in accordance with this Section 5.19, the successor  Person
formed by such  consolidation or into or with which Lessee is merged or to which
such sale, assignment,  transfer, lease, conveyance or other disposition is made
shall  succeed  to, and be  substituted  for (so that from and after the date of
such consolidation,  merger, sale, lease,  conveyance or other disposition,  the
provisions of this Agreement and the other Operative  Documents referring to the
"Lessee" shall refer to or include instead the successor Person and not Lessee),
and may exercise  every right and power of Lessee under this  Agreement with the
same  effect  as if such  successor  Person  had been  named as  Lessee  herein;
provided,  however,  that the predecessor  Lessee shall not be relieved from the
obligation to pay Rent or perform the other Obligations  except in the case of a
sale of all of such Lessee's assets that meets the  requirements of this Section
5.19 hereof.

        Section 5.20. Acquisitions. Without limiting the generality of any other
provision of this Agreement,  neither Lessee nor any Restricted Subsidiary shall
consummate any Acquisition unless (i) the acquiree is primarily a retail propane
distribution  business;  (ii) such  Acquisition is undertaken in accordance with
all applicable  Requirements of Law; (iii) the prior,  effective written consent
or  approval  to such  Acquisition  of the  board  of  directors  or  equivalent
governing body of the acquiree is obtained;  and (iv)  immediately  after giving
effect  thereto,  no Lease  Default or Lease  Event of Default  will occur or be
continuing  and each of the  representations  and warranties of Lessee herein is
true on and as of the date of such  Acquisition,  both  before and after  giving
effect thereto.  Nothing in Section 5.38 shall prohibit (x) the making by Lessee
of a Permitted  Acquisition  indirectly through the General Partner,  the MLP or
any of its or their  Affiliates  in a series  of  substantially  contemporaneous
transactions  in which  Lessee  shall  ultimately  own the  assets  that are the
subject of such Permitted  Acquisition or (y) the assumption of Acquired Debt in
connection  therewith  to the extent  such  Acquired  Debt is (if not  otherwise
permitted  to be  incurred  by  Lessee  pursuant  to this  Agreement)  upon such
assumption   immediately  repaid  (with  the  proceeds  of  Revolving  Loans  or
otherwise).

        Section 5.21.  Limitation on  Indebtedness.  Lessee shall not, and shall
not  permit any of the  Restricted  Subsidiaries  to,  directly  or  indirectly,
create,  incur, issue,  assume,  suffer to exist,  guarantee or otherwise become
directly  or  indirectly  liable  with  respect to any  Indebtedness  (including
Acquired  Debt)  or  any  Synthetic  Leases  and  Lessee  shall  not  issue  any
Disqualified  Interests and shall not permit any of the Restricted  Subsidiaries
to issue any shares of preferred stock;  provided,  however, that Lessee and any
Restricted  Subsidiary of Lessee may create,  incur,  issue,  assume,  suffer to
exist,  guarantee or otherwise become directly or indirectly liable with respect
to any  Indebtedness  (including  Acquired  Debt) or any Synthetic  Lease to the
extent that the Leverage Ratio is maintained in accordance with Section 5.12(a),
both before and after giving effect to the  incurrence of such  Indebtedness  or
such Synthetic Lease, as the case may be, and, provided,  further,  that (x) the
aggregate  principal  amount of (1) all  Capitalized  Lease  Obligations and all
Synthetic  Lease  Obligations  (other than  Capitalized  Lease  Obligations  and
Synthetic Lease Obligations in respect of Growth-Related  Capital  Expenditures)
of Lessee and the Restricted  Subsidiaries  and (2) all  Indebtedness  for which
Lessee and any Restricted  Subsidiary of Lessee become liable in connection with
Acquisitions  of  retail  propane  businesses  in favor of the  sellers  of such
businesses  and  secured  by any Lien on any  property  of  Lessee or any of the
Restricted   Subsidiaries,   shall  not  exceed  $65,000,000  at  any  one  time
outstanding,  and (y) the principal  amount of any Indebtedness for which Lessee
or any  Restricted  Subsidiary  of  Lessee  becomes  liable in  connection  with
Acquisitions  of  retail  propane  businesses  in favor of the  sellers  of such
businesses shall not exceed the fair market value of the assets so acquired, and
(z) the aggregate amount of Indebtedness of Lessee and its Subsidiaries  through
one or more SPEs in connection with Accounts  Receivable  Securitizations  shall
not exceed $60,000,000 at any one time outstanding.

        Section 5.22. Transactions with Affiliates.  Lessee shall not, and shall
not permit any of the  Restricted  Subsidiaries  to,  sell,  lease,  transfer or
otherwise  dispose  of any of its  properties  or  assets  to, or  purchase  any
property or assets from, or enter into any contract,  agreement,  understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate, including
any Non-Recourse Subsidiary (each of the foregoing, an "Affiliate Transaction"),
unless (a) such Affiliate  Transaction is on terms that are no less favorable to
Lessee or the  relevant  Restricted  Subsidiary  than those that would have been
obtained in a comparable  transaction  by Lessee or such  Restricted  Subsidiary
with an unrelated  Person and (b) with respect to (i) any Affiliate  Transaction
with an aggregate  value in excess of $500,000,  a majority of the  directors of
the  General  Partner  having no direct or  indirect  economic  interest in such
Affiliate  Transaction  determines by resolution that such Affiliate Transaction
complies with clause (a) above and approves such Affiliate  Transaction and (ii)
any Affiliate  Transaction  involving the purchase or other acquisition or sale,
lease,  transfer or other  disposition of properties or assets other than in the
ordinary course of business, in each case, having a fair market value or for net
proceeds in excess of $15,000,000, Lessee delivers to Agent and the Participants
an opinion as to the  fairness to Lessee or such  Restricted  Subsidiary  from a
financial  point  of view  issued  by an  investment  banking  firm of  national
standing;  provided,  however, that (i) any employment agreement or stock option
agreement  entered into by Lessee or any of the Restricted  Subsidiaries  in the
ordinary  course of business and consistent with the past practice of Lessee (or
the  General  Partner)  or  such  Restricted  Subsidiary,   Restricted  Payments
permitted by the  provisions of Section 5.28, and  transactions  entered into by
Lessee in the ordinary  course of business in  connection  with  reinsuring  the
self-insurance  programs or other similar forms of retained  insurable  risks of
the retail propane businesses  operated by Lessee,  the Restricted  Subsidiaries
and its Affiliates,  in each case, shall not be deemed  Affiliate  Transactions,
and (ii) nothing  herein shall  authorize  the payments by Lessee to the General
Partner or any other Affiliate of Lessee for administrative expenses incurred by
such Person other than such out-of-pocket administrative expenses as such Person
shall  incur and  Lessee  shall pay in the  ordinary  course  of  business;  and
provided,  further, that the foregoing provisions of this Section 5.22 shall not
apply to transfers of accounts receivable of Lessee to an SPE in connection with
any Accounts Receivable Securitization permitted by Section 5.21.

        Section 5.23. Use of Proceeds. Lessee shall not, and shall not suffer or
permit any Restricted Subsidiary to, use any portion of the proceeds of the sale
of the Units,  the  Certificates  or the Notes,  directly or indirectly,  (i) to
purchase  or  carry  Margin  Stock,   (ii)  to  repay  or  otherwise   refinance
indebtedness  of Lessee or others  incurred to purchase or carry  Margin  Stock,
(iii) to extend  credit for the purpose of  purchasing  or  carrying  any Margin
Stock,  or (iv) to acquire any  security in any  transaction  that is subject to
Section 13 or 14 of the Exchange Act.

        Section 5.24. Use of Proceeds - Ineligible Securities. Lessee shall not,
directly  or  indirectly,  use any  portion of the  proceeds  of the sale of the
Units,  the  Certificates  or the Notes (i)  knowingly  to  purchase  Ineligible
Securities  from the Credit  Agreement  Arranger  during any period in which the
Credit  Agreement  Arranger makes a market in such Ineligible  Securities,  (ii)
knowingly to purchase  during the  underwriting or placement  period  Ineligible
Securities  being  underwritten  or  privately  placed by the  Credit  Agreement
Arranger,  or (iii) to make  payments of  principal  or  interest on  Ineligible
Securities underwritten or privately placed by the Credit Agreement Arranger and
issued by or for the benefit of Lessee or any Affiliate of Lessee.

     Section  5.25.  Contingent  Obligations.  Lessee  shall not,  and shall not
suffer or permit any Restricted  Subsidiary to, create,  incur, assume or suffer
to exist any Contingent Obligations except:

     (a)  endorsements  for  collection  or  deposit in the  ordinary  course of
business;

                   (b) subject to compliance with the trading policies in effect
         from time to time as submitted to Agent,  Hedging  Obligations  entered
         into  in  the  ordinary   course  of  business  as  bona  fide  hedging
         transactions;

     (c) the Guaranties under the Credit Agreement and the Operative Documents;

     (d) Guaranty Obligations to the extent not prohibited by Section 5.21; and

     (e)   indemnities   not   guaranteeing   Indebtedness  or  Synthetic  Lease
Obligations of any Person.

     Section  5.26.  Joint  Ventures.  Lessee shall not, and shall not suffer or
permit any Restricted Subsidiary to enter into any Joint Venture unless the same
shall be a Permitted Lessee Investment.

        Section 5.27. Lease Obligations. The aggregate obligations of Lessee and
the Restricted Subsidiaries for the payment of rent for any property under lease
or  agreement to lease  (excluding  obligations  of Lessee and its  Subsidiaries
under or with respect to Synthetic  Leases) for any fiscal year shall not exceed
the  greater  of (a)  $40,000,000  or (b) 20% of (i)  Consolidated  Cash Flow of
Lessee for the most recently ended eight consecutive  fiscal quarters divided by
(ii) two;  provided,  however,  that any payment of rent for any property  under
lease or  agreement  to lease  for a term of less  than one year  (after  giving
effect to all automatic renewals) shall not be subject to this Section 5.27. For
purposes of this Section 5.27, the calculation of  Consolidated  Cash Flow shall
give  pro  forma   effect   to   Acquisitions   (including   all   mergers   and
consolidations),  Asset  Sales and other  dispositions  and  discontinuances  of
businesses  or assets  that  have  been made by Lessee or any of the  Restricted
Subsidiaries  during the reference period or subsequent to such reference period
and on or prior to the date of  calculation of  Consolidated  Cash Flow assuming
that  all  such   Acquisitions,   Asset   Sales  and  other   dispositions   and
discontinuances  of  businesses  or assets had  occurred on the first day of the
reference period.

        Section 5.28. Restricted Payments. Lessee shall not and shall not permit
any of the Restricted Subsidiaries to, directly or indirectly (i) declare or pay
any dividend or make any  distribution  on account of Lessee's or any Restricted
Subsidiary's Equity Interests (other than (x) dividends or distributions payable
in Equity Interests (other than Disqualified Interests) of Lessee, (y) dividends
or  distributions  payable  to Lessee  or a  Wholly-Owned  Subsidiary  that is a
Restricted  Subsidiary and a Guarantor or (z) distributions or dividends payable
pro rata to all  holders  of Capital  Interests  of any such  Subsidiary);  (ii)
purchase,  redeem,  call or  otherwise  acquire  or retire  for value any Equity
Interests of Lessee or any  Restricted  Subsidiary or other  Affiliate of Lessee
(other than,  subject to compliance with Section 5.37, any such Equity Interests
owned by a Wholly-Owned Subsidiary of Lessee that is a Restricted Subsidiary and
a  Guarantor);   (iii)  make  any  Investment  other  than  a  Permitted  Lessee
Investment;  or (iv) prepay, purchase,  redeem, retire, defease or refinance the
1998 Fixed Rate Senior Notes or the 2000 Notes (all  payments and other  actions
set forth in clauses (i) through  (iv) above being  collectively  referred to as
"Restricted  Payments"),  except  to the  extent  that,  at  the  time  of  such
Restricted Payment:

                   (a) no Lease  Default or Lease  Event of  Default  shall have
         occurred and be continuing or would occur as a consequence  thereof and
         each of the  representations  and warranties of Lessee set forth herein
         is true on and as of the date of such  Restricted  Payment  both before
         and after giving effect thereto; and

                   (b)  the  Fixed  Charge  Coverage  Ratio  for  Lessee's  most
         recently ended four full fiscal  quarters for which internal  financial
         statements are available  immediately  preceding the date on which such
         Restricted Payment is made,  calculated on a pro forma basis as if such
         Restricted  Payment had been made at the beginning of such four-quarter
         period, would have been more than (i) 2.15 to 1.00 for each such period
         of four fiscal quarters ending on or prior to January 31, 2001 and (ii)
         2.25 to 1.00 for each such period of four fiscal  quarters ending after
         January 31, 2001; and

                   (c) such Restricted  Payment (the amount of any such payment,
         if other than cash, to be  determined by the Board of Directors,  whose
         determination  shall be conclusive  and evidenced by a resolution in an
         officer's  certificate signed by a Responsible Officer and delivered to
         Agent),  together with the aggregate of all other  Restricted  Payments
         (other than any  Restricted  Payments  permitted by the  provisions  of
         clause (ii) of the penultimate  paragraph of this Section 5.28) made by
         Lessee and its  Subsidiaries  in the fiscal  quarter  during which such
         Restricted  Payment  is made  shall not  exceed an amount  equal to (x)
         Available Cash of Lessee for the immediately  preceding  fiscal quarter
         plus (y) the lesser of (i) the amount of any  Available  Cash of Lessee
         during the first 45 days of such fiscal  quarter and (ii) the excess of
         the aggregate  amount of Credit  Agreement Loans that Lessee could have
         borrowed over the actual amount of Credit Agreement Loans  outstanding,
         in each  case as of the last day of the  immediately  preceding  fiscal
         quarter; and

                   (d)  such  Restricted  Payment  (other  than  (x)  Restricted
         Payments described in clause (i) of the first paragraph of this Section
         5.28 made during the fiscal quarter ending January 31, 1997 that do not
         exceed  $26,000,000  in the  aggregate or (y) any  Restricted  Payments
         described  in  clauses  (iii) or (iv) of the  first  paragraph  of this
         Section 5.28) the amount of which (to be determined in accordance  with
         clause (c) of this Section 5.28 if made other than with cash) shall not
         exceed an amount equal to (1) Consolidated  Cash Flow of Lessee and the
         Restricted  Subsidiaries for the period from and after October 31, 1996
         through  and  including  the  last  day of the  fiscal  quarter  ending
         immediately  preceding the date of the proposed Restricted Payment (the
         "Determination  Period"),  minus (2) the sum of  Consolidated  Interest
         Expense of Lessee and the Restricted Subsidiaries for the Determination
         Period plus all capital expenditures (other than Growth-Related Capital
         Expenditures  and net of capital asset sales in the ordinary  course of
         business)  made by Lessee and the  Restricted  Subsidiaries  during the
         Determination  Period  plus  the  aggregate  of  all  other  Restricted
         Payments (other than (x) Restricted Payments described in clause (i) of
         the first paragraph of this Section 5.28 made during the fiscal quarter
         ending January 31, 1997 that do not exceed $26,000,000 in the aggregate
         or (y) any  Restricted  Payments  described in clauses (iii) or (iv) of
         the first  paragraph  of this  Section  5.28)  made by  Lessee  and the
         Restricted  Subsidiaries  during the period from and after  October 31,
         1996 through and including the date of the proposed Restricted Payment,
         plus (3)  $30,000,000,  plus (4) the excess,  if any,  of  consolidated
         working  capital of Lessee and the Restricted  Subsidiaries at July 31,
         1996 over  consolidated  working  capital of Lessee and the  Restricted
         Subsidiaries  at the end of the fiscal year  immediately  preceding the
         date of the proposed Restricted Payment,  minus (5) the excess, if any,
         of   consolidated   working   capital  of  Lessee  and  the  Restricted
         Subsidiaries  at the end of the fiscal year  immediately  preceding the
         date of the  proposed  Restricted  Payment  over  consolidated  working
         capital of Lessee and the Restricted Subsidiaries at July 31, 1996. For
         purposes of this  subsection  5.28(d),  the calculation of Consolidated
         Cash Flow shall give pro forma effect to  Acquisitions  (including  all
         mergers and  consolidations),  Asset Sales and other  dispositions  and
         discontinuances  of  business  or  assets  that  have been made by such
         Person  or any of the  Restricted  Subsidiaries  during  the  reference
         period or  subsequent to such  reference  period and on or prior to the
         date of  calculation of  Consolidated  Cash Flow assuming that all such
         Acquisitions, Asset Sales and other dispositions and discontinuances of
         businesses  or assets had  occurred  on the first day of the  reference
         period.

         The  foregoing  provisions  will not  prohibit  (i) the  payment of any
distribution  within 60 days after the date on which Lessee becomes committed to
make such  distribution,  if at said date of commitment  such payment would have
complied  with the  provisions  of this  Agreement;  and  (ii)  the  redemption,
repurchase, retirement or other acquisition of any Equity Interests of Lessee in
exchange  for, or out of the  proceeds  of, the  substantially  concurrent  sale
(other  than to a  Subsidiary  of Lessee) of other  Equity  Interests  of Lessee
(other than any Disqualified Interests).

         Not later than the date of making any Restricted  Payment,  the General
Partner shall deliver to Agent an officer's  certificate signed by a Responsible
Officer stating that such Restricted  Payment is permitted and setting forth the
basis upon which the  calculations  required by this Section 5.28 were computed,
which  calculations  may be  based  upon  Lessee's  latest  available  financial
statements.

        Section 5.29.  Prepayments of  Subordinated  Indebtedness.  Lessee shall
not, and shall not permit any of the Restricted  Subsidiaries  to, (a) purchase,
redeem,  retire or  otherwise  acquire  for value,  or set apart any money for a
sinking,  defeasance  or other  analogous  fund for, the  purchase,  redemption,
retirement  or other  acquisition  of, or make any payment or  prepayment of the
principal  of or  interest  on, or any other  amount  owing in  respect  of, any
Indebtedness  that is  subordinated  to the  Obligations,  except for  regularly
scheduled payments of interest in respect of such Indebtedness required pursuant
to  the  instruments   evidencing  such   Indebtedness  that  are  not  made  in
contravention of the terms and conditions of subordination  set forth on part II
of Schedule 5.21 or (b) directly or indirectly,  make any payment in respect of,
or set apart any money for a  sinking,  defeasance  or other  analogous  fund on
account of, Guaranty Obligations subordinated to the Obligations.  The foregoing
provisions  will not  prohibit  the  defeasance,  redemption  or  repurchase  of
subordinated   Indebtedness   with  the   proceeds  of   Permitted   Refinancing
Indebtedness.

        Section  5.30.  Dividend  and  Other  Payment   Restrictions   Affecting
Subsidiaries.  Lessee  shall not,  and shall not  permit  any of the  Restricted
Subsidiaries to, directly or indirectly,  create or otherwise cause or suffer to
exist or become  effective any  encumbrance or restriction on the ability of any
Restricted  Subsidiary to (a) pay dividends or make any other  distributions  to
Lessee or any of the Restricted Subsidiaries (1) on its Capital Interests or (2)
with respect to any other interest or participation in, or interest measured by,
its profits,  (b) pay any  indebtedness  owed to Lessee or any of the Restricted
Subsidiaries,  (c) make  loans or  advances  to Lessee or any of the  Restricted
Subsidiaries or (d) transfer any of its properties or assets to Lessee or any of
the  Restricted  Subsidiaries,  except  for such  encumbrances  or  restrictions
existing  under or by reason of (i) Existing  Indebtedness,  (ii) the  Operative
Documents,  the Credit  Agreement,  the 1998 Note Purchase  Agreement,  the 1998
Fixed Rate Senior Notes,  the 2000 Note  Purchase  Agreement and the 2000 Notes,
(iii)  applicable  law, (iv) any instrument  governing  Indebtedness  or Capital
Interests of a Person  acquired by Lessee or any of the Restricted  Subsidiaries
as in  effect  at the  time of  such  Acquisition  (except  to the  extent  such
Indebtedness  was  incurred  in  connection  with  or in  contemplation  of such
Acquisition),  which encumbrance or restriction is not applicable to any Person,
or the  properties  or assets  of any  Person,  other  than the  Person,  or the
property or assets of the Person,  so acquired,  provided that the  Consolidated
Cash Flow of such Person to the extent  that  dividends,  distributions,  loans,
advances or transfers  thereof is limited by such  encumbrance or restriction on
the date of acquisition  is not taken into account in  determining  whether such
acquisition  was  permitted  by the  terms  of  this  Agreement,  (v)  customary
non-assignment  provisions  in leases  entered  into in the  ordinary  course of
business and consistent with past practices, (vi) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature  described  in clause (d) above on the  property so  acquired,  (vii)
Permitted Refinancing  Indebtedness of any Existing Indebtedness,  provided that
the   restrictions   contained  in  the  agreements   governing  such  Permitted
Refinancing  Indebtedness  are no more  restrictive  than those contained in the
agreements   governing  the  Indebtedness   being  refinanced  or  (viii)  other
Indebtedness  permitted to be incurred subsequent to the Effective Date pursuant
to the provisions of Section 5.21 hereof, provided that such restrictions are no
more restrictive than those contained in this Agreement.

        Section 5.31. Change in Business. Lessee shall not, and shall not suffer
or permit any Restricted  Subsidiary to, engage in any material line of business
substantially  different  from those lines of business  carried on by Lessee and
the Restricted Subsidiaries on the date hereof.

        Section 5.32. Accounting Changes. Lessee shall not, and shall not suffer
or  permit  any  Restricted  Subsidiary  to,  make  any  significant  change  in
accounting  treatment or  reporting  practices,  except as required by GAAP,  or
change  the  fiscal  year of Lessee or of any  Restricted  Subsidiary  except as
required by the Code.

        Section 5.33. Limitation on Sale and Leaseback Transactions. Lessee will
not, and will not permit any of the Restricted  Subsidiaries  to, enter into any
arrangement  with  any  Person  providing  for the  leasing  by  Lessee  or such
Restricted  Subsidiary  of any  property  that  has  been  or is to be  sold  or
transferred  by  Lessee  or  such  Restricted   Subsidiary  to  such  Person  in
contemplation of such leasing; provided, however, that Lessee or such Restricted
Subsidiary  may enter into such sale and  leaseback  transaction  if: (i) Lessee
could have (A) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback  transaction  pursuant to the Leverage Ratio
test set forth in Section  5.12(a) and (B)  secured a Lien on such  Indebtedness
pursuant to Section 5.17; (ii) the lease in such sale and leaseback  transaction
is for a term not in excess of the lesser of (A) three  years and (B) 60% of the
remaining  useful  life of such  property;  or (iii)  such  sale  and  leaseback
transaction  is otherwise  permitted by the last sentence of Section 4.17 of the
1996 Indenture as in effect as of the date hereof.

        Section 5.34.    [Intentionally Omitted].

        Section  5.35.  Amendments  of  Organization  Documents  or Certain Debt
Agreements.  Lessee shall not modify,  amend,  supplement or replace, nor permit
any  modification,  amendment,  supplement or  replacement  of the  Organization
Documents of the General  Partner,  Lessee or any Subsidiary of Lessee,  the MLP
Senior Notes,  the 1996  Indenture,  the 1998 Fixed Rate Senior Notes,  the 1998
Note Purchase  Agreement,  the 2000 Notes or the 2000 Note Purchase Agreement or
any document executed and delivered in connection with any of the foregoing,  in
any respect that would adversely  affect the  Participants,  Lessee's ability to
perform the  Obligations,  any  Guarantor's  ability to perform its  obligations
under the Guaranty, in each such case without the prior written consent of Agent
and the  Required  Participants.  Furthermore,  the Lessee  shall not permit any
modification, amendment, supplement or replacement of the Organization Documents
of the MLP that would have a material effect on Lessee without the prior written
consent of Agent and the Required Participants.

        Section 5.36.    [Intentionally Omitted].

        Section 5.37. Operations through Subsidiaries.  Lessee shall not conduct
any  of  its  operations  through  Restricted   Subsidiaries  unless:  (a)  such
Restricted   Subsidiary  executes  a  Guaranty   guaranteeing   payment  of  the
Obligations,  accompanied by an opinion of counsel to the Restricted  Subsidiary
addressed to Agent and the Participants as to the due authorization,  execution,
delivery and  enforceability  of the Guaranty;  (b) such  Restricted  Subsidiary
agrees not to incur any  Indebtedness  other than (i) trade debt, (ii) debt owed
to Lessee or any other  Restricted  Subsidiary and (iii) Acquired Debt otherwise
permitted by this Agreement;  (c) the Consolidated  Cash Flow of such Restricted
Subsidiary,  when  added  to  Consolidated  Cash  Flow of all  other  Restricted
Subsidiaries for any fiscal year, shall not exceed 10% of the Consolidated  Cash
Flow of Lessee and the Restricted Subsidiaries for such fiscal year; and (d) the
value of the assets of such  Restricted  Subsidiary,  when added to the value of
the assets of all other  Restricted  Subsidiaries for any fiscal year, shall not
exceed 10% of the consolidated  value of the assets of Lessee and the Restricted
Subsidiaries  for such fiscal  year,  as  determined  in  accordance  with GAAP;
provided that the  requirements of subsections (c) and (d) above shall not apply
as to any Restricted Subsidiary if the aggregate Indebtedness of such Restricted
Subsidiary,  when added to the Indebtedness of all other Restricted Subsidiaries
at such time  (excluding,  in each case, debt of any such Restricted  Subsidiary
owed to Lessee or another Restricted  Subsidiary),  shall not exceed $5 million.
Lessee shall not conduct any of its operations through, and shall not establish,
create or otherwise invest in, any Unrestricted Subsidiary unless the same shall
be a Permitted Lessee Investment.

        Section 5.38.  Operations of MLP.  Except in connection with an indirect
Acquisition  permitted by Section 5.20, the General Partner and Lessee shall not
permit the MLP or any of its Affiliates  (including any Non-Recourse  Subsidiary
or any Unrestricted Subsidiary) to operate or conduct any business substantially
similar to that conducted by Lessee and the Restricted  Subsidiaries within a 25
mile radius of any business conducted by Lessee and the Restricted Subsidiaries.
In order to comply  with this  Section  5.38,  Lessee may enter into one or more
transactions by which its assets and properties are "swapped" or "exchanged" for
assets and  properties of another Person prior to or  concurrently  with another
transaction  which,  but for such swap or exchange  would  violate this Section;
provided, that (i) if the value of the MLP's assets or units to be so swapped or
exchanged exceeds $15 million, as determined by the audit committee of the Board
of Directors  of the General  Partner,  Lessee shall have first  obtained at its
expense  an  opinion  from a  nationally  recognized  investment  banking  firm,
addressed  to it,  Agent  and the  Participants  and  opining  without  material
qualification  and based on assumptions that are realistic at the time, that the
exchange  or  swap   transactions   are  fair  to  Lessee  and  the   Restricted
Subsidiaries,  and  (ii) if the  value  of the  MLP's  assets  or units to be so
swapped or exchanged  exceeds $50 million,  as determined by the audit committee
of the Board of Directors of the General Partner,  at the option of the Required
Participants,   Agent  shall  have  first  retained,  at  Lessee's  expense,  an
investment  banking  firm on behalf  of the  Participants  who  shall  also have
rendered an opinion  containing the statements and content referred to in clause
(i).

        Section 5.39.    Miscellaneous.

         (a) Further Assurances. The Lessee, at its cost and expense, will cause
to be promptly and duly taken,  executed,  acknowledged  and  delivered all such
further  acts,   documents  and  assurances  as  Certificate  Trustee  or  Agent
reasonably may request from time to time in order to carry out more  effectively
the intent and purposes of this Agreement and the other Operative  Documents and
the Overall  Transaction.  The Lessee,  at its cost and expense,  will cause all
financing statements (including  precautionary  financing  statements),  fixture
filings,  mortgages and other documents,  to be recorded or filed at such places
and times in such  manner,  and will take all such  other  actions or cause such
actions to be taken,  as may be necessary or as may be  reasonably  requested by
Agent or  Certificate  Trustee  in order to  establish,  preserve,  protect  and
perfect the title and Lien of Agent in the Units, the Lessee  Collateral and the
Lessor  Collateral and Certificate  Trustee's,  Agent's and/or any Participant's
rights under this Agreement and the other Operative Documents.

         (b) Change of Name or Address.  Lessee shall  provide Agent thirty (30)
days' prior  written  notice of any change in name,  or the address of its chief
executive  office and  principal  place of business or the office where it keeps
its records concerning its accounts and the Units.

         (c) Securities. Lessee shall not, nor shall it permit anyone authorized
to act on its behalf to,  take any action  which would  subject the  issuance or
sale of the Notes or Certificates,  the Units, the Trust Estate or the Operative
Documents,  or any security or lease the offering of which,  for purposes of the
Securities Act or any state  securities  laws, would be deemed to be part of the
same offering as the offering of the  aforementioned  items to the  registration
requirements of Section 5 of the Securities Act or any state securities laws.

         (d) Rates.  With  respect to each  determination  of Interest and Yield
pursuant to this Agreement,  the Loan  Agreement,  the Trust Agreement and Basic
Rent under the Lease,  Lessee  agrees to be bound by Sections 2.6 and 2.7 of the
Loan Agreement,  Sections 2.4 and 2.5 of the Trust  Agreement,  and Sections 2.8
and 2.9 hereof and the applicable definitions in Appendix 1.

        Section 5.40.  Accounting  Principles.  (a) Unless the context otherwise
clearly  requires,  all accounting  terms not expressly  defined herein shall be
construed, and all financial computations required under this Agreement shall be
made in  accordance  with GAAP  consistently  applied.  In the  event  that GAAP
changes  during  the term of the Lease  such  that the  covenants  contained  in
Section 5.12 would then be  calculated in a different  manner or with  different
components,  (i) Lessee and the  Participants  agree to amend this  Agreement in
such  respects as are  necessary  to conform  those  covenants  as criteria  for
evaluating  Lessee's  financial  condition to substantially the same criteria as
were  effective  prior to such change in GAAP and (ii) Lessee shall be deemed to
be in compliance with the covenants  contained in Section 5.12 during the 90-day
period  following any such change in GAAP if and to the extent that Lessee would
have been in compliance  therewith under GAAP as in effect  immediately prior to
such change.

         (b) Except as otherwise  specified,  references herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of Lessee."

         (c)  The  following   definitions  set  forth  in  Appendix  I  to  the
Participation  Agreement  shall be and are hereby added as new defined  terms or
amended and restated, as the case may be, to read as follows:

                           "Acquisition"  means  any  transaction  or  series of
                  related transactions for the purpose of or resulting, directly
                  or indirectly,  in (a) the acquisition of all or substantially
                  all of the assets of a Person,  or of any business or division
                  of a Person,  (b) the  acquisition  of in excess of 50% of the
                  capital stock,  partnership  interests or equity of any Person
                  or otherwise  causing any Person to become a Subsidiary of the
                  acquiring  Person,  or (c) a merger  or  consolidation  or any
                  other  combination  with another  Person  (other than a Person
                  that is a Subsidiary  of the acquiring  Person)  provided that
                  Lessee  or the  Subsidiary  of  the  acquiring  entity  is the
                  surviving Person.

                           "Available  Cash" has the meaning  given to such term
                  in the Partnership Agreement,  as amended to October 14, 1998;
                  provided, that (a) Available Cash shall not include any amount
                  of Net  Proceeds  of Asset  Sales  until  the  270-day  period
                  following the  consummation of the applicable  Asset Sale, (b)
                  investments,  loans and other  contributions to a Non-Recourse
                  Subsidiary, Unrestricted Subsidiary or Joint Venture are to be
                  treated  as "cash  disbursements"  when made for  purposes  of
                  determining the amount of Available Cash and (c) cash receipts
                  of a Non-Recourse Subsidiary, Unrestricted Subsidiary or Joint
                  Venture  shall not  constitute  cash  receipts  of Lessee  for
                  purposes of  determining  the amount of  Available  Cash until
                  cash is actually distributed by such Non-Recourse  Subsidiary,
                  Unrestricted  Subsidiary  or  Joint  Venture  to  Lessee  or a
                  Restricted Subsidiary.

                           "Capital  Interests"  means,  (a) with respect to any
                  corporation,  any and all  shares,  participations,  rights or
                  other equivalent  interests in the capital of the corporation,
                  (b) with  respect  to any  partnership  or  limited  liability
                  company, any and all partnership interests (whether general or
                  limited) or limited liability company interests, respectively,
                  and other interests or participations  that confer on a Person
                  the right to receive a share of the  profits and losses of, or
                  distributions  of  assets  of,  such  partnership  or  limited
                  liability  company,  and (c) with respect to any other Person,
                  ownership interests of any type in such Person.

                           "Consolidated  Cash  Flow"  means,  with  respect  to
                  Lessee and the  Restricted  Subsidiaries  for any period,  the
                  Consolidated  Net Income for such  period,  plus (a) an amount
                  equal to any extraordinary  loss plus any net loss realized in
                  connection  with an asset sale, to the extent such losses were
                  deducted  in  computing  Consolidated  Net  Income,  plus  (b)
                  provision  for taxes  based on income or profits of Lessee and
                  the  Restricted  Subsidiaries  for such period,  to the extent
                  such   provision   for  taxes  was   deducted   in   computing
                  Consolidated  Net  Income,  plus  (c)  Consolidated   Interest
                  Expense for such period,  whether  paid or accrued  (including
                  amortization  of original issue  discount,  non-cash  interest
                  payments and the interest component of any payments associated
                  with  Capital  Lease  Obligations  and net  payments  (if any)
                  pursuant to Hedging  Obligations),  to the extent such expense
                  was deducted in computing  Consolidated  Net Income,  plus (d)
                  depreciation  and  amortization   (including  amortization  of
                  goodwill and other  intangibles but excluding  amortization of
                  prepaid  cash  expenses  that were paid in a prior  period) of
                  Lessee and the Restricted Subsidiaries for such period, to the
                  extent such  depreciation  and  amortization  were deducted in
                  computing  Consolidated Net Income, plus (e) non-cash employee
                  compensation   expenses   of   Lessee   and   the   Restricted
                  Subsidiaries  for such period,  plus (f) the  Synthetic  Lease
                  Principal Component of Lessee and the Restricted  Subsidiaries
                  for  such  period;  in each  case,  for  such  period  without
                  duplication  on  a   consolidated   basis  and  determined  in
                  accordance with GAAP.

                           "Consolidated  Interest  Expense" means, with respect
                  to  Lessee  and the  Restricted  Subsidiaries  for any  fiscal
                  period, on a consolidated  basis, the sum of (a) all interest,
                  fees  (including  Letter of Credit fees),  charges and related
                  expenses paid or payable  (without  duplication) by Lessee and
                  the  Restricted  Subsidiaries  for that  fiscal  period to the
                  Banks  hereunder  or to any other  lender in  connection  with
                  borrowed  money or the deferred  purchase price of assets that
                  are considered  "interest  expense"  under GAAP,  plus (b) the
                  portion  of rent  paid or  payable  (without  duplication)  by
                  Lessee and the Restricted  Subsidiaries for that fiscal period
                  under  Capital  Lease  Obligations  that  should be treated as
                  interest in accordance  with  Financial  Accounting  Standards
                  Board Statement No. 13, on a consolidated  basis, plus (c) the
                  Synthetic   Lease   Interest   Component  of  Lessee  and  the
                  Restricted Subsidiaries for that fiscal period.

                           "Consolidated  Net  Income"  means,  with  respect to
                  Lessee and the  Restricted  Subsidiaries  for any period,  the
                  aggregate  of the Net  Income  of  Lessee  and the  Restricted
                  Subsidiaries  for  such  period,  on  a  consolidated   basis,
                  determined in accordance with GAAP; provided, that (a) the Net
                  Income of any Person that is not a  Restricted  Subsidiary  or
                  that is accounted for by the equity method of accounting shall
                  be included  only to the extent of the amount of  dividends or
                  distributions  paid to Lessee or a Wholly-Owned  Subsidiary of
                  Lessee,  (b) the Net Income of any Person that is a Restricted
                  Subsidiary  (other than a  Wholly-Owned  Subsidiary)  shall be
                  included  only to the  extent of the  amount of  dividends  or
                  distributions  paid to Lessee or a Wholly-Owned  Subsidiary of
                  Lessee, (c) the Net Income of any Person acquired in a pooling
                  of interests  transaction  for any period prior to the date of
                  such  acquisition  shall  be  excluded  except  to the  extent
                  otherwise  includable  under  clause  (a)  above  and  (d) the
                  cumulative  effect of a change in accounting  principles shall
                  be excluded.

                           "Consolidated  Net  Worth"  means,  with  respect  to
                  Lessee and the Restricted Subsidiaries as of any date, the sum
                  of (a) the consolidated  equity of the common  stockholders or
                  partners of Lessee and the Restricted  Subsidiaries as of such
                  date, plus (b) the respective  amounts reported on the balance
                  sheet of Lessee  and the  Restricted  Subsidiaries  as of such
                  date with respect to any series of preferred stock (other than
                  Disqualified  Interests)  that by its terms is not entitled to
                  the payment of dividends unless such dividends may be declared
                  and paid only out of net  earnings  in  respect of the year of
                  such  declaration  and payment,  but only to the extent of any
                  cash received by Lessee and the Restricted  Subsidiaries  upon
                  issuance  of such  preferred  stock,  less  (x) all  write-ups
                  (other  than  write-ups   resulting   from  foreign   currency
                  translations  and  write-ups  of  tangible  assets  of a going
                  concern  business made within 12 months after the  acquisition
                  of such business) subsequent to the Effective Date in the book
                  value  of  any  asset  owned  by  Lessee  and  the  Restricted
                  Subsidiaries,   (y)  all   Investments  as  of  such  date  in
                  unconsolidated  Subsidiaries  and  in  Persons  that  are  not
                  Restricted  Subsidiaries  (except,  in  each  case,  Permitted
                  Lessee Investments), and (z) all unamortized debt discount and
                  expense and unamortized  deferred charges as of such date, all
                  of the foregoing determined in accordance with GAAP.

                           "Credit   Agreement"  means  the  Third  Amended  and
                  Restated  Credit  Agreement  dated as of April 18,  2000 among
                  Lessee,  the General Partner,  the  Administrative  Agent, the
                  Credit Agreement Banks and the Documentation Agent.

     "Credit Agreement Arranger" means Banc of America Securities LLC.

                           "Credit   Agreement   Bank"   means   the   financial
                  institutions  defined as "Banks" in the introductory clause to
                  the Credit Agreement.

     "Documentation Agent" has the meaning specified in the introductory
                  clause to the Credit Agreement.

                           "Effective  Date"  means the first  date on which all
                  conditions  precedent  set  forth  in  Section  5  of  Omnibus
                  Amendment  Agreement  No. 2 are  satisfied  or  waived  by the
                  Certificate Purchasers or the Lenders.

                           "Existing Credit  Agreement" means the Second Amended
                  and Restated  Credit  Agreement,  dated as of July 2, 1998, as
                  amended prior to the Effective Date, among Lessee, the General
                  Partner, the several financial  institutions from time to time
                  party  thereto and Bank of America,  N.A.,  as  Administrative
                  Agent.

                           "Existing   Indebtedness"   means   Indebtedness  and
                  Synthetic  Lease  Obligations  of Lessee and its  Subsidiaries
                  (other  than  the  "Obligations"  as  defined  in  the  Credit
                  Agreement)  and certain  Indebtedness  of the General  Partner
                  with respect to which Lessee has assumed the General Partner's
                  repayment  obligations,  in  each  case  in  existence  on the
                  Restatement  Effective  Date and as more  fully  set  forth on
                  Schedule V to Omnibus Amendment Agreement No. 2.

                           "Fixed Charge  Coverage  Ratio" means with respect to
                  Lessee and the  Restricted  Subsidiaries  for any period,  the
                  ratio of  Consolidated  Cash  Flow for  such  period  to Fixed
                  Charges  for such  period.  In the event that Lessee or any of
                  the Restricted  Subsidiaries (a) incurs, assumes or guarantees
                  any  Indebtedness or Synthetic Lease  Obligations  (other than
                  revolving credit borrowings including, with respect to Lessee,
                  the  Loans) or (b)  redeems  or  repays  any  Indebtedness  or
                  Synthetic  Lease  Obligations  (other  than  revolving  credit
                  borrowings that are properly classified as a current liability
                  for GAAP including,  with respect to Lessee,  the Loans to the
                  extent  that  such  Loans  are so  classified  and  excluding,
                  regardless of classification,  any Loans or other Indebtedness
                  or Synthetic Lease  Obligations the proceeds of which are used
                  for Acquisitions or Growth Related Capital  Expenditures),  in
                  any case  subsequent  to the  commencement  of the  period for
                  which the Fixed Charge Coverage Ratio is being  calculated but
                  prior to the date of the event for  which the  calculation  of
                  the Fixed  Charge  Coverage  Ratio is made (the "Fixed  Charge
                  Ratio Calculation Date"), then the Fixed Charge Coverage Ratio
                  shall  be   calculated   giving  pro  forma   effect  to  such
                  incurrence,  assumption, guarantee, redemption or repayment of
                  Indebtedness  or Synthetic Lease  Obligations,  as if the same
                  had  occurred at the  beginning  of the  applicable  reference
                  period. The foregoing calculation of the Fixed Charge Coverage
                  Ratio  shall  also  give  pro  forma  effect  to  Acquisitions
                  (including  all mergers and  consolidations),  Asset Sales and
                  other dispositions and discontinuances of businesses or assets
                  that  have  been  made  by  Lessee  or any  of the  Restricted
                  Subsidiaries during the reference period or subsequent to such
                  reference  period  and on or prior to the Fixed  Charge  Ratio
                  Calculation  Date assuming that all such  Acquisitions,  Asset
                  Sales and other dispositions and discontinuances of businesses
                  or assets  had  occurred  on the  first  day of the  reference
                  period; provided, however, that with respect to Lessee and the
                  Restricted Subsidiaries, (a) Fixed Charges shall be reduced by
                  amounts  attributable  to  businesses  or  assets  that are so
                  disposed  of or  discontinued  only  to the  extent  that  the
                  obligations  giving rise to such Fixed Charges would no longer
                  be obligations  contributing to the Fixed Charges of Lessee or
                  the Restricted  Subsidiaries  subsequent to Fixed Charge Ratio
                  Calculation Date and (b)  Consolidated  Cash Flow generated by
                  an  acquired  business  or asset of Lessee  or the  Restricted
                  Subsidiaries  shall be  determined  by the actual gross profit
                  (revenues minus costs of goods sold) of such acquired business
                  or asset  during  the  immediately  preceding  number  of full
                  fiscal  quarters as are in the reference  period minus the pro
                  forma expenses that would have been incurred by Lessee and the
                  Restricted  Subsidiaries  in the  operation  of such  acquired
                  business or asset during such period  computed on the basis of
                  (i) personnel  expenses for  employees  retained by Lessee and
                  the Restricted  Subsidiaries  in the operation of the acquired
                  business or asset and (ii)  non-personnel  costs and  expenses
                  incurred by Lessee and the  Restricted  Subsidiaries  on a per
                  gallon  basis  in  the  operation  of  Lessee's   business  at
                  similarly situated Lessee facilities.

                           "Fixed Charges" means, with respect to Lessee and the
                  Restricted  Subsidiaries  for any  period,  the  sum,  without
                  duplication,  of (a)  Consolidated  Interest  Expense for such
                  period,  whether  paid or accrued,  to the extent such expense
                  was deducted in computing  Consolidated Net Income  (including
                  amortization of original issue  discounts,  non-cash  interest
                  payments,  the interest  component of all payments  associated
                  with  Capital  Lease  Obligations  and net  payments  (if any)
                  pursuant   to  Hedging   Obligations   permitted   under  this
                  Agreement),  (b)  commissions,  discounts  and other  fees and
                  charges  incurred  with respect to letters of credit,  (c) any
                  interest  expense on  Indebtedness  of another  Person that is
                  guaranteed  by  Lessee  and  the  Restricted  Subsidiaries  or
                  secured  by a Lien on assets of any such  Person,  and (d) the
                  product  of (i) all cash  dividend  payments  on any series of
                  preferred  stock of Lessee  and the  Restricted  Subsidiaries,
                  times (ii) a fraction,  the  numerator of which is one and the
                  denominator  of which is one minus the then  current  combined
                  federal,  state  and  local  statutory  tax  rate  of  Lessee,
                  expressed  as  a  decimal,  determined,  in  each  case,  on a
                  consolidated basis and in accordance with GAAP.

                           "Funded  Debt" means all  Indebtedness  of Lessee and
                  the   Restricted   Subsidiaries,   excluding  all   Contingent
                  Obligations of Lessee and the Restricted Subsidiaries under or
                  in connection with Letters of Credit  outstanding from time to
                  time.

                           "Guaranty"   means  a  continuing   guaranty  of  the
                  Obligations   in  favor  of  the   Agent  on   behalf  of  the
                  Participants, in form and substance satisfactory to the Agent.

                           "Interest  Coverage  Ratio"  means  with  respect  to
                  Lessee and the  Restricted  Subsidiaries  for any period,  the
                  ratio of  Consolidated  Cash for such  period to  Consolidated
                  Interest Expense for such period.  In the event that Lessee or
                  any of the  Restricted  Subsidiaries  (a)  incurs,  assumes or
                  guarantees any  Indebtedness  or Synthetic  Lease  Obligations
                  (other  than  revolving  credit  borrowings  including,   with
                  respect  to Lessee,  the  Loans) or (b)  redeems or repays any
                  Indebtedness  or  Synthetic  Lease  Obligations   (other  than
                  revolving credit borrowings that are properly  classified as a
                  current  liability  under  GAAP  including,  with  respect  to
                  Lessee,  the Loans, to the extent such Loans are so classified
                  and  excluding,  regardless  of  classification,  any Loans or
                  other Indebtedness or Synthetic Lease Obligations the proceeds
                  of which are used for  Acquisitions  or Growth Related Capital
                  Expenditures),  in any case subsequent to the  commencement of
                  the  period  for which the  Interest  Coverage  Ratio is being
                  calculated,  but prior to the date on which the calculation of
                  the Interest  Coverage Ratio is made (the  "Interest  Coverage
                  Ratio  Calculation  Date"),  then the Interest  Coverage Ratio
                  shall  be   calculated   giving  pro  forma   effect  to  such
                  incurrence,  assumption, guarantee, redemption or repayment of
                  Indebtedness  or Synthetic Lease  Obligations,  as if the same
                  had  occurred at the  beginning  of the  applicable  reference
                  period.  The foregoing  calculation  of the Interest  Coverage
                  Ratio  shall  also  give  pro  forma  effect  to  Acquisitions
                  (including  all mergers and  consolidations),  Asset Sales and
                  other dispositions and discontinuances of businesses or assets
                  that  have  been  made  by  Lessee  or any  of the  Restricted
                  Subsidiaries during the reference period or subsequent to such
                  reference  period  and on or  prior to the  Interest  Coverage
                  Ratio  Calculation  Date assuming that all such  Acquisitions,
                  Asset  Sales and other  dispositions  and  discontinuances  of
                  businesses  or  assets  had  occurred  on the first day of the
                  reference  period;  provided,  however,  that with  respect to
                  Lessee  and  the  Restricted  Subsidiaries,  (a)  Consolidated
                  Interest  Expense shall be reduced by amounts  attributable to
                  businesses  or assets that are so disposed of or  discontinued
                  only to the extent that the  Indebtedness  or Synthetic  Lease
                  Obligations giving rise to such Consolidated  Interest Expense
                  would no longer be Indebtedness or Synthetic Lease Obligations
                  contributing to the Consolidated Interest Expense of Lessee or
                  the  Restricted   Subsidiaries   subsequent  to  the  Interest
                  Coverage Ratio Calculation Date and (b) Consolidated Cash Flow
                  generated  by an acquired  business or asset of Lessee and the
                  Restricted  Subsidiaries  shall be  determined  by the  actual
                  gross  profit  (revenues  minus  costs of goods  sold) of such
                  acquired  business or asset during the  immediately  preceding
                  number of full  fiscal  quarters  as in the  reference  period
                  minus the pro forma  expenses that would have been incurred by
                  Lessee and the  Restricted  Subsidiaries  in the  operation of
                  such acquired business or asset during such period computed on
                  the basis of (i) personnel  expenses for employees retained by
                  Lessee and the Restricted Subsidiaries in the operation of the
                  acquired  business or asset and (ii)  non-personnel  costs and
                  expenses incurred by Lessee and the Restricted Subsidiaries on
                  a per gallon basis in the  operation  of Lessee's  business at
                  similarly situated facilities of Lessee.

                           "Investment"  means,  relative  to  any  Person,  any
                  direct  or  indirect  purchase  or other  acquisition  by such
                  Person of stock or other  securities of any other  Person,  or
                  any direct or indirect loan,  advance or capital  contribution
                  by such Person to any other  Person,  and any other item which
                  would be classified as an  "investment"  on a balance sheet of
                  such  Person  prepared  in  accordance  with GAAP,  including,
                  without  limitation,  any direct or indirect  contribution  by
                  such  Person  of  property  or  assets  to  a  joint  venture,
                  partnership  or other  business  entity in which  such  Person
                  retains an interest.  For purposes of the Operative Documents,
                  the amount  involved  in  Investments  made  during any period
                  shall be the aggregate cost to Lessee of all such  Investments
                  made during such period,  determined in accordance  with GAAP,
                  but without  regard to  unrealized  increases  or decreases in
                  value,  or  write-ups,  write-downs  or  write-offs,  of  such
                  Investments  and  without  regard  to  the  existence  of  any
                  undistributed   earnings  or  accrued  interest  with  respect
                  thereto  accrued  after  the  respective  dates on which  such
                  Investments were made, less any net return of capital realized
                  during  such  period  upon  the  sale,   repayment   or  other
                  liquidation of such Investment  (determined in accordance with
                  GAAP, but without regard to any amounts  received  during such
                  period as earnings (in the form of dividends not  constituting
                  a return of capital, interest or otherwise) on such Investment
                  or as loans from any Person in whom such  Investment  has been
                  made).

                           "Leverage  Ratio"  means,  with respect to Lessee and
                  the  Restricted  Subsidiaries  for any  period,  the  ratio of
                  Funded Debt plus Synthetic Lease Obligations,  in each case of
                  Lessee and the Restricted  Subsidiaries  as of the last day of
                  such period, to Consolidated Cash Flow for such period. In the
                  event that Lessee or any of the  Restricted  Subsidiaries  (a)
                  incurs,  assumes or guarantees any  Indebtedness  or Synthetic
                  Lease  Obligations  (other than  revolving  credit  borrowings
                  including,  with respect to Lessee,  the Loans) or (b) redeems
                  or repays any  Indebtedness  or  Synthetic  Lease  Obligations
                  (other than  revolving  credit  borrowings  that are  properly
                  classified as a current  liability under GAAP including,  with
                  respect to Lessee,  the Loans to the extent  such Loans are so
                  classified and excluding,  regardless of  classification,  any
                  Loans or other Indebtedness or Synthetic Lease Obligations the
                  proceeds of which are used for  Acquisitions or Growth Related
                  Capital   Expenditures),   in  any  case   subsequent  to  the
                  commencement  of the  period for which the  Leverage  Ratio is
                  being   calculated   but  prior  to  the  date  on  which  the
                  calculation of the Leverage Ratio is made (the "Leverage Ratio
                  Calculation   Date"),   then  the  Leverage   Ratio  shall  be
                  calculated   giving  pro  forma  effect  to  such  incurrence,
                  assumption, guarantee, redemption or repayment of Indebtedness
                  or Synthetic Lease Obligations, as if the same had occurred at
                  the  beginning  of  the  applicable   reference  period.   The
                  foregoing  calculation  of the Leverage  Ratio shall also give
                  pro forma effect to  Acquisitions  (including  all mergers and
                  consolidations),   Asset  Sales  and  other  dispositions  and
                  discontinuances of businesses or assets that have been made by
                  Lessee  or any  of  the  Restricted  Subsidiaries  during  the
                  reference period or subsequent to such reference period and on
                  or prior to the Leverage Ratio  Calculation Date assuming that
                  all such Acquisitions,  Asset Sales and other dispositions and
                  discontinuances  of  businesses  or assets had occurred on the
                  first day of the reference  period;  provided,  however,  that
                  with respect to Lessee and the  Restricted  Subsidiaries,  (a)
                  Funded Debt and Synthetic Lease  Obligations  shall be reduced
                  by amounts  attributable  to  businesses or assets that are so
                  disposed  of or  discontinued  only  to the  extent  that  the
                  Indebtedness  or Synthetic  Leases included within such Funded
                  Debt and  Synthetic  Lease  Obligations  would no longer be an
                  obligation of Lessee or the Restricted Subsidiaries subsequent
                  to the Leverage Ratio  Calculation  Date and (b)  Consolidated
                  Cash Flow generated by an acquired business or asset of Lessee
                  or the  Restricted  Subsidiaries  shall be  determined  by the
                  actual  gross profit  (revenues  minus costs of goods sold) of
                  such  acquired   business  or  asset  during  the  immediately
                  preceding  number of full fiscal  quarters as in the reference
                  period  minus  the pro forma  expenses  that  would  have been
                  incurred  by Lessee  and the  Restricted  Subsidiaries  in the
                  operation  of such  acquired  business  or asset  during  such
                  period  computed on the basis of (i)  personnel  expenses  for
                  employees  retained by Lessee and the Restricted  Subsidiaries
                  in the  operation of the  acquired  business or asset and (ii)
                  non-personnel  costs and  expenses  incurred by Lessee and the
                  Restricted Subsidiaries on a per gallon basis in the operation
                  of  Lessee's  business at  similarly  situated  facilities  of
                  Lessee.

                           "Net  Income"  means,  with respect to Lessee and the
                  Restricted  Subsidiaries,   the  net  income  (loss)  of  such
                  Persons,  determined  in  accordance  with GAAP and before any
                  reduction in respect of preferred stock dividends,  excluding,
                  however,  (a) any  gain  (but  not  loss),  together  with any
                  related  provision  for  taxes on such  gain  (but not  loss),
                  realized  in  connection  with (i) any asset sale  (including,
                  without   limitation,   dispositions   pursuant  to  sale  and
                  leaseback  transactions),  or  (ii)  the  disposition  of  any
                  securities or the extinguishment of any Indebtedness of Lessee
                  or  any  of  the   Restricted   Subsidiaries,   and   (b)  any
                  extraordinary  gain (but not loss),  together with any related
                  provision for taxes on such extraordinary gain (but not loss);
                  provided, however, that all costs and expenses with respect to
                  the redemption of the 1994 Fixed Rate Senior Notes, including,
                  without  limitation,  cash  premiums,  tender offer  premiums,
                  consent  payments  and all fees  and  expenses  in  connection
                  therewith,  shall be added  back to the Net  Income of Lessee,
                  the  General  Partner or the  Restricted  Subsidiaries  to the
                  extent  that  they  were  deducted  from  such Net  Income  in
                  accordance with GAAP.

                           "Net Proceeds of Asset Sale" means the aggregate cash
                  proceeds   received  by  Lessee  or  any  of  the   Restricted
                  Subsidiaries  in respect of any Asset Sale,  net of the direct
                  costs  relating  to  such  Asset  Sale   (including,   without
                  limitation, legal, accounting and investment banking fees, and
                  sales  commissions) and any relocation  expenses incurred as a
                  result  thereof,  taxes paid or  payable  as a result  thereof
                  (after  taking  into  account  any  available  tax  credits or
                  deductions  and any tax  sharing  arrangements),  and  amounts
                  required  to be  applied  to  the  repayment  of  Indebtedness
                  secured by a Lien on the asset or assets  the  subject of such
                  Asset Sale.

                           "1994 Fixed Rate Senior Notes" means the 10% Series A
                  Fixed Rate  Senior  Notes due 2001 that were  issued by Lessee
                  and  Ferrellgas   Finance  Corp.   pursuant  to  that  certain
                  Indenture  dated as of July 5, 1994 among  Lessee,  Ferrellgas
                  Finance   Corp.   and   Norwest   Bank   Minnesota,   National
                  Association.  All of the 1994  Fixed  Rate  Senior  Notes were
                  redeemed prior to the Effective Date.

     "Omnibus Amendment Agreement No. 2" means Omnibus Amendment Agreement No. 2
in respect of the Participation  Agreement and the Lease,  dated as of April 18,
2000,  between the Lessee,  the General Partner,  the Certificate  Trustee,  the
Agent, the Certificate Purchasers and the Lender.

                           "Organization   Documents"   means,   (a)   for   any
                  corporation, the certificate or articles of incorporation, the
                  bylaws,   any  certificate  of   determination  or  instrument
                  relating  to the  rights  of  preferred  shareholders  of such
                  corporation,   any  shareholder  rights  agreement,   and  all
                  applicable  resolutions  of the  board  of  directors  (or any
                  committee thereof) of such corporation, (b) for any general or
                  limited  partnership,   the  partnership   agreement  of  such
                  partnership  and all  amendments  thereto  and any  agreements
                  otherwise relating to the rights of the partners thereof,  and
                  (c) for any limited liability company,  the limited liability,
                  operating or similar agreement and all amendments  thereto and
                  any agreements otherwise relating to the rights of the members
                  thereof.

                           "Partnership Agreement" shall mean the Second Amended
                  and Restated Agreement of Limited  Partnership of Lessee dated
                  October 14, 1998,  as amended from time to time in  accordance
                  with the terms of the Participation Agreement.

                           "Permitted   Lessee   Investments"   means   (a)  any
                  Investments in Cash Equivalents; (b) any Investments in Lessee
                  or(subject to the  provisions of Section 5.37) in a Restricted
                  Subsidiary of Lessee that is a Guarantor;  (c)  Investments by
                  Lessee or any  Restricted  Subsidiary of Lessee in a Person in
                  compliance with the other provisions of this Agreement,  if as
                  a  result  of  such  Investment  (i)  such  Person  becomes  a
                  Restricted  Subsidiary  of Lessee and a Guarantor or (ii) such
                  Person is merged, consolidated or amalgamated with or into, or
                  transfers or conveys substantially all of its assets to, or is
                  liquidated into,  Lessee or a Restricted  Subsidiary of Lessee
                  that is a  Guarantor;  and (d)  Investments  by  Lessee or any
                  Restricted  Subsidiary in Unrestricted  Subsidiaries and Joint
                  Ventures;  provided  that  the  amount  of  cash  or  property
                  contributed,  loaned or  otherwise  advanced by Lessee or such
                  Restricted Subsidiaries in respect of such Investments may not
                  exceed at any time an aggregate amount equal to the greater of
                  (i) $15,000,000 and (ii) 10% of Consolidated Cash Flow for the
                  most recently ended four fiscal quarters of Lessee.

                           "Person"    means   an    individual,    partnership,
                  corporation,  limited liability company, business trust, joint
                  stock  company,  trust,  unincorporated   association,   Joint
                  Venture or Governmental Authority.

                           "Quarterly  Payment  Period"  shall  mean  successive
                  calendar  quarters  commencing on the Interim Term  Expiration
                  Date and  thereafter on the last business day in March,  June,
                  September and December in each year; provided,  however,  that
                  no Quarterly Payment Period may end later than the last day of
                  the Lease Term.

                           "Restricted   Subsidiary"  means  any  Subsidiary  of
                  Lessee  (a)  of  which  80% or  more  of  the  voting  Capital
                  Interests are beneficially owned,  directly or indirectly,  by
                  Lessee and none of which Capital Interests are owned, directly
                  or  indirectly,  by  Unrestricted  Subsidiaries,  (b) which is
                  engaged in the same or substantially the same line of business
                  as Lessee, (c) which is organized under the laws of the United
                  States or any State thereof, (d) which maintains substantially
                  all  of  its  assets  and  conducts  substantially  all of its
                  business  within the United States and (e) which is designated
                  as a Restricted Subsidiary in Schedule IV to Omnibus Amendment
                  Agreement  No. 2 as of the  Effective  Date or which  shall be
                  designated   as  a  Restricted   Subsidiary  by  Lessee  at  a
                  subsequent date pursuant to Section 5.16;  provided,  however,
                  that (x) to the extent a newly  formed or acquired  Subsidiary
                  meeting  the   foregoing   requirements   is  not  declared  a
                  Restricted Subsidiary or an Unrestricted  Subsidiary within 90
                  days of its formation or acquisition, such Subsidiary shall be
                  deemed to have  been  designated  by  Lessee  as a  Restricted
                  Subsidiary  (in which event  Lessee  shall  comply,  and shall
                  cause such Restricted Subsidiary to comply, with Section 5.37)
                  and  (b) a  Restricted  Subsidiary  may  be  designated  as an
                  Unrestricted  Subsidiary in accordance  with the provisions of
                  Section 5.16.

                           "2000  Note  Purchase   Agreement"   means  the  Note
                  Purchase Agreement,  dated as of February 1, 2000 among Lessee
                  and the Purchasers  named therein,  pursuant to which the 2000
                  Notes  were  issued,  as  it  may  be  amended,   modified  or
                  supplemented from time to time.

                           "2000 Notes" means, collectively, (a) the $21,000,000
                  8.68%  Senior  Notes,  Series A, due August 1,  2006,  (b) the
                  $90,000,000  8.78% Senior Notes,  Series B, due August 1, 2007
                  and (c) the  $73,000,000  8.87%  Senior  Notes,  Series C, due
                  August 1, 2009, in each case issued by Lessee  pursuant to the
                  2000 Note Purchase Agreement.

     "Unrestricted  Subsidiary"  means any Subsidiary  which is not a Restricted
Subsidiary."

     Section 1.2. Amendments to Lease. (a) Section 8.1 of the Lease shall be and
is hereby amended and restated in its entirety to read as follows:

     "Section 8.1. Events of Default.  The following shall constitute  events of
default (each a "Lease Event of Default") hereunder:

                   (a)  Non-Payment.  Lessee  fails  to  pay,  (i)  when  and as
         required  to be paid  herein,  any  payment of Basic Rent or any amount
         payable  pursuant  to Section  6.1(a),  or Article IX, or (ii) within 5
         days after the same  becomes  due,  any  Supplemental  Rent (other than
         Supplemental Rent described in clause (i)); or

                   (b)   Representation  or  Warranty.   Any  representation  or
         warranty by Lessee or the General  Partner  made or deemed made herein,
         in  any  other  Operative  Document,  or  which  is  contained  in  any
         certificate,  document or financial or other  statement by Lessee,  the
         General  Partner,  or any  Responsible  Officer,  furnished at any time
         under  this  Lease,  or in or under any other  Operative  Document,  is
         incorrect in any  material  respect on or as of the date made or deemed
         made; or

                   (c)  Specific  Defaults.  (i) Lessee  fails to  maintain  the
         insurance required by Section 6.2 or Lessee fails to perform or observe
         any term,  covenant or  agreement  contained  in any of (A) Section 5.2
         hereof or (B) Section 5.3 (other than  subsection  (d) thereof),  5.12,
         5.13 or 5.17 through 5.38, inclusive,  of the Participation  Agreement;
         or (ii) Lessee  shall fail to sell all of the Units on the  Termination
         Date  in  accordance  with  and  satisfaction  of  each  of the  terms,
         covenants,  conditions  and  agreements  set forth under  Article IX in
         connection with and following its exercise of the Sale Option; or

                   (d)  Other  Defaults.  Lessee,  the  General  Partner  or any
         Subsidiary  fails to  perform or  observe  any other  term or  covenant
         contained  in this  Lease or any  other  Operative  Document,  and such
         default  shall  continue  unremedied  for a period of 30 days after the
         earlier of (i) the date upon which a  Responsible  Officer knew of such
         failure or (ii) the date upon which written  notice thereof is given to
         Lessee by the Lessor or Agent; provided that if (i) such default is not
         curable by the payment of money and cannot be cured  within such 30 day
         period,  and (ii) Lessee,  the General  Partner or such  Subsidiary  is
         diligently pursuing the cure of such default,  then the period for cure
         of such default will be extended for the period  necessary  for Lessee,
         the General  Partner or such  Subsidiary to effect such cure, but in no
         event longer than 90 days from the date of such notice or knowledge; or

                   (e)  Cross-Default.   Lessee,  the  General  Partner  or  any
         Restricted  Subsidiary  (i) fails to make any payment in respect of any
         Indebtedness,  Synthetic  Lease  Obligation  or  Contingent  Obligation
         having an aggregate  principal amount  (including  undrawn committed or
         available  amounts and including  amounts owing to all creditors  under
         any combined or syndicated credit arrangement) of more than $10,000,000
         when  due  (whether  by  scheduled   maturity,   required   prepayment,
         acceleration, demand or otherwise) and such failure continues after the
         applicable  grace or notice period,  if any,  specified in the relevant
         document  on the  date of such  failure  or (ii)  fails to  perform  or
         observe any other condition or covenant,  or any other event (including
         any termination or similar event in respect of any Accounts  Receivable
         Securitization)  shall occur or condition exist, under any agreement or
         instrument   relating  to  any  such   Indebtedness,   Synthetic  Lease
         Obligation or Contingent  Obligation,  and such failure continues after
         the  applicable  grace  or  notice  period,  if any,  specified  in the
         relevant  document  on the date of such  failure  if the effect of such
         failure,  event or  condition  is to cause,  or to permit the holder or
         holders of such  Indebtedness or beneficiary or  beneficiaries  of such
         Indebtedness  or Synthetic  Lease  Obligation (or a trustee or agent on
         behalf of such holder or holders or  beneficiary or  beneficiaries)  to
         cause such Indebtedness or Synthetic Lease Obligation to be declared to
         be due and  payable  prior to its  stated  maturity  or to  cause  such
         Indebtedness, Synthetic Lease Obligation or Contingent Obligation to be
         prepaid,  purchased or redeemed by Lessee, the MLP, the General Partner
         or any Restricted  Subsidiary,  or such Contingent Obligation to become
         payable or cash collateral in respect thereof to be demanded; or

                   (f) Insolvency;  Voluntary Proceedings.  The General Partner,
         the MLP, Lessee or any Restricted  Subsidiary (i) ceases or fails to be
         solvent,  or generally fails to pay, or admits in writing its inability
         to pay,  its debts as they  become  due,  subject to  applicable  grace
         periods,  if  any,  whether  at  stated  maturity  or  otherwise,  (ii)
         voluntarily  ceases to conduct  its  business in the  ordinary  course,
         (iii) commences any Insolvency  Proceeding  with respect to itself,  or
         (iv) takes any action to effectuate or authorize any of the  foregoing;
         or

                   (g) Involuntary  Proceedings.  (i) Any involuntary Insolvency
         Proceeding is commenced or filed against the General Partner,  the MLP,
         Lessee or any Restricted Subsidiary, or any writ, judgment,  warrant of
         attachment,  execution or similar process is issued or levied against a
         substantial  part  of  any  such  Person's  properties,  and  any  such
         proceeding or petition shall not be dismissed,  or such writ, judgment,
         warrant  of  attachment,  execution  or  similar  process  shall not be
         released,  vacated or fully bonded  within 60 days after  commencement,
         filing  or levy,  (ii) the  General  Partner,  the MLP,  Lessee  or any
         Restricted  Subsidiary  admits the material  allegations  of a petition
         against  it in any  Insolvency  Proceeding,  or an order for relief (or
         similar  order  under  non-U.S.  law)  is  ordered  in  any  Insolvency
         Proceeding  or  (iii)  the  General  Partner,  the MLP,  Lessee  or any
         Restricted  Subsidiary  acquiesces  in the  appointment  of a receiver,
         trustee, custodian,  conservator,  liquidator,  mortgagee in possession
         (or agent therefor) or other similar Person for itself or a substantial
         portion of its property or business; or

                   (h)  ERISA.  (i) An ERISA  Event  occurs  with  respect  to a
         Pension  Plan which has  resulted  or could  reasonably  be expected to
         result in liability of Lessee or the General  Partner under Title IV of
         ERISA to the Pension Plan or the PBGC in an aggregate  amount in excess
         of $10,000,000 or (ii) the  commencement  or increase of  contributions
         to, or the  adoption of or the  amendment  of a Pension Plan by Lessee,
         the General  Partner or any of their  Affiliates  which has resulted or
         could  reasonably  be  expected  to result in an  increase  in Unfunded
         Pension  Liability  among all Pension  Plans in an aggregate  amount in
         excess of $10,000,000.

                   (i)  Monetary  Judgments.  One  or  more  judgments,  orders,
         decrees or arbitration  awards is entered against  Lessee,  the General
         Partner or any  Restricted  Subsidiary  involving  in the  aggregate  a
         liability  (to  the  extent  not  covered  by  independent  third-party
         insurance as to which the insurer does not dispute  coverage) as to any
         single or related series of transactions,  incidents or conditions,  of
         more than $10,000,000; or

                   (j) Non-Monetary Judgments.  Any non-monetary judgment, order
         or decree  is  entered  against  Lessee,  the  General  Partner  or any
         Restricted  Subsidiary  which does or would  reasonably  be expected to
         have a Material  Adverse  Effect,  and there  shall be any period of 60
         consecutive days during which a stay of enforcement of such judgment or
         order,  by  reason of a pending  appeal or  otherwise,  shall not be in
         effect; or

                   (k)     [Intentionally Omitted.]

     (l) Adverse Change. There occurs a Material Adverse Effect; or

                   (m) Certain  Indenture  Defaults,  Etc. (i) To the extent not
         otherwise  within  the scope of  subsection  (e)  above,  any "Event of
         Default" shall occur and be continuing under and as defined in the 1998
         Note Purchase Agreement or the 2000 Note Purchase Agreement or (ii) any
         of the  following  shall  occur  under  or  with  respect  to the  1996
         Indenture  or  any  other  Indebtedness  guaranteed  by  Lessee  or its
         Subsidiaries  (collectively,  the "Guaranteed  Indebtedness"):  (A) any
         demand for  payment  shall be made under any such  Guaranty  Obligation
         with respect to the Guaranteed  Indebtedness or (B) so long as any such
         Guaranty  Obligation  shall  be  in  effect  (x)  Lessee  or  any  such
         Subsidiary  shall  fail to pay  principal  of or  premium,  if any,  or
         interest on such  Guaranteed  Indebtedness  after the expiration of any
         applicable  notice  or cure  periods  or (y)  any  "Event  of  Default"
         (however  defined) shall occur and be continuing  under such Guaranteed
         Indebtedness  which  results  in the  acceleration  of such  Guaranteed
         Indebtedness; or

                   (n) Guarantor  Defaults.  Any Guarantor fails in any material
         respect to perform or observe any term,  covenant or  agreement  in its
         Guaranty,  or any Guaranty is for any reason partially  (including with
         respect  to future  advances)  or wholly  revoked  or  invalidated,  or
         otherwise  ceases to be in full force and effect,  or any  Guarantor or
         any other Person contests in any manner the validity or  enforceability
         thereof  or denies  that it has any  further  liability  or  obligation
         thereunder  or any event  described at  subsections  (f) or (g) of this
         Section 8.1 occurs with respect to any Guarantor; or

                   (o) Operative Documents. Any Operative Document shall (except
         in accordance with its terms), in whole or in part, terminate, cease to
         be effective or cease to be the legally valid,  binding and enforceable
         obligation  of  Lessee,  or  Lessee  or any of  its  Affiliates  shall,
         directly  or  indirectly,  contest  in  any  manner  in any  court  the
         effectiveness,  validity,  binding nature or enforceability thereof, or
         the Lien securing Lessee's  obligations  under the Operative  Documents
         shall, in whole or in part, cease to be a perfected first priority Lien
         free and clear of all Liens (other than  Permitted  Liens),  or, in any
         case, Lessee or any of its Affiliates  shall, at any time,  directly or
         indirectly,  contest  in  any  manner  in any  court  the  validity  or
         enforceability thereof; or

                   (p) Other Lease. A "Lease Event of Default" shall occur under
the Other Lease.

                   (q)     Change of Control.  A Change of Control occurs."

         (b)  Section  8.2  shall  be and is  hereby  amended  by  deleting  the
reference  to  "Section  8.1(e)  or  Section  8.1(f)"  contained  in the  fourth
paragraph  thereof and  substituting in place thereof the phrase "Section 8.1(f)
or Section 8.1(g)".

     Section 1.3. Amendment to Loan Agreement. Schedule II to the Loan Agreement
shall be and is hereby  amended  in its  entirety  to read as Exhibit A attached
hereto.

SECTION 2.           REPRESENTATIONS OF THE LESSEE.

         As of the date hereof, Lessee represents and warrants as follows:

         (a) all  representations  and warranties set forth in the Participation
Agreement and Lease,  as amended by this  Amendment,  are true and correct as of
the date hereof and are incorporated herein by reference with the same force and
effect as though herein set forth in full; and

         (b) no Lease Default or Lease Event of Default exists.

SECTION 3.           AUTHORIZATION AND DIRECTION.

         The  Certificate  Purchaser,  by its execution  hereof,  authorizes the
Certificate Trustee to execute and deliver this Amendment.

SECTION 4.           EFFECTIVENESS.

         This  Amendment  shall not become  effective  until,  and shall  become
effective when, each and every one of the following  conditions  shall have been
satisfied:

         (a) The Lessee,  the General  Partner,  the  Certificate  Trustee,  the
Agent,  the  Certificate  Purchasers  and the Lenders  shall have  executed this
Amendment;

         (b) The Certificate Trustee, the Certificate Purchasers and the Lenders
shall have received (i) certificates of existence and good standing with respect
to Lessee and the General  Partner  from the  Secretary of State of the state of
its organization dated no earlier than the 30th day prior to the Effective Date,
(ii) copies of Lessee's  Certificate  of Limited  Partnership,  certified by the
Secretary  of State of the state of its  organization  dated no earlier than the
30th day prior to the Effective  Date,  (iii)  certificates  of the Secretary or
Assistant  Secretary  of the general  partner of Lessee,  in form and  substance
satisfactory to Agent and the  Participants,  and attaching and certifying as to
(A) the Lessee's limited partnership  agreement,  (B) the directors' resolutions
in  respect  of the  execution,  delivery  and  performance  by  Lessee  of this
Amendment,  (C) the general  partner's  articles of incorporation and bylaws and
(D) the incumbency  and signatures of persons  authorized to execute and deliver
documents on behalf of Lessee, and (iv) a legal opinion of Bracewell & Patterson
L.L.P.,  satisfactory  in form and  substance to the  Certificate  Trustee,  the
Certificate Purchasers and the Lenders;

         (c) The  reasonable  fees and  expenses of the  Certificate  Purchasers
(including the fees and expenses of their special  counsel) shall have been paid
in accordance with Section 5 hereof; and

         (d) All  proceedings  taken in connection  with this  Amendment and any
documents   relating   thereto  shall  be  reasonably   satisfactory  to  Agent,
Certificate  Trustee,  the  Certificate   Purchasers,   the  Lenders  and  their
respective  counsel,  and each such Person  shall have  received  copies of such
documents as they may reasonably  request in connection  therewith,  all in form
and substance reasonably satisfactory to each such Person.

SECTION 5.           FEES AND EXPENSES.

         Lessee  agrees  to pay all the  reasonable  fees  and  expenses  of the
Certificate   Purchasers  in  connection  with  the  negotiation,   preparation,
approval,  execution  and  delivery of this  Amendment  (including  the fees and
expenses of their special counsel).

SECTION 6.           MISCELLANEOUS.

         Section  6.1.  Construction.  This  Amendment  shall  be  construed  in
connection  with and as part of the  Agreements,  and  except  as  modified  and
expressly  amended  by this  Amendment,  all  terms,  conditions  and  covenants
contained in the Agreements are hereby  ratified and shall be and remain in full
force and effect.

         Section 6.2. References.  Any and all notices,  requests,  certificates
and other instruments executed and delivered after the execution and delivery of
this Amendment may refer to the Agreements  without making specific reference to
this Amendment but  nevertheless  all such references shall be deemed to include
this Amendment unless the context otherwise requires.

         Section  6.3.  Headings  and Table of  Contents.  The  headings  of the
Sections of this  Amendment  and the Table of Contents are inserted for purposes
of  convenience  only and  shall  not be  construed  to affect  the  meaning  or
construction  of any of the  provisions  hereof and any  reference  to  numbered
Sections, unless otherwise indicated, are to Sections of this Amendment.

     Section 6.4. Counterparts.  This Amendment may be executed in any number of
counterparts,  each  executed  counterpart  constituting  an  original  but  all
together only one Amendment.

         SECTION 6.5.  GOVERNING  LAW. THIS  AMENDMENT  SHALL BE GOVERNED BY AND
CONSTRUED  IN  ACCORDANCE  WITH  THE LAWS OF THE  STATE  OF NEW YORK  (EXCLUDING
CHOICE-OF-LAW  PRINCIPLES  OF THE LAW OF  SUCH  STATE  THAT  WOULD  REQUIRE  THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE).


<PAGE>





         IN WITNESS WHEREOF,  the Lessee,  the General Partner,  the Certificate
Trustee, the Agent, the Certificate  Purchasers and the Lenders have caused this
instrument to be executed, all as of the day and year first above written.

Lessee:                               FERRELLGAS, LP, as Lessee


                                      By Ferrellgas, Inc., its General Partner




                                     By:
                                     Name:
                                     Title:


General Partner:                     FERRELLGAS, INC.


                                     By:
                                     Name:
                                     Title:


<PAGE>


Certificate Trustee:                 FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                                     in its individual capacity and as
                                     Certificate Trustee




                                     By:
                                     Name:
                                     Title:




<PAGE>


Agent:                                FIRST SECURITY TRUST COMPANY OF NEVADA,
                                      not in its individual capacity except as
                                      expressly stated
                                      herein, but solely as Agent




                                     By:
                                     Name:
                                     Title:


<PAGE>


Certificate Purchaser:         [_____________________], as Certificate Purchaser




                                     By:
                                     Name:
                                     Title:


<PAGE>


Certificate Purchaser:         [_____________________], as Certificate Purchaser




                                     By:
                                     Name:
                                     Title:


<PAGE>


Certificate Purchaser:         [_____________________], as Certificate Purchaser




                                     By:
                                    Name:
                                     Title:


<PAGE>


Lender:                        [_____________________], as Lender



                                     By:
                                     Name:
                                     Title:


<PAGE>


Lender:                          [_____________________], as Lender




                                     By:
                                     Name:
                                     Title:


<PAGE>


Lender:                          [_____________________], as Lender




                                     By:
                                     Name:
                                     Title:


<PAGE>


Lender:                          [_____________________], as Lender




                                     By:
                                     Name:
                                     Title:



<PAGE>







                                   SCHEDULE I


                            [CERTIFICATE PURCHASERS]



<PAGE>







                                   SCHEDULE II


                                    [LENDERS]



<PAGE>







                                  SCHEDULE III


                                     [LIENS]



<PAGE>







                                   SCHEDULE IV


                          [SUBSIDIARIES AND AFFILIATES]





<PAGE>







                                   SCHEDULE V


                             [EXISTING INDEBTEDNESS]







<PAGE>


                                    EXHIBIT A


                                   SCHEDULE II
                               (TO LOAN AGREEMENT)


                          AMORTIZATION OF CLASS A NOTE

<TABLE>

                              Payment                                                                   Loan
    Year                       Date*                                   Principal                       Balance

                                                                                                        100.000000%
    <S>                          <C>                                      <C>                           <C>
      1                           3/30/00                                  0.303030%                     99.696970%
                                  6/30/00                                  0.303030%                     99.393939%
                                  9/30/00                                  0.303030%                     99.090909%
                                 12/30/00                                  0.303030%                     98.787879%
      2                           3/30/01                                  0.303030%                     98.484848%
                                  6/30/01                                  0.303030%                     98.181818%
                                  9/30/01                                  0.303030%                     97.878788%
                                 12/30/01                                  0.303030%                     97.575758%
      3                           3/30/02                                  0.303030%                     97.272727%
                                  6/30/02                                  0.303030%                     96.969697%
                                  9/30/02                                  0.303030%                     96.666667%
                                 12/30/02                                  0.303030%                     96.363636%
      4                           3/30/03                                  0.303030%                     96.060606%
                                  6/30/03                                  0.303030%                     95.757576%
                                  9/30/03                                  0.303030%                     95.454545%
                                 12/30/03                                  0.303030%                     95.151515%
      5                           3/30/04                                  0.303030%                     94.848485%
                                  6/30/04                                  0.303030%                     94.545455%
                                  9/30/04                                  0.303030%                     94.242424%
                                 12/30/04                                  0.303030%                     93.939394%
      6                           3/30/05                                  0.303030%                     93.636364%
                                  6/30/05                                 93.636364%                      0.000000%
</TABLE>

*last Business Day of calendar quarter



</TEXT>
</DOCUMENT>
