<PAGE>





                  FIRST AMENDMENT TO REFUNDING CREDIT AGREEMENT


         THIS FIRST AMENDMENT TO REFUNDING CREDIT AGREEMENT (this
"AMENDMENT") dated as of June 30, 2000 among Cornerstone Propane, L.P., a
Delaware limited partnership (the "BORROWER"), the undersigned financial
institutions (each a "LENDER" and together constituting the "REQUIRED
LENDERS", as said terms are defined in the Credit Agreement referred to
below) and Bank of America, N.A. (formerly Bank of America National Trust and
Savings Association), as agent for the Lenders as are or may become parties
to said Credit Agreement (in such capacity, the "AGENT").

                                 R E C I T A L S

         The Borrower is a party to a Refunding Credit Agreement dated as of
November 20, 1998 with the Agent and the Lenders party thereto (as amended,
supplemented or otherwise modified to the date hereof, the "CREDIT
AGREEMENT"). Capitalized terms used but not defined herein shall have the
respective meanings given such terms in the Credit Agreement.

         The Borrower has requested the Agent and the Lenders currently
parties to the Credit Agreement, as provided in Section 11.1 thereof, to
effect certain amendments of the Credit Agreement as more fully herein below
set forth and in fulfillment of the condition set forth in Section 2.1(b)
hereof, NOR has indicated its willingness to enter into a certain Guaranty
Agreement of even date herewith in favor of the Agent, for the benefit of the
Agent and the Lenders from time to time parties to the Credit Agreement.

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

                                    ARTICLE I

                         AMENDMENTS OF CREDIT AGREEMENT

Section 1.1 AMENDMENT OF PREAMBLE. On the terms of this Amendment and subject
            to the satisfaction of the conditions precedent set forth below in
            Article II, the preamble of the Credit Agreement is hereby amended
            to read in its entirety as follows:

              "This REFUNDING CREDIT AGREEMENT (as the same may be amended,
              supplemented or otherwise modified from time to time, this
              "AGREEMENT"), dated as of November 20, 1998, among CORNERSTONE
              PROPANE, L.P., a Delaware limited partnership (the
              "BORROWER"), the various financial institutions or other
              Persons as are or may become parties hereto pursuant to
              Section 11.11.1 or 11.11.3 hereof (collectively, the
              "LENDERS"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
              ASSOCIATION ("BOFA"), as agent (the "AGENT") for the Lenders."

                                       1

<PAGE>

Section 1.2 AMENDMENTS OF SECTION 1.1. On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II:

(A)  The definition of "Consolidated Interest Expense" set forth in Section 1.1
     of the Credit Agreement is hereby amended to read in its entirety as
     follows:

                         "`CONSOLIDATED INTEREST EXPENSE' means, for any
period, the aggregate consolidated interest expense of the Borrower and the
Restricted Subsidiaries determined in accordance with GAAP but including,
without duplication, (a) all commissions, discounts and other fees and
charges owed with respect to letters of credit and banker's acceptances for
such period, (b) net costs under Interest Rate Agreements for such period,
(c) the Synthetic Lease Interest Component of the Borrower and the Restricted
Subsidiaries for such period, (d) the portion of any Capitalized Lease
Liabilities allocable to consolidated interest expense for such period and
(e) the product of (1) the amount of all dividends (whether in cash or
otherwise (except dividends payable solely in shares of Qualified Capital
Stock)) on all Disqualified Stock of such Person and its Subsidiaries, times
(2) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local
income tax rate of such Person, expressed as a decimal; provided, however,
that "Consolidated Interest Expense" shall not include during any period any
out-of-pocket fees or expenses of the Borrower incurred in connection with
that certain First Amendment to Refunding Credit Agreement, dated as of June
30, 2000, among the Borrower, the Lenders and the Agent."

(B)    Section 1.1 of the Credit Agreement is hereby amended by inserting
       therein, in its proper alphabetical order, an additional definition to
       read in its entirety as follows:

                  "`GUARANTY AGREEMENT' means the Guaranty Agreement, dated as
         of June 30, 2000 by NOR in favor of the Agent."

(C)    The definition of "Loan Document" set forth in Section 1.1 of the Credit
       Agreement is hereby amended to read in its entirety as follows:

                 "`LOAN DOCUMENT' means this Agreement, the Notes, the Security
         Agreement, the Intercreditor Agreement, the Guaranty and any pledge
         agreement, security agreement, guaranty, or mortgage delivered to the
         Agent pursuant to this Agreement, as the same may be amended,
         supplemented, restated or otherwise modified from time to time;
         provided, that the Guaranty Agreement shall not be a Loan Document for
         purposes of this Agreement."

(D)    Section 1.1 of the Credit Agreement is hereby amended by inserting
       therein, in its proper alphabetical order, an additional definition to
       read in its entirety as follows:

         "`NOR PURCHASE EVENT' means the purchase by NOR of all of the
         outstanding Commitments and the Loans under this Agreement and the
         provision of cash collateral or the making of other arrangements
         satisfactory to the Issuer with respect to outstanding Letters of
         Credit, in each case in accordance with Section 2.12(b)(i) or 2.14 of
         the Guaranty Agreement."

                                       2

<PAGE>

Section 1.3 AMENDMENT OF SECTION 8.2.4. On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II, Section 8.2.4 of the Credit Agreement is
            hereby amended by inserting, at the end of said Section, a new
            paragraph to read in its entirety as follows:

        "Notwithstanding the foregoing provisions of this SECTION 8.2.4 or any
        directly or indirectly appurtenant definition set forth in SECTION 1.1,
        so long as the Guaranty Agreement shall be in full force and effect and
        NOR (i) is in compliance with all of its material obligations
        thereunder and (ii) has not attempted to revoke in writing any of its
        obligations thereunder pursuant to Section 2.10 thereof or otherwise:

                  (A) the "Total Funded Indebtedness to Consolidated Cash Flow
         Ratio" as of any relevant date and for the period then ending shall,
         for purposes of the foregoing clause (a) of this SECTION 8.2.4, be
         computed by subtracting $40,000,000 (or such greater amount as shall
         be the applicable "Guarantied Amount" on such date as specified in or
         pursuant to the Guaranty Agreement) from the sum of the consolidated
         Debt, Capitalized Lease Liabilities and Synthetic Lease Obligations of
         the Borrower and the Restricted Subsidiaries (to the extent not
         resulting in a negative number); and

                  (B) the ratio of Consolidated Cash Flow to Consolidated
         Interest Expense as of any relevant date and for the period then
         ending shall, for purposes of the foregoing clause (b) of this
         SECTION 8.2.4, be computed by excluding from the denominator of such
         ratio an amount equal to the interest paid during such period on an
         amount of such Indebtedness, not less than $40,000,000, equal to the
         daily average "Guarantied Amount" from time to time in effect during
         such period as specified in or pursuant to the Guaranty Agreement of
         Indebtedness of the Borrower and the Restricted Subsidiaries at a rate
         equal to (1) to the extent of the average amount of the Loans
         outstanding during such period, the interest rates paid during such
         period on such Loans under this Agreement and (2) thereafter, the
         average of the interest rates paid during such period on the Private
         Placement Debt and the Parity Debt.

         In the event that (i) the Guaranty Agreement shall cease to be in full
         force and effect, (ii) NOR fails to comply with any of its material
         obligations under the Guaranty Agreement or (iii) NOR attempts to
         revoke in writing any of its obligations under the Guaranty Agreement,
         any Default or Event of Default which would have existed under the
         Credit Agreement except for the adjustments made pursuant to clauses
         (A) and (B) above shall be retroactively reinstated, and the Agent and
         the Lenders shall have all of their rights and remedies under the
         Credit Agreement, including any rights and remedies arising from a
         Default or Event of Default occasioned by a violation of this Section
         8.2.4."

Section 1.4 AMENDMENT OF SECTION 9.3(d). On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II, Section 9.3(d) of the Credit Agreement is
            hereby amended by inserting the following at the end thereof:

         "Without limiting the generality of the foregoing, the Borrower
         acknowledges and agrees that the rights provided for in the Guaranty
         Agreement are in addition to the rights provided for in this Agreement
         and the other Loan Documents. In connection with the

                                       3

<PAGE>

         Guaranty Agreement, the Borrower agrees that any amount paid over to
         the Agent pursuant to Section 2.08 of the Guaranty Agreement may be
         applied by the Agent and the Lenders to principal of the Loans (and
         the same shall thereupon be reduced) notwithstanding the Borrower's
         intention to pay, or direction to NOR or any other Person to pay, any
         other obligation of the Borrower. Any amounts received by the Agent
         or the Lenders pursuant to the terms of the Guaranty Agreement shall
         be applied to principal of the Loans."

Section 1.5 AMENDMENT OF SECTION 10.9. On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II, the last two sentences of Section 10.9 of the
            Credit Agreement are hereby amended to read in their entirety as
            follows:

         "Any successor agent shall have a market capitalization equal to or
         greater than $500,000,000; PROVIDED, HOWEVER, that this requirement
         shall not apply from and after the occurrence of a NOR Purchase Event.
         Notwithstanding the foregoing, (a) BofA may not be removed as the
         Agent at the request of the Required Lenders unless BofA shall also
         simultaneously be replaced as the Issuer hereunder pursuant to
         documentation in form and substance reasonably satisfactory to BofA
         and (b) upon any resignation of BofA (or any successor Agent) as the
         Agent, BofA (or such successor) shall be deemed to have concurrently
         resigned as the Issuer with respect to the issuance of any further
         Letters of Credit hereunder (including without limitation the
         extension of the expiration of any outstanding Letter of Credit),
         and, unless such resignation shall occur concurrently with or after a
         NOR Purchase Event, the successor Agent shall be deemed concurrently
         appointed as the Issuer (unless the Required Lenders otherwise
         agree)."

Section 1.6 ADDITION OF SECTION 10.12. On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II, the Credit Agreement is hereby amended by
            inserting, as Section 10.12 of the Credit Agreement, a new
            provision to read in its entirety as follows:

         "Section 10.12 GUARANTY AGREEMENT. Each of the Lenders from time to
         time party to this Agreement irrevocably authorizes the Agent, without
         the necessity of any notice to or further consent from such Lender, to
         accept, on behalf of such Lender, the Guaranty Agreement, and agrees
         to be bound by all of the terms and conditions thereof."

Section 1.7 AMENDMENT OF SECTION 11.1. On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II, Section 11.1 of the Credit Agreement is hereby
            amended by (a) deleting the period at the end of subsection (d) and
            substituting "; or" in lieu thereof and (b) inserting, immediately
            following such subsection (d), a new subsection (e) to read in its
            entirety as follows:

         "(e)  release NOR from its obligations under the Guaranty
               Agreement."

Section 1.8 ADDITION OF SECTION 11.11.3. On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II, Section 11.11 of the

                                       4

<PAGE>

            Credit Agreement is hereby amended by inserting, as Section
            11.11.3 of the Credit Agreement, a new provision to read in its
            entirety as follows:

         "Section 11.11.3 ASSIGNMENTS TO NOR. Upon the occurrence of a NOR
         Purchase Event, each Lender shall assign and delegate to NOR all of
         such Lender's total Loans and Commitments (the date of such assignment
         and delegation, the "Assignment Effective Date") pursuant to
         documentation satisfactory to such Lender and NOR. From and after the
         Assignment Effective Date, (x) NOR shall be deemed automatically to
         have become a party hereto and shall be and have the rights and
         obligations of a Lender hereunder and under the other Loan Documents,
         and (y) each assignor Lender shall be released from its obligations
         hereunder and under the other Loan Documents. Upon the Assignment
         Effective Date, the Commitments hereunder shall automatically be
         reduced to zero and NOR shall have no other obligation to lend, issue
         Letters of Credit or otherwise extend financial accommodations to the
         Borrower, although NOR may, in its sole discretion, do so if it so
         elects. In no event shall NOR have any obligation to indemnify the
         Agent under Section 10.7 hereof for events occurring prior to the
         Assignment Effective Date. Upon the Assignment Effective Date, the
         Borrower agrees for the benefit of NOR that the Borrower shall take
         all action necessary or appropriate pursuant to this Agreement, the
         Intercreditor Agreement and the other Loan Documents to reflect the
         NOR Purchase Event including, without limitation, (a) issuing new
         Notes payable to NOR, and (b) delivery to the Trustee of the
         certificates contemplated by Section 6 of the Intercreditor Agreement
         to ensure that NOR is recognized by the Trustee as a holder of Parity
         Debt and a Parity Lender thereunder for purposes of Section 4 of the
         Intercreditor Agreement."

Section 1.9 ADDITION OF SECTION 11.16. On the terms of this Amendment and
            subject to the satisfaction of the conditions precedent set forth
            below in Article II, the Credit Agreement is hereby amended by
            inserting, as Section 11.16 of the Credit Agreement, a new
            provision to read in its entirety as follows:

         "Section 11.16 AMENDMENT OF INTERCREDITOR AGREEMENT. So long as the
         Guaranty Agreement remains in effect, each of the Borrower, the Agent
         and the Lenders hereby agrees that it will not, without the prior
         written consent of NOR, amend or otherwise modify the Intercreditor
         Agreement in any manner which would adversely affect the rights of
         NOR, in the event that NOR shall hold any Loans on the date of any
         distribution payable in respect of Parity Debt under Section 4 of the
         Intercreditor Agreement (as said Agreement is in effect on June 30,
         2000), to receive the portion of such distribution allocable to the
         Loans so held by NOR."

                                   ARTICLE II

                              CONDITIONS PRECEDENT

Section 2.1 CONDITIONS TO EFFECTIVENESS OF ARTICLE I AMENDMENTS. The amendments
            set forth in Article I of this Amendment shall become effective on
            the date (the "AMENDMENT EFFECTIVE DATE") which is the first date
            on which all of the following conditions precedent shall have been
            satisfied, and when effective, shall take effect as of June 30,
            2000, regardless of whether the Amendment Effective Date occurs
            prior to, on or after such date:

                                       5

<PAGE>

(a)    The Agent shall have received, on behalf of the Lenders, this Amendment,
       duly executed and delivered by or on behalf of the Borrower, the Agent
       and the Required Lenders under the Credit Agreement.

(b)    The Agent shall have received, on behalf of the Lenders, the Guaranty
       Agreement, duly executed and delivered by NOR.

(c)    The Agent shall have received, on behalf of the Lenders, copies of
       partnership authorizations for the Borrower and resolutions of the board
       of directors of each of the Managing General Partner, the Restricted
       Subsidiaries and NOR authorizing and ratifying the transactions
       contemplated hereby, certified by the Secretary or an Assistant
       Secretary of such Person.

(d)    The Agent shall have received, on behalf of the Lenders, the opinion of
       (i) McCutchen, Doyle, Brown & Enersen, LLP, special counsel for the
       Borrower and (ii) Andrews & Kurth L.L.P., special counsel for NOR and of
       Eric R. Jacobsen, Vice President and General Counsel of NOR (it being
       understood that said special counsel and Mr. Jacobsen may apportion the
       coverage of their respective opinions in a manner customary for external
       and internal counsel in financing transactions); in each case in form
       and substance satisfactory to the Agent.

(e)    Each of the representations and warranties set forth in this Amendment
       shall be true and correct on a date when all other conditions set forth
       in Sections 2(a) through 2(d), inclusive, shall have been satisfied.

(f)    The Agent shall have received, for the account of each Lender, a
       non-refundable amendment fee in an amount equal to 0.6875% of the
       Commitments of such Lender (without regard to usage). Such amendment
       fees shall be fully earned and nonrefundable on the Amendment Effective
       Date. The Agent shall have also received, for its own account, a
       separate amendment fee pursuant to a letter agreement, dated the date
       hereof, between the Agent and the Borrower.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

Section 3.1 THE BORROWER'S REPRESENTATIONS AND WARRANTIES. In order to induce
            the Agent and the Lenders to enter into this Amendment and to amend
            the Credit Agreement in the manner provided in this Amendment, the
            Borrower represents and warrants to the Agent and each Lender as
            of the date of this Amendment as follows:

(a)    POWER AND AUTHORITY. The Borrower has all requisite partnership power
       and authority to enter into this Amendment and to carry out the
       transactions contemplated by, and perform its obligations under, the
       Credit Agreement as amended by this Amendment (hereafter referred to as
       the "AMENDED CREDIT AGREEMENT").

(b)    AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
       Amendment by the Borrower, and the performance of the Amended Credit
       Agreement by the Borrower have

                                       6

<PAGE>

       been duly authorized by all necessary partnership action, and this
       Amendment has been duly executed and delivered on behalf of the
       Borrower.

(c)    ENFORCEABILITY.  The Amended Credit Agreement constitutes the legal,
       valid and binding obligation of the Borrower, enforceable against the
       Borrower in accordance with its terms, except as enforceability may be
       limited by (a) applicable bankruptcy, insolvency, reorganization,
       moratorium, fraudulent conveyance, fraudulent transfer or other similar
       laws relating to or affecting the rights of creditors generally, (b)
       general principles of equity (regardless of whether considered in a
       proceeding in equity or at law), including, without limitation (i) the
       possible unavailability of specific performance, injunctive relief or
       any other equitable remedy, and (ii) concepts of materiality,
       reasonableness, good faith and fair dealing, and (c) rights of
       indemnification or contribution being limited by Federal and state
       securities laws and the public policy underlying such laws.

(d)    NO CONFLICT. The execution and delivery by the Borrower of this
       Amendment and the performance by the Borrower of the Amended Credit
       Agreement do not and will not (i) contravene, in any material respect,
       any provision of any law, regulation, decree, ruling, judgment or order
       that is applicable to the Borrower or its properties or other assets,
       (ii) result in a breach of or constitute a default under the certificate
       of limited partnership or partnership agreement of the Borrower or any
       material agreement, indenture, lease or instrument binding upon it, or
       its properties or other assets or (iii) result in the creation or
       imposition of any Liens on its properties other than as permitted under
       the Credit Agreement.

(e)    GOVERNMENTAL CONSENTS. No authorization or approval or other action by,
       and no notice to or filing with, any governmental authority or
       regulatory body is required for the due execution, delivery and
       performance by the Borrower of this Amendment.

(f)    REPRESENTATIONS AND WARRANTIES IN THE CREDIT AGREEMENT. The Borrower
       confirms that, as of the Amendment Effective Date and after giving
       effect to this Amendment and the Guaranty Agreement, (i) the
       representations and warranties contained in Article VII of the Credit
       Agreement are true and correct in all material respects, except to the
       extent any such representation and warranty is expressly stated to have
       been made as of a specific date, in which case it shall be true and
       correct as of such specific date and (ii) no Default or Event of Default
       has occurred and is continuing.

(g)    RESTRICTED SUBSIDIARIES. As of the date of this Amendment, the Borrower
       has no Restricted Subsidiaries other than Cornerstone Holding and Flame.

                                   ARTICLE IV

                                  MISCELLANEOUS

Section 4.1 COUNTERPARTS; NOTICE OF EFFECTIVENESS. This Amendment may be
            executed by the Borrower and the Required Lenders in any number of
            counterparts, all of which shall constitute together but one and
            the same agreement, and any such person may become a party hereto
            by executing any such counterpart. The Agent shall give written
            notice of the

                                       7

<PAGE>

            occurrence of the Amendment Effective Date to the Borrower, the
            Lenders and NOR in the manner specified in Section 11.2 of the
            Credit Agreement; PROVIDED, HOWEVER, that the failure to so notify
            shall not impair the effectiveness of this Amendment.

Section 4.2 RATIFICATION OF CREDIT AGREEMENT. The Credit Agreement, as amended
            by this Amendment (including, without limitation, Section 11.3(a)
            thereof as applied to the transactions contemplated hereby), is
            hereby ratified and confirmed in all respects.

Section 4.3 GOVERNING LAW. This Amendment shall be deemed to be a contract made
            under and governed by the internal laws of the State of New York.

                                       8

<PAGE>




         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.


                            CORNERSTONE PROPANE, L.P.

                            By:      CORNERSTONE PROPANE GP, INC.,
                                     its Managing General Partner



                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________



                             BANK OF AMERICA, N.A., as Agent for the Lenders




                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       9

<PAGE>






                              BANK OF AMERICA, N.A.



                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       10

<PAGE>






                             UNION BANK OF CALIFORNIA, N.A.



                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       11

<PAGE>





                             FLEET NATIONAL BANK


                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       12

<PAGE>





                            FIRST UNION NATIONAL BANK



                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       13

<PAGE>






                             THE BANK OF NOVA SCOTIA



                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       14

<PAGE>






                             CREDIT AGRICOLE INDOSUEZ


                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       15

<PAGE>





Each of the undersigned hereby acknowledges and consents to the foregoing First
Amendment to Refunding Credit Agreement, reaffirms the terms of its Guaranty in
favor of the Trustee and acknowledges that such Guaranty remains in full force
and effect in accordance with its terms.


Dated: ________________              CORNERSTONE HOLDING CORP.


                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________



                                      FLAME, INC.


                                     By:      ________________________________
                                     Name:    ________________________________
                                     Title:   ________________________________

                                       16