<PAGE>

Exhibit 10.9

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                           CORNERSTONE PROPANE GP, INC.,
                                     SYN INC.
                                       AND
                            CORNERSTONE PROPANE, L.P.


                                   $85,000,000
                  7.33% Senior Secured Notes due January 31, 2013

                      (Private Placement Number: 21923# AB 2)


                               _________________________

                                    NOTE AGREEMENT
                               _________________________




 
                            Dated as of December 11, 1998

        
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<PAGE>


                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE

<S>           <C>                                                          <C>
SECTION 1.     AUTHORIZATION OF NOTES. . . . . . . . . . . . . . . . . . . . .1

SECTION 2.     SALE AND PURCHASE OF NOTES. . . . . . . . . . . . . . . . . . .1

SECTION 3.     CLOSING.. . . . . . . . . . . . . . . . . . . . . . . . . . . .2

SECTION 4.     CONDITIONS TO CLOSING.. . . . . . . . . . . . . . . . . . . . .2

     4.1.      Representations and Warranties. . . . . . . . . . . . . . . . .2

     4.2.      Performance; No Default.. . . . . . . . . . . . . . . . . . . .3

     4.3.      Compliance Certificates.. . . . . . . . . . . . . . . . . . . .3

     4.4.      Opinions of Counsel.. . . . . . . . . . . . . . . . . . . . . .3

     4.5.      Legal Investment. . . . . . . . . . . . . . . . . . . . . . . .3

     4.6.      Trust Agreement.. . . . . . . . . . . . . . . . . . . . . . . .4

     4.7.      Security Documents. . . . . . . . . . . . . . . . . . . . . . .4

     4.8.      Operative Agreements. . . . . . . . . . . . . . . . . . . . . .4

     4.9.      Sale and Issuance of Other Notes. . . . . . . . . . . . . . . .4

     4.10.     Sale of Units.. . . . . . . . . . . . . . . . . . . . . . . . .4

     4.11.     Proceedings and Documents.. . . . . . . . . . . . . . . . . . .5

     4.12.     Rating. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

     4.13.     Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . .5
     
     4.14.     Payment of Closing Fees.. . . . . . . . . . . . . . . . . . . .5

     4.15.     Private Placement Number. . . . . . . . . . . . . . . . . . . .5

     4.16.     Other Agreements. . . . . . . . . . . . . . . . . . . . . . . .5

     4.17.     Subsidiary Security Documents.. . . . . . . . . . . . . . . . .5

SECTION 5.     REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNERS AND THE
               COMPANY.. . . . . . . . . . . . . . . . . . . . . . . . . . . .6

     5.1.      Organization, Standing, etc.. . . . . . . . . . . . . . . . . .6

     5.2.      Partnership and Stock Interests.. . . . . . . . . . . . . . . .6

     5.3.      Qualification.. . . . . . . . . . . . . . . . . . . . . . . . .7

     5.4.      Financial Statements. . . . . . . . . . . . . . . . . . . . . .7

     5.5.      Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . . .9



<PAGE>

     5.6.      Tax Returns and Payments. . . . . . . . . . . . . . . . . . . .9

     5.7.      Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . .9

     5.8.      Ownership of Assets.. . . . . . . . . . . . . . . . . . . . . .9

     5.9.      Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . 10

     5.10.     Compliance with Other Instruments, etc. . . . . . . . . . . . 11

     5.11.     Governmental Consent. . . . . . . . . . . . . . . . . . . . . 11

     5.12.     Offer of Notes. . . . . . . . . . . . . . . . . . . . . . . . 11

     5.13.     Use of Proceeds.. . . . . . . . . . . . . . . . . . . . . . . 12

     5.14.     Federal Reserve Regulations.. . . . . . . . . . . . . . . . . 12

     5.15.     Investment Company Act. . . . . . . . . . . . . . . . . . . . 12

     5.16.     Public Utility Holding Company Act; Federal Power Act.. . . . 12

     5.17.     ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

     5.18.     Environmental Matters.. . . . . . . . . . . . . . . . . . . . 14

     5.19.     Foreign Assets Control Regulations, etc.. . . . . . . . . . . 15

     5.20.     Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 16

     5.21.     Chief Executive Office. . . . . . . . . . . . . . . . . . . . 16

     5.22.     Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 16

     5.23.     Year 2000.. . . . . . . . . . . . . . . . . . . . . . . . . . 17

SECTION 6.     PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS. . . . . . . . . 17

SECTION 7.     ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION. . . . 19

SECTION 8.     INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . . . 25

SECTION 9.     PREPAYMENT OF NOTES.. . . . . . . . . . . . . . . . . . . . . 25

     9.1.      Required Prepayments of the Notes.. . . . . . . . . . . . . . 25

     9.2.      Optional Prepayments of the Notes with Make Whole Amount. . . 26

     9.3.      Prepayment on Change of Control.. . . . . . . . . . . . . . . 26

     9.4.      Contingent Prepayments on Disposition of Property, Taking or
               Destruction.. . . . . . . . . . . . . . . . . . . . . . . . . 27

     9.5.      Notice of Prepayments; Officers' Certificate. . . . . . . . . 28

                                      ii


<PAGE>


     9.6.      Allocation of Partial Prepayments.. . . . . . . . . . . . . . 29

     9.7.      Maturity; Surrender, etc. . . . . . . . . . . . . . . . . . . 29

     9.8.      Acquisition of Notes. . . . . . . . . . . . . . . . . . . . . 29

SECTION 10.    BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY.. . . . . . . 29

     10.1.     Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 30

     10.2.     Liens, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 36

     10.3.     Investments, Guaranties, etc. . . . . . . . . . . . . . . . . 39

     10.4.     Restricted Payments.. . . . . . . . . . . . . . . . . . . . . 42

     10.5.     Transactions with Affiliates. . . . . . . . . . . . . . . . . 42

     10.6.     Subsidiary Stock and Indebtedness.. . . . . . . . . . . . . . 43

     10.7.     Consolidation, Merger, Sale of Assets, etc. . . . . . . . . . 43

     10.8.     Partnership or Corporate Existence, etc.; Business. . . . . . 48

     10.9.     Payment of Taxes and Claims.. . . . . . . . . . . . . . . . . 48

     10.10.    Compliance with ERISA.. . . . . . . . . . . . . . . . . . . . 49

     10.11.    Maintenance of Properties; Insurance. . . . . . . . . . . . . 50

     10.12.    Operative Agreements; Security Documents. . . . . . . . . . . 50

     10.13.    Chief Executive Office. . . . . . . . . . . . . . . . . . . . 51

     10.14.    Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . 51

     10.15.    Information Required by Rule 144A.. . . . . . . . . . . . . . 51

     10.16.    Covenant to Secure Notes Equally. . . . . . . . . . . . . . . 52

     10.17.    Compliance with Laws. . . . . . . . . . . . . . . . . . . . . 52

     10.18.    Further Assurances. . . . . . . . . . . . . . . . . . . . . . 52

     10.19.    Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 53

     10.20.    Damage, Destruction, Taking, etc. . . . . . . . . . . . . . . 54

     10.21,    Accounting Changes. . . . . . . . . . . . . . . . . . . . . . 55

     10.22.    Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . 55

     10.23.    Impairment of Security Interests. . . . . . . . . . . . . . . 55

     10.24.    Limitation on Restrictions on Subsidiary Dividends, etc.. . . 55

                                      iii


<PAGE>

     10.25.    No Other Negative Pledges.. . . . . . . . . . . . . . . . . . 55

     10.26.    Sales of Receivables. . . . . . . . . . . . . . . . . . . . . 56

     10.27.    Fixed Price Supply Contracts; Certain Policies. . . . . . . . 56

     10.28.    Independent Corporate Existence.. . . . . . . . . . . . . . . 56

     10.29.    Other Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 57

     10.30.    Restriction on General Partner. . . . . . . . . . . . . . . . 58

SECTION 11.    EVENTS OF DEFAULT; ACCELERATION.. . . . . . . . . . . . . . . 58

SECTION 12.    REMEDIES ON DEFAULT; RECOURSE, ETC. . . . . . . . . . . . . . 62

SECTION 13.    DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . 63

SECTION 14.    REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES. . . . . . . 83

     14.1.     Note Register; Ownership of Notes.. . . . . . . . . . . . . . 83

     14.2.     Transfer and Exchange of Notes. . . . . . . . . . . . . . . . 83

     14.3.     Replacement of Notes. . . . . . . . . . . . . . . . . . . . . 83

     14.4.     Notes Held by Company, etc. Deemed Not Outstanding. . . . . . 83

SECTION 15.    PAYMENTS ON NOTES.. . . . . . . . . . . . . . . . . . . . . . 84

     15.1.     Place of Payment. . . . . . . . . . . . . . . . . . . . . . . 84

     15.2.     Home Office Payment.. . . . . . . . . . . . . . . . . . . . . 84

                                      iv


<PAGE>

SECTION 16.    EXPENSES, INDEMNIFICATION, ETC. . . . . . . . . . . . . . . . 84

SECTION 17.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 87

SECTION 18.    AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . 88

SECTION 19.    NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . 88

SECTION 20.    REPRODUCTION OF DOCUMENTS.. . . . . . . . . . . . . . . . . . 89

SECTION 21.    MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 89

SECTION 22.    SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . . . . 89

SECTION 23.    WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . 90

SECTION 24.    GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . 90

SECTION 25.    CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . . . 90

</TABLE>
                                       v


<PAGE>

<TABLE>
<CAPTION>

<S>                <C>
Schedule A          --   Schedule of Purchasers

Schedule 5.3        --   Jurisdiction of Qualification

Schedule 5.4(b)     --   Certain Changes

Schedule 5.7        --   Indebtedness

Schedule 5.8(b)     --   List of Title Exceptions

Schedule 5.9        --   Litigation

Schedule 5.18       --   Environmental Notices

Schedule 10.2       --   Liens

Schedule 10.5       --   Transactions With Affiliates

Exhibit A           --   Form of Note

Exhibit B1          --   Form of Opinion of Company Counsel

Exhibit B2          --   Form of Opinion of Debevoise & Plimpton

Exhibit C           --   Form of Trust Agreement

Exhibit D           --   Form of Subordination Provisions

Exhibit E           --   Form of Company Security Agreement

Exhibit F           --   Form of Intercompany Note

Exhibit G           --   Form of Partnership Agreement

Exhibit H           --   Form of Perfection Certificate

Exhibit I           --   Form of Subsidiary Guarantee Agreement

Exhibit J           --   Form of Supplemental Agreement


                                      vi
</TABLE>

<PAGE>



                             CORNERSTONE PROPANE GP, INC.
                              CORNERSTONE PROPANE, L.P.
                                       SYN INC.

                                  432 Westridge Drive,
                             Watsonville, California  95076

                       7.33% Senior Secured Notes due January 31, 2013

                                                  Dated as of December 11, 1998

TO EACH OF THE PURCHASERS LISTED
  IN THE ATTACHED SCHEDULE A

Dear Purchaser:

        Cornerstone Propane GP, Inc., a California corporation (the 
"Managing General Partner"), SYN Inc., a Delaware corporation (the 
"Special General Partner"), and together with the Managing General Partner, 
each a "General Partner" and together, the "General Partners," and 
Cornerstone Propane, L.P., a Delaware limited partnership (the "Company"), 
hereby agree with you as follows:

SECTION 1.     AUTHORIZATION OF NOTES.

        The Company will authorize the issue and sale of $85,000,000 
aggregate principal amount of its 7.33% Senior Secured Notes due January 31, 
2013 (the "Notes", such term to include any Notes issued in substitution 
therefor or replacement thereof pursuant to Section 14).  The Notes shall be 
substantially in the form of Exhibit A, with such changes therefrom, if any, 
as may be approved by you and the Company.  Certain capitalized terms used in 
this Note Agreement (the "Agreement") are defined in Section 13; references 
to a "Section" or a "Schedule" or an "Exhibit" are, unless otherwise 
specified, to a Section of this Agreement or to a Schedule or an Exhibit 
attached to this Agreement.

SECTION 2.     SALE AND PURCHASE OF NOTES.

        Subject to the terms and conditions of this Agreement, the Company 
will issue and sell to you and you will purchase from the Company, at the 
Closing provided for in Section 3, Notes in the principal amount specified 
opposite your name in Schedule A for purchase by you at the Closing, at the 
purchase price of 100% of the principal amount thereof.  At the Closing 
provided for in Section 3, subject to the conditions stated in the PCI 
Agreements, the Public Partnership and CHC will acquire all the outstanding 
stock and warrants of Propane Continental, Inc., a Delaware corporation 
("PCI"), pursuant to the terms of the PCI Agreements, and the Public 
Partnership will transfer, directly or

<PAGE>


indirectly, to CHC all the capital stock and warrants of PCI acquired by it
pursuant to the PCI Agreements.

        Contemporaneously with entering into this Agreement, the General 
Partners and the Company are entering into identical Note Agreements (the 
"Other Agreements") with each of the other purchasers named in Schedule A 
(the "Other Purchasers"), providing for the sale to each of the Other 
Purchasers, at the Closing, of Notes in the principal amount specified 
opposite its name in Schedule A.  The sale of Notes to you and the Other 
Purchasers are to be separate sales, and this Agreement and the Other 
Agreements constitute separate agreements.

SECTION 3.     CLOSING.

 The sales of the Notes to you and the Other Purchasers shall take place at 
the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New York, at 
9:00 a.m., New York time, at a closing (the "Closing") on December 11, 
1998, or such later date as may be agreed upon by Managing General Partner, 
the Company, you and the Other Purchasers.  At the Closing, the Company will 
deliver to you Notes in the principal amount to be purchased by you, in the 
form of a single Note (or such greater number of Notes as you may request, 
provided that each such Note shall be in a denomination of at least 
$500,000), each dated the date of the Closing and registered in your name (or 
in the name of your nominee as indicated in Schedule A), against payment of 
the purchase price therefor on the date of Closing by transfer of immediately 
available funds to the Company, or as otherwise directed by the Company in 
writing (at least two days prior to the date of the Closing).  If at the 
Closing the Company shall fail to tender such Notes to you as provided above 
in this Section 3 or if any of the conditions specified in Section 4 shall 
not have been fulfilled to your satisfaction, you shall, at your election, be 
relieved of all further obligations under this Agreement, without thereby 
waiving any other rights you may have by reason of such failure or such 
nonfulfillment.  At the Closing, the Company will designate (to the extent 
not theretofore so designated) Cornerstone Sales & Service Corporation, 
Flame, Inc., CHC and PCI as Restricted Subsidiaries under this Agreement, the 
Other Agreements and the 1996 Agreements.  At the Closing, you will become a 
party to the Trust Agreement with respect to the Notes.

SECTION 4.     CONDITIONS TO CLOSING.

        Your obligation to purchase and pay for the Notes to be sold to you 
at the Closing is subject to the fulfillment to your satisfaction, prior to 
or at the Closing, of the following conditions:

        4.1. REPRESENTATIONS AND WARRANTIES.  The representations and 
warranties of the Company and its Affiliates contained in this Agreement, the 
other Operative Agreements, and those otherwise made in writing by or on 
behalf of the Company or any Affiliate of the Company in connection with the 
transactions contemplated by this Agreement, shall 

                                      2

<PAGE>

be true and correct when made and at the time of the Closing, except as 
affected by the consummation of such transactions and except for any 
representation and warranty that is expressly stated to relate to a specific 
date, in which case such representation and warranty shall be true and 
correct as of such earlier date.

        4.2. PERFORMANCE; NO DEFAULT.  Each of the Company and its Affiliates 
shall have performed and complied with all agreements and conditions 
contained in this Agreement or any other Operative Agreement required to be 
performed or complied with by it prior to or at the Closing, and at the time 
of the Closing no Event of Default or Potential Event of Default under this 
Agreement or default by any party under any other Operative Agreement shall 
have occurred and be continuing.

        4.3. COMPLIANCE CERTIFICATES.  You shall have received Officer's 
Certificates of the Company and each General Partner, dated the date of the 
Closing and satisfactory in substance and form to you, certifying that the 
conditions specified in Sections 4.1 and 4.2 have been fulfilled in all 
material respects insofar as the relevant representation or warranty is made 
by, or the relevant agreement or condition is required to be performed or 
complied with by, or the relevant Event of Default, Potential Event of 
Default or default has been caused by or relates to, each of such entities 
and, with respect to the Officer's Certificate of the Company, its 
Subsidiaries, and in the case of the Officer's Certificate of the Managing 
General Partner and the Company, certifying that no material adverse change 
has occurred in the financial condition of the Business subsequent to the 
date of the financial statements delivered pursuant to Section 5.4(a).

        4.4. OPINIONS OF COUNSEL.  You shall have received favorable opinions 
from (a) McCutchen, Doyle, Brown & Enersen, L.L.P., counsel for the Company 
and its Affiliates, substantially in the form of Exhibit B1 and (b) Debevoise 
& Plimpton, your special counsel in connection with the transactions 
contemplated by this Agreement, substantially in the form of Exhibit B2, and 
in each case covering such other matters incident to such transactions as you 
may reasonably request, each addressed to you, dated the date of the Closing 
and otherwise reasonably satisfactory in substance and form to you.  You 
shall have received copies of each of the opinions delivered pursuant to the 
Underwriting Agreement (other than the opinion of counsel to the 
underwriters), accompanied by letters, dated the date of the Closing and 
addressed to you, from the counsel rendering such opinions, stating that you 
are entitled to rely on such opinions as if they were addressed to you.  The 
Company and the General Partners hereby direct their counsel referred to in 
clause (a) of this Section 4.4, and each of its counsel who deliver opinions 
pursuant to the Underwriting Agreement, to deliver to you such opinions and 
letters to be delivered by it and authorize you to rely thereon.

        4.5. LEGAL INVESTMENT.  On the date of the Closing your purchase of 
Notes shall be permitted by the laws and regulations of each jurisdiction to 
which your investments are subject, but without recourse to provisions (such 
as section 1404(b) or 1405(a)(8) of the New York Insurance Law) permitting 
limited investments by insurance companies in

                                      3

<PAGE>

securities not otherwise legally eligible for investment.  If requested by 
you by prior written request to the Company or the General Partners, you 
shall have received, at least five Business Days prior to the Closing, an 
Officers' Certificate of the Company or the General Partners, as the case may 
be, certifying as to such matters of fact as you may reasonably specify to 
enable you to determine whether such purchase is so permitted.

        4.6. TRUST AGREEMENT.  The Trust Agreement shall be in full force and 
effect and shall constitute the valid, binding and enforceable obligation of 
the Company, the Qualifying Restricted Subsidiaries, if any, and the Trustee, 
except that such enforceability may be limited by applicable bankruptcy, 
insolvency, reorganization, moratorium and similar laws of general 
application relating to or affecting the rights and remedies of creditors, 
and no default on the part of the Company or the Qualifying Restricted 
Subsidiaries shall exist thereunder.

        4.7. SECURITY DOCUMENTS.  Each of the Security Documents shall be in 
full force and effect and shall constitute the valid, binding and enforceable 
obligation of each such party, except that such enforceability may be limited 
by applicable bankruptcy, insolvency, reorganization, moratorium and similar 
laws of general application relating to or affecting the rights and remedies 
of creditors and by general equitable principles, regardless of whether such 
enforceability is considered in a proceeding in equity or at law.

        4.8. OPERATIVE AGREEMENTS.  Each of the Operative Agreements shall be 
in full force and effect, and shall constitute the legal, valid and binding 
and enforceable obligations of the respective parties thereto, except that 
such enforceability may be limited by applicable bankruptcy, insolvency, 
reorganization, moratorium and similar laws of general application relating 
to or affecting the rights and remedies of creditors and by general equitable 
principles, regardless of whether such enforceability is considered in a 
proceeding in equity or law, and no default or accrued right of termination 
on the part of any of the parties thereto shall exist thereunder as of the 
date of the Closing, and you and the Trustee shall have received a fully 
executed original, or a true and complete copy, of each such document.

        4.9. SALE AND ISSUANCE OF OTHER NOTES.  Contemporaneously with the 
Closing, the Company shall sell to the Other Purchasers the Notes to be 
purchased by them at the Closing under the Other Agreements as specified in 
Schedule A.

        4.10.     SALE OF UNITS.  At the time of the Closing, (a) the 
Underwriting Agreement shall be in full force and effect, (b) all conditions 
to closing contained in the Underwriting Agreement shall have been fulfilled 
or, in a manner acceptable to you, waived, (c) your special counsel shall 
have received a copy of each agreement, document, opinion (as specified in 
Section 4.4) and certificate delivered in connection with the closing under 
the Underwriting Agreement, and (d) substantially simultaneously with the 
receipt of the proceeds of the sale of the Notes to you and the Other 
Purchasers at the Closing, (i) the 

                                      4

<PAGE>

Public Partnership shall sell to the Underwriters the Units provided to be 
sold under the Underwriting Agreement for an aggregate gross purchase price 
of not less than $53,850,000, (ii) the Public Partnership shall have 
contributed the net proceeds of such sale to the Company as an additional 
contribution to partnership capital and (iii) all transactions contemplated 
by the Registration Statement, the Memorandum and the PCI Agreements to be 
completed by the General Partners, the Company and their Affiliates prior to 
or substantially simultaneously with the issuance of the Notes shall have 
been completed substantially as contemplated therein and in a manner 
acceptable to you.

        4.11.     PROCEEDINGS AND DOCUMENTS.  All proceedings in connection 
with the transactions contemplated by this Agreement and the PCI Agreements 
and all documents and instruments incident to such transactions shall be 
satisfactory to you and your special counsel, and you and your special 
counsel shall have received all such counterpart originals or certified or 
other copies of such documents as you or they may reasonably request.

        4.12.     RATING.  Prior to the Closing, the Notes shall have 
received a rating of at least BBB from Fitch Investors Service, Inc., which 
rating remains in effect as of the Closing.

         4.13.     INSURANCE.  Insurance complying with the provisions of 
Section 10.11 hereof shall be in full force and effect.

        4.14.     PAYMENT OF CLOSING FEES.  The Company shall have paid the 
fees and disbursements required by Section 16 to be paid by the Company on 
the date of the Closing.

        4.15.     PRIVATE PLACEMENT NUMBER.  The Company shall have obtained 
for the Notes a Private Placement Number issued by Standard & Poor's CUSIP 
Service Bureau (in cooperation with the Securities Valuation Office of the 
National Association of Insurance Commissioners).

        4.16.     OTHER AGREEMENTS.  The Company shall have delivered to you 
a true and complete copy of the Registration Statement.

        4.17.     SUBSIDIARY SECURITY DOCUMENTS.  CHC and PCI shall each have 
(i) become a party to the Subsidiary Guarantee Agreement, the Company 
Security Agreement and the Trust Agreement and (ii) duly executed and 
delivered to your special counsel for filing the financing statements 
contemplated thereby.

        4.18.     YEAR 2000 QUESTIONNAIRE.  The Company will have delivered 
to you a copy of the Company's response to the Year 2000 Due Diligence 
Questionnaire supplied by the Securities Valuation Office of the National 
Association of Insurance Commissioners..

                                      5

<PAGE>


SECTION 5.  REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNERS AND THE 
            COMPANY.

        Each of the General Partners and the Company represents and warrants 
that:

        5.1. ORGANIZATION, STANDING, ETC.  (a) The Company is a limited 
partnership duly organized, validly existing and in good standing under the 
Delaware Revised Uniform Limited Partnership Act and has all requisite 
partnership power and authority to own and operate its properties and assets, 
to conduct its business as described in the Registration Statement, to enter 
into this Agreement and the other Operative Agreements to which it is a 
party, to issue and deliver the Notes and to carry out the terms of this 
Agreement, such other Operative Agreements and the Notes.

    (b)  Each General Partner is a corporation duly organized, validly 
existing and in good standing (in the case of the Managing General Partner) 
under the laws of the State of California or (in the case of the Special 
General Partner) under the laws of the State of Delaware and has all 
requisite corporate power and authority to own and operate its properties, to 
conduct its business, to enter into and carry out the terms of this Agreement 
and the other Operative Agreements to which it is a party, and, in the case 
of the Managing General Partner, to execute and deliver as Managing General 
Partner of the Company this Agreement, the Notes and the other Operative 
Agreements to which the Company is a party.

    (c)  Each Restricted Subsidiary is a corporation duly organized, validly 
existing and in good standing under the laws of the State of Delaware and has 
all requisite corporate power and authority to own and operate its properties 
and to conduct its business as may be described in the Registration Statement.

    (d)  The Public Partnership is a limited partnership duly organized, 
validly existing and in good standing under the Delaware Revised Uniform 
Limited Partnership Act and has all requisite partnership power and authority 
to own and operate its properties, to conduct its business, and to execute, 
deliver and carry out the terms of the Operative Agreements to which it is a 
party.

        5.2. PARTNERSHIP AND STOCK INTERESTS.  The only general partners of 
the Company are the General Partners, which own an aggregate 1.0101% general 
partner interest in the Company.  The only limited partner of the Company is 
the Public Partnership, which owns a 98.9899% limited partner interest in the 
Company.  The Company does not have any other partners.  Except for 
Cornerstone Sales & Service Corporation, a Delaware corporation, Flame, Inc., 
an Arizona corporation, CHC and PCI the Company does not have, and 
immediately after giving effect to the transactions contemplated by the PCI 
Agreements will not have, any Subsidiaries or any Investments in any Person 
(other than Investments of the types described in Section 10.3(a)).  CHC is 

                                      6

<PAGE>

a direct Wholly Owned Subsidiary of the Company and upon the consummation of 
the Closing PCI will be a direct Wholly Owned Subsidiary of CHC.

        5.3. QUALIFICATION.  The Company is duly qualified or registered and 
is in good standing as a foreign limited partnership for the transaction of 
business, and each General Partner and Restricted Subsidiary is qualified or 
registered and is in good standing as a foreign corporation for the 
transaction of business, in the jurisdictions set forth in Schedule 5.3 which 
are the only jurisdictions in which, the nature of their respective 
activities or the character of the properties they own, lease or use makes 
such qualification or registration necessary and in which the failure so to 
qualify or to be so registered would have a Material Adverse Effect.  Each of 
the General Partners, the Restricted Subsidiaries and the Company has taken 
all necessary partnership or corporate action to authorize the execution, 
delivery and performance by it of this Agreement, the Notes, as the case may 
be, and each other Operative Agreement to which it is a party.  Each of the 
General Partners, the Restricted Subsidiaries and the Company has duly 
executed and delivered each of this Agreement, the Notes and the other 
Operative Agreements to which it is a party, and each of them constitutes its 
legal, valid, binding and enforceable obligation in accordance with its 
terms, except that such enforceability may be limited by applicable 
bankruptcy, insolvency, reorganization, moratorium and similar laws of 
general application relating to or affecting the rights and remedies of 
creditors and by general equitable principles, regardless of whether such 
enforceability is considered in a proceeding in equity or at law.

        5.4. FINANCIAL STATEMENTS.

    (a)  The Company has delivered to you complete and correct copies of (i) 
the Registration Statement, (ii) the memorandum prepared by the Company for 
use in connection with the Company's private placement of the Notes (together 
with any supplements or amendments, the "Memorandum") and (iii) the Public 
Partnership's Securities Exchange Act of 1934, as amended, filings delivered 
in connection with the offering of the Notes.  The historical and pro forma 
consolidated financial statements of the Public Partnership set forth in or 
incorporated by reference into the Registration Statement comply in all 
material respects with the applicable accounting requirements of the 
Securities Act of 1933, as amended, and the published rules and regulations 
thereunder and, in the opinion of the Managing General Partner, the 
assumptions on which the pro forma adjustments set forth in or incorporated 
by reference into the Registration Statement to such historical consolidated 
financial statements of the Public Partnership are based, provide a 
reasonable basis for presenting the significant effects of the transactions 
contemplated by the pro forma consolidated financial statements set forth in 
or incorporated by reference into the Registration Statement and such pro 
forma adjustments give appropriate effect to such assumptions and are 
properly applied in all material respects to the historical amounts in the 
compilation of such pro forma consolidated financial statements. The 
financial statements and schedules included in the 

                                      7

<PAGE>

    Registration Statement (other than with respect to pro forma matters) 
    have been prepared in accordance with GAAP applied on a consistent basis 
    throughout the periods specified, except to the extent disclosed therein, 
    and present fairly the consolidated financial position of the Public 
    Partnership as of the respective dates specified and the results of its 
    consolidated operations and cash flows for the respective periods 
    specified (subject, as to interim statements, to the omission of 
    footnotes and year-end audit adjustments).  Since June 30, 1998, there 
    has been no material adverse change in the business, financial condition, 
    or results of operations of the Public Partnership and its consolidated 
    subsidiaries taken as a whole.  The financial data included under the 
    caption "Selected Historical and Pro Forma Financial and Operating 
    Data" in the Registration Statement present fairly, on the basis stated 
    in the Registration Statement, the information set forth therein and have 
    been compiled on a basis consistent with the audited and unaudited 
    historical financial statements included in the Registration Statement.  
    The historical aspects of the financial data included under the caption 
    "Capitalization" in the Registration Statement present fairly, on the 
    basis stated in the Registration Statement, the information set forth 
    therein and have been compiled on a basis consistent with that of the 
    audited and unaudited historical financial statements included in the 
    Registration Statement; the pro forma aspects of such financial data 
    included under the caption "Capitalization" have been prepared in all 
    material respects in accordance with all applicable rules and guidelines 
    of the Securities and Exchange Commission with respect to pro forma 
    financial information; and the assumptions on which the pro forma 
    adjustments to the pro forma aspects of the financial data included under 
    the caption "Capitalization" are based provide a reasonable basis for 
    presenting the significant effects of the transactions contemplated by 
    such pro forma financial data and such pro forma adjustments give 
    appropriate effect to such assumptions and are properly applied in all 
    material respects to the historical amounts in the compilation of such 
    pro forma financial data.

        (b)  Except as may be disclosed on Schedule 5.4(b), since June 30, 
    1998, there has been no change or event which could reasonably be 
    expected to have a Material Adverse Effect.  The financial data for the 
    Public Partnership in the Memorandum present fairly in all material 
    respects, on the basis stated in the Memorandum, the information set 
    forth therein and have been compiled based on the audited financial 
    statements included in the Registration Statement. Schedule 5.4(b) 
    specifies information in the Registration Statement that modifies and 
    updates information previously contained in the Memorandum. Modifications 
    of a non-material nature are not reflected in Schedule 5.4(b). Except as 
    otherwise provided on Schedule 5.4(b), the financial data identified as 
    historical included in the Memorandum present fairly, on the basis stated 
    in the Memorandum, the information set forth therein and have been 
    compiled on a basis consistent with that of the audited financial 
    statements included in the Registration Statement; the pro forma 
    financial data included in the Memorandum represent, in all material 
    respects and on the basis stated in the Memorandum, the Managing General 
    Partner's best estimate with respect to pro forma financial information; 
    and the 

                                      8

<PAGE>

assumptions on which the pro forma adjustments to the pro forma aspects of 
the financial data included in the Memorandum are based provide a reasonable 
basis for presenting all of the significant effects of the transactions 
contemplated by such pro forma financial data and such pro forma adjustments 
give appropriate effect to such assumptions and are properly applied in all 
material respects to the historical amounts in the compilation of such pro 
forma financial data.

        5.5. CHANGES, ETC.  Except as contemplated by this Agreement, the 
other Operative Agreements, the Registration Statement or the Memorandum, 
subsequent to June 30, 1998, the Company and its Affiliates have not incurred 
any material liabilities or obligations, direct or contingent, or entered 
into any material transaction not in the ordinary course of business, no 
events have occurred, which individually or in the aggregate, could 
reasonably be expected to have a Material Adverse Effect, and there has not 
been any Restricted Payment of any kind declared, paid or made by the Company 
or either General Partner (other than the distribution of $0.54 per 
Subordinated Unit paid on November 13, 1998 by the Company and the 
distribution of all of the retained earnings of PCI as of December 11, 1998 
to PCI's preferred shareholders).

        5.6. TAX RETURNS AND PAYMENTS.  On the Closing Date and after giving 
effect to the transactions then to be consummated under the Operative 
Agreements, each of the Company and its Affiliates has filed all federal, 
state and other tax returns required by law to be filed by it or has properly 
filed for an extension of time for the filing thereof and has paid all, 
taxes, assessments and other governmental charges levied upon it or any of 
its properties, assets, income or franchises which are due and payable, 
except those (a) which are not past due or are presently being contested in 
good faith by appropriate proceedings diligently conducted for which such 
reserves or other appropriate provisions, if any, as shall be required by 
GAAP have been made, or (b) for which the failure to file or extend would not 
reasonably be expected to have a Material Adverse Effect.  The Company is a 
limited partnership that is treated as a pass-through entity for federal 
income tax purposes.

        5.7. INDEBTEDNESS.  At the time of the Closing, other than the 
Indebtedness represented by the Notes and the Indebtedness listed in Schedule 
5.7, none of Company, either General Partner or any Restricted Subsidiary 
will have any secured or unsecured Indebtedness outstanding.  At the time of 
the Closing, no instrument or agreement to which the Company or, other than 
Section 7.6(a) of the MLP Agreement either General Partner is a party or by 
which the Company or either General Partner is bound or which is applicable 
to the Company or either General Partner (other than this Agreement, the 1996 
Note Agreements and the Bank Credit Facilities) contains any restrictions on 
the incurrence by the Company or either General Partner of additional 
Indebtedness.

        5.8. OWNERSHIP OF ASSETS.  (a)  The Company and each Restricted 
Subsidiary are in possession of and operating in compliance in all respects 
with all franchises, grants, authorizations, approvals, licenses, permits, 
easements, rights-of-way, consents, 

                                      9

<PAGE>

certificates and orders required to own, lease or use its properties and 
assets and (considering all such Permits (as below defined) in the possession 
of, and being complied with by, the Company and such Restricted Subsidiary 
taken together) to permit the conduct of the Business as now conducted and 
proposed to be conducted ("Permits"), except for those Permits 
(collectively, "Permitted Exceptions") (i) which are not required at such 
time and are routine or administrative in nature and are expected in the 
reasonable judgment of Managing General Partner to be obtained or given in 
the ordinary course of business after the date of the Closing, or (ii) which, 
if not obtained or given, would not, individually or in the aggregate, have a 
Material Adverse Effect.

        (b)  Except as set forth in Schedule 5.8(b), the Company has (i) 
title to the portion of its properties and assets constituting real property 
owned in fee simple, (ii) good and valid leasehold interests in the portion 
of its properties and assets constituting real property and leased, pursuant 
to which the Company shall enjoy undisturbed possession thereof, except for 
defects in, or lack of recorded title and exceptions to, leasehold interests 
as would not, in the aggregate, be reasonably expected to have a Material 
Adverse Effect, and (iii) sufficient title to the portion of its properties 
and assets constituting personal property reasonably necessary for the use 
and operation of such personal property as it has been used in the past and 
as it is proposed to be used in the Business, in each case subject to no 
Liens except Permitted Encumbrances and Liens that will be discharged prior 
to the Closing.  Such properties and assets are all of the assets and 
properties reasonably necessary to enable the Company to conduct the 
Business.  Subject to exceptions as would not, individually or in the 
aggregate, be reasonably expected to have a Material Adverse Effect, (A) the 
Company enjoys peaceful and undisturbed possession under all leases necessary 
for the operation of the Business, other than certain immaterial leased 
property of which the Company shall enjoy undisturbed possession, and (B) all 
such leases are valid and subsisting and are in full force and effect.  
Except to perfect and to protect security interests permitted by Section 
10.2, (x) at the time of the Closing, no effective financing statement under 
the Uniform Commercial Code which names the Company, any Restricted 
Subsidiary or either General Partner as debtor, which individually or in the 
aggregate relates to any part of the assets pledged pursuant to any Security 
Document, will be on file in any jurisdiction and (y) at the time of the 
Closing, none of the Company, any Restricted Subsidiary or either General 
Partner will have signed any effective financing statement or any effective 
security agreement, which relates to any part of the assets pledged pursuant 
to any Security Document, authorizing any secured party thereunder to file 
any such financing statement, except for financing statements to be executed 
and filed in connection with the Closing.

        5.9. LITIGATION, ETC.  Except as set forth on Schedule 5.9, there is 
no action, proceeding or investigation pending or, to the knowledge of the 
Company and the General Partners upon reasonable inquiry, threatened (or any 
basis therefor known to the Company or either General Partner) which 
questions the validity of this Agreement, 

                                      10

<PAGE>

any other Operative Agreement or the Notes or any action taken or to be taken 
pursuant to this Agreement, any other Operative Agreement or the Notes, or 
which could reasonably be expected to have, either in any case or in the 
aggregate, a Material Adverse Effect.

        5.10.     COMPLIANCE WITH OTHER INSTRUMENTS, ETC.  Neither the 
Company, any Restricted Subsidiary nor either General Partner (i) is in 
violation of any term of the Partnership Agreement or, in the case of such 
Restricted Subsidiary and the General Partners, of their respective articles 
or certificates of incorporation or by-laws, or (ii) is in violation of any 
term of any other agreement or instrument to which the Company, such 
Restricted Subsidiary or either General Partner is a party or by which any of 
them or any of their properties is bound or any term of any applicable law, 
ordinance, rule or regulation of any governmental authority or any term of 
any applicable order, judgment or decree of any court, arbitrator or 
governmental authority, in the case of clause (ii), the consequences of which 
would have a Material Adverse Effect; the execution, delivery and performance 
by each of the General Partners and the Company of this Agreement and the 
other Operative Agreements to which it is a party and the Notes, as the case 
may be, will not result in any violation of or be in conflict with or 
constitute a default under any such term or result in the creation of (or 
impose any obligation on the Company, any Restricted Subsidiary or either 
General Partner to create) any Lien upon any of the properties or assets of 
the Company or either General Partner prohibited by any such term, except for 
Permitted Encumbrances and for any such term relating to Indebtedness to be 
repaid in full at the time of the Closing; and there is no such term the 
compliance with which would have, or in the future may in the reasonable 
judgment of either General Partner or the Company be likely to have, a 
Material Adverse Effect.

        5.11.     GOVERNMENTAL CONSENT.  No consent, approval or 
authorization of, or declaration or filing with, any governmental authority 
(which has not been obtained) is required for the valid execution, delivery 
and performance of this Agreement or the other Operative Agreements (other 
than Permitted Exceptions), and no such consent, approval, authorization, 
declaration or filing is required for the valid offer, issue, sale and 
delivery of the Notes pursuant to this Agreement and the Other Agreements.

        5.12.     OFFER OF NOTES.  Neither the Company nor any of its 
Affiliates nor anyone acting on its or their behalf has directly or 
indirectly offered the Notes or any part thereof or any similar securities 
for sale to, or solicited any offer to buy any of the same from, or otherwise 
approached or negotiated in respect thereof with, anyone other than you, the 
Other Purchasers and not more than 25 other institutional investors.  Neither 
the General Partners nor the Company nor anyone authorized to act on their 
behalf has taken or will take any action which would subject the issuance and 
sale of the Notes to the registration and prospectus delivery provisions of 
the Securities Act of 1933, as amended, or to the registration or 
qualification provisions of any securities or Blue Sky law of any applicable 
jurisdiction or require qualification of any Security Document under the 
Trust Indenture Act of 1939, as amended; PROVIDED, HOWEVER, that it is 
understood that any action taken 

                                      11

<PAGE>

by you or any Other Purchaser shall not have been taken on behalf of the 
Company or the General Partners.

        5.13.     USE OF PROCEEDS.  The proceeds of the sale of the Units by 
the Public Partnership will be used by the Public Partnership and the Company 
as contemplated by the Registration Statement.  The proceeds of the sale of 
the Notes to you and the Other Purchasers will be used to pay a portion of 
the consideration payable under the PCI Agreements (including without 
limitation the refunding of PCI obligations contemplated by the PCI 
Agreements), for general partnership purposes and to pay fees and expenses 
associated with the offering.

        5.14.     FEDERAL RESERVE REGULATIONS.  Neither the General Partners 
nor the Company will, directly or indirectly, use any of the proceeds of the 
sale of the Notes for the purpose, whether immediate, incidental or ultimate, 
of buying a "margin stock" or of maintaining, reducing or retiring any 
indebtedness originally incurred to purchase a stock that is currently a 
"margin stock", or for any other purpose which might constitute this 
transaction a "purpose credit", in each case within the meaning of 
Regulation U of the Board of Governors of the Federal Reserve System (12 
C.F.R. 221, as amended), or otherwise take or permit to be taken any action 
which would involve a violation of such Regulation U or of Regulations T or X 
(12 C.F.R. 220, as amended, and 12 C.F.R. 224, as amended, respectively) or 
any other applicable regulation of such Board.  No indebtedness being reduced 
or retired, directly or indirectly, out of the proceeds of the sale of the 
Notes was incurred for the purpose of buying or carrying any stock which is 
currently a "margin stock", and neither General Partner nor the Company 
owns or has any present intention of acquiring with the proceeds thereof any 
amount of such "margin stock".

        5.15.     INVESTMENT COMPANY ACT.  None of the General Partners or 
the Company is an "investment company", or a company "controlled" by an 
"investment company", within the meaning of the Investment Company Act of 
1940, as amended.

        5.16.     PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT.  
None of the General Partners or the Company is a "holding company", or a 
"subsidiary company" of a "holding company", or an "affiliate" of a 
"holding company" or of a "subsidiary company" of a "holding company", 
as such terms are defined in the Public Utility Holding Company Act of 1935, 
as amended; none of the General Partners or the Company, or the issue and 
sale of the Notes by the Company is subject to regulation under such Act; and 
none of  the General Partners or the Company is a "public utility" as such 
term is defined in the Federal Power Act, as amended.

        5.17.     ERISA.  (a) None of the General Partners, the Company, any 
Subsidiary of the Company or any Related Person of the General Partners or 
the Company (other than Northwestern Growth Corporation, a Delaware 
corporation, and any Subsidiaries of Northwestern Growth Corporation (except 
for the General Partners and any Subsidiary of 

                                      12

<PAGE>

the General Partners that is a Related Person of the Company)) is obligated 
to contribute to, and none of the General Partners, the Company or any 
Related Person of the Company has any liability or obligation with respect 
to, any Plan that is subject to Section 302 or Title IV of ERISA or Section 
412 of the Code (other than a Multiemployer Plan).  None of the Company, any 
Subsidiary of the Company or any Related Person of the Company has any 
liability or obligation to provide any amount or type of compensation or 
benefit in respect of any employee or former employee of the Business which 
relates to periods, services performed or benefits or amounts accrued prior 
to December 17, 1996 (other than pursuant to a Multiemployer Plan, 
continuation coverage provided pursuant to Section 4980B of the Code or 
Section 601, et seq., of ERISA, or any liability or obligation for 
contributions pursuant to a Plan not yet required to be paid).  None of the 
General Partners, the Company, any Subsidiary of the Company or any Related 
Person of the Company has incurred any material liability under Title IV of 
ERISA with respect to any such Plan and no event or condition exists or has 
occurred as a result of which such a liability would reasonably be expected 
to be incurred.  None of the General Partners, the Company, any Subsidiary of 
the Company or any Related Person of the Company has engaged in any 
transaction, including the transactions contemplated hereunder which could 
subject the Company or any Related Person of the Company to a material 
liability pursuant to Section 4069(a) or 4212(c) of ERISA.  There has been no 
reportable event (within the meaning of Section 4043(b) of ERISA other than 
one for which the applicable notice requirements have been waived by PBGC 
regulation) or any other event or condition with respect to any Plan which 
presents a risk of the termination of, or the appointment of a trustee to 
administer, any such Plan (other than a Multiemployer Plan) by the PBGC.  No 
prohibited transaction (within the meaning of Section 406(a) of ERISA or 
Section 4975 of the Code) exists or has occurred with respect to any Plan 
which has subjected or could reasonably be expected to subject either General 
Partner, the Company or any Subsidiary of the Company to a material liability 
under Section 502(i) or 502(l) of ERISA or Section 4975 of the Code.  No 
material liability to the PBGC (other than liability for premiums not yet 
due) has been or is expected to be incurred with regard to any Plan by the 
General Partners, the Company, any Subsidiary of the Company or any Related 
Person of the Company.  None of the General Partners, the Company, any 
Subsidiary of the Company or any Related Person of the Company contributes or 
is obligated to contribute or has ever contributed or been obligated to 
contribute to any single employer plan tht has at least two contributing 
sponsors not under common control.  Timely payment has been made of all 
amounts which the General Partners, the Company, any Subsidiary of the 
Company or any Related Person of the Company is required under applicable 
law, the terms of each Plan or any collective bargaining agreement to have 
paid as contributions to each such Plan except to the extent that failure to 
do so would not have a Material Adverse Effect.  To the knowledge of the 
General Partners and the Company, no Multiemployer Plan has been terminated 
or presents a material risk of termination, is insolvent or is in 
reorganization within the meaning of Section 4241 or 4245 of ERISA and the 
transactions contemplated hereby will not result in a withdrawal from any 
Multiemployer Plan that would have a Material Adverse Effect.

                                      13


<PAGE>

None of the General Partners, the Company or any Subsidiary of the Company 
has any obligation to provide any material amount of  post-employment welfare 
benefits or coverage (other than continuation coverage provided pursuant to 
Section 4980B of the Code or Section 601, et seq., of ERISA).

        (b)  The execution and delivery of this Agreement and the Other 
Agreements and the issue and sale of the Notes, and delivery of the Notes 
hereunder and thereunder will not involve any non-exempt "prohibited 
transaction" within the meaning of Section 406 of ERISA or Section 4975 of 
the Code.  The representations by the Company and the General Partners in the 
immediately preceding sentence are made in reliance upon and subject to the 
accuracy of your representation in Section 6.2 of this Agreement and the 
representations of the Other Purchasers in Section 6.2 of the Other 
Agreements as to the source of the funds to be used to pay the purchase price 
of the Notes to be purchased by you and the Other Purchasers, respectively.  
With respect to each employee benefit plan identified to the Company in 
accordance with clause (c) of Section 6.2 of this Agreement or of any of the 
Other Agreements, none of the General Partners, the Company or any 
"affiliate" (as defined in Section V(c) of the QPAM Exemption) of either 
General Partner or the Company has at this time, and has not exercised at any 
time within the one year period preceding the date of the Closing, the 
authority to appoint or terminate you or any Other Purchaser as manager of 
any of the assets of any such plan or to negotiate the terms of any 
management agreement with you or any Other Purchaser on behalf of any such 
plan.

        5.18.     ENVIRONMENTAL MATTERS.  (a)  Except as disclosed in 
Schedule 5.18 each of the Company, each Restricted Subsidiary and either 
General Partner is, and after giving effect to the consummation of the PCI 
Agreements will be, in compliance with all Environmental Laws applicable to 
it or to the Business or its properties or assets except where such 
noncompliance would not have a Material Adverse Effect.  Each of the Company 
and each Restricted Subsidiary has timely and properly applied for renewal of 
all environmental permits or licenses that have expired or are about to 
expire and are necessary for the conduct of the Business as now conducted and 
as proposed to be conducted, except where the failure to timely and properly 
reapply would not have a Material Adverse Effect. Schedule 5.18 lists (i) all 
notices from Federal, state or local environmental agencies to the Company, 
any Restricted Subsidiary or the General Partners citing environmental 
violations that have not been finally resolved and disposed of, and no such 
violation, whether or not notice regarding such violation is listed on 
Schedule 5.18, if ultimately resolved against the Company, such Restricted 
Subsidiary or either General Partner, as the case may be, individually or in 
the aggregate, would have a Material Adverse Effect, and (ii) all current 
reports filed by the Company, each Restricted Subsidiary or either General 
Partner with any Federal, state or local environmental agency having 
jurisdiction over the properties and assets of each, true and complete copies 
of which reports have been made available to you and your special counsel.  
Notwithstanding any such notice, the Company, each Restricted Subsidiary and 
each 

                                      14

<PAGE>

General Partner are currently operating in all material respects within the 
limits set forth in such environmental permits or licenses and any current 
noncompliance with such permits or licenses will not result in any material 
liability or penalty to the Company, any Restricted Subsidiary or either 
General Partner or in the revocation, loss or termination of any such 
environmental permits or licenses, the revocation, loss or termination of 
which would have a Material Adverse Effect.

        (b)  Except as disclosed in Schedule 5.18, all facilities located on 
the real property of the Company or any Restricted Subsidiary which are 
subject to regulation by RCRA are and have been operated in compliance with 
RCRA, except where such noncompliance would not have a Material Adverse 
Effect and none of the Company, such Restricted Subsidiary or either General 
Partner has received, or, to the knowledge of the Company and either General 
Partner been threatened with, a notice of violation of RCRA regarding such 
facilities.

        (c)  Except as disclosed in Schedule 5.18, no hazardous substance (as 
defined in CERCLA) or hazardous waste (as defined in RCRA) is located or 
present at any of the real property of the Company or any Restricted 
Subsidiary in violation of any Environmental Law, which violation will have a 
Material Adverse Effect, and with respect to such real property there has not 
occurred (i) any release or threatened release of any such hazardous 
substance, (ii) any discharge or threatened discharge of any substance into 
ground, surface, or navigable waters which violates any Federal, state, local 
or foreign laws, rules or regulations concerning water pollution, or (iii) 
any assertion of any Lien pursuant to Environmental Laws resulting from any 
use, spill, discharge or clean-up of any hazardous or toxic substance or 
waste, which occurrence will have a Material Adverse Effect.

        5.19.     FOREIGN ASSETS CONTROL REGULATIONS, ETC.  The issue and 
sale of the Notes by the Company and its use of the proceeds thereof as 
contemplated by this Agreement, will not violate any of the regulations 
(other than those regulations, if any, that are implicated solely as a result 
of the actions of the purchasers of the Notes) administered by the Office of 
Foreign Assets Control, the United States Department of the Treasury, 
including, without limitation, the Foreign Assets Control Regulations, the 
Transaction Control Regulations, the Cuban Assets Control Regulations, the 
Foreign Funds Control Regulations, the Iranian Assets Control Regulations, 
the Iranian Transactions Regulations, the Iraqi Sanctions Regulations, the 
Libyan Sanctions Regulations, the Federal Republic of Yugoslavia (Serbia and 
Montenegro) and Bosnian Serb-Controlled Areas of the Republic of Bosnia and 
Herzegovina Sanctions Regulations, the Unita (Angola) Sanctions Regulations, 
the Terrorism Sanctions Regulations, and the Soviet Gold Coin Regulations of 
the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as 
amended) or the restrictions set forth in Executive Orders No. 8389, 9193, 
12543 (Libya), 12544 (Libya), 12801 (Libya), 12722 (Iraq), 12724 (Iraq), 
12775 (Haiti), 12779 (Haiti), 12808 (Yugoslavia), 12810 (Yugoslavia) or 12831 
(Yugoslavia), as 

                                      15

<PAGE>

amended, of the President of the United States of America or of any rules or 
regulations issued thereunder.

        5.20.     DISCLOSURE.  This Agreement, the other Operative 
Agreements, the Memorandum (as such may be updated by Schedule 5.4(b) 
hereto), and each other historical financial statement, document, certificate 
or instrument delivered to you by or on behalf of the Company, any Restricted 
Subsidiary, or either General Partner or any of their Affiliates (as amended, 
updated or revised by any subsequent delivery) in connection with the 
transactions contemplated by this Agreement, taken together do not contain 
any untrue statement of a material fact or omit to state a material fact 
necessary in order to make the statements contained therein, in light of the 
circumstances under which they were made, not misleading (other than the 
statements made regarding general economic conditions relating to national or 
local economies (provided that this reference shall not affect the 
representation made in Section 5.4(b)) and except for projections made and 
delivered in good faith and on the basis of reasonable assumptions). There is 
no fact actually known to the Company or either General Partner which has or 
in the future would (so far as the Company or either General Partner can now 
reasonably foresee) have a Material Adverse Effect which has not been set 
forth or referred to in this Agreement, the Memorandum (as such may be 
updated by Schedule 5.4(b) hereto) or another document, certificate or 
instrument delivered to you (other than the Registration Statement).  You and 
the Other Purchasers shall be entitled to rely on the statements and 
disclosures set forth in the Registration Statement.

        5.21.     CHIEF EXECUTIVE OFFICE.  The chief executive office of the 
Company and the Managing General Partner and the office where each maintains 
its records relating to the transactions contemplated by the Operative 
Agreements is located at 432 Westridge Drive, Watsonville, California 95076.

        5.22.     SOLVENCY.  Upon the sale of the Notes and the concurrent or 
prior consummation of the transactions contemplated hereby, the Company and 
each Restricted Subsidiary will be Solvent. "SOLVENT" means, with respect 
to any Person, that (a) the sum of the assets of such Person, both at a fair 
valuation and at present fair saleable value, will exceed the liabilities of 
such Person, (b) such Person will have sufficient capital with which to 
conduct its business as presently conducted and as proposed to be conducted 
and (c) such Person has not incurred debts, and does not intend to incur 
debts, beyond its ability to pay such debts as they mature.  For purposes of 
the foregoing definition, "DEBTS" means any liabilities or claims, and 
"CLAIM" means (i) a right to payment, whether or not such right is reduced 
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, 
disputed, undisputed, legal, equitable, secured or unsecured or (ii) a right 
to an equitable remedy for breach of performance if such breach gives rise to 
a payment, whether or not such right to an equitable remedy is reduced to 
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, 
disputed, undisputed, legal, equitable, secured or unsecured.  With respect 
to any contingent liabilities, such liabilities 

                                      16

<PAGE>

shall be computed at the amount which, in light of all the facts and 
circumstances existing at the time, represents the amount which can 
reasonably be expected to become an actual or matured liability.

        5.23.     YEAR 2000.  The Company and its Subsidiaries have reviewed 
the areas within their business and operations which could be adversely 
affected by, and have developed or are developing a program to address on a 
timely basis, the Year 2000 Problem.  Based on such review and program, the 
Company represents and warrants that (a) the Company's and its Subsidiaries' 
computer based systems are Year 2000 Compliant or will be Year 2000 Compliant 
not later than December 30, 1999 and (b) the Year 2000 Problem will not 
result in a Default or have a material adverse effect on the condition 
(financial or otherwise), business, operations, assets or properties of the 
Company and the Restricted Subsidiaries (taken as a whole).  The Company and 
its Subsidiaries, to the best of the Company's and its Subsidiaries' 
knowledge, have worked or will work with their relevant customers, suppliers 
and other service providers to seek to prevent any Year 2000 Problem in such 
customers', suppliers' and other service providers' systems from having a 
material adverse effect on the Company and its Subsidiaries (taken as a 
whole).

SECTION 6.     PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS.

        6.1. You represent that you are purchasing the Notes for your own 
account or for one or more separate accounts maintained by you or for the 
account of one or more pension or trust funds, in each case not with a view 
to or for sale in connection with any distribution thereof within the meaning 
of the Securities Act of 1933, as amended, or with any present intention of 
selling any of the Notes in connection with any distribution, PROVIDED that 
the disposition of your property shall at all times be within your control.  
If you are purchasing for the account of one or more pension or trust funds 
(other than pension or trust funds included in the general account of an 
insurance company), you represent that (except to the extent that you have 
otherwise advised Debevoise & Plimpton and the Company in writing) you have 
sole investment discretion with respect to the acquisition of the Notes to be 
issued to you pursuant to this Agreement and the authority to make the 
representations herein contained on behalf of such pension or trust funds and 
on your own behalf and that the determination and decision on your behalf to 
purchase such Notes for such pension or trust funds is being made by the same 
individual or group of individuals who customarily pass on such investments.

        6.2  You represent that at least one of the following statements is 
an accurate representation as to the source of funds to be used by you to pay 
the purchase price of the Notes purchased by you hereunder:

        (a)  if you are an insurance company, no part of such funds 
    constitutes assets allocated to any separate account maintained by you in 
    which an employee benefit 

                                      17

<PAGE>

    plan (or its related trust) has any interest and, if the source of funds 
    includes assets of an insurance company general account, then the 
    statements in Section 6.2(e) are accurate as to such source; or

        (b)  if you are an insurance company, to the extent that any of such 
    funds constitutes assets allocated to any separate account maintained by 
    you, (i) such separate account is a "pooled separate account" within 
    the meaning of Prohibited Transaction Class Exemption 90-1, in which case 
    you have disclosed to the Company the names of each employee benefit plan 
    whose assets in such separate account exceed 10% of the total assets or 
    are expected to exceed 10% of the total assets of such account as of the 
    date of such purchase (and for the purposes of this subdivision (b), all 
    employee benefit plans maintained by the same employer or employee 
    organization are deemed to be a single plan), or (ii) such separate 
    account contains only the assets of a specific employee benefit plan, the 
    identity of which you have delivered to the Company in writing; or

        (c)  if you are a "qualified professional asset manager" or 
    "QPAM" (as defined in Part V of Prohibited Transaction Class Exemption 
    84-14, issued March 13, 1984 (the "QPAM Exemption")), all of such funds 
    constitute assets of an "investment fund" (as defined in Part V of the 
    QPAM Exemption) managed by you, no employee benefit plan assets which are 
    included in such investment fund, when combined with the assets of all 
    other employee benefit plans (i) established or maintained by the same 
    employer or an affiliate (as defined in Part V of the QPAM Exemption) of 
    such employer or by the same employee organization and (ii) managed by 
    you, exceed 20% of the total client assets managed by you, the conditions 
    of the QPAM Exemption  (other than Section I(a) thereof) are satisfied 
    and you have disclosed to the Company the names of all employee benefit 
    plans whose assets are included in such investment fund; or

        (d)  if you are other than an insurance company, all or a portion of 
    such funds consists of funds which do not constitute assets of any 
    employee benefit plan (other than a governmental plan exempt from the 
    coverage of ERISA) and the remaining portion, if any, of such funds 
    consists of funds which may be deemed to constitute assets of one or more 
    specific employee benefit plans, accurate information as to the identity 
    of which you have delivered to the Company in writing; or

        (e)  if you are an insurance company, the source of the funds is an 
    insurance company general account in respect of which the reserves and 
    liabilities for the general account contract(s) held by or on behalf of 
    any benefit plan (as defined by the annual statement for life insurance 
    companies approved by the National Association of Insurance Commissioners 
    (the "NAIC Annual Statement"), determined before reduction for credits 
    on account of any reinsurance ceded on a coinsurance basis) together with 
    the amount of the reserves and liabilities for the general account 
    contract(s) held by or on behalf of any other benefit plans (as defined 
    by the NAIC 

                                      18

<PAGE>

    Annual Statement) maintained by the same employer (or affiliate thereof 
    as defined in Prohibited Transaction Class Exemption 95-60) or by the 
    same employee organization (as defined by the NAIC Annual Statement) 
    in the general account do not exceed 10% of the total reserves and 
    liabilities of the general account (exclusive of separate account 
    liabilities) plus surplus as set forth in the NAIC Annual Statement 
    filed with the state of domicile of the insurance company.

As used in this Section 6.2, the terms "employee benefit plan", 
"governmental plan" and "separate account" shall have the respective 
meanings assigned to such terms in Section 3 of ERISA.

SECTION 7.     ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION.

        The Company will maintain, and will cause each Restricted Subsidiary 
to maintain, a system of accounting established and administered in 
accordance with GAAP, and will accrue, and will cause each Restricted 
Subsidiary to accrue, all such liabilities as shall be required by GAAP.  The 
Company will deliver (in duplicate, unless you have advised us otherwise) to 
you (and, in the case of subsection (f) hereof, to the Trustee), so long as 
you shall be entitled to purchase Notes under this Agreement or you or your 
nominee shall be the holder of any Notes, and to each other Institutional 
Investor holding any Notes (other than a Competitor of the Company):

        (a)  as soon as practicable, but in any event within 60 days after 
    the end of each of the first three quarterly fiscal periods in each 
    fiscal year of the Company beginning with the fiscal period ending 
    December 31, 1998, consolidated (and to the extent that such are being 
    prepared, consolidating) balance sheets of the Company and the Restricted 
    Subsidiaries as at the end of such period and the related consolidated 
    (and, as to statements of income and cash flows, if applicable and, to 
    the extent that such are being prepared, consolidating) statements of 
    income, surplus or partners' capital, cash flows and stockholders' equity 
    of the Company and the Restricted Subsidiaries (i) for such period and 
    (ii) (in the case of the second and third quarterly periods) for the 
    period from the beginning of the current fiscal year to the end of such 
    quarterly period, setting forth in each case in comparative form the 
    consolidated and, where applicable and as appropriate, consolidating 
    figures for the corresponding periods of the previous fiscal year, all in 
    reasonable detail and certified by an authorized financial officer of the 
    Managing General Partner as presenting fairly, in all material respects, 
    the information contained therein (subject to changes resulting from 
    normal year-end adjustments), in accordance with GAAP applied on a basis 
    consistent with prior fiscal periods, PROVIDED that delivery within the 
    time period specified above of copies of the Public Partnership's 
    Quarterly Report on Form 10-Q prepared in compliance with the 
    requirements therefor and filed with the Securities and Exchange 
    Commission shall be deemed to satisfy the requirements hereof to the 
    extent such reports otherwise satisfy the requirements of this Section 
    7(a);

                                      19

<PAGE>


        (b)  as soon as practicable, but in any event within 120 days after 
    the end of each fiscal year of the Company beginning with the fiscal year 
    ending June 30, 1999, consolidated (and to the extent that such are being 
    prepared, consolidating) balance sheets of the Company and the Restricted 
    Subsidiaries as at the end of such year and the related consolidated 
    (and, as to statements of income and cash flows, if applicable and to the 
    extent that such are being prepared, consolidating) statements of income, 
    partners' capital, cash flows and stockholders' equity of the Company and 
    the Restricted Subsidiaries for such fiscal year, setting forth in each 
    case in comparative form the consolidated and, where applicable and, to 
    the extent that such are being prepared, consolidating figures for the 
    previous fiscal year, all in reasonable detail, PROVIDED that delivery 
    within the time periods specified above of copies of the Public 
    Partnership's Annual Report on Form 10-K prepared in compliance with the 
    requirements therefor and filed with the Securities and Exchange 
    Commission shall be deemed to satisfy the requirements hereof to the 
    extent such reports otherwise satisfy such requirements, and accompanied 
    by a report thereon of Arthur Andersen LLP or other independent public 
    accountants of recognized national standing selected by the Company, 
    which report shall state that such consolidated financial statements 
    present fairly in all material respects the financial position of the 
    Company and the Restricted Subsidiaries as at the dates indicated and the 
    results of their operations and cash flows for the periods indicated in 
    conformity with GAAP applied on a basis consistent with prior years and 
    that the audit by such accountants in connection with such consolidated 
    financial statements has been made in accordance with generally accepted 
    auditing standards in effect in the United States from time to time, and 
    (ii) in the case of such consolidating financial statements of the 
    Company, if any, certified by an authorized financial officer of the 
    Managing General Partner of the Company, as presenting fairly in all 
    material respects the information contained therein, in accordance with 
    GAAP applied on a basis consistent with prior fiscal periods;

        (c)  together with each delivery of financial statements pursuant to 
    subdivisions (a) and (b) of this Section 7, a certificate by an 
    authorized financial officer of the Managing General Partner of the 
    Company (i) stating that the signer has reviewed the terms of this 
    Agreement and the other Operative Agreements and has made, or caused to 
    be made under his or her supervision, a review in reasonable detail of 
    the transactions and condition of the Company and the Restricted 
    Subsidiaries during the accounting  period covered by such financial 
    statements and that the signer does not have knowledge of the existence 
    and continuance as at the date of such certificate of any condition or 
    event which constitutes an Event of Default or Potential Event of 
    Default, or, if any such condition or event exists, specifying the nature 
    and period of existence thereof and what action the Company has taken or 
    is taking or proposes to take with respect thereto, (ii) specifying the 
    amount available at the end of such accounting period for Restricted 
    Payments in compliance with Section 10.4 and showing in reasonable detail 
    all calculations required in arriving at such amount, (iii) demonstrating 
    in reasonable detail, if applicable,  compliance during and at the 

                                      20

<PAGE>

    end of such accounting period with the restrictions contained in Sections 
    10.1(b), (d), (e), (f), (g), (h), (i), (j), (p), (q) and (r), 10.3(c), 
    10.7(a)(ii), 10.7(a)(iii), and 10.7(c)(ii), and (iv) if not specified in 
    the related financial statements being delivered pursuant to subdivisions 
    (a) and (b) above, specifying the aggregate amount of interest paid or 
    accrued by the Company and the Restricted Subsidiaries, and the aggregate 
    amount of depreciation, depletion and amortization charged on the books 
    of the Company and the Restricted Subsidiaries, during the fiscal period 
    covered by such financial statements;

        (d)  together with each delivery of consolidated financial statements 
    pursuant to subdivision (b) of this Section 7, a written statement by the 
    independent public accountants giving the report thereon (i) stating that 
    in connection with their audit examination, the terms of this Agreement 
    and the other Operative Agreements were reviewed to the extent considered 
    necessary for the purpose of expressing an opinion on the consolidated 
    financial statements and for making the statement contained in clause 
    (ii) hereof (it being understood that no special audit procedures in 
    addition to those required by generally accepted auditing standards then 
    in effect in the United States shall be required) and (ii) stating 
    whether, in the course of their audit examination, they obtained 
    knowledge (and whether, as of the date of such written statement, they 
    have knowledge) of the existence and continuance of any condition or 
    event which constitutes an Event of Default or Potential Event of Default 
    insofar as such Event of Default or Potential Event of Default relates to 
    accounting or financial matters, and, if so, specifying the nature and 
    period of existence thereof;

        (e)  promptly upon their becoming publicly available, copies of (i) 
    all financial statements, reports, notices and proxy statements sent or 
    made available by the Company, the Managing General Partner or the Public 
    Partnership to all of its security holders in compliance with the 
    Securities Exchange Act of 1934, as amended from time to time, or any 
    comparable Federal or state laws relating to the disclosure by any Person 
    of information to its security holders, (ii) all regular and periodic 
    reports and all registration statements and prospectuses filed by the 
    Company, the Managing General Partner or the Public Partnership with any 
    securities exchange or with the Securities and Exchange Commission or any 
    governmental authority succeeding to any of its functions (other than 
    Registration Statements on Form S-8), and (iii) all press releases and 
    other statements made available by the Company, the Managing General 
    Partner or the Public Partnership to the public concerning material 
    developments in the business of the Company, either General Partner of 
    the Company or the Public Partnership, as the case may be;

        (f)  promptly, but in any event within five days after any 
    Responsible Officer of the Company knows, that (x) any condition or event 
    which constitutes an Event of Default or Potential Event of Default has 
    occurred or exists, or is expected to occur or exist, (y) the holder of 
    any Note has given any notice or taken any other action with 

                                      21

<PAGE>

    respect to a claimed Event of Default or Potential Event of Default under 
    this Agreement or default under any other Operative Agreement or (z) any 
    Person has given any notice to the Company, either General Partner or any 
    Restricted Subsidiary or taken any other action with respect to a claimed 
    default or event or condition of the type referred to in Section 11(f), 
    an Officers' Certificate of the Company describing the same and the 
    period of existence thereof and what action the Company has taken, is 
    taking and proposes to take with respect thereto;

        (g)  promptly, and in any event within five Business Days after a 
    Responsible Officer of the Company obtains knowledge of (i) the 
    occurrence of an adverse development with respect to any litigation or 
    proceeding involving the Company, any of its Subsidiaries or either 
    General Partner which in the reasonable judgment of the Company presents 
    a reasonable likelihood of having a Material Adverse Effect or (ii) the 
    commencement of any litigation or proceeding involving the Company, any 
    of the Subsidiaries or either General Partner which in the reasonable 
    judgment of the Company presents a reasonable likelihood of having a 
    Material Adverse Effect, a written notice of a Responsible Officer 
    describing in reasonable detail such commencement of, or adverse 
    development with respect to, such litigation or proceeding;

        (h)  promptly, but in any event within five days after any 
    Responsible Officer of the Company knows, that any of the events or 
    conditions specified below with respect to any Plan has occurred or 
    exists, or is expected to occur or exist, a statement setting forth 
    details respecting such event or condition and the action, if any, that 
    the Company or any Related Person of the Company has taken, is taking and 
    proposes to take or cause to be taken with respect thereto (and a copy of 
    any notice or report filed with or given to or communication received 
    from the PBGC, the Internal Revenue Service or the Department of Labor 
    with respect to such event or condition):

                (A)  any reportable event, as defined in Section 4043(b) of 
        ERISA and the regulations issued thereunder (other than one for which 
        the applicable notice requirements have been waived by PBGC 
        regulation);

                (B)  the filing under Section 4041 of ERISA of a notice of 
        intent to terminate any Plan or the termination of any Plan;

                (C)  a substantial cessation of operations within the meaning 
        of Section 4062(e) of ERISA under circumstances which could result in 
        the treatment of the Company or any Related Person of the Company as 
        a substantial employer under a "multiple employer plan" or the 
        application of the provisions of Section 4062, 4063 or 4064 of ERISA 
        to the Company or any Related Person of the Company;

                                      22

<PAGE>


                (D)  the taking of any steps by the PBGC or the institution 
        by the PBGC of proceedings under Section 4042 of ERISA for the 
        termination of, or the appointment of a trustee to administer, any 
        Plan, or the receipt by the Company or any Related Person of the 
        Company of a notice from a Multiemployer Plan that such action has 
        been taken by the PBGC with respect to such Multiemployer Plan;

                (E)  the complete or partial withdrawal by the Company or any 
        Related Person of the Company under Section 4063, 4203 or 4205 of 
        ERISA from a Plan which is a "multiple employer plan" or a 
        Multiemployer Plan, or the receipt by the Company or any Related 
        Person of the Company of notice from a Multiemployer Plan regarding 
        any alleged withdrawal or that it intends to impose withdrawal 
        liability on the Company or any Related Person of the Company or that 
        it is in reorganization or is insolvent within the meaning of Section 
        4241 or 4245 of ERISA or that it intends to terminate under Section 
        4041A of ERISA or from a "multiple employer plan" that it intends 
        to terminate;

                (F)  the taking of any steps concerning the threat or the 
        institution of a proceeding against the Company or any Related Person 
        of the Company to enforce Section 515 of ERISA;

                (G)  the occurrence or existence of any event or series of 
        events which could result in a material liability to the Company or 
        any Related Person of the Company pursuant to Section 4069(a) or 
        4212(c) of ERISA;

                (H)  the failure to make a contribution to any Plan, which 
        failure, either alone or when taken together with any other such 
        failure, is sufficient to result in the imposition of a lien on any 
        property of the Company or any Related Person of the Company pursuant 
        to Section 302(f) of ERISA or Section 412(n) of the Code or could 
        result in the imposition of a material tax or material penalty 
        pursuant to Section 4971 of the Code on the Company or any Related 
        Person of the Company;

                (I)  the amendment of any Plan in a manner which would be 
        treated as a termination of such Plan under Section 4041(e) of ERISA 
        or require the Company or any Related Person of the Company to 
        provide security to such Plan pursuant to Section 307 of ERISA or 
        Section 401(a)(29) of the Code; or

                (J)  the incurrence of liability in connection with the 
        occurrence of a "prohibited transaction" (within the meaning of 
        Section 406 of ERISA or Section 4975 of the Code);

        (i)  promptly, but in any event within five days, after an officer of 
    any of the Company, any Subsidiary or either General Partner receives any 
    notice or request from any Person (other than any Affiliate or any agent, 
    attorney or similar party

                                      23


<PAGE>

    employed by the Company or either General Partner) for information, or if 
    the Company, any Subsidiary or either General Partner provides any notice 
    or information to any such Person (other than any Affiliate or any agent, 
    attorney or similar party employed by the Company or either General 
    Partner), concerning the presence or release of any hazardous substance 
    (as defined in CERCLA) or hazardous waste (as defined in RCRA) or other 
    contaminants (as defined by any applicable federal, state, local or 
    foreign laws) within, on, from, relating to or affecting any property 
    owned, leased, or subleased by the Company, any Subsidiary or either 
    General Partner (each such notice, request or information, an 
    "Environmental Notice"), copies of such Environmental Notice, except 
    (i) any Environmental Notice which the Company reasonably determines will 
    not result in any claim or liability in excess of $250,000 (it being 
    understood that to the extent that all such Environmental Notices could 
    reasonably be expected to result in aggregate claims or liabilities in 
    excess of $250,000, the Company shall provide a summary of such 
    Environmental Notices) and (ii) any Environmental Notice made in the 
    normal course of business which does not pertain to the violation by the 
    Company, any Subsidiary or either General Partner of an Environmental Law;

        (j)  with reasonable promptness, such other financial reports and 
    information and data (including, without limitation, any management 
    letter issued or provided by independent public accountants of the 
    Company or any Restricted Subsidiary) with respect to the Company, any 
    Restricted Subsidiary, any other Subsidiary (to the extent such reports, 
    information and data relate to environmental matters or any material 
    litigation or proceeding) or either General Partner as from time to time 
    may be requested by you (so long as you hold a Note), or by any 
    Institutional Investor holder of any Note other than a Competitor of the 
    Company;

        (k)  promptly after a Responsible Officer of the Company or any 
    Restricted Subsidiary becomes aware of (i) any material violation of or 
    notice of potential liability under any Environmental Law or (ii) any 
    release or threatened release of any Hazardous Material at, on, into, 
    under or from any real property of any facility or equipment thereat in 
    excess of reportable or allowable standards or levels under any 
    Environmental Law, or in a manner and/or amount which could reasonably be 
    expected to result in liability under any Environmental Law, which 
    liability would result in a Material Adverse Effect, a statement setting 
    forth details respecting such event or condition and the action, if any, 
    that the Company or any Restricted Subsidiary of the Company has taken, 
    is taking and proposes to take or cause to be taken with respect thereto; 
    and

        (l)  promptly, and, in any event, within 30 days after such material 
    is provided to the governmental authority or third party, copies of any 
    notice, submission or documentation provided by the Company or any 
    Restricted Subsidiary to any governmental authority or third party under 
    any Environmental Law if the matter 

                                      24

<PAGE>

    which is the subject of the notice, submission or other documentation 
    could reasonably be expected to have a Material Adverse Effect.

SECTION 8.     INSPECTION.

        The Company will permit or cause the Managing General Partner to 
permit (a) at any time when an Event of Default or Potential Event of Default 
shall have occurred and be continuing, any authorized representatives 
designated by you, so long as you shall be entitled to purchase the Notes 
under this Agreement or you or your nominee shall be the holder of any Notes, 
or by any other Institutional Investor that is a holder of any Notes (other 
than a Competitor of the Company), and (b) at any other time, any authorized 
representative designated by any Purchaser or Purchasers  holding at least 
4.5% of the aggregate principal amount of the Notes, or by any other holder 
or holders of at least 4.5% of the aggregate principal amount of the Notes 
(other than a Competitor of the Company) then outstanding and an authorized 
representative of all of the holders of the Notes, in each case, upon prior 
written notice and as may be reasonably requested, to visit during normal 
business hours and inspect any of the properties of the Company, any 
Restricted Subsidiary and any other Subsidiary (to the extent relating to 
environmental or litigation matters) and, to the extent relating to the 
Business, any properties of either General Partner or of either General 
Partner's Subsidiaries, including the books of account of the Company, the 
Restricted Subsidiaries, such other Subsidiaries, either General Partner and 
either General Partner's Subsidiaries, and to make copies and take extracts 
therefrom, and to discuss its and their affairs, finances and accounts with 
its and their senior officers and (with reasonable prior written notice) 
independent public accountants (and by this provision each of the Company and 
either General Partner authorizes such accountants to discuss with such 
representatives the affairs, finances and accounts of the Company, any 
Restricted Subsidiary, such other Subsidiaries), and, to the extent relating 
to the Business, either General Partner or any of either General Partner's 
Subsidiaries, as the case may be) all at such times and as often as may be 
requested, PROVIDED that you shall bear the expenses of your authorized 
representative, except the Company will bear the expenses of such authorized 
representatives if an Event of Default or Potential Event of Default has 
occurred and is continuing; and the Company shall at all times bear the 
expenses of its and its Affiliates' officers and independent public 
accountants.

SECTION 9.     PREPAYMENT OF NOTES.

        9.1. REQUIRED PREPAYMENTS OF THE NOTES.  On each of the dates set 
forth in the following table, the Company will prepay the principal amount of 
the Notes set forth opposite such date in such table (or such lesser 
principal amount of the Notes as shall at the time be outstanding), at the 
principal amount of the Notes so prepaid, without premium, together with 
interest accrued thereon:

                                      25

<PAGE>

<TABLE>
<CAPTION>
                                          Principal Amount
                 Date of Prepayment         of Prepayment
                 ----------------------   -----------------
                 <S>                     <C>
                  January 31, 2005        $9,444,444.44
                  January 31, 2006        $9,444,444.44
                  January 31, 2007        $9,444,444.44
                  January 31, 2008        $9,444,444.44
                  January 31, 2009        $9,444,444.44
                  January 31, 2010        $9,444,444.44
                  January 31, 2011        $9,444,444.44
                  January 31, 2012        $9,444,444.44

</TABLE>

        Any partial prepayment of the Notes pursuant to Section 9.2, 9.3 or 
(to the extent not applied to satisfy a prepayment required under this 
Section 9.1) 9.4 shall be applied to reduce each prepayment thereafter 
required to be made pro rata, but otherwise no acquisition of the Notes by 
the Company or any of its Affiliates, shall relieve the Company from its 
obligation to make the required prepayments provided for in this Section 9.1. 
 The Company shall notify the holders of the Notes of any application 
provided for in the immediately preceding sentence five days prior to such 
application.  On the maturity date, the Company will pay the then outstanding 
principal amount of the Notes together with interest accrued thereon.

        9.2. OPTIONAL PREPAYMENTS OF THE NOTES WITH MAKE WHOLE AMOUNT.  The 
Notes shall be subject to prepayment, in whole at any time or from time to 
time in part (in an amount of not less than $5,000,000), at the option of the 
Company, upon notice as provided in Section 9.5 at 100% of the principal 
amount of the Notes so prepaid plus interest accrued thereon to the 
prepayment date and the Make Whole Amount.

        9.3. PREPAYMENT ON CHANGE OF CONTROL.  (a)  The Company will, within 
90 days after any Change of Control give written notice of such Change of 
Control to each holder of Notes.  Such notice shall contain and constitute an 
offer to prepay the Notes as described in subdivision (b) of this Section 9.3 
and shall be accompanied by the certificate described in subdivision (e) of 
this Section 9.3.

        (b)  The offer to prepay Notes contemplated by subdivision (a) of 
this Section 9.3 shall be an offer to prepay, in accordance with and subject 
to this Section 9.3, all, but not less than all, the Notes held by each 
holder (in this case only, "holder" in respect of any Note registered in 
the name of a nominee for a disclosed beneficial owner shall mean such 
beneficial owner) on the Business Day specified in such offer (the "Proposed 
Prepayment Date") that is not less than 20 days and not more than 30 days 
after the date of such offer (if the Proposed Prepayment Date shall not be 
specified in 

                                      26

<PAGE>

such offer, the Proposed Prepayment Date shall be the 20th day after the date 
of such offer).

        (c)  A holder of Notes may accept the offer to prepay made pursuant 
to this Section 9.3 by causing a notice of such acceptance to be delivered to 
the Company at least 5 days prior to the Proposed Prepayment Date.  A failure 
by a holder of Notes to respond to an offer to prepay made pursuant to this 
Section 9.3 shall be deemed to constitute a rejection of such offer by such 
holder.

        (d)  Prepayment of the Notes to be prepaid pursuant to this Section 
9.3 shall be at 100% of the principal amount of such Notes, plus a premium 
equal to 1% of such principal amount (the "Premium Amount"), together with 
interest on such Notes accrued to the date of prepayment.  The principal 
amount and accrued interest and the Premium Amount shall, with respect to all 
Notes the holders of which accepted the offer to prepay pursuant to 
subdivision (c), become due and payable on the Proposed Prepayment Date.

        (e)  Each offer to prepay the Notes pursuant to this Section 9.3 
shall be accompanied by a certificate, executed by a senior financial officer 
of the Managing General Partner and dated the date of such offer, specifying: 
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to 
this Section 9.3; (iii) the principal amount of each Note offered to be 
prepaid; (iv) the Premium Amount due on each Note in connection with such 
prepayment; (v) the interest that would be due on each Note offered to be 
prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of 
this Section 9.3 have been fulfilled; (vii) in reasonable detail, the nature 
and date of the Change of Control; and (viii) that a failure to respond to 
such notice shall be deemed a rejection of such offer to prepay the Notes.

        9.4. CONTINGENT PREPAYMENTS ON DISPOSITION OF PROPERTY, TAKING OR 
DESTRUCTION.  (a)  If at any time the Company or any of the Restricted 
Subsidiaries disposes of property or such property shall be damaged, 
destroyed or taken in eminent domain or there shall be insurance proceeds 
with respect to such property, in any such case, with the result that there 
are Excess Proceeds, and the Company does not apply such Excess Proceeds in 
the manner described in Section 10.7(c)(ii)(B)(x), and if the next scheduled 
date of prepayment of the Notes pursuant to Section 9.1 occurs within 365 
days after receipt of such Excess Proceeds, such Excess Proceeds may be 
applied to such prepayment required under Section 9.1 (unless such scheduled 
prepayment has been paid by the Company).  To the extent that there are such 
Excess Proceeds remaining after application in accordance with the first 
sentence of this Section 9.4(a), the Company shall prepay, upon notice as 
provided in Section 9.5 (which notice shall be given not later than 365 days 
after the date of such sale of property), a principal amount of the 
outstanding Notes equal to the amount of such remaining Excess Proceeds 
allocable to the Notes, determined by allocating such remaining Excess 
Proceeds pro rata among the holders of all Notes and Parity Debt, if any, 
outstanding on the date such prepayment is to be made, according to the 
aggregate then unpaid principal amounts of the Notes (and the Make 

                                      27

<PAGE>

Whole Amount on the principal amount of the Notes to be prepaid) and Parity 
Debt, respectively.  Each prepayment of Notes pursuant to this Section 9.4(a) 
shall be made at 100% of the principal amount of the Notes to be prepaid, 
plus interest thereon to the prepayment date plus, to the extent the 
prepayment is not made in satisfaction of a required prepayment in accordance 
with Section 9.1, the Make Whole Amount thereon.

        (b)  In the event that damage, destruction or a taking shall occur in 
respect of all or a portion of the properties subject to any of the Security 
Documents, all net insurance proceeds, self-insurance amounts or net awards 
which, as of any date, shall not theretofore have been applied to the cost of 
repairing or replacing any damaged or destroyed assets shall be deemed to be 
proceeds of property disposed of voluntarily, shall be subject to the 
provisions of Section 10.7(c) and, if subdivision (ii)(B)(y) of Section 
10.7(c) is applicable thereto, shall be subject to the prepayment provisions 
of Section 9.4(a).  Any amounts prepaid pursuant to this Section 9.4(b) on 
the date on which a prepayment is required under Section 9.1 may be applied 
to satisfy such prepayment required under Section 9.1.

        9.5. NOTICE OF PREPAYMENTS; OFFICERS' CERTIFICATE.  The Company will 
give each holder of any Notes and the Trustee irrevocable written notice of 
each prepayment under Section 9.2 or 9.4 not less than 10 days and not more 
than 30 days prior to the Business Day, fixed for such prepayment, in each 
case specifying such prepayment date, the aggregate principal amount of the 
Notes and the principal amount of each Note held by such holder to be prepaid 
and the Section under which such prepayment is to be made.  Notice of 
prepayment having been given as aforesaid, the principal amount of the Notes 
specified in such notice, together with interest thereon to the prepayment 
date and together with the Make Whole Amount, if any, with respect thereto, 
shall become due and payable on such prepayment date.  The Company shall, on 
or before the Business Day next succeeding the date which the Company sends 
such written notice, give telephonic notice (immediately followed by written 
notice sent by facsimile transmission) of the principal amount of the Notes 
to be prepaid and the prepayment date to each holder of any Notes which shall 
have designated a recipient of such notices in the Schedule of Purchasers 
attached hereto or by notice in writing to the Company.  Each holder of a 
Note and the Trustee shall receive, on the Business Day immediately preceding 
the date scheduled for any such prepayment, an Officers' Certificate 
certifying that the conditions of the Section under which such prepayment is 
to be made have been fulfilled and specifying the particulars of such 
fulfillment.  In the event that there shall have been a partial prepayment of 
the Notes under Section 9.2, 9.3 or 9.4, the Company shall promptly give 
notice to the holders of the Notes, accompanied by an Officers' Certificate 
setting forth the principal amount of each of the Notes that was prepaid and 
specifying how each such amount was determined, setting forth the reduced 
amount of each required prepayment thereafter becoming due with respect to 
the Notes under Section 9.1, and certifying that such reduction has been 
computed in accordance with such Section.

                                      28

<PAGE>

        9.6. ALLOCATION OF PARTIAL PREPAYMENTS.  Upon any partial prepayment 
of the Notes pursuant to Section 9.1, 9.2 or 9.4 the principal amount so 
prepaid shall be allocated (in integral multiples of $1,000 as nearly as 
practicable) to all Notes at the time outstanding in proportion to the 
respective outstanding principal amounts thereof not theretofore called for 
prepayment, with adjustments, to the extent practicable, to compensate for 
any prior prepayments not made exactly in such proportion.

        9.7. MATURITY; SURRENDER, ETC.  In the case of each prepayment, the 
principal amount of each Note to be prepaid shall mature and become due and 
payable on the date fixed for such prepayment, together with interest on such 
principal amount accrued to such date and the applicable Make Whole Amount or 
Premium Amount, if any.  From and after such date, unless the Company shall 
fail to pay such principal amount when so due and payable, together with the 
interest and Make Whole Amount or Premium Amount, if any, as aforesaid, 
interest on such principal amount shall cease to accrue.  Any Note paid or 
prepaid in full shall, after such payment or prepayment in full, be 
surrendered to the Company and canceled and shall not be reissued, and no 
Note shall be issued in lieu of any such paid or prepaid principal amount of 
any Note.

        9.8. ACQUISITION OF NOTES.  None of the General Partners or the 
Company shall, nor shall any permit any of their respective Subsidiaries or 
any Restricted Affiliate to, prepay or otherwise retire in whole or in part 
prior to their stated final maturity (other than by prepayment pursuant to 
Section 9.1, 9.2, 9.3 or 9.4 or upon acceleration of such final maturity 
pursuant to Section 11), or purchase or otherwise acquire, directly or 
indirectly, Notes held by any holder, except, in the case of such purchase or 
acquisition, pursuant to an offer to purchase made pro rata to the holders of 
all of the Notes on the same terms and conditions.  Any Notes prepaid or 
otherwise retired or purchased or otherwise acquired by the Company or any of 
its Subsidiaries or either General Partner shall not be deemed to be 
outstanding for any purpose under this Agreement or any other Operative 
Agreement.  Any Notes prepaid or otherwise purchased or otherwise acquired by 
any Affiliate of the Company (other than any of its Subsidiaries or either 
General Partner) shall not be deemed outstanding for the purpose of any vote 
of the holders of the Notes (including, without limitation, the calculation 
of any percentage of principal amount of the Notes outstanding with respect 
to any such vote) pursuant to this Agreement or any other Operative Agreement 
but shall be deemed outstanding with respect to the calculation of any future 
payment of principal, premium and interest on the Notes.

SECTION 10.    BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY.

        The Company covenants that from the date of this Agreement through 
the Closing and thereafter so long as any of the Notes are outstanding:

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<PAGE>

        10.1.     INDEBTEDNESS.  The Company will not, and will not permit 
any Restricted Subsidiary to, directly or indirectly, create, incur, assume 
or suffer to exist (such condition to be satisfied only on the date of such 
incurrence) with respect to, any Indebtedness, except that:

        (a)  the Company may become and remain liable with respect to the 
    Indebtedness evidenced by the Notes;

        (b)  the Company and the Restricted Subsidiaries may become and 
    remain liable with respect to Indebtedness, which may be secured equally 
    and ratably with the Notes, incurred by the Company and the Restricted 
    Subsidiaries to finance the making of expenditures for the improvement or 
    repair of or additions to their respective properties or assets, PROVIDED 
    that (i) the aggregate principal amount of Indebtedness incurred under 
    this Section 10.1(b) and outstanding at any time shall not exceed an 
    amount equal to the sum of (x) the net cash proceeds received by the 
    Company from the Managing General Partner or from the Public Partnership 
    as a capital contribution or as consideration for the issuance by the 
    Company of additional partnership interests, in each case for the sole 
    purpose of financing such expenditures, and (y) the fair market value of 
    the Units contributed to the Company by the Public Partnership or issued 
    directly to the Person selling such asset or making such repair or 
    improvement by the Public Partnership for the sole purpose of financing 
    such expenditures, only to the extent, however, that such Units are used 
    to pay, substantially concurrently with the date of contribution, at 
    least 50% of  the purchase price or cost of such improvements, repairs or 
    additions, and (ii) if such Indebtedness is to be secured under the 
    Security Documents as provided in Section 10.2(i), the agreement or 
    instrument pursuant to which such Indebtedness is incurred (A) contains 
    no financial or business covenants that are more restrictive on the 
    Company or its Subsidiaries than or that are in addition to those 
    contained in this Section 10 (unless prior to or simultaneously with the 
    incurrence of such Indebtedness this Agreement and the Other Agreements 
    are amended to provide the benefits of such more restrictive covenants to 
    the holders of the Notes) and (B) specifies no events of default (other 
    than with respect to the payment of principal and interest on such 
    Indebtedness or the accuracy of representations and warranties made in 
    connection with such agreement or instrument) which are capable of 
    occurring prior to the occurrence of the Events of Default specified in 
    Section 11 (unless prior to or simultaneously with the incurrence of such 
    Indebtedness this Agreement and the Other Agreements are amended to 
    provide the benefit of such events of default to the holders of the 
    Notes);

        (c)  any Restricted Subsidiary may become and remain liable with 
    respect to Indebtedness of such Restricted Subsidiary owing to the 
    Company or to another Restricted Subsidiary, PROVIDED that such 
    Indebtedness is created and is outstanding under an agreement or 
    instrument pursuant to which such Indebtedness is 

                                      30

<PAGE>

    subordinated to the Notes and to Indebtedness secured under the Security 
    Documents at least to the extent provided in the subordination provisions 
    set forth in Exhibit D and PROVIDED FURTHER that such Indebtedness is 
    evidenced by an Intercompany Note pledged to the Trustee;

        (d)  the Company and the Restricted Subsidiaries may become and 
    remain liable with respect to unsecured Indebtedness owing to either 
    General Partner or an Affiliate of either General Partner, PROVIDED that 
    (i) the aggregate principal amount of such Indebtedness of the Company 
    and the Restricted Subsidiaries outstanding at any time shall not be in 
    excess of $20,000,000 and (ii) such Indebtedness is created and is 
    outstanding under an agreement or instrument pursuant to which such 
    Indebtedness is subordinated to the Notes and to Indebtedness secured 
    under the Security Documents at least to the extent provided in the 
    subordination provisions set forth in Exhibit D;

        (e)  the Company may become and remain liable with respect to 
    Indebtedness incurred under the Bank Credit Facilities, PROVIDED that

                (i)  the aggregate principal amount outstanding under the 
        Initial Acquisition Facility, together with amounts outstanding 
        pursuant to Indebtedness permitted by subdivisions (h)(3)(i) and 
        (j)(x)(i) of this Section 10.1, will be in an aggregate principal 
        amount not in excess of the greater of (i) $35,000,000, and (ii) 40% 
        of the Consolidated Net Worth of the Company as of the date of 
        incurrence of the Indebtedness outstanding at any time, and

                (ii) in respect of the Working Capital Facility:

                        (1)  there shall be a period of at least 30 
                consecutive days during each fiscal year of the Company on 
                each day of which there shall be no such Indebtedness 
                outstanding under the Working Capital Facility (the 
                "Requisite Period"), PROVIDED that, in the event that there 
                shall not have been any Requisite Period in any fiscal year, 
                the lowest average balance for a period of 30 consecutive 
                days outstanding during such fiscal year shall be treated as 
                outstanding funded Indebtedness for purposes of future 
                incurrences of Indebtedness pursuant to Section 10.1(f)(iii), 
                and

                        (2)  the aggregate principal amount of loans, 
                exposure under letters of credit in respect of the Working 
                Capital Facility and the unfunded commitments thereunder at 
                any time outstanding thereunder shall not be in excess of 
                $75,000,000 plus the excess, if any, of (x) Consolidated Cash 
                Flow over (y) $53,000,000;

        (f)  the Company and the Restricted Subsidiaries may become and 
    remain liable with respect to Indebtedness, in addition to that otherwise 
    permitted by the other subdivisions of this Section 10.1, which may be 
    secured equally and ratably 

                                      31

<PAGE>

    with the Notes, if on the date the Company or any Restricted Subsidiary 
    becomes liable with respect to any such additional Indebtedness and 
    immediately after giving effect thereto and to the substantially 
    concurrent repayment of any other Indebtedness (i) the ratio of 
    Consolidated Cash Flow to Consolidated Pro Forma Debt Service is greater 
    than (x) 2.25 to 1.0 for Incurrence Dates on or prior to June 30, 2000 
    and (y) 2.50 for Incurrence Dates after June 30, 2000, (ii) the ratio of 
    Consolidated Cash Flow to Maximum Consolidated Pro Forma Debt Service is 
    greater than 1.25 to 1.0, and (iii) the ratio of total funded 
    Indebtedness (including the Indebtedness to be incurred) to Consolidated 
    Cash Flow is less than (x) 5.25 to 1.0 for Incurrence Dates on or prior 
    to June 30, 2000 and (y) 5.0 to 1.0 for Incurrence Dates after June 30, 
    2000, PROVIDED that, in addition to the foregoing, if such Indebtedness 
    is to be secured under the Security Documents as provided in Section 
    10.2(i), such Indebtedness shall be incurred pursuant to an agreement or 
    instrument which complies with the requirements set forth in clause (ii) 
    of the proviso to Section 10.1(b);

        (g)  the Company and the Restricted Subsidiaries may become and 
    remain liable with respect to the Indebtedness referred to in Schedule 
    5.7 to the 1996 Note Agreements, PROVIDED that the aggregate principal 
    amount of all such Indebtedness at any time outstanding shall not exceed 
    $15,000,000;

        (h)  the Company and any Restricted Subsidiary may become and remain 
    liable with respect to pre-existing Indebtedness relating to any Person, 
    business or assets acquired by the Company or such Restricted Subsidiary, 
    or both, as the case may be, PROVIDED that (1)  no condition or event 
    shall exist which constitutes an Event of Default or Potential Event of 
    Default, (2) such Indebtedness was not incurred in anticipation of the 
    acquisition of such Person, business or assets and (3) after giving 
    effect to such Person becoming a Restricted Subsidiary, or the 
    acquisition of such business or assets, either (i) the sum of (A) such 
    Indebtedness, and (B) the then outstanding aggregate principal amount of 
    Indebtedness under the Initial Acquisition Facility, and under 
    subdivision (j)(i) of this Section 10.1, does not exceed the greater of 
    (A) $35,000,000 and (B) 40% of the Consolidated Net Worth of the Company 
    as of the date of the incurrence of the Indebtedness, or (ii) the Company 
    or such Restricted Subsidiary could incur at least $1 of additional 
    Indebtedness in compliance with the requirements set forth in clauses 
    (i), (ii) and (iii) of Section 10.1(f) (it being understood for purposes 
    of this Section 10(h) and Section 10.1(e)(i) that any Indebtedness which 
    on the date of acquisition of any Person, business or assets could be 
    incurred under the foregoing clause (i) or (ii) of this Section 10.1(h) 
    shall be deemed to have been incurred under clause (ii) of this Section 
    10.1(h));

        (i)  so long as no Event of Default or Potential Event of Default has 
    occurred and is continuing, the Company and the Restricted Subsidiaries 
    may become and remain liable with respect to Indebtedness, which may be 
    secured equally and ratably with the Notes, incurred for any extension, 
    renewal, refunding or refinancing of 

                                      32

<PAGE>

    Indebtedness permitted pursuant to subdivisions (a), (b), (f) and (s) of 
    this Section 10.1, PROVIDED that (i) the principal amount (including any 
    exposure under letters of credit and any unfunded commitments) of such 
    Indebtedness shall not exceed the principal amount (including any 
    exposure under letters of credit and any unfunded commitments) of such 
    Indebtedness being extended, renewed, refunded or refinanced together 
    with any accrued interest and Make Whole Amount, Premium Amount or other 
    premium with respect thereto and any costs and expenses related to such 
    extension, renewal, refunding or refinancing, (ii) the maturity date of 
    such Indebtedness shall not be sooner than the maturity date of such 
    Indebtedness being extended, renewed, refunded or refinanced, (iii) the 
    average life to maturity of such Indebtedness shall be equal to or 
    greater than the remaining average life to maturity of such Indebtedness 
    being extended, renewed, refunded or refinanced and (iv) if such 
    Indebtedness is incurred for any extension, renewal, refunding or 
    refinancing of Indebtedness permitted pursuant to subdivision (b), (f) or 
    (s) and it is secured, such Indebtedness satisfies the conditions 
    specified in clause (ii) of the proviso to subdivision (b) and such 
    Indebtedness specifies no events of default (other than with respect to 
    the payment of principal and interest on such Indebtedness or the 
    accuracy of representations and warranties made in connection with such 
    agreement or instrument) which are capable of occurring prior to the 
    occurrence of the events of default specified in the Bank Credit 
    Facilities as of the date of this Agreement (unless prior to or 
    simultaneously with the incurrence of such Indebtedness this Agreement 
    and the Other Agreements are amended to provide the benefit of such more 
    restrictive covenants and events of default to the holders of the Notes);

        (j)  so long as no Event of Default or Potential Event of Default has 
    occurred and is continuing, the Company and the Restricted Subsidiaries 
    may become and remain liable with respect to Indebtedness which may be 
    secured equally and ratably with the Notes, incurred for any extension, 
    renewal, refunding or refinancing of Indebtedness permitted pursuant to 
    subdivision (e) of this Section 10.1, PROVIDED that (x) after giving 
    effect thereto (i) the aggregate principal amount of (A) such 
    Indebtedness incurred to extend, refund, renew or refinance Indebtedness 
    incurred pursuant to subdivision (e)(i) in connection with the Initial 
    Acquisition Facility, (B) any such Indebtedness incurred pursuant to 
    subdivision (e)(i) and remaining outstanding, and (C) any outstanding 
    Indebtedness incurred pursuant to subdivision (h)(3)(i), shall not exceed 
    the greater of $35,000,000 and 40% of Consolidated Net Worth of the 
    Company determined as of the last day of the month immediately preceding 
    the date of such extension, renewal, refunding or refinancing, and (ii) 
    the aggregate principal amount of (A) such Indebtedness incurred to 
    extend, refund, renew or refinance Indebtedness incurred pursuant to 
    subdivision (e)(ii) in connection with the Working Capital Facility, (B) 
    any such Indebtedness incurred pursuant to subdivision (e)(ii) and 
    remaining outstanding (including any exposure in respect of issued but 
    undrawn letters of credit), and (C) any remaining unfunded commitment 
    under the Working Capital Facility, shall not exceed $75,000,000 plus

                                      33


<PAGE>

    the excess, if any, of (X) Consolidated Cash Flow over (Y) $53,000,000, 
    and (y) such Indebtedness, any such letters of credit and commitments 
    shall be incurred pursuant to the Initial Acquisition Facility or a 
    working capital facility (A) which complies with the requirements set 
    forth in clause (ii)(1) of Section 10.1(e) and (B) the financial and 
    business covenants of such Indebtedness are no more restrictive on the 
    Company and its Subsidiaries and there are no additional covenants than 
    those contained in the Bank Credit Facilities as of the date of this 
    Agreement and such Indebtedness specifies no events of default (other 
    than with respect to the payment of principal and interest on such 
    Indebtedness or the accuracy of representations and warranties made in 
    connection with such agreement or instrument) which are capable of 
    occurring prior to the occurrence of the events of default specified in 
    the Bank Credit Facilities as of the date of this Agreement (unless prior 
    to or simultaneously with the incurrence of such Indebtedness this 
    Agreement and the Other Agreements are amended to provide the benefit of 
    such more restrictive covenants and events of default to the holders of 
    the Notes);

        (k)  so long as no Event of Default or Potential Event of Default has 
    occurred and is continuing, the Company and the Restricted Subsidiaries 
    may become and remain liable with respect to unsecured Indebtedness 
    incurred for any extension, renewal, refunding or refinancing of 
    Indebtedness otherwise permitted by this Section 10.1, PROVIDED that (i) 
    the principal amount of such unsecured Indebtedness to be incurred shall 
    not exceed the principal amount of such Indebtedness being extended, 
    renewed, refunded or refinanced together with any accrued interest and 
    Make Whole Amount, Premium Amount or other premium with respect thereto 
    and any costs and expenses related to such extension, renewal, refunding 
    or refinancing, (ii) the maturity date of such unsecured Indebtedness 
    shall not be sooner than the maturity date of such Indebtedness being 
    extended, renewed,  refunded or refinanced and (iii) the average life to 
    maturity of such unsecured Indebtedness shall be equal to or greater than 
    the remaining average life to maturity of such Indebtedness being 
    extended, renewed, refunded or refinanced;

        (l)  so long as no Event of Default or Potential Event of Default has 
    occurred and is continuing, the Company and the Restricted Subsidiaries 
    may become and remain liable with respect to secured Indebtedness 
    incurred for any extension, renewal, refunding or refinancing of secured 
    Indebtedness (other than Indebtedness permitted by subdivisions (a), (b), 
    (e) or (f)) otherwise permitted pursuant to this Section 10.1, PROVIDED 
    that (i) the principal amount of such Indebtedness to be incurred shall 
    not exceed the principal amount of such Indebtedness being extended, 
    renewed, refunded or refinanced together with any accrued interest and 
    premium with respect thereto and any and all costs and expenses related 
    to such extension, renewal, refunding or refinancing, (ii) the maturity 
    date of such Indebtedness shall not be sooner than the maturity date of 
    such Indebtedness being extended, renewed, refunded or refinanced, and 
    (iii) the average life to maturity of such Indebtedness to be incurred 

                                      34

<PAGE>

    shall be equal to or greater than the remaining average life to maturity 
    of such Indebtedness being extended, renewed, refunded or refinanced;

        (m)  the Company and any Restricted Subsidiaries may become and 
    remain liable with respect to any Interest Rate Agreement;

        (n)  the Company and any Restricted Subsidiaries may become and 
    remain liable with respect to any Commodity Hedging Agreements;

        (o)  any Qualifying Restricted Subsidiary may become and remain 
    liable with respect to Indebtedness evidenced by the Subsidiary Guarantee 
    Agreements or Guarantees of Parity Debt;

        (p)  the Company may become and remain liable with respect to secured 
    Indebtedness incurred in connection with Capital Lease obligations, 
    PROVIDED that (1) the security for such Indebtedness shall extend only to 
    such property or asset, (2) the obligation incurred does not exceed the 
    fair market value of such property or asset (as determined in good faith 
    by the board of directors of the Managing General Partner) and (3) after 
    incurring such Indebtedness, and giving effect to the substantially 
    concurrent retirement of any other Indebtedness, the Company could incur 
    at least $1 of additional Indebtedness in compliance with the 
    requirements set forth in clauses (i), (ii) and (iii) of Section 10.1(f);

        (q)  the Company may become and remain liable with respect to secured 
    Indebtedness incurred in connection with purchase money obligations in 
    respect of any property or asset, PROVIDED that (1) the security for such 
    Indebtedness shall extend only to such property or asset, (2) the 
    obligation incurred does not exceed 85% of the fair market value of such 
    property or asset (as determined in good faith by the Board of Directors 
    of the Managing General Partner) and (3) after incurring such 
    Indebtedness and giving effect to the substantially concurrent retirement 
    of any other Indebtedness the Company could incur at least $1 of 
    additional Indebtedness in compliance with the requirements set forth in 
    clauses (i), (ii) and (iii) of Section 10.1(f);

        (r)  the Company may become and remain liable with respect to secured 
    Indebtedness incurred to pay all or a portion of the purchase price of 
    property acquired by the Company or to secure obligations incurred in 
    consideration of non-compete agreements, PROVIDED that (1) the security 
    for such Indebtedness shall extend only to the property or assets so 
    acquired, (2) such obligation does not exceed 85% of the fair market 
    value of such property or asset or 35% in the case of non-compete 
    obligations (each as determined in good faith by the board of directors 
    of the Managing General Partner of the Company) and (3) either (A) after 
    incurring such Indebtedness, and giving effect to the substantially 
    concurrent retirement of any other Indebtedness, the Company could incur 
    at least $1 of additional Indebtedness in 

                                      35

<PAGE>

    compliance with the requirements set forth in clauses (i), (ii) and (iii) 
    of Section 10.1(f) or (B) the amount of Indebtedness permitted under 
    subdivision (e)(i) of this Section 10.1 is permanently reduced by the 
    amount of such Indebtedness; and

        (s)  the Company may remain liable with respect to the Indebtedness 
    evidenced by the 1996 Notes.

        Notwithstanding the foregoing, the aggregate principal amount of all 
Indebtedness of all Restricted Subsidiaries  at any time outstanding (other 
than (i) Indebtedness permitted by Section 10.1(o) (but only to the extent 
such Guarantees are in favor of the holders of Parity Debt) and (ii) 
intercompany Indebtedness of all Restricted Subsidiaries which is created in 
accordance with the provisions of Section 10.1(c)) shall not exceed $10 
million.  For the purpose of this Section 10.1, any Person becoming a 
Restricted Subsidiary after the date of this Agreement shall be deemed to 
have become liable with respect to all of its then outstanding Indebtedness 
at the time it becomes a Restricted Subsidiary, and any Person extending, 
renewing or refunding any Indebtedness shall be deemed to have become liable 
with respect to such Indebtedness at the time of such extension, renewal or 
refunding.  The Company or any Restricted Subsidiary shall be deemed to have 
become liable with respect to any Indebtedness secured by any real property 
acquired by the Company or such Restricted Subsidiary, as the case may be, at 
the time of such acquisition.  Any amendment of the terms of this Agreement 
required by clause (ii) of the proviso to Section 10.1(b) shall provide that 
such amendment shall only be effective until the date the Indebtedness (the 
incurrence of which required the amendment of this Agreement) is paid in full 
and all commitments to lend and letters of credit outstanding under such 
facility are canceled or terminated.  The Company shall provide written 
notice to each holder of the repayment in full in cash of such Indebtedness 
and the cancellation of all commitments and letters of credit pursuant to any 
such facility, which notice shall provide that the amendments to this 
Agreement required by clause (ii) of the proviso to Section 10.1(b) with 
respect to such facility, are no longer effective.

        10.2.     LIENS, ETC.  The Company will not, and will not permit any 
Restricted Subsidiary to, directly or indirectly create, incur, assume or 
permit to exist any Lien on or with respect to any property or asset 
(including any document or instrument in respect of goods or accounts 
receivable) of the Company or any Restricted Subsidiary, whether now owned or 
held or hereafter acquired, or any income or profits therefrom (whether or 
not provision is made for the equal and ratable securing of the Notes in 
accordance with the provisions of Section 10.16), except:

        (a)  Liens for taxes, assessments or other governmental charges the 
    payment of which is not at the time required by Section 10.9;

        (b)  Liens of landlords and carriers, vendors, warehousemen, 
    mechanics, materialmen, repairmen and other like Liens incurred in the 
    ordinary course of 

                                      36

<PAGE>

    business for sums not yet due or the payment of which is not at the time 
    required by Section 10.9, in each case not incurred or made in connection 
    with the borrowing of money, the obtaining of advances or credit or the 
    payment of the deferred purchase price of property;

        (c)  Liens (other than any Lien imposed by ERISA) incurred or 
    deposits made in the ordinary course of business (i) in connection with 
    workers' compensation, unemployment insurance, old age pension, retiree 
    health benefits and other types of social security, or (ii) to secure (or 
    to obtain letters of credit that secure) the performance of tenders, 
    statutory obligations, surety and appeal bonds, bids, leases, performance 
    bonds, purchase, construction or sales contracts and other similar 
    obligations, in each case not incurred or made in connection with the 
    borrowing of money, the obtaining of advances or credit or the payment of 
    the deferred purchase price of property;

        (d)  any attachment or judgment Lien, unless the judgment it secures 
    shall not, within 60 days after the entry thereof, have been discharged 
    or execution thereof stayed pending appeal, or shall not have been 
    discharged within 60 days after expiration of any such stay;

        (e)  leases or subleases granted to others, zoning restrictions, 
    easements, licenses, reservations, rights-of-way, restrictions on the use 
    of property or irregularities of title (and with respect to leasehold 
    interests, mortgages, obligations, liens and other encumbrances incurred, 
    created, assumed or permitted to exist and arising by, through or under a 
    landlord or owner of the leased property with or without the consent of 
    the lessee) and other similar charges or encumbrances, which do not 
    materially interfere with the ordinary conduct of the business of the 
    Company or any Restricted Subsidiary;

        (f)  Liens on property or assets of any Restricted Subsidiary 
    securing Indebtedness of such Restricted Subsidiary owing to the Company 
    or any other Restricted Subsidiary;

        (g)  Liens described in Schedule 10.2 of the 1996 Note Agreements;

        (h)  Liens created by any of the Security Documents securing 
    Indebtedness incurred in accordance with Section 10.1(a), Section 10.1(e) 
    or Section 10.1(s);

        (i)  Liens created by any of the Security Documents securing 
    Indebtedness incurred in accordance with Section 10.1(b), 10.1(f) or 
    10.1(m), PROVIDED that (1) such Liens are effected through an amendment 
    to the Security Documents to the extent necessary to provide the holders 
    of such Indebtedness equal and ratable security in the property and 
    assets subject to the Security Documents with the holders of the Notes 
    and of other Indebtedness secured under the Security Documents as 

                                      37

<PAGE>

    provided in Section 10.1(b), 10.1(f) or 10.1(m), (2) the Security 
    Documents are amended to the extent necessary to extend the Lien thereof 
    to any property or assets acquired or otherwise financed with the 
    proceeds of such Indebtedness, (3) the Company has delivered to the 
    Trustee an Officers' Certificate demonstrating that the principal amount 
    of such Indebtedness does not exceed the lesser of the cost to the 
    Company of such property or assets and the fair market value of such 
    property or assets (as determined in good faith by the Managing General 
    Partner of the Company), that such incurrence of Indebtedness pursuant to 
    Section 10.1(b), 10.1(f) or 10.1(m), as the case may be, complies in all 
    respects with the requirements of such Section and that the amendments to 
    the Security Documents required by this Section 10.2(i) and the filing 
    and recordation of such amendments and related supplements will not have 
    a Material Adverse Effect, and (4) the Company has delivered to the 
    Trustee an opinion of counsel reasonably satisfactory to the Trustee to 
    the effect that the Lien of the Security Documents has attached and is 
    perfected with respect to such additional property and assets;

        (j)  Liens existing on any property of any Person at the time it 
    becomes a Restricted Subsidiary, or existing prior to the time of 
    acquisition (and not created in anticipation of such acquisition) upon 
    any property acquired by the Company or any Restricted Subsidiary through 
    purchase, merger or consolidation or otherwise, whether or not assumed by 
    the Company or such Restricted Subsidiary, or created to secure 
    Indebtedness incurred under Section 10.1(f) to pay all or any part of the 
    purchase price ("Purchase Money Lien") of property acquired by the 
    Company or a Restricted Subsidiary or to pay the cost of an improvement 
    (other than improvements to property subject to the Lien of the Security 
    Documents), PROVIDED that (i) any such Lien shall be confined solely to 
    the item or items of property so acquired and, if required by the terms 
    of the instrument originally creating such Lien, other property which is 
    an improvement to or is acquired for specific use in connection with such 
    acquired property, (ii) such item or items of property so acquired (other 
    than property (which may include stock or other equity interests) subject 
    to Liens existing prior to the time of acquisition and not created in 
    anticipation of such acquisition) are not required to become part of the 
    Collateral under the terms of the Security Documents, (iii) the principal 
    amount of the Indebtedness secured by any such Lien shall at no time 
    exceed an amount equal to the lesser of (A) the cost of such property to 
    the Company or such Restricted Subsidiary, as the case may be, and (B) 
    the fair market value of such property (as determined in good faith by 
    the Managing General Partner) at the time such Person owning such 
    property becomes a Restricted Subsidiary or at the time of such 
    acquisition by the Company or such Restricted Subsidiary, as the case may 
    be, (iv) any such Purchase Money Lien shall be created not later than 90 
    days after, in the case of property, its acquisition, or, in the case of 
    improvements, their completion and (v) any such Lien (other than a 
    Purchase Money Lien) shall not have been created or assumed in 
    contemplation of such Person's becoming a 

                                      38

<PAGE>

    Restricted Subsidiary or such acquisition of property by the Company or 
    any Subsidiary;

        (k)  Liens in amounts not exceeding $500,000 incurred, required or 
    provided for under state law in connection with self-insurance 
    arrangements;

        (l)  Liens arising from or constituting Permitted Encumbrances;

        (m)  any Lien securing Indebtedness referred to in Section 10.1(i), 
    (j) or (l) renewing or extending any Lien permitted by the foregoing 
    subdivisions of this Section 10.2, PROVIDED that (i) the Indebtedness 
    secured by any such Lien shall not exceed the principal amount of such 
    Indebtedness outstanding (including any exposure under letters of credit 
    and any unfunded commitments) immediately prior to the renewal or 
    extension of such Lien, (ii) no assets encumbered by any such Lien other 
    than the assets encumbered immediately prior to such renewal or extension 
    shall be encumbered thereby or with respect to any Indebtedness 
    extending, renewing, refunding or refinancing any Indebtedness secured 
    pursuant to the Security Documents, the assets specified therein and 
    (iii) the maturity date of the Indebtedness secured by any such Lien 
    shall not be sooner than the maturity date of such Indebtedness 
    outstanding immediately prior to the renewal or extension of such Lien;

        (n)  any Lien securing Indebtedness incurred in accordance with 
    Section 10.1(n), Section 10.1 (p), Section 10.1(q) or Section 10.1(r);

        (o)  any Lien arising from the action of collecting banks; and

        (p)  those Liens described on Schedule 10.2.

        10.3.     INVESTMENTS, GUARANTIES, ETC.  The Company will not, and 
will not permit any Restricted Subsidiary to, directly or indirectly (i) make 
or own any Investment in any Person, or (ii) create or become liable with 
respect to any Guaranty, except:

        (a)  the Company or any Restricted Subsidiary may make and own 
    Investments in

                (1)  marketable obligations issued or unconditionally 
        guaranteed by the United States of America, or issued by any agency 
        thereof and backed by the full faith and credit of the United States 
        of America in each case maturing within one year from the date of 
        acquisition thereof,

                (2)  marketable direct obligations issued by any state of the 
        United States of America or any political subdivision of any such 
        state or any public instrumentality thereof maturing within one year 
        from the date of acquisition thereof and having as at any date of 
        determination the 

                                      39

<PAGE>

        highest rating obtainable from either Standard & Poor's Ratings Group 
        or Moody's Investors Service, Inc.,

                (3)  commercial paper maturing no more than 270 days from the 
        date of creation thereof and having as at any date of determination 
        one of the two highest ratings obtainable from either Standard & 
        Poor's Ratings Group or Moody's Investors Service, Inc.,

                (4)  certificates of deposit maturing one year or less from 
        the date of acquisition thereof issued by commercial banks 
        incorporated under the laws of the United States of America or any 
        state thereof or the District of Columbia or Canada, (A) the 
        commercial paper or other short-term unsecured debt obligations of 
        which are rated either A-1 or better (or comparably if the rating 
        system is changed) by Standard & Poor's Ratings Group or Prime-1 or 
        better (or comparably if the rating system is changed) by Moody's 
        Investors Service, Inc. or (B) the long-term debt obligations of 
        which are rated either AA- or better (or comparably if the rating 
        system is changed) by Standard & Poor's Ratings Group or Aa3 or 
        better (or comparably if the rating system is changed) by Moody's 
        Investors Service, Inc. ("Permitted Banks"), or by any bank party 
        to the Bank Credit Facilities the long-term debt obligations of which 
        are rated either A or better (or comparably if the rating system is 
        changed) by Standard and Poor's Rating Group or A or better (or 
        comparably if the rating system is changed) by Moody's Investor 
        Service, Inc.,

                (5)  Eurodollar time deposits having a maturity of less than 
        270 days from the date of acquisition thereof purchased directly from 
        any Permitted Bank,

                (6)  bankers' acceptances eligible for rediscount under 
        requirements of The Board of Governors of the Federal Reserve System 
        and accepted by Permitted Banks, and

                (7)  obligations of the type described in clause (1), (2), 
        (3) or (4) above purchased from a securities dealer designated as a 
        "primary dealer" by the Federal Reserve Bank of New York or from a 
        Permitted Bank as counterparty to a written repurchase agreement 
        obligating such counterparty to repurchase such obligations not later 
        than 14 days after the purchase thereof and which provides that the 
        obligations which are the subject thereof are held for the benefit of 
        the Company or a Restricted Subsidiary by a custodian which is a 
        Permitted Bank;

        (b)  the Company and any Restricted Subsidiary may make and own 
    Investments in any Restricted Subsidiary or  Investments in capital stock 
    of, or other 

                                      40

<PAGE>

    equity interests in, any Person which as a result of such Investment 
    becomes a Restricted Subsidiary, and any Qualifying Restricted Subsidiary 
    may make and permit to be outstanding Investments in the Company and may 
    create or become liable with respect to the Subsidiary Guarantee 
    Agreement in respect of the Company's obligations under the Notes or 
    under Parity Debt;

        (c)  the Company or any Restricted Subsidiary may make and own 
    Investments (other than those included in subdivision (b) above) in the 
    capital stock of, or joint venture, partnership or other equity interests 
    in, or the contributions to capital in the ordinary course of business 
    of, any Unrestricted Subsidiary if immediately after giving effect to the 
    making of any such Investment, (A) the aggregate amount of all such 
    Investments made and outstanding pursuant to this subdivision (c) shall 
    not at any time exceed 20% of the Consolidated Net Worth of the Company 
    and (B) the aggregate amount of all Investments made and outstanding 
    pursuant to this subdivision (c) as at the end of any fiscal quarter of 
    the Company shall not exceed by more than $15,000,000 the amount of such 
    Investments outstanding as at the end of the corresponding fiscal quarter 
    of the immediately preceding fiscal year of the Company, and in the case 
    of both clauses (A) and (B) of this subdivision (c), (i) the amounts 
    specified therein may be increased by an amount equal to the net cash 
    proceeds received by the Company from the Managing General Partner or 
    from the Public Partnership as a capital contribution or as consideration 
    for the issuance by the Company of additional partnership interests for 
    the sole purpose of making an Investment in an Unrestricted Subsidiary, 
    and (ii) net of cash distributions received from all Unrestricted 
    Subsidiaries for such period;

        (d)  the Company or any Restricted Subsidiary may make and own 
    Investments (x) constituting trade credits or advances to any Person 
    incurred in the ordinary course of business, (y) arising out of loans and 
    advances to officers, directors and employees for travel, entertainment 
    and relocation expenses, in each case incurred in the ordinary course of 
    business or (z) acquired by reason of the exercise of customary 
    creditors' rights upon default or pursuant to the bankruptcy, insolvency 
    or reorganization of a debtor;

        (e)  the Company or any Restricted Subsidiary may create or become 
    liable with respect to any Guaranty constituting an obligation, warranty 
    or indemnity, not guaranteeing Indebtedness of any Person, which is 
    undertaken or made in the ordinary course of business;

        (f)  the Company or any Restricted Subsidiary may create and become 
    liable with respect to any Interest Rate Agreements; and

        (g)  the Company may create and become liable with respect to 
    Commodity Hedging Agreements.

                                      41

<PAGE>


        10.4.     RESTRICTED PAYMENTS.  The Company will not, directly or 
indirectly, nor will it permit any Subsidiary to declare, order, pay, make or 
set apart any sum for any Restricted Payment, except that (a) the Company may 
declare, order, pay, make or set apart once during each calendar quarter a 
Restricted Payment in cash if (i) such Restricted Payment is in an amount not 
exceeding Available Cash for the immediately preceding calendar quarter, (ii) 
prior to any such proposed action no condition or event shall exist which 
constitutes a Potential Event of Default under Section 11(b) or an Event of 
Default and immediately after giving effect to any such proposed Restricted 
Payment no condition or event shall exist which constitutes a Potential Event 
of Default or an Event of Default, (iii) the ratio of Consolidated Cash Flow 
to Consolidated Interest Expense, as of the date of such action, is greater 
than 1.75 to 1.00 (the "Coverage Test") and (iv) the Company shall have 
given to each holder of a Note written notice thereof on the date such 
Restricted Payment is declared, which date shall be within 50 days of the 
date on which the Coverage Test was satisfied and at least 10 days prior to 
the date such Restricted Payment is made, (b) the Company may declare, order, 
pay, make or set apart a Restricted Payment needed to pay pass-through taxes 
so long as (1) prior to any such proposed action no condition or event shall 
exist which constitutes an Event of Default and (2) immediately after giving 
effect to any such proposed action no condition or event shall exist which 
constitutes a Potential Event of Default or an Event of Default, and (c) any 
Subsidiary may make, pay or set apart dividends and distributions so long as 
such dividends or distributions are made, paid or set apart for each holder 
of such Person's capital stock or other equity on a pro-rata basis.  Upon 
satisfaction of the Coverage Test by the Company, such Restricted Payment 
shall be made within 60 days thereafter, and, notwithstanding any other 
provision of this Section 10.4, if the payment would have been permitted as 
of the date of such declaration, such payment shall be permitted if made 
during such 60 day period.  The Company will not, in any event, directly or 
indirectly declare, order, pay or make any Restricted Payment except in cash.

        10.5.     TRANSACTIONS WITH AFFILIATES.  Except for the transactions 
or conduct effected pursuant to the Operative Agreements as in effect on the 
date of the Closing or any other transactions or conduct described in or 
contemplated by the Registration Statement or listed on Schedule 10.5, the 
Company will not, and will not permit any Restricted Subsidiary to, directly 
or indirectly, engage in any transaction with any Affiliate of the Company, 
including, without limitation, the purchase, sale or exchange of assets or 
the rendering of any service, to the Company's or such Restricted 
Subsidiary's business except upon fair and reasonable terms that are no less 
favorable to the Company or such Restricted Subsidiary, as the case may be, 
than those which might be obtained in an arm's-length transaction at the time 
such transaction is agreed upon from Persons which are not such an Affiliate, 
PROVIDED that the foregoing limitations and restrictions shall not apply to 
any transaction between the Company and any Restricted Subsidiary or between 
Restricted Subsidiaries or to loans and advances to officers, directors and 
employees made in the ordinary course of business.

                                      42

<PAGE>


        10.6.     SUBSIDIARY STOCK AND INDEBTEDNESS.  The Company will not:

        (a)  directly or indirectly sell, assign, pledge or otherwise dispose 
    of any Indebtedness of or any shares of stock or similar interests of (or 
    warrants, rights or options to acquire stock or similar interests of) any 
    Subsidiary, except to a Restricted Subsidiary;

        (b)  permit any Restricted Subsidiary directly or indirectly to sell, 
    assign, pledge or otherwise dispose of any Indebtedness of (i) the 
    Company or (ii) any other Restricted Subsidiary, or any shares of stock 
    or similar interests of (or warrants, rights or options to acquire stock 
    or similar interests of) any other Subsidiary, except to, in the case of 
    clause (i), the Company or, in all other cases, the Company or a 
    Restricted Subsidiary;

        (c)  permit any Restricted Subsidiary to have outstanding any shares 
    of stock or similar interests which are preferred over any other shares 
    of stock or similar interests owned by the Company unless such shares of 
    preferred stock or similar interests are owned by the Company; or

        (d)  permit any Restricted Subsidiary directly or indirectly to issue 
    or sell (including, without limitation, in connection with a merger or 
    consolidation of a Restricted Subsidiary otherwise permitted by Section 
    10.7(a)) any shares of its stock or similar interests (or warrants, 
    rights or options to acquire its stock or  similar interests) except to 
    the Company or a Restricted Subsidiary;

PROVIDED that, (i) any Restricted Subsidiary may sell, assign or otherwise 
dispose of Indebtedness of the Company or a Restricted Subsidiary if, 
assuming such Indebtedness were incurred immediately after such sale, 
assignment or disposition, such Indebtedness would be permitted under Section 
10.1 (and if such Indebtedness is secured, such Lien would be permitted 
pursuant to Section 10.2) or (ii) subject to compliance with Section 10.7(c), 
all Indebtedness and shares of stock or partnership interests of any 
Restricted Subsidiary owned by the Company or by another Restricted 
Subsidiary may be simultaneously sold as an entirety for consideration at 
least equal to the fair value thereof (as determined in good faith by the 
Managing General Partner) at the time of such sale if such Restricted 
Subsidiary does not at the time own (A) any Indebtedness of the Company 
(other than Indebtedness which, if incurred immediately after such 
transaction, would be permitted under Section 10.1) or (B) any Indebtedness, 
stock or other interest in any other Restricted Subsidiary which is not also 
being simultaneously sold as an entirety in compliance with this proviso or 
Section 10.7(b)(ii).

        10.7.     CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.  The Company 
will not, and will not permit any Restricted Subsidiary to, directly or 
indirectly,

                                      43


<PAGE>

        (a)  consolidate with or merge into any other Person or permit any 
    other Person to consolidate with or merge into it, except that:

                (i)  any Restricted Subsidiary may consolidate with or merge 
        into the Company or a Restricted Subsidiary if, in the case of a 
        consolidation with or merger into the Company, the Company shall be 
        the surviving Person and if, immediately after giving effect to such 
        transaction, no condition or event shall exist which constitutes an 
        Event of Default or Potential Event of Default; and

                (ii) any entity (other than a Restricted Subsidiary) may 
        consolidate with or merge into the Company or a Restricted Subsidiary 
        if the Company or a Restricted Subsidiary, as the case may be, shall 
        be the surviving Person and if, immediately after giving effect to 
        such transaction, (w) the Company (1) shall not have a Consolidated 
        Net Worth (but without giving effect to any write-up in assets or 
        amounts attributable to goodwill pursuant to purchase accounting 
        methods) of less than the Consolidated Net Worth of the Company 
        immediately prior to the effectiveness of such transaction, (2) shall 
        not be liable with respect to any Indebtedness or allow its property 
        to be subject to any Lien which it could not become liable with 
        respect to or allow its property to become subject to under this 
        Agreement on the date of such transaction, and (3) could incur, if 
        the consolidating or merging entity has outstanding Indebtedness, at 
        least $1 of additional Indebtedness in compliance with Section 
        10.1(f) after giving effect to such transaction, (x) substantially 
        all of the assets of such entity shall be located and substantially 
        all of its business shall be conducted within the United States of 
        America, and (y) no condition or event shall exist which constitutes 
        an Event of Default or Potential Event of Default; and

                (iii) the Company may consolidate with or merge into any 
        other entity if (v) the surviving entity is a corporation, limited 
        partnership, limited liability company or business trust organized 
        and existing under the laws of the United States of America or a 
        state thereof or the District of Columbia, with substantially all of 
        its properties located and its business conducted within the United 
        States of America, (w) such corporation, limited partnership, limited 
        liability company or business trust expressly and unconditionally 
        assumes the obligations of the Company under this Agreement and each 
        of the other Operative Agreements and delivers to each holder of a 
        Note at the time outstanding in connection with such assumption an 
        opinion of counsel reasonably satisfactory to the Required Holders 
        with respect to such matters incident to such assumption as may be 
        reasonably requested by such holders, including, without limitation, 
        as to the due authorization and execution of the related agreement of 
        assumption and the enforceability of such agreement against such 
        corporation, limited partnership, limited liability company or

                                      44

<PAGE>

        business trust, (x) immediately after giving effect to such 
        transaction, such corporation, limited partnership, limited liability 
        company or business trust (1) shall not have a Consolidated Net Worth 
        (but without giving effect to any write-up in assets or amounts 
        attributable to goodwill pursuant to purchase accounting methods) of 
        less than the Consolidated Net Worth of the Company immediately prior 
        to the effectiveness of such transaction, (2) shall not be liable 
        with respect to any Indebtedness or allow its property to be subject 
        to any Lien which it could not become liable with respect to or allow 
        its property to become subject to under this Agreement on the date of 
        such transaction and (3) could incur, if the consolidating or merging 
        entity had outstanding Indebtedness, at least $1 of additional 
        Indebtedness in compliance with Section 10.1(f) after giving effect 
        to such transaction, and (y) immediately after giving effect to such 
        transaction no condition or event shall exist which constitutes an 
        Event of Default or a Potential Event of Default; or

        (b)  sell, lease, abandon or otherwise dispose of all or 
    substantially all its assets, except that:

                (i)  any Restricted Subsidiary may sell, lease or otherwise 
        dispose of all or substantially all its assets to the Company or to a 
        Restricted Subsidiary; and

                (ii) the Company may sell, lease or otherwise dispose of all 
        or substantially all its assets to any corporation, limited 
        partnership, limited liability company or business trust into which 
        the Company could be consolidated or merged in compliance with clause 
        (a)(iii) of this Section 10.7, PROVIDED that each of the conditions 
        set forth in such subdivision (a)(iii) shall have been fulfilled; or

        (c)  sell, lease, abandon or otherwise dispose of any property to any 
    Person other than the Company or any Restricted Subsidiary (except for 
    (x) sales, leases or other dispositions of property in transactions 
    permitted by the foregoing clauses (a) or (b) of this Section 10.7, and 
    (y) sales or leasing of inventory in the ordinary course of business) 
    unless immediately before and after giving effect to such transaction, no 
    Event of Default or Potential Event of Default shall exist or be 
    continuing and:

                (i)  at least 70% or more of the consideration (or 25% or 
        more in the event such consideration is less than $1,000,000) 
        therefor shall be in the form of cash consideration or marketable 
        securities, PROVIDED, that the amount of (A) any liabilities (as 
        shown on the Company's or such Restricted Subsidiary's most recent 
        balance sheet or in the notes thereto) of the Company or any 
        Restricted Subsidiary (other than liabilities that are by their terms 
        subordinated in right of payment to the Notes) that are assumed by 
        the transferee of any such assets and (B) any notes or other 
        obligations received 

                                      45

<PAGE>

        by the Company or any such Restricted Subsidiary from such transferee 
        that are promptly converted into cash (to the extent of the cash 
        received), shall be deemed to be cash for the purposes of this 
        Section 10.7(c)(i), and

                (ii) either

                        (A)    the aggregate net after-tax proceeds of all 
                such dispositions by the Company and all Restricted 
                Subsidiaries during the current fiscal year (including all 
                proceeds under title insurance policies with respect to real 
                property and all net insurance proceeds, self-insurance 
                amounts and net awards with respect to property lost as a 
                result of damage, destruction or a taking which have not been 
                applied to the cost of repairing or replacing any damaged or 
                destroyed assets ), less the amount of all such net after-tax 
                proceeds previously applied in accordance with subdivision 
                (ii)(B) of this Section 10.7(c) and the amount of such net 
                after-tax proceeds equal to the purchase price of any assets 
                acquired to the extent that (1) such assets were acquired 
                within 90 days prior to the date of such disposal of 
                property, (2) the purchase price of such assets was not 
                previously applied to reduce the amount of net after-tax 
                proceeds of property disposed of under this Section 10.7(c), 
                (3) such assets were acquired for subsequent replacement of 
                the property so disposed of or may be productively used in 
                the United States of America in the conduct of the Business, 
                (4) if the assets so disposed were or should have been, then 
                such newly acquired assets shall be subject to the Lien of 
                the Security Documents, and (5) to the extent such assets 
                were acquired (in whole or in part) with borrowed money, such 
                borrowing has been repaid in full, (x) shall not exceed 
                $7,500,000 during such fiscal year and (y) when aggregated 
                with such net after-tax proceeds of all prior transactions 
                under this Section 10.7(c), shall not exceed $30,000,000; or

                        (B)    in the event that such net after-tax proceeds 
                (less the amount thereof previously applied in accordance 
                with this subdivision (ii)(B) and the amount thereof equal to 
                the purchase price of any assets acquired to the extent that 
                (1) such assets were acquired within 90 days prior to the 
                date of such disposal of property, (2) the purchase price of 
                such assets was not previously applied to reduce the amount 
                of net after-tax proceeds of property disposed of under this 
                Section 10.7(c), (3) such assets were acquired for subsequent 
                replacement of the property so disposed of or may be 
                productively used in the United States of America in the 
                conduct of the Business, (4) if the assets so disposed were 
                or should have been, then such newly acquired assets shall be 
                subject to the Lien of the Security Documents, and (5) to the 
                extent such assets were acquired (in whole or in part) with 
                borrowed money, such borrowing has been repaid in full) during

                                      46

<PAGE>


                the current fiscal year exceed $7,500,000 or, when aggregated 
                with such net after-tax proceeds of all prior transactions 
                under this Section 10.7(c), exceed $30,000,000 (the larger 
                amount of such excess net after-tax proceeds actually 
                realized being herein called "Excess Proceeds"), the 
                Company shall promptly pay over to the Trustee under the 
                Trust Agreement such Excess Proceeds not at the time held by 
                the Trustee for application by the Trustee (x) within 365 
                days of the date of the disposal or loss of property to the 
                acquisition of assets in replacement of the property so 
                disposed of or lost or of assets which may be used in the 
                United States of America in the conduct of the Business (and 
                if the assets so disposed were or should have been, then such 
                newly acquired assets shall be subjected to the Lien of the 
                Security Documents) or to the cost of repairing or replacing 
                any damaged or destroyed assets, or (y) to the extent of 
                Excess Proceeds not applied pursuant to the immediately 
                preceding clause (x), to the payment and/or prepayment of the 
                Notes and Parity Debt, if any, pursuant to Section 9.1 and/or 
                9.4(a), all as provided in Section 4(d) of the Trust 
                Agreement and such Section 9.1 and/or 9.4(a), and the Trustee 
                shall have received an Officers' Certificate from the 
                Managing General Partner of the Company certifying that the 
                consideration received for such property is at least equal to 
                its fair value (as determined in good faith by the Managing 
                General Partner of the Company) and that such consideration 
                has been applied in accordance with the terms of this 
                Agreement.

        Notwithstanding the foregoing, the Company and any Restricted 
Subsidiary may sell or dispose of (i) real property assets sold or disposed 
of within 12 months of the acquisition of such assets, and (ii) all other 
assets sold or disposed of within 6 months of the acquisition of such assets, 
in each case constituting a portion of an acquired business, if (y) such 
assets are specifically designated to the holders of the Notes in writing at 
the time of such acquisition or within 30 Business Days thereafter as assets 
to be disposed of, and (z) the Trustee shall have received an Officers' 
Certificate from the Managing General Partner of the Company certifying that 
the consideration received for such property is at least equal to its fair 
value (as determined in good faith by the Managing General Partner of the 
Company).  Such sales under this paragraph will not be applied towards the 
annual or cumulative limitations in subdivision (c) of this Section 10.7.  In 
addition, notwithstanding the foregoing, the Company may, at any time, 
exchange assets for other like assets which may be used in the conduct of the 
Business, PROVIDED (1) the fair value of the assets so acquired is 
substantially equivalent to the fair value of the assets so exchanged (as 
determined in good faith by the Managing General Partner of the Company), (2) 
if the assets exchanged were or should have been, then such newly acquired 
assets shall be subject to the Lien of the Security Documents and (3) the 
total value of the assets so exchanged in any twelve month period shall not 
in the aggregate exceed 15% of the total assets of the Company.  The holders 
of Notes agree to take all 


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<PAGE>

actions reasonably requested by the Company (and at the expense of the 
Company) to cause dispositions of any Collateral made in compliance with this 
Section 10.7 to be made free and clear of the Liens created by the Security 
Documents.

        10.8.     PARTNERSHIP OR CORPORATE EXISTENCE, ETC.; BUSINESS.  (a)  
(i) The Company will at all times preserve and keep in full force and effect 
its partnership existence and (subject to the provisions of subdivision (b) 
of this Section 10.8) its status as a partnership not taxable as a 
corporation for federal income tax purposes; (ii) the Company will cause each 
Restricted Subsidiary to keep in full force and effect its partnership or 
corporate existence; and (iii) the Company will, and will cause each 
Restricted Subsidiary to, at all times preserve and keep in full force and 
effect all of its material rights and franchises (in each case except as 
otherwise specifically permitted in Sections 10.6 and 10.7; PROVIDED, 
HOWEVER, that notwithstanding the preceding provisions of this Section 10.8 
the partnership or corporate existence of any Restricted Subsidiary, and any 
right or franchise of the Company or any Restricted Subsidiary, may be 
terminated if, in the good faith judgment of the Managing General Partner, 
such termination is in the best interest of the Company, is not 
disadvantageous to the holders of the Notes in any material respect and would 
not have a Material Adverse Effect).

        (b)  The Company shall not be obligated to preserve its status as a 
partnership not taxable as a corporation for federal income tax purposes if 
(i) the Company's failure to preserve such status shall be the result of an 
amendment to the tax laws enacted by the Congress of the United States and 
(ii) after giving effect to the loss of such status the ratio of Consolidated 
Cash Flow to Maximum Consolidated Pro Forma Debt Service, determined as of 
the date of the loss of such status, would be greater than 1.1 to 1.0, 
assuming, for the purposes of the computation of Consolidated Cash Flow, that 
Consolidated Cash Flow would be reduced by taxes at the applicable tax rate 
of the Company for such period had the Company been taxable as a corporation.

        (c)  The Company will not, and will not permit any Restricted 
Subsidiary to, engage in any material lines of business other than the 
Business as described in the Registration Statement and other activities 
incidental or related to the Business; PROVIDED that, the Company will not 
permit Cornerstone Sales & Service Corporation to exist for any purpose, or 
to carry on any business, other than the ownership and operation of the 
Service Assets (as defined in the Contribution, Conveyance and Assumption 
Agreement dated as of December 17, 1996 among the Company, the Public 
Partnership, the General Partners and Empire Energy SC Corporation, a 
Delaware corporation) and other assets of that type.

        10.9.     PAYMENT OF TAXES AND CLAIMS.  The Company will, and will 
cause each Subsidiary to, pay all taxes, assessments and other governmental 
charges or levies imposed upon it or any of its properties or assets or in 
respect of any of its franchises, business, income or profits when the same 
become due and payable, but in any event before any penalty or interest 
accrues thereon, and all claims (including, without 


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<PAGE>

limitation, claims for labor, services, materials and supplies) for sums 
which have become due and payable and which by law have or might become a 
Lien upon any of its properties or assets, and promptly reimburse the holders 
of the Notes for any such taxes, assessments, charges or claims paid by them, 
PROVIDED that no such tax, assessment, charge or claim need be paid or 
reimbursed if it is being contested in good faith by appropriate proceedings 
promptly initiated and diligently conducted and if such reserves or other 
appropriate provision, if any, as shall be required by GAAP shall have been 
made therefor and be adequate in the good faith judgment of the Managing 
General Partner.

        10.10.    COMPLIANCE WITH ERISA.  The Company will not, and will not 
permit any Subsidiary or Related Person of the Company to:

        (a)  (i) engage in any transaction in connection with which the 
    Company or any Subsidiary could be subject to either a civil penalty 
    assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 
    4975 of the Code, (ii) terminate (within the meaning of Title IV of 
    ERISA) or withdraw from any Plan in a manner, or take, or fail to take, 
    any other action with respect to any Plan (including, without limitation, 
    a substantial cessation of operations within the meaning of Section 
    4062(e) of ERISA), (iii) establish, maintain, contribute to or become 
    obligated to contribute to any welfare benefit plan (as defined in 
    Section 3(1) of ERISA) or other welfare benefit arrangement which 
    provides post-employment benefits, which cannot be unilaterally 
    terminated by the Company, (iv) fail to make full payment when due of all 
    amounts which, under the provisions of any Plan or applicable law, the 
    Company or any Subsidiary or Related Person of the Company is required to 
    pay as contributions or permit to exist any material accumulated funding 
    deficiency, whether or not waived, with respect to any Plan or (v) engage 
    in any transaction in connection with which the Company, any Subsidiary 
    or any Related Person of the Company could be subject to liability 
    pursuant to Section 4069(a) or 4212(c) of ERISA, if any such event, 
    condition or transaction described in clauses (i) through (v) above, 
    either individually or together with any other such event, condition or 
    transaction, could reasonably be expected to result in (x) the imposition 
    of a Lien in a material amount on any assets or property of the Company 
    or any Subsidiary of the Company pursuant to Section 302(f) of ERISA or 
    Section 412(n) of the Code or (y) any liability to the Company, any 
    Subsidiary of the Company or any Related Person of the Company, which 
    liability could have a Material Adverse Effect; or

        (b)  as of any date of determination (i) permit the amount of 
    unfunded benefit liabilities under any Plan (other than a Multiemployer 
    Plan) maintained at such time by the Company or any Subsidiary or Related 
    Persons of the Company to exceed the current value of the assets of any 
    such Plan by more than $1,000,000 or (ii) permit the aggregate liability 
    incurred by the Company and any Subsidiary of the Company and Related 
    Persons of the Company pursuant to Title IV of ERISA with respect to one 
    or 

                                      49

<PAGE>

    more terminations of, or one or more complete or partial withdrawals 
    from, any Plan to exceed $1,000,000.

As used in this Section 10.10, the term "accumulated funding deficiency" 
has the meaning specified in Section 302 of ERISA and Section 412 of the 
Code, the term "current value" has the meaning specified in Section 3 of 
ERISA and the terms "benefit liabilities" and "amount of unfunded benefit 
liabilities" have the meanings specified in Section 4001 of ERISA.

        10.11.    MAINTENANCE OF PROPERTIES; INSURANCE.  (a)  The Company 
will maintain or cause to be maintained in working order and condition, in 
accordance with normal industry standards and as otherwise required by the 
Security Documents, all material properties used or useful in the business of 
the Company and the Restricted Subsidiaries and from time to time will make 
or cause to be made all appropriate repairs, renewals and replacements 
thereof.

        (b)  The Company will, and will cause each of the Restricted 
Subsidiaries to, keep its insurable properties adequately insured at all 
times by Permitted Insurers; maintain such other insurance, to such extent 
and against such risks, including fire and other risks insured against by 
extended coverage, as is customary with companies in the same or similar 
businesses, including public liability insurance against claims for personal 
injury or death or property damage occurring upon, in, about or in connection 
with the use of any properties owned, occupied or controlled by it; maintain 
such other insurance policy as may be required by law or any Security 
Document; and cause each such insurance policy to name the Trustee, as an 
additional insured or loss payee thereunder. The Company may maintain a 
system of self-insurance in an amount customary for companies with 
established reputations engaged in the same or similar business and owning 
similar properties as the Company.  The Company will permit the holders of 
the Notes and an insurance consultant retained by the Required Holders, at 
the expense of the Company, to review the insurance policies maintained by 
the Company on an annual basis and will implement any changes to such 
policies reasonably recommended by such consultant if available on a 
commercially reasonable basis.

        10.12.    OPERATIVE AGREEMENTS; SECURITY DOCUMENTS.  The Company 
will, and will cause each Restricted Subsidiary to, perform and comply with 
all of its obligations under each of the Operative Agreements to which it is 
a party, will enforce each such Operative Agreement against each other party 
thereto and will not accept the termination of any such Operative Agreement, 
unless (but only with respect to Operative Agreements other than this 
Agreement or the Other Agreements) the taking of or omitting to take any such 
action would not have a Material Adverse Effect and will not amend, modify or 
supplement any Operative Agreement without the prior written consent of the 
Required Holders (or with respect to this Agreement as specified in Section 
18), PROVIDED that (i) the MLP Agreement and the Partnership Agreement (other 
than Sections 4.5, 6.3, and 7.5(a) of the Partnership Agreement the amendment 
of which requires the consent of the 


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<PAGE>

Required Holders) may be amended, modified or supplemented without the prior 
written consent of the Required Holders if such amendment, modification or 
supplement would not have a Material Adverse Effect and the Company shall 
have delivered to each holder of any Notes a copy of such proposed amendment, 
modification or supplement together with an Officers' Certificate describing 
such proposed amendment, modification or supplement and stating that to the 
best of the Company's knowledge (after due inquiry) such proposed amendment, 
modification or supplement would not have a Material Adverse Effect, (ii) the 
Bank Credit Facilities may be amended, modified or supplemented without the 
prior written consent of the Required Holders if such amendment, modification 
or supplement may be made without the written consent of any holders of the 
Notes under the Trust Agreement, and (iii) the conveyances, assignments and 
bills of sale referred to in clause (b) of the definition of PCI Agreements 
may be amended, modified or supplemented so long as such amendments, 
modifications or supplements do not, in the aggregate, have a Material 
Adverse Effect.

        10.13.    CHIEF EXECUTIVE OFFICE.  The Company will not move its 
chief executive office and the office at which it maintains its records 
relating to the transactions contemplated by this Agreement and the Security 
Documents unless (a) not less than 45 days' prior written notice of its 
intention to do so, clearly describing the new location, shall have been 
given to the Trustee and each holder of a Note and (b) such action, 
reasonably satisfactory to the Trustee and each holder of a Note, to maintain 
any security interest in the property subject to the Security Documents at 
all times fully perfected and in full force and effect shall have been taken.

        10.14.    OPINIONS.  The Company, at its expense, will furnish to the 
Trustee and each holder of a Note during the period commencing October 1 to 
November 1 of the years 2001 and 2006 and at such other times as the Trustee 
may reasonably request in connection with the perfection of  Liens granted 
pursuant to the Security Documents an opinion of counsel satisfactory to the 
Trustee stating that in the opinion of such counsel such action has been 
taken with respect to the recording, filing, re-recording and re-filing of 
the Security Documents and any financing statements necessary to maintain the 
Lien or security interest created thereby and reciting the details of such 
action or stating that in the opinion of such counsel no such action is 
necessary to maintain such lien or security interest; PROVIDED, HOWEVER, that 
such opinion may be from counsel not located in such jurisdiction and 
PROVIDED, FURTHER, that such opinion is not required to address filings with 
respect to the perfection of any lien or security interest in fixtures.

        10.15.    INFORMATION REQUIRED BY RULE 144A.  The Company covenants 
that it will, upon the prior written request of the holder of any Note, 
provide such holder, and any qualified institutional buyer designated by such 
holder, such financial and other information as such holder may reasonably 
determine to be necessary in order to permit compliance with the information 
requirements of Rule 144A under the Securities Act of 1933, as amended, in 
connection with the resale of Notes, except at such times as the 


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<PAGE>

Company is subject to the reporting requirements of section 13 or 15(d) of 
the Securities Exchange Act of 1934, as amended.  For the purpose of this 
Section 10.15, the term "qualified institutional buyer" shall have the 
meaning specified in Rule 144A under the Securities Act of 1933, as amended.

        10.16.    COVENANT TO SECURE NOTES EQUALLY.  The Company covenants 
that, if it or any Restricted Subsidiary shall create or assume any Lien upon 
any of its property or assets, whether now owned or hereafter acquired, other 
than Liens permitted by the provisions of Section 10.2 (unless prior written 
consent to the creation or assumption thereof shall have been obtained 
pursuant to Section 18 and except any such Lien arising by operation of law), 
it will make or cause to be made effective provision whereby the Notes will 
be secured by such Lien equally and ratably with any and all other 
Indebtedness thereby secured so long as any such other Indebtedness shall be 
so secured, it being understood that the provision of such equal and ratable 
security shall not constitute a cure or waiver of any related Event of 
Default.

        10.17.    COMPLIANCE WITH LAWS.  (a) The Company will, and will cause 
each Subsidiary to, comply with all applicable statutes, rules, regulations, 
and orders of, and all applicable restrictions imposed by, the United States 
of America, foreign countries, states, provinces and municipalities, and of 
or by any governmental department, commission, board, regulatory authority, 
bureau, agency and instrumentality of the foregoing, and of or by any court, 
arbitrator or grand jury, in respect of the conduct of their respective 
businesses and the ownership of their respective properties or business 
(including, without limitation, Environmental Laws), except (i) such as are 
being contested in good faith by appropriate proceedings promptly initiated 
and diligently conducted and if such reserve or other appropriate provision, 
if any, as shall be required by GAAP shall have been made therefor or (ii) 
for any failure to so comply which, individually or in the aggregate, could 
not reasonably be expected to have a Material Adverse Effect.

        (b)  The Company will, and will cause each Restricted Subsidiary to, 
comply with all Environmental Laws, other than noncompliance which could not 
reasonably be expected to result in a Material Adverse Effect, individually 
or in the aggregate, with any other liability under any Environmental Laws.

        10.18.    FURTHER ASSURANCES.  At any time and from to time promptly, 
the Company shall, at its expense, execute and deliver to each holder of a 
Note and to the Trustee such further instruments and documents, and take such 
further action, as the holders of the Notes may from time to time reasonably 
request, in order to further carry out the intent and purpose of this 
Agreement and to establish and protect the rights, interests and remedies 
created, or intended to be created, in favor of the holders of the Notes, 
including, without limitation, the execution, delivery and recordation and 
filing of security agreements and financing statements and continuation 
statements under the Uniform Commercial Code of any applicable jurisdiction.

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<PAGE>


        10.19.    SUBSIDIARIES.    (a) The Company 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 the following conditions:

                (i)  immediately before and after giving effect to such 
        designation no condition or event shall exist which constitutes an 
        Event of Default or Potential Event of Default;

                (ii) immediately after giving effect to such designation, (1) 
        (other than in the case of a designation of an Unrestricted 
        Subsidiary that does not have any Indebtedness as a Restricted 
        Subsidiary), the Company would be permitted to incur at least $1 of 
        additional Indebtedness in compliance with subdivisions (i), (ii) and 
        (iii) of Section 10.1(f), (2) the Company and the Restricted 
        Subsidiaries would not be liable with respect to Indebtedness or any 
        Guaranty, would not own any Investments and their property would not 
        be subject to any Lien which is not permitted by this Agreement and 
        (3) substantially all of the Company's and the Restricted 
        Subsidiaries' assets will be located, and substantially all of the 
        Company's and the Restricted Subsidiaries' business will be 
        conducted, in the United States of America;

                (iii)     in the case of a designation as an Unrestricted 
        Subsidiary, if such designation (and all other prior designations of 
        Restricted Subsidiaries or newly acquired or formed Subsidiaries as 
        Unrestricted Subsidiaries during the current fiscal year) were deemed 
        to constitute an Investment by the Company in respect of all the 
        assets of the Subsidiary so designated, such Investment would be in 
        compliance with Section 10.3(c), with the amount of such Investment 
        being deemed to equal the net book value of such assets (as 
        determined in good faith by the Managing General Partner) in the case 
        of a Restricted Subsidiary or the cost of acquisition or formation in 
        the case of a newly acquired or formed Subsidiary, PROVIDED, that 
        this subdivision (iii) of this Section 10.19(a) shall not apply to an 
        acquisition or formation by the Company or a Restricted Subsidiary of 
        a newly acquired or formed Unrestricted Subsidiary to the extent such 
        acquisition or formation (1) is funded solely by the net cash 
        proceeds received by the Company from either General Partner or from 
        the Public Partnership as a capital contribution or as consideration 
        for the issuance by the Company of additional partnership interests 
        or (2) the assets involved in such acquisition are acquired in 
        exchange for additional partnership interests of the Company or the 
        Public Partnership PROVIDED, FURTHER, the net book value of the 
        Restricted Subsidiary designated an Unrestricted Subsidiary and the 
        cost (other than the amount paid in cash) of the acquisition or 
        formation of a newly acquired or formed Subsidiary shall be deemed 
        proceeds from the sale of assets of the Company for purposes of 
        Section 10.7 and Section 9.4;

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<PAGE>

                (iv) 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; and

                (v)  the Company shall deliver to each holder of Notes, 
    within 20 Business Days after any such designation, an Officers' 
    Certificate stating the effective date of such designation and confirming 
    compliance with the provisions of this Section 10.19.

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

        (b)  The Company will cause each Qualifying Restricted Subsidiary, at 
the time it is or is deemed to be designated as a Restricted Subsidiary, to 
(i) become a party to the Company Security Agreement, the Subsidiary 
Guarantee Agreement and the Trust Agreement by execution of a Supplemental 
Agreement and deliver a Perfection Certificate and (ii) enter into such 
documents as may be necessary or as you may request in form and substance 
satisfactory to the Required Holders in order to secure such Restricted 
Subsidiary's obligations under the Subsidiary Guarantee Agreement with all or 
substantially all of the assets of such Restricted Subsidiary of any type 
which, if they were assets of the Company, would be Collateral.  Prior to the 
designation of a Subsidiary as a Restricted Subsidiary, the Company shall 
deliver to the holders of the Notes an opinion of counsel with respect to the 
due execution and delivery of the Supplemental Agreement by such Subsidiary 
and as to the enforceability of the Company Security Agreement, the Trust 
Agreement, the Supplemental Agreement and the Subsidiary Guarantee Agreement 
with respect to such Subsidiary, such opinion to be in form and substance 
satisfactory to the Required Holders.

        (c)  The Company will not own any Unrestricted Subsidiaries other 
than Wholly Owned Subsidiaries satisfying the requirements in clauses (a), 
(b) and (c) of the definition of Restricted Subsidiary.

        10.20.    DAMAGE, DESTRUCTION, TAKING, ETC.  In the event of any 
damage, destruction or a taking in respect of all or a portion of the 
properties subject to any of the Security Documents or in the event there 
shall be proceeds under title insurance policies with respect to any real 
property, the Company will not apply any net insurance proceeds or 
self-insurance amounts, net awards, if such proceeds (whether resulting from 
one or a series of events or circumstances) exceed $25,000,000 in the 
aggregate, to the cost of repairing or replacing any damaged or destroyed 
assets without the prior written consent of the Required Holders.

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<PAGE>


        10.21.    ACCOUNTING CHANGES.  The Company will not, and will not 
suffer or permit any Restricted Subsidiary to, make any significant change in 
accounting treatment or reporting practices, except as required by GAAP or 
consented to by the Company's independent public accountant.  The Company 
will, and will cause each Restricted Subsidiary to, cause its fiscal year to 
end on June 30 in each year.

        10.22.    ACQUISITIONS.  Except as otherwise permitted by Section 
10.7, the Company will not, and will not cause or permit any of the 
Restricted Subsidiaries to, purchase, lease or otherwise acquire (in one 
transaction or a series of transactions) all or any substantial part of the 
assets of any other Person, except that (a) the Company and any of the 
Restricted Subsidiaries may purchase Inventory in the ordinary course of 
business and (b) the Company or any Restricted Subsidiary may engage in any 
such acquisition if no Event of Default or Potential Event of Default has 
occurred and is continuing at the time of any such acquisition or would occur 
immediately after giving effect thereto.

        10.23.    IMPAIRMENT OF SECURITY INTERESTS.  Other than with respect 
to Permitted Encumbrances, the Company will not, and will not permit any of 
the Restricted Subsidiaries to, take or omit to take any action, which action 
or omission might or would have the result of materially impairing the 
security interests in favor of the Trustee with respect to the Collateral, 
and the Company will not, and will not permit any of the Restricted 
Subsidiaries to, grant to any Person (other than the Trustee) any interest 
whatsoever in the Collateral.

        10.24.    LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS, ETC.  
The Company will not, and will not cause or permit any of the Restricted 
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer 
to exist or become effective any consensual encumbrance or restriction on the 
ability of any Restricted Subsidiary to (a) pay dividends or make any other 
distributions on or in respect of its capital stock, or pay any Indebtedness 
owed to the Company or any Restricted Subsidiary, (b) make loans or advances 
to the Company or any Restricted Subsidiary or (c) transfer any of its 
properties or assets to the Company or any Restricted Subsidiary, except for 
such encumbrances or restrictions existing under or by reason of (i) 
customary non-assignment provisions in any lease governing a leasehold 
interest or other contract entered into in the ordinary course of business 
consistent with past practices, (ii) restrictions on the payment of dividends 
and distributions pursuant to the terms of  Indebtedness incurred by such 
Restricted Subsidiary in accordance with Section 10.1 or (iii) this Agreement 
or any other Operative Agreement.

        10.25.    NO OTHER NEGATIVE PLEDGES.  The Company will not, and will 
not cause or permit any of the Restricted Subsidiaries to, directly or 
indirectly, enter into any agreement prohibiting the creation or assumption 
of any Lien upon the properties or assets of the Company or any Restricted 
Subsidiary, whether now owned or hereafter acquired, or requiring an 
obligation to be secured if some other obligation is secured, 


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<PAGE>

except for this Agreement, the Other Agreements, the Bank Credit Facilities 
and the terms of any other Indebtedness incurred in accordance with Section 
10.1 (PROVIDED that the terms of such agreement for such other Indebtedness 
are no more onerous to the Company and its Subsidiaries than those terms set 
forth in Section 10.2); PROVIDED that no such agreement shall prohibit the 
granting of Liens on assets of the Company and its Restricted Subsidiaries as 
contemplated by the terms of this Agreement, the Security Documents and any 
documents evidencing or creating any other Parity Debt.

        10.26.    SALES OF RECEIVABLES.  The Company will not, and will not 
cause or permit any of the Restricted Subsidiaries to, sell with recourse, 
discount or otherwise sell or dispose of its notes or accounts receivable, 
except for (a) accounts receivable consisting of assets of an operating unit 
sold as a going concern in accordance with all other provisions of this 
Agreement and (b) sales of account receivables which have been written off as 
uncollectable or collectable only after extended delays.

        10.27.    FIXED PRICE SUPPLY CONTRACTS; CERTAIN POLICIES.  (a) The 
Company will not, and will not permit any of the Restricted Subsidiaries to, 
at any time be a party or subject to any contract for the purchase or supply 
by such parties of propane or other product except where (i) the purchase 
price is set with reference to a spot index or indices substantially 
contemporaneously with the delivery of such product or (ii) delivery of such 
propane or other product is to be made no more than one year after the 
purchase price is agreed to.

        (b)  The Company will not amend, modify or waive the trading policy 
or supply inventory position policy existing as of the date of Closing, 
except that the Company may amend its supply inventory position policy such 
that such policy provides that neither it nor any of the Restricted 
Subsidiaries will hold on hand more than 90 days' of commodities inventory.  
The Company will provide each holder of a Note  with prompt written notice of 
any such new commodity hedging agreement or any such change in such policy. 
Subject to the foregoing exception, the Company and the Restricted 
Subsidiaries will comply in all material respects with such policies at all 
times.

        10.28.    INDEPENDENT CORPORATE EXISTENCE.  (a) The Company shall 
maintain, and shall cause each of its Subsidiaries to maintain, books, 
records and accounts that are separate from the books, records and accounts 
of the General Partners or any of their respective Subsidiaries (other than 
the Company and its Subsidiaries) such that: (i) the revenues of the Company 
and its Subsidiaries will be credited to the accounts of the Company and its 
Subsidiaries only; (ii) all expenses incurred by the Company and its 
Subsidiaries shall be paid only from the accounts of the Company and its 
Subsidiaries (other than those paid by the Managing General Partner and 
allocated to the Company or its Subsidiaries in the manner set forth in 
subdivision (c) of this Section); (iii) only officers and employees of the 
Managing General Partner, the Company and its Subsidiaries in their capacity 
as such shall have the authority to make disbursements with respect to the 
accounts of the Company and its Subsidiaries, as the case may be; (iv) there 


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<PAGE>


shall occur no sharing of accounts or funds between the Company and its 
Subsidiaries, on the one hand, and either General Partner or any of their 
respective Subsidiaries (other than the Company and its Subsidiaries), on the 
other hand; and (v) all cash and funds of the Company and its Subsidiaries 
shall be managed separately from the cash and funds of either General Partner 
or any of their respective Subsidiaries (other than the Company and its 
Subsidiaries), and there shall not occur any commingling, including for 
investment purposes, of funds or assets of the Company and its Subsidiaries 
with the funds or assets of either General Partner or any of their respective 
Subsidiaries (other than the Company and its Subsidiaries).

        (b)  All full-time employees, consultants and agents of the Company 
and its Subsidiaries shall be compensated directly from the bank accounts of 
the Managing General Partner, the Company and such Subsidiaries for services 
provided by such employees, consultants and agents and, to the extent any 
employee, consultant or agent is also an employee, consultant or agent of 
either General Partner or any of their respective Subsidiaries (other than 
the Company and its Subsidiaries), the compensation of such employee, 
consultant or agent shall be allocated in accordance with subdivision (c) of 
this Section among the Company and its Subsidiaries, on the one hand, and 
either General Partner and any of their respective Subsidiaries (other than 
the Company and its Subsidiaries), on the other hand, on a basis which 
reasonably reflects the services rendered to the Company and its Subsidiaries.

        (c)  All overhead expenses (including telephone and other utility 
charges) for  items shared by the Company and its Subsidiaries, on the one 
hand, and either General Partner or any of their respective Subsidiaries 
(other than the Company and its Subsidiaries), on the other hand, shall be 
allocated on the basis of actual use to the extent practicable and, to the 
extent such allocation is not practicable, on a basis reasonably related to 
actual use.

        (d)  The Company shall not permit either General Partner or any of  
their respective Subsidiaries (other than the Company and its Subsidiaries) 
to be named as a loss payee or additional insured on the insurance policy 
covering the property of the Company or any of its Subsidiaries, or enter 
into an agreement with the holder of such policy whereby in the event of a 
loss in connection with such property, proceeds are paid to either General 
Partner and their respective Subsidiaries (other than the Company and its 
Subsidiaries).

        10.29.    OTHER DEBT.  (a) The Company shall ensure that the lenders 
from time to time in respect of any Parity Debt or any other Indebtedness in 
the aggregate principal amount of at least $3,750,000 outstanding as 
permitted by paragraphs (b) through (f), (i) through (l) and (r) of Section 
10.1, in the documents governing the terms of such Indebtedness, (i) 
recognize the existence and validity of the obligations represented by the 
Notes and (ii) agree to refrain from making or asserting any claim that this 
Agreement or the obligations represented by the Notes are invalid or not 
enforceable in accordance 


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with its and their terms as a result of the circumstances surrounding the 
incurrence of such obligations.

        (b)  Each holder of Notes from time to time, as evidenced by its 
acceptance of such Notes, (i) acknowledges the existence and validity of the 
obligations of the Company under the Bank Credit Facilities and the 1996 Note 
Agreements (and any extension, renewal, refunding or refinancing of the Bank 
Credit Facilities or the 1996 Notes permitted by Section 10.1) and (ii) 
agrees to refrain from making or asserting any claim that such obligations or 
the instruments governing the terms thereof are invalid or not enforceable in 
accordance with its and their terms as a result of the circumstances 
surrounding the incurrence of such obligations.

        10.30.    RESTRICTION ON GENERAL PARTNER.  The Managing General 
Partner shall not (i) exist for any purpose or engage in any business or 
business activity except (a) to serve as the Managing General Partner of the 
Company and the Public Partnership, in the circumstances provided in the 
Partnership Agreement and Public Partnership Agreement, and (b) to own other 
wholly-owned corporate Subsidiaries, PROVIDED that, each General Partner 
shall have agreed (x) that it will not guaranty or, except with respect to 
Indebtedness assumed by the Company or the Public Partnership, otherwise 
agree to be liable with respect to any Indebtedness incurred by such 
Subsidiary and at the time of formation or acquisition thereof and in 
connection therewith, the assets of either General Partner are not and will 
not be subject to any Liens relating to and Indebtedness or other obligations 
of such Subsidiaries and (y) to be bound by the provisions of Section 10.28 
(all references therein to the Company to be deemed references to the General 
Partners and all references therein to Subsidiaries to be deemed references 
to Subsidiaries of the General Partners) and (z) the General Partners shall 
confirm with an Approved Rating Agency (as defined below) that its rating on 
the Notes in effect at such time will not be downgraded solely as a result 
thereof, or (ii) incur any Indebtedness or, other than with respect to the 
activities described in subsection (i) (a) above, other liabilities (other 
than tax liabilities).  "Approved Rating Agency" shall mean any of Fitch 
Investors Services, Inc., Standard & Poor's Ratings Group, Moody's Investor 
Service, Inc. or Duff and Phelps Credit Rating Co.

SECTION 11.    EVENTS OF DEFAULT; ACCELERATION.

        If any of the following conditions or events ("Events of Default") 
shall occur and be continuing:

        (a)  the Company shall default in the payment of any principal of or 
    Make Whole Amount or Premium Amount, if any, on any Note when the same 
    becomes due and payable, whether at maturity or at a date fixed for 
    prepayment or by declaration or otherwise; or

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        (b)  the Company shall default in the payment of any interest on any 
    Note or any amount due and payable under any Operative Agreement for more 
    than 5 Business Days after the same becomes due and payable; or

        (c)  the Company or any Restricted Subsidiary shall default in the 
    performance of or compliance with any term contained in Section 7(f), any 
    of Sections 10.1 through 10.8 (other than Section 10.8(c)), inclusive, or 
    the Dedicated Funds are not used to repay Indebtedness as specified in 
    the pro forma calculations set forth in the definition of Consolidated 
    Pro Forma Debt Service or the definition of Maximum Consolidated Pro 
    Forma Debt Service, as the case may be; or

        (d)  the Company, either General Partner, the Public Partnership or 
    any Restricted Subsidiary shall default in the performance of or 
    compliance with any other term contained in this Agreement or any other 
    Operative Agreement and such default shall not have been remedied within 
    30 Business Days after the earlier of the date such default shall first 
    have become actually known to any Responsible Officer of such Person or 
    the date written notice thereof shall have been received by the Company 
    from the Trustee or from any Note holder; or

        (e)  any material representation or warranty made in writing by or on 
    behalf of the Company or any of its Affiliates in this Agreement, any 
    other Operative Agreement or in any instrument furnished in connection 
    with the transactions contemplated by this Agreement shall prove to have 
    been false or incorrect in any material respect on the date as of which 
    made or deemed made; or

        (f)  (i) the Company or any Restricted Subsidiary (as principal or 
    guarantor or other surety) shall default (after receiving notice, if any, 
    and/or the expiration of any applicable grace period) in the payment of 
    any amount of principal of or premium or interest on the Parity Debt or 
    any event shall occur or condition shall exist in respect of the Parity 
    Debt the effect of which is to cause such Parity Debt to become due 
    before its stated maturity or before its regularly scheduled dates of 
    payment and such default, event or condition shall continue for more than 
    the period of grace, if any, specified therein and shall not have been 
    waived pursuant thereto;

        (ii)  the Company or any Restricted Subsidiary (as principal or 
    guarantor or other surety) shall default (after receiving notice, if any, 
    and/or the expiration of any applicable grace period) in the payment of 
    any amount of principal of or premium or interest on any Indebtedness in 
    an amount at least equal to $10,000,000; or any event shall occur or 
    condition shall exist in respect of such other Indebtedness which is 
    outstanding in a principal amount of at least $10,000,000 or under any 
    evidence of any such Indebtedness or of any mortgage, indenture or other 
    agreement relating to such other Indebtedness, the effect of which is to 
    cause such other Indebtedness to become due before its stated maturity or 
    before its regularly scheduled dates of payment; or

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<PAGE>

        (g)  filing by or on the behalf of the Company or the Managing 
    General Partner of a voluntary petition or an answer seeking 
    reorganization, arrangement, readjustment of its debts or for any other 
    relief under any bankruptcy, reorganization, compromise, arrangement, 
    insolvency, readjustment of debt, dissolution or liquidation or similar 
    act or law, state or federal, now or hereafter existing ("Bankruptcy 
    Law"), or any action by the Company or the Managing General Partner, or 
    consent or acquiescence to, the appointment of a receiver, trustee or 
    other custodian of the Company or the Managing General Partner, or of all 
    or a substantial part of its property; or the making by the Company or 
    the Managing General Partner of any assignment for the benefit of 
    creditors; or the admission by the Company or the Managing General 
    Partner of the Company in writing of its inability to pay its debts as 
    they become due; or

        (h)  filing of any involuntary petition against the Company or the 
    Managing General Partner in bankruptcy or seeking reorganization, 
    arrangement, readjustment of its debts or for any other relief under any 
    Bankruptcy Law and an order for relief by a court having jurisdiction in 
    the premises shall have been issued or entered therein; or any other 
    similar relief shall be granted under any applicable Federal or state 
    law; or a decree or order of a court having jurisdiction in the premises 
    for the appointment of a receiver, liquidator, sequestrator, trustee or 
    other officer having similar powers over the Company or the Managing 
    General Partner or over all or a part of its property shall have been 
    entered; or the involuntary appointment of an interim receiver, trustee 
    or other custodian of the Company or the Managing General Partner or of 
    all or a substantial part of its property; or the issuance of a warrant 
    of attachment, execution or similar process against any substantial part 
    of the property of the Company or the Managing General Partner; and 
    continuance of any such event for 60 consecutive days unless dismissed, 
    bonded to the satisfaction of the court having jurisdiction in the 
    premises or discharged; or

        (i)  filing by or on the behalf of any Restricted Subsidiary of a 
    voluntary petition or an answer seeking reorganization, arrangement, 
    readjustment of its debts or for any other relief under any Bankruptcy 
    Law, or any action by any Restricted Subsidiary for, or consent or 
    acquiescence to, the appointment of a receiver, trustee or other 
    custodian of such Restricted Subsidiary or of all or a substantial part 
    of its property; or the making by any Restricted Subsidiary of any 
    assignment for the benefit of creditors; or the admission by any 
    Restricted Subsidiary in writing of its inability to pay its debts as 
    they become due; or

        (j)  filing of any involuntary petition against any Restricted 
    Subsidiary in bankruptcy or seeking reorganization, arrangement, 
    readjustment of its debts or for any other relief under any Bankruptcy 
    Law and an order for relief by a court having jurisdiction in the 
    premises shall have been issued or entered therein; or any other similar 
    relief shall be granted under any applicable Federal or state law; or a 
    decree or

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<PAGE>


    order of a court having jurisdiction in the premises for the appointment 
    of a receiver, liquidator, sequestrator, trustee or other officer having 
    similar powers over any Restricted Subsidiary or over all or a part of 
    its property shall have been entered; or the involuntary appointment of 
    an interim receiver, trustee or other custodian of any Restricted 
    Subsidiary or of all or a substantial part of its property; or the 
    issuance of a warrant of attachment, execution or similar process against 
    any substantial part of the property of any Restricted Subsidiary; and 
    continuance of any such event for 60 consecutive days unless dismissed, 
    bonded to the satisfaction of the court having jurisdiction in the 
    premises or discharged; or

        (k)  a final judgment or judgments (which is or are non-appealable or 
    which has or have not been stayed pending appeal or as to which all 
    rights to appeal have expired or been exhausted) shall be rendered 
    against the Company or any Restricted Subsidiary for the payment of money 
    in excess of $10,000,000 in the aggregate (net of any insurance coverage) 
    and any one of such judgments shall not be discharged or execution 
    thereon stayed pending appeal within 60 days after the date due, or, in 
    the event of such a stay, such judgment shall not be discharged within 60 
    days after such stay expires or any action shall be legally taken by a 
    judgment creditor to levy upon the assets or properties of the Company or 
    any Restricted Subsidiary to enforce any such judgment; or

        (l)  any of the Security Documents shall at any time, for any reason, 
    cease in any material respect to be in full force and effect or shall be 
    declared to be null and void in whole or in any material part by the 
    final judgment (which is non-appealable or has not been stayed pending 
    appeal or as to which all rights to appeal have expired or been 
    exhausted) of any court or other governmental or regulatory authority 
    having jurisdiction in respect thereof, or if the validity or the 
    enforceability of any of the Security Documents shall be contested by or 
    on behalf of the Company, either General Partner, the Public Partnership, 
    or any Restricted Subsidiary, or the Company, either General Partner, the 
    Public Partnership, or any Restricted Subsidiary shall renounce any of 
    the Security Documents or deny that it is bound by the terms of any of 
    the Security Documents; or

        (m)  any order, judgment or decree is entered in any proceedings 
    against the Company decreeing a split-up of the Company, and such order, 
    judgment or decree shall not be dismissed or execution thereon stayed 
    pending appeal or review within 60 days after entry thereof, or in the 
    event of such a stay, such order, judgment or decree shall not be 
    dismissed within 60 days after such stay expires;

then, (x) upon the occurrence of any Event of Default described in 
subdivision (g) or (h) of this Section 11, the unpaid principal amount of and 
accrued interest on the Notes shall automatically become due and payable 
(without Make Whole Amount), or, (y) upon the occurrence and continuance of 
any other Event of Default, any holder or holders of more than 50% in 
principal amount of the Notes at the time outstanding, may at any time 


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<PAGE>


(unless all defaults shall theretofore have been remedied in accordance with 
the terms hereof) at its or their option, by written notice or notices to the 
Company, declare all the Notes to be due and payable, whereupon the same 
shall forthwith mature and become due and payable, together with interest 
accrued thereon and, to the extent permitted by applicable law, the 
applicable  Make Whole Amount, if any, with respect to such Notes, all 
without presentment, demand, protest or further notice, which are hereby 
waived, PROVIDED that during the existence of an Event of Default described 
in subdivision (a) or (b) (insofar as subdivision (b) relates to interest on 
any Note) of this Section 11, any holder of the Notes at the time outstanding 
may, at its option, by notice in writing to the Company, declare the Notes 
then held by such holder to be due and payable, whereupon the Notes then held 
by such holder shall forthwith mature and become due and payable, together 
with interest accrued thereon and, to the extent permitted by applicable law, 
the applicable Make Whole Amount with respect to such Notes.

        At any time after the principal of, and interest accrued on, all the 
Notes are declared due and payable, the Required Holders, by written notice 
to the Company, may rescind and annul any such declaration and its 
consequences (other than in respect of any Note which has been individually 
accelerated pursuant to the proviso contained in the immediately preceding 
paragraph) if (x) the Company has paid all overdue interest on the Notes, the 
principal of and Make Whole Amount, if any, on any such Notes which have 
become due otherwise than by reason of such declaration, and interest on such 
overdue principal and the applicable Make Whole Amount and (to the extent 
permitted by applicable law) overdue interest, at a rate per annum equal to 
the rate of interest stated on the face of the Notes plus 2.0%, (y) all 
Events of Default, other than nonpayment of amounts which have become due 
solely by reason of such declaration, and all conditions and events which 
constitute Events of Default or Potential Events of Default have been cured 
or waived, and (z) no judgment or decree has been entered for the payment of 
any monies due pursuant to the Notes or this Agreement; but no such 
rescission and annulment shall extend to or affect any subsequent Event of 
Default or Potential Event of Default or impair any right consequent thereon.

SECTION 12.  REMEDIES ON DEFAULT; RECOURSE, ETC.

        In case any one or more Events of Default or Potential Events of 
Default shall occur and be continuing, (i) the holder of any Note at the time 
outstanding may proceed to protect and enforce the rights of such holder by 
an action at law, suit in equity or other appropriate proceeding, whether for 
the specific performance of any agreement contained herein or in such Note, 
or for an injunction against a violation of any of the terms hereof or 
thereof, or in aid of the exercise of any power granted hereby or thereby or 
by law or otherwise, and (ii) the Trustee and the holders of the Notes may 
exercise any rights or remedies in their respective capacities under the 
Security Documents in accordance with the provisions thereof.  In case of a 
default in the payment or performance of any provision hereof or of the Notes 
or of the Security Documents, the Company will pay to 


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<PAGE>

the holder of each Note such further amount as shall be sufficient to cover 
the costs and expenses of collection, including, without limitation, 
reasonable attorneys' fees, expenses and disbursements, and any out-of-pocket 
costs and expenses of any such holder incurred in connection with analyzing, 
evaluating, protecting, ascertaining, defending or enforcing any of its 
rights as set forth herein or in any of the Security Documents.  No course of 
dealing and no delay on the part of any holder of any Note in exercising any 
right, power or remedy shall, to the extent permitted by law, operate as a 
waiver thereof or otherwise prejudice such holder's rights, powers or 
remedies.  No right, power or remedy conferred by this Agreement or by any 
Note upon any holder thereof shall be exclusive of any other right, power or 
remedy referred to herein or therein or now or hereafter available at law, in 
equity, by statute or otherwise.

SECTION 13.  DEFINITIONS.

        As used herein the following terms have the following respective 
meanings:

        1996 NOTE AGREEMENTS:  the separate Note Agreements dated as of 
December 11, 1996 among the Company, the General Partners and the Purchasers 
listed in Schedule A attached hereto.

        1996 NOTES:  the 7.53% Senior Secured Notes due December 30, 2010, in 
the aggregate original principal amount of $220,000,000, issued by the 
Company pursuant to the 1996 Note Agreements.

        ADMINISTRATIVE AGENT:  Bank of America National Trust and Savings 
Association, in its capacity as administrative agent for the Banks under the 
Bank Credit Facilities, and its successors in such capacity.

        AFFILIATE:  as applied to any Person, any other Person directly or 
indirectly controlling or controlled by or under common control with such 
Person, PROVIDED that (i) for purposes of this definition, "control" 
(including, with correlative meanings, the terms "controlled by" and 
"under common control with") as used with respect to any Person shall mean 
the possession, directly or indirectly, of the power to direct or cause the 
direction of the management and policies of such Person, whether as a general 
partner or through the ownership of voting securities or by contract or 
otherwise, (ii) as applied to the Company, the term "Affiliate" shall 
include each General Partner and the Public Partnership, and (iii) neither 
you nor any other Person which is an institution shall be deemed to be an 
Affiliate of the Company solely by reason of ownership of the Notes or other 
securities issued in exchange for the Notes or by reason of having the 
benefits of any agreements or covenants contained in this Agreement or the 
other Operative Agreements.

        AGREEMENT:  the meaning specified in Section 1.


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        AVAILABLE CASH:  with respect to any fiscal quarter of the Company, 
(a) the sum of (i) all cash and cash equivalents of the Company and the 
Restricted Subsidiaries on hand at the end of such quarter and (ii) all 
additional cash and cash equivalents of the Company and the Restricted 
Subsidiaries on hand on the date of determination of Available Cash with 
respect to such quarter obtained through available borrowings for working 
capital purposes made after the end of such quarter, less (b) (i) the amount 
of cash reserves necessary or appropriate in the reasonable discretion of the 
Managing General Partner to (A) provide for the proper conduct of the 
business of the Company subsequent to such quarter and the Restricted 
Subsidiaries (including, without limitation, cash reserves for future capital 
expenditures) subsequent to such quarter or (B) provide funds for 
distributions under Section 6.4 or 6.5 of the MLP Agreement in respect of any 
one or more of the next four fiscal quarters or (C) comply with applicable 
law or any loan agreement (including this Agreement), mortgage, security 
agreement, debt instrument or other agreement or obligation to which the 
Company or any Restricted Subsidiary is a party or by which it or its assets 
are subject (including the payment of principal, Make Whole Amount or Premium 
Amount, if applicable, and interest in respect of the Notes), or (ii) all 
Dedicated Funds and (iii) all amounts which a Restricted Subsidiary is 
prohibited from dividending or distributing to the Company; PROVIDED that 
Available Cash shall exclude without duplication (x) in each fiscal calendar 
quarter a reserve equal to at least 50% of the aggregate amount of all 
interest payments, except for interest payments to be made in respect of 
borrowings for working capital purposes, in respect of all Indebtedness of 
the Company and the Restricted Subsidiaries upon which interest is due 
semiannually or less frequently to be made in the next fiscal quarter 
(assuming, in the case of Indebtedness incurred under the Bank Credit 
Facilities and other Indebtedness bearing interest at fluctuating interest 
rates which cannot be determined in advance, that the interest rate in effect 
on the last Business Day of the immediately preceding fiscal quarter will 
remain in effect until such Indebtedness is due to be paid), (y) with respect 
to any Indebtedness secured equally and ratably with the Notes of which 
principal is payable annually, in the third calendar quarter immediately 
preceding each fiscal quarter in which any scheduled principal payment is due 
with respect to such Notes and other Indebtedness (a "principal payment 
quarter"), a reserve equal to at least 25% of the aggregate amount of all 
principal to be paid in respect of such Notes and other such Indebtedness 
secured equally and ratably with the Notes in such principal payment quarter; 
in the second fiscal quarter immediately preceding a principal payment 
quarter, a reserve equal to at least 50% of the aggregate amount of all 
principal to be paid in respect of such Notes and other such Indebtedness in 
such principal payment quarter; and in the fiscal quarter immediately 
preceding a principal payment quarter, a reserve equal to at least 75% of the 
aggregate amount of all principal to be paid in respect of such Notes and 
other such Indebtedness in such principal payment quarter, and (z) with 
respect to and any other Indebtedness secured equally and ratably with the 
Notes of which principal is payable semiannually, in each fiscal quarter 
which immediately precedes a fiscal quarter in which principal is payable in 
respect of such Indebtedness a reserve equal to at least 50% of the aggregate 
amount of all principal to be paid in respect of such other such 


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Indebtedness in the next fiscal quarter; PROVIDED FURTHER that the amount of 
such reserve specified in clauses (y) and (z) of this definition for 
principal amounts to be paid shall be reduced by the aggregate principal 
amount of all binding, irrevocable letters of credit established to refinance 
such principal amounts.

        BANK CREDIT FACILITIES:  that Credit Agreement, dated as of November 
20, 1998, among the Company, Bank of America National Trust and Savings 
Association, as agent, and the Banks, pursuant to which the Initial 
Acquisition Facility and the Working Capital Facility will be made available 
to the Company, and any extension, renewal, refunding or replacement thereof 
otherwise permitted to be incurred and outstanding under Section 10.1.

        BANKRUPTCY LAW:  the meaning specified in Section 11(g).

        BANKS:  the financial institutions listed in the signature pages of 
the Bank Credit Facilities, each assignee which becomes a lender under the 
Bank Credit Facilities pursuant to the terms thereof and their respective 
successors.

        BUSINESS:  the operation by the Company and its Subsidiaries of the 
wholesale and retail sale, distribution and storage of propane gas and 
related petroleum derivative products, the leasing of propane storage tanks  
and the related retail sale of supplies and equipment, including home 
appliances, and such other businesses in which the Company and its Restricted 
Subsidiaries were engaged on the date of Closing as may be described in the 
Registration Statement.

        BUSINESS DAY:  any day other than a Saturday, a Sunday or a day on 
which commercial banks in New York City or San Francisco, California are 
required or authorized by law to be closed.

        CALLED PRINCIPAL:  with respect to any Note, the principal of such 
Note that is to be prepaid pursuant to Section 9.2, 9.3 or 9.4 or becomes or 
is declared to be immediately due and payable pursuant to Section 11, as the 
context requires.

        CAPITAL LEASE:  as applied to any Person, any lease of any property 
(whether real, personal or mixed) by such Person (as lessee or guarantor or 
other surety) which would, in accordance with GAAP, be required to be 
classified and accounted for as a capital lease on a balance sheet of such 
Person.

        CERCLA:  the Federal Comprehensive Environmental Response, 
Compensation and Liability Act, as amended.

        CHANGE OF CONTROL:  any of the following:

        (a)  the liquidation or dissolution of the Managing General Partner 
of the Company;


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        (b)  any merger or consolidation of the Managing General Partner with 
or into any Person (other than a Permitted Holder) if the Managing General 
Partner is not the surviving entity thereof, or any sale, whether direct or 
indirect, of all or substantially all of the assets of the Managing General 
Partner to any Person or "group" (as used in Section 13(d) and 14(d) of the 
Securities Exchange Act of 1934, as amended), other than to a Permitted 
Holder;

        (c)  any Person or "group" is or becomes, directly  or indirectly, 
the beneficial owner of more than 50% of the then outstanding total voting 
power of all classes of stock (or other securities) of the Managing General 
Partner, the holders of which are ordinarily, in the absence of 
contingencies, entitled to elect a majority of the directors (or Persons 
performing similar functions) of the Managing General Partner;

        (d)  during any period of twelve consecutive months after the date of 
Closing, individuals who at the beginning of such twelve month period (or 
Persons nominated by such members of the Board of Directors of the Managing 
General Partner to succeed them) constitute the Board of Directors of the 
Managing General Partner cease, for any reason, to constitute a majority of 
the Board of Directors of the general partner of the Company then in office; 
or

        (e)  if the Permitted Holders cease to own, directly or indirectly, 
in the aggregate, an amount of the general partnership interest in the 
Company equal to at least fifty percent of the amount of the general 
partnership interest in the Company owned, collectively, by the General 
Partners on the date of Closing (as reduced to reflect the effect of the 
Overallotment Option), PROVIDED it shall not be a Change of Control pursuant 
to paragraph (b), (c), (d) or (e), if the Chief Executive Officer or Chief 
Financial Officer of the Company, immediately prior to the events specified 
therein, serves as Chief Executive Officer or Chief Financial Officer, after 
the occurrence of such an event.

        CHC:  Cornerstone Holding Corp., a Delaware corporation.

        CLOSING:  the meaning specified in Section 3.

        CODE:  the Internal Revenue Code of 1986, as amended from time to 
time.

        COLLATERAL:  collectively, the properties referred to as the 
"Collateral" under the Company Security Agreement and as the "Security" 
in the Trust Agreement.

        COMMODITY HEDGING AGREEMENT(S):  any agreement or arrangement 
designed solely to protect the Company against fluctuations in the price of 
propane or natural gas with respect to quantities of propane or natural gas 
that the Company reasonably expects to purchase from suppliers, sell to its 
customers or need for its inventory during the period covered by such 
agreement or arrangement.


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        COMPANY:  the meaning specified in the Introduction.

        COMPANY SECURITY AGREEMENT:  the Security Agreement among the 
Company, the Qualifying Restricted Subsidiaries and the Trustee substantially 
in the form attached hereto as Exhibit E as amended from time to time.

        COMPETITOR:  any Person engaged primarily in the wholesale and retail 
sale, distribution and storage of propane gas and related petroleum 
derivative products. 

        CONSOLIDATED CASH FLOW:  at any date of determination, for the period 
of four consecutive fiscal quarters most recently completed at least 45 days 
(except that, in connection with any calculation required pursuant to Section 
10.4, for the period of four consecutive fiscal quarters most recently 
completed) prior to such date of determination,

        (a)  the sum of, without duplication, the amounts for such period, 
    taken as a single accounting period, (i) Consolidated Net Income and (ii) 
    all amounts deducted in the determination of such Consolidated Net Income 
    for such period in respect of (v) interest charges (including 
    amortization of debt discount and expense and imputed interest on Capital 
    Lease obligations), (x) provisions for all income taxes and reserves 
    (including reserves for deferred income taxes), (y) all other non-cash 
    items, and (z) all fees, cost and expenses with respect to the retirement 
    or repayment of Indebtedness of either General Partner existing 
    immediately prior to the Closing, LESS

        (b)  without duplication, all amounts added in the determination of 
    such Consolidated Net Income for such period in respect of non-cash items.

Consolidated Cash Flow shall be calculated after giving effect (without 
duplication)  on a pro forma basis for the four consecutive fiscal quarters 
most recently completed prior to such date of determination to any asset 
sales or asset acquisitions (including, without limitation, any asset 
acquisition giving rise to the need to make such calculation as a result of 
the Company or any Restricted Subsidiary (including any Person who becomes a 
Restricted Subsidiary as a result of such asset acquisition) incurring, 
assuming or otherwise being liable for acquired Indebtedness) occurring 
during the period commencing on the first day of such four fiscal quarter 
period to and including the date of determination (the "REFERENCE PERIOD"), 
as if such asset sale or asset acquisition occurred on the first day of the 
Reference Period; PROVIDED, that Consolidated Cash Flow generated by an 
acquired business or asset shall be determined on the basis of, without 
duplication, (a)  the actual gross profit (revenues minus cost of goods sold) 
of the acquired business or asset during the immediately preceding four full 
fiscal quarters), minus (b) the pro forma expenses that would have been 
incurred by the Company or such Restricted Subsidiary in the operation of 
such acquired business or asset during such period computed on the basis of 
personnel expenses for employees retained or to be retained by the Company or 
such Restricted Subsidiary in the operation of such acquired business or 
asset and non-personnel costs and expenses incurred by the Company or the 
Managing General Partner 


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in the operation of its business at similarly situated Company facilities or 
Restricted Subsidiary facilities.  If the applicable Reference Period for any 
calculation of Consolidated Cash Flow shall include a partial period 
occurring prior to the Closing, then such Consolidated Cash Flow shall be 
calculated based upon the Consolidated Cash Flow on a PRO FORMA basis for 
such portion of the Reference Period prior to the Closing (giving effect to 
the transactions occurring on the date of Closing) and the Consolidated Cash 
Flow for the remaining portion of the Reference Period occurring on and after 
the Closing, giving PRO FORMA effect, as described in the preceding 
sentences, to all applicable transactions occurring on the date of Closing or 
otherwise.

        CONSOLIDATED INTEREST EXPENSE:  as of any date of determination, the 
total amount payable by the Company and the Restricted Subsidiaries on a 
consolidated basis, during the period of twelve consecutive months 
immediately following such date of determination in respect of all interest 
charges (including amortization of debt discount and expense and imputed 
interest on payments under Capital Lease obligations) with respect to 
Indebtedness of the Company and the Restricted Subsidiaries outstanding on 
the date of determination, assuming for such purpose (a) the amount of such 
Indebtedness is not reduced or increased during such twelve month period, and 
(b) that interest expense for such twelve month period with respect to 
Indebtedness of a revolving nature shall equal the actual interest expense 
for Indebtedness of a revolving nature during the most recently completed 
twelve month period.

        CONSOLIDATED NET INCOME:  with reference to any period, the net 
income (or deficit) of the Company and the Restricted Subsidiaries for such 
period (taken as a cumulative whole), after deducting all operating expenses, 
provisions for all taxes and reserves (including reserves for deferred income 
taxes) and all other proper deductions, all determined in accordance with 
GAAP on a consolidated basis, after eliminating all intercompany 
transactions, PROVIDED that there shall be excluded (a) the income (or 
deficit) of any Person accrued prior to the date it becomes a Restricted 
Subsidiary or is merged into or consolidated with the Company or a Restricted 
Subsidiary, (b) the income (or deficit) of any Person (other than a 
Restricted Subsidiary) in which the Company or any Restricted Subsidiary has 
an ownership interest, except to the extent that any such income has been 
actually received by the Company or such Restricted Subsidiary in the form of 
dividends or similar distributions, (c) the undistributed earnings of any 
Restricted Subsidiary to the extent that the declaration or payment of 
dividends or similar distributions by such Restricted Subsidiary is not at 
the time permitted by the terms of its charter or any agreement, instrument, 
judgment, decree, order, statute, rule or governmental regulation applicable 
to such Restricted Subsidiary, (d) any restoration to income of any 
contingency reserve, except to the extent that provision for such reserve was 
made out of income accrued during such period, (e) any aggregate net 
after-tax gain or net after-tax loss during such period arising from the 
sale, exchange or other disposition of capital assets (such term to include 
all fixed assets, whether tangible or intangible, all Inventory sold in 
conjunction with the disposition of fixed assets, and all 


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securities), (f) any write-up of any asset, (g) any net gain from the 
collection of the proceeds of life insurance policies, (h) any gain arising 
from the acquisition of any securities, or the extinguishment, under GAAP, of 
any Indebtedness, of the Company or any Restricted Subsidiary, (i) any after 
tax gain or loss during such period from any change in accounting, from any 
discontinued operations or the disposition thereof, from any extraordinary 
events or from any prior period adjustments, (j) any deferred credit 
representing the excess of equity in any Restricted Subsidiary at the date of 
acquisition over the cost of the investment in such Restricted Subsidiary, 
and (k) in the case of a successor to the Company by consolidation or merger 
or as a transferee of its assets, any earnings of the successor corporation 
prior to such consolidation, merger or transfer of assets.

        CONSOLIDATED NET WORTH:  as to the Company, the amount by which

        (i)  the total assets of the Company and the Restricted Subsidiaries 
    appearing on a consolidated balance sheet of the Company and the 
    Restricted Subsidiaries prepared in accordance with GAAP as of the date 
    of determination exceeds

        (ii) total liabilities of the Company and the Restricted Subsidiaries 
    appearing on a consolidated balance sheet of the Company and the 
    Restricted Subsidiaries prepared in accordance with GAAP as of the date 
    of determination on a consolidated basis,

in each case after eliminating all intercompany transactions; and as to any 
other Person, the amount by which

        (i)  the total assets of such Person and its Subsidiaries appearing 
    on a consolidated balance sheet of such Person and its Subsidiaries 
    prepared in accordance with GAAP as of the date of determination  (after 
    eliminating all amounts properly attributable to minority interests in 
    the stock and surplus, if any, of its Subsidiaries) exceeds

        (ii) total liabilities of such Person and its Subsidiaries appearing 
    on a consolidated balance sheet of such Person and its Subsidiaries 
    prepared in accordance with GAAP as of the date of determination on a 
    consolidated basis,

in each case after eliminating all intercompany transactions.

        CONSOLIDATED PRO FORMA DEBT SERVICE:  as of any date of 
determination, the total amount payable by the Company and the Restricted 
Subsidiaries on a consolidated basis, during the four consecutive calendar 
quarters next succeeding the date of determination, in respect of scheduled 
principal payments and all cash interest charges with respect to Indebtedness 
of the Company and the Restricted Subsidiaries outstanding on such date of 
determination, after giving effect to any Indebtedness proposed to be 
incurred on such 

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date (the "Incurrence Date") and to any Indebtedness proposed to be repaid 
from funds of such newly incurred Indebtedness (x) within 30 days of the 
Incurrence Date, or (y) within the twelve months following such Incurrence 
Date as to which funds for such payments have been within 30 days of the 
Incurrence Date irrevocably placed in escrow with the Trustee with 
irrevocable instructions to the Trustee to make such repayments (such funds 
pursuant to clauses (x) and (y) collectively, the "Dedicated Funds") and 
(a) including actual payments under Capital Lease obligations, (b) assuming, 
in the case of Indebtedness (other than Indebtedness incurred under the Bank 
Credit Facilities) bearing interest at fluctuating interest rates which 
cannot be determined in advance, that the rate in effect on such date will 
remain in effect throughout such period, (c) assuming in the case of 
Indebtedness incurred under the Bank Credit Facilities, that (1) the interest 
payments payable during such four consecutive calendar quarters next 
succeeding the date of determination will equal the actual interest payments 
associated with the Bank Credit Facilities during the most recent four fiscal 
quarters, (2) except for the twelve-month period immediately prior to the 
termination or final maturity thereof (unless extended, renewed or 
refinanced), no principal payments will be made under the Working Capital 
Facility and (3) principal payments relating to the Initial Acquisition 
Facility will (unless already converted to a fixed amortization schedule) 
become due based on the assumption that the conversion to the fixed 
amortization schedule pursuant to Section 3.1(f) of the Bank Credit 
Facilities is effected on the dates set forth therein, (d) treating the 
principal amount of all Indebtedness outstanding as of such date of 
determination under a revolving credit or similar agreement (other than the 
Bank Credit Facilities) as maturing and becoming due and payable on the 
scheduled maturity date or dates thereof (including the maturity of any 
payment required by any commitment reduction or similar amortization 
provision), without regard to any provision permitting such maturity date to 
be extended and (e) including any other designated repayments of Indebtedness 
due within twelve months from such date of determination.

        DEDICATED FUNDS:  the meaning specified in the definition of 
"Consolidated Pro Forma Debt Service."

        DISCOUNTED VALUE:  with respect to the Called Principal of any Note, 
the amount obtained by discounting all Remaining Scheduled Payments with 
respect to such Called Principal from their respective scheduled due dates to 
the Settlement Date with respect to such Called Principal, in accordance with 
accepted financial practice and at a discount factor (applied on a 
semi-annual basis) equal to the Reinvestment Yield plus 50 basis points with 
respect to such Called Principal.

        DOLLAR AND SIGN "$":  lawful money of the United States of America.

        ENVIRONMENTAL LAWS:  applicable federal, state, local and foreign 
laws, rules or regulations relating to emissions, discharges, releases or 
threatened releases of pollutants, contaminants, chemicals or industrial, 
toxic or hazardous substances or wastes into the environment (including, 
without limitation, air, surface water, ground water or land), or 

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otherwise relating to the manufacture, processing, distribution, use, 
treatment, storage, disposal, transport or handling of pollutants, 
contaminants, chemicals or industrial, toxic or hazardous substances or 
wastes.

        ENVIRONMENTAL NOTICE:  the meaning specified in Section 7(i).

        ERISA:  the Employee Retirement Income Security Act of 1974, as 
amended from time to time.

        EVENT OF DEFAULT:  the meaning specified in Section 11.

        EXCESS PROCEEDS:  the meaning specified in Section 10.7(c).

        GAAP:  generally accepted accounting principles in effect in the 
United States from time to time.

        GENERAL PARTNER(S):  the meaning specified in the Introduction.

        GUARANTY:  as applied to any Person, any direct or indirect 
liability, contingent or otherwise, of such Person with respect to any 
indebtedness, lease (other than operating leases under which the Company or a 
Restricted Subsidiary is the lessee), dividend or other obligation of 
another, including, without limitation, any such obligation directly or 
indirectly guaranteed, endorsed (otherwise than for collection or deposit in 
the ordinary course of business) or discounted or sold with recourse by such 
Person, or in respect of which such Person is otherwise directly or 
indirectly liable or any other obligation under any contract which, in 
economic effect, is substantially equivalent to a guaranty, including, 
without limitation, any such obligation of a partnership in which such Person 
is a general partner or of a joint venture in which such Person is a joint 
venturer, and any such obligation in effect guaranteed by such Person through 
any agreement (contingent or otherwise) to purchase, repurchase or otherwise 
acquire such obligation or any security therefor, or to provide funds for the 
payment or discharge of such obligation (whether in the form of loans, 
advances, stock purchases, capital contributions or otherwise), or to 
maintain the solvency or any balance sheet or other financial condition of 
the obligor of such obligation, or to make payment for any products, 
materials or supplies or for any transportation or services regardless of the 
non-delivery or nonfurnishing thereof, in any such case if the purpose or 
intent of such agreement is to provide assurance that such obligation will be 
paid or discharged, or that any agreements relating thereto will be complied 
with, or that the holders of such obligation will be protected against loss 
in respect thereof.

        HAZARDOUS MATERIALS:  any gasoline or petroleum (including crude oil 
or any fraction thereof) or petroleum products, polychlorinated biphenyls, 
urea-formaldehyde insulation, asbestos or asbestos-containing materials, 
pollutants, contaminants, radioactivity, and any other materials or 
substances of any kind, whether or not any such 

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substance is defined as hazardous under any Environmental Law, that is 
regulated pursuant to any Environmental Law or that could give rise to 
liability under any Environmental Law.

        INCURRENCE DATE:  the meaning specified in the definition of 
"Consolidated Pro Forma Debt Service."

        INDEBTEDNESS:  as applied to any Person (without duplication):

        (a)  any indebtedness for borrowed money which such Person has 
    directly or indirectly created, incurred or assumed;

        (b)  any indebtedness, whether or not for borrowed money, with 
    respect to which such Person has become directly or indirectly liable and 
    which represents the deferred purchase price (or a portion thereof) or 
    has been incurred to finance the purchase price (or a portion thereof) of 
    any property or service or business acquired by such Person, whether by 
    purchase, consolidation, merger or otherwise;

        (c)  all obligations evidenced by notes, bonds, debentures or similar 
    instruments, including obligations so evidenced incurred in connection 
    with the acquisition or property, assets or businesses;

        (d)  all indebtedness created or arising under any conditional sale 
    or other title retention agreement, or incurred as financing, in either 
    case with respect to property acquired by the Person (even though the 
    rights and remedies of the seller or lender under such agreement in the 
    event of default are limited to repossession or sale of such property);

        (e)  any obligations under Capital Leases to the extent such 
    obligations would, in accordance with GAAP, appear on a balance sheet of 
    such Person;

        (f)  any indebtedness, whether or not for borrowed money, secured by 
    (or for which the holder of such Indebtedness has an existing right, 
    contingent or otherwise, to be secured by) any Lien in respect of 
    property owned by such Person, whether or not such Person has assumed or 
    become liable for the payment of such indebtedness, PROVIDED that the 
    amount of such Indebtedness if not so assumed shall in no event be deemed 
    to be greater than the fair market value from time to time (as determined 
    in good faith by such Person) of the property subject to such Lien;

        (g)  all capital stock of such Person redeemable at the option of the 
    holder prior to the final maturity of the Notes, valued at the greater of 
    its voluntary or involuntary maximum fixed repurchase price or any 
    mandatory redemption payment  obligations in respect thereon plus, in 
    either case, accrued dividends thereon;

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<PAGE>

        (h)  any preferred stock of any Restricted Subsidiary of such Person 
    redeemable at the option of the holder prior to the final maturity of the 
    Notes, valued at the sum of the liquidation preference thereof or any 
    mandatory redemption payment obligations in respect thereof PLUS, in 
    either case, accrued dividends thereon;

        (i)  all liabilities of such Person in respect of letters of credit 
    or instruments serving a similar function issued or accepted for its 
    account by banks and other financial institutions (whether or not 
    representing obligations for borrowed money);

        (j)  any indebtedness of the character referred to in clause (a) 
    through (i) of this definition deemed to be extinguished under GAAP but 
    for which such Person remains legally liable; and

        (k)  any indebtedness of any other Person of the character referred 
    to in clause (a) through (j) of this definition with respect to which the 
    Person whose Indebtedness is being determined has become liable by way of 
    a Guaranty.

Notwithstanding the foregoing, in determining the Indebtedness of the Company 
and the Restricted Subsidiaries, there shall be excluded all undrawn letters 
of credit (not yet due and payable), all drawn letters of credit for which 
the Company reimburses the issuer thereof in accordance with the terms of the 
reimbursement agreement with respect thereto, trade accounts payable, accrued 
interest and other accrued expenses and customer credit balances arising in 
the ordinary course of business on ordinary terms.

        INITIAL ACQUISITION FACILITY:  that Initial Acquisition Facility 
under the Bank Credit Facilities which shall permit borrowings thereunder in 
an aggregate amount at any time no greater than as permitted by Section 
10.1(e) and which shall be secured by the Collateral pursuant to the Security 
Documents, and any extension, renewal, refunding or replacement thereof 
otherwise permitted to be incurred and outstanding under Section 10.1.

        INSTITUTIONAL INVESTOR:  means (a) any original purchaser of a Note, 
(b) any holder of a Note holding $1,000,000 or more of the aggregate 
principal amount of the Notes then outstanding, and (c) any bank, trust 
company, savings and loan association or other financial institution, any 
pension plan, any investment company, any insurance company, any broker or 
dealer, or any other similar financial institution or entity, regardless of 
legal form.

        INTERCOMPANY NOTES:  any and all promissory notes of a Restricted 
Subsidiary issued to the Company or to another Restricted Subsidiary, in the 
form attached hereto as Exhibit F or such other form as may be satisfactory 
to the Required Holders, representing all Indebtedness of such Restricted 
Subsidiary to the Company or such other Restricted Subsidiary, as the case 
may be.


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<PAGE>

        INTEREST RATE AGREEMENT:  any interest rate swap agreement, interest 
rate cap agreement, interest rate collar agreement or other similar agreement 
or arrangement designed solely to protect the Company against fluctuations in 
interest rates on Indebtedness outstanding under the Bank Credit Facilities 
entered into with one or more of the banks party to the Bank Credit 
Facilities (or their affiliates).

        INVENTORY:  goods held by a Person for sale or lease and accounted 
for as inventory under GAAP.

        INVESTMENT:  as applied 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 the purposes of Section 10.3(b), the amount involved in 
Investments made during any period shall be the aggregate cost to the Company 
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 Investments have been made).

        LEGAL REQUIREMENT:  any law, statute, ordinance, decree, requirement, 
order, judgment, rule or regulation (or published official interpretation by 
any governmental authority of any of the foregoing) of any governmental 
authority.

        LIEN:  as to any Person, any mortgage, lien (statutory or otherwise), 
pledge, reservation, right of entry, encroachment, easement, right of way, 
restrictive covenant, license, charge, security interest or other encumbrance 
in or on, or any interest or title of any vendor, lessor under any lease not 
intended to be an operating lease, lender or other secured party to or of 
such Person under any conditional sale or other title retention agreement or 
Capital Lease with respect to, any property or asset owned or held by such 
Person, or the signing or filing of a financing statement with respect to any 
of the foregoing which names such Person as debtor, or the signing of any 
security agreement with respect to any of the foregoing authorizing any other 
party as the secured party thereunder to file any financing statement or any 
other agreement to give or grant any of the foregoing.  Negative pledge 
agreements, however, shall not constitute Liens for purposes of this 
Agreement or any other Operative Agreement.  For the purposes of this 


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Agreement, a Person shall be deemed to be the owner of any asset which it has 
placed in trust for the benefit of the holders of Indebtedness of such Person 
and such trust shall be deemed to be a Lien if such Person remains legally 
liable therefor, notwithstanding that such Indebtedness is or may be deemed 
to be extinguished under GAAP.

        MAKE WHOLE AMOUNT:  with respect to any Note, an amount equal to the 
excess, if any, of the Discounted Value of the Remaining Scheduled Payments 
of the Called Principal of such Note over such Called Principal.  The Make 
Whole Amount shall in no event be less than zero.

        MANAGING GENERAL PARTNER:  Managing General Partner, so long as it 
holds a general partner interest in the Company and shall be the managing 
general partner as provided in the Partnership Agreement, and any successor 
to such position as managing general partner, so long as such successor shall 
hold such position.

        MATERIAL ADVERSE EFFECT:  a material adverse effect on (a) the 
business, operations, property, condition (financial or otherwise) or 
prospects (financial or otherwise) of the Company and the Restricted 
Subsidiaries, taken a whole (after giving effect to the transactions 
contemplated by the Operative Agreements) or the Business, (b) the ability of 
the Company, either General Partner or any Restricted Subsidiary to perform 
its obligations under this Agreement or any other Operative Agreement to 
which it is a party, or (c) the validity, enforceability, perfection or 
priority of this Agreement or any other Operative Agreement or of the rights 
or remedies of the holder of any Notes or the Trustee.

        MAXIMUM CONSOLIDATED PRO FORMA DEBT SERVICE:  as of any date of 
determination, the highest total amount payable by the Company and the 
Restricted Subsidiaries on a consolidated basis, during any period of four 
consecutive fiscal quarters, commencing with the fiscal quarter in which such 
date of determination occurs and ending on the maturity date of the Notes, in 
respect of scheduled principal payments and all cash interest charges with 
respect to all Indebtedness of the Company and the Restricted Subsidiaries 
outstanding or to be outstanding as a result of the transactions occurring on 
such date of determination, after giving effect to any Indebtedness to be 
incurred on the Incurrence Date and to any Indebtedness proposed to be repaid 
from Dedicated Funds and (a) including actual payments under Capital Lease 
obligations, (b) assuming, in the case of Indebtedness (other than 
Indebtedness incurred under the Bank Credit Facilities) bearing interest at 
fluctuating interest rates which cannot be determined in advance, that the 
rate in effect on such date will remain in effect throughout such period, (c) 
assuming in the case of Indebtedness incurred under the Bank Credit 
Facilities, that (1) the interest payments payable during such four 
consecutive calendar quarters will equal the actual interest payments 
associated with the Bank Credit Facilities during the most recent four fiscal 
quarters, (2) except for the twelve-month period immediately prior to the 
termination or final maturity thereof (unless extended, renewed or 
refinanced) no principal payments will be made under the Working Capital 

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Facility and (3) principal payments relating to the Initial Acquisition 
Facility will (unless already converted to a fixed amortization schedule) 
become due based on the assumption that the conversion to the fixed 
amortization schedule pursuant to Section 3.1(f) of the Bank Credit 
Facilities is effected on the dates set forth therein, (d) treating the 
principal amount of all Indebtedness outstanding as of such date of 
determination under a revolving credit or similar agreement (other than the 
Bank Credit Facilities) as maturing and becoming due and payable on the 
scheduled maturity date or dates thereof (including the maturity of any 
payment required by any commitment reduction or similar amortization 
provision), without regard to any provision permitting such maturity date to 
be extended and (e) including any other designated repayments of Indebtedness.

        MEMORANDUM:  the meaning specified in Section 5.4(b).

        MLP AGREEMENT:  the Amended and Restated Agreement of Limited 
Partnership of the Public Partnership.

        MULTIEMPLOYER PLAN:  a Plan which is a "multiemployer plan" within 
the meaning of Section 4001(a)(3) of ERISA.

        NOTES:  the meaning specified in Section 1.

        OBSOLETE ASSETS:  means assets, property or equipment that have been 
determined by the Company, in good faith, to no longer be useful in the 
operations or the business of the Company or a Restricted Subsidiary.

        OFFICERS' CERTIFICATE:  as to any corporation, a certificate executed 
on its behalf by the Chairman of the Board of Directors (if an officer) or 
its President or one of its Vice Presidents and its Treasurer, or Controller, 
or one of its Assistant Treasurers or Assistant Controllers, and, as to any 
partnership, a certificate executed on behalf of such partnership by its 
Managing General Partner in a manner which would qualify such certificate as 
an Officers' Certificate of such Managing General Partner hereunder.

        OPERATIVE AGREEMENTS:  this Agreement, the Other Agreements, the 
Notes, the Bank Credit Facilities, the Security Documents, the Underwriting 
Agreement, the PCI Agreements, the MLP Agreement and the Partnership 
Agreement.

        OTHER AGREEMENTS:  the meaning specified in Section 2.

        OTHER PURCHASERS:  the meaning specified in Section 2.

        OVERALLOTMENT OPTION:  the overallotment option granted to the 
Underwriters by the Public Partnership pursuant to the Underwriting Agreement.

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        PARITY DEBT:  Indebtedness of the Company incurred in accordance with 
Section 10.1(b), 10.1(e), 10.1(f), 10.1(i), 10.1(j), 10.1(m) or 10.1(s) and 
secured by the lien of the Security Documents in accordance with Section 
10.2(h), 10.2(i) or 10.2(m).

        PARTNERSHIP AGREEMENT:  the Amended and Restated Agreement of Limited 
Partnership of the Company, as in effect on the date of the Closing, and as 
the same may from time to time be amended, modified or supplemented in 
accordance with the terms thereof and Section 10.12 hereof, in the form of 
Exhibit G.

        PBGC:  the Pension Benefit Guaranty Corporation or any governmental 
authority succeeding to any of its functions.

        PCI:  the meaning specified in Section 2.

        PCI Agreements:  (a)  the Stock Purchase and Contribution Agreement 
dated October 27, 1998, among the Public Partnership, CHC, PCI and the 
holders of stock and warrants of PCI named therein, as amended from time to 
time, and (b) each of the individual instruments of conveyance to be 
delivered to the Company or its Affiliates pursuant to the agreement referred 
to in the foregoing clause (a).

        PERFECTION CERTIFICATE:  a certificate from the Company in 
substantially the form attached hereto as Exhibit H.

        PERMITTED BANKS:  the meaning specified in Section 10.3(a).

        PERMITTED ENCUMBRANCES:  the encumbrances and exceptions to title to 
properties or assets (a) described in the Security Documents or (b) existing 
on the date of Closing as permitted by the applicable provisions hereof with 
respect to real property owned or leased by the Company or otherwise 
permitted hereunder pursuant to Section 10.2(j).

        PERMITTED EXCEPTIONS:  the meaning specified in Section 5.8(a).

        PERMITTED HOLDERS:  Northwestern Corporation, a Delaware corporation, 
and any Person directly or indirectly controlling or controlled by 
Northwestern Corporation, PROVIDED that for purposes of this definition 
"control" shall have the same meaning assigned to such term in the 
definition of Affiliate.

        PERMITTED INSURERS:  insurers with ratings of A- or better according 
to Best's Insurance Reports or a comparable rating agency for insurance 
companies located outside of the United States of America and Canada and with 
assets of no less than $500 million.

        PERSON:  a corporation, a limited liability company, a firm, a joint 
venture, an association, a partnership, an organization, a business, a trust 
or other entity or enterprise, an individual, a government or political 
subdivision thereof or a governmental agency, department or instrumentality.


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        PLAN:  an "employee pension benefit plan" (as defined in Section 
3(2) of ERISA) which is or has been established or maintained, or to which 
contributions are or have been made, by either General Partner, the Company 
or any Related Person of the Company or either General Partner or to which 
either General Partner, the Company or any Related Person of the Company or 
either General Partner is or has been obligated to contribute, or an employee 
benefit plan as to which either General Partner, the Company or any Related 
Person of the Company or either General Partner could be treated as a 
contributory sponsor under Section 4069 or Section 4212 of ERISA if such plan 
were terminated.

        POTENTIAL EVENT OF DEFAULT:  any condition or event which, with 
notice or lapse of time or both, would become an Event of Default.

        PREMIUM AMOUNT:  the meaning specified in Section 9.3(d).

        PUBLIC PARTNERSHIP:  Cornerstone Propane Partners, L.P., a Delaware 
limited partnership.

        PURCHASE MONEY LIEN:  the meaning specified in Section 10.2(j).

        QPAM EXEMPTION:  the meaning specified in Section 6.2(c).

        QUALIFYING RESTRICTED SUBSIDIARIES:  the Restricted Subsidiaries 
other than Cornerstone Sales & Service Corporation.

        RCRA:  the Federal Resource Conservation and Recovery Act, as amended.

        REGISTRATION STATEMENT:  the Registration Statement on Form S-3 under 
the Securities Act of 1933, as amended, of the Public Partnership 
(Registration Number 333-60931), as initially filed with the Securities and 
Exchange Commission on August 7, 1998, and as may be amended from time to 
time through the date of Closing by subsequent filings with the Securities 
and Exchange Commission, and the Prospectus Supplement delivered thereunder.

        REINVESTMENT YIELD:  with respect to the Called Principal of any 
Note, the yield to maturity implied by (i) the yields reported, as of 10:00 
a.m. (New York City time) on the Business Day next preceding the Settlement 
Date with respect to such Called Principal, on the display designated as 
"USD" on the Bloomberg Financial Markets (or such other display as may 
replace USD on the Bloomberg Financial Markets) for actively traded U.S. 
Treasury securities having a maturity equal to the Remaining Average Life of 
such Called Principal as of such Settlement Date, or if such yields shall not 
be reported as of such time or the yields reported as of such time shall not 
be ascertainable, including by interpolation (ii) the Treasury constant 
maturity series yields reported, for the latest day for which such yields 
shall have been so reported as of the Business Date next preceding the 
Settlement Date with respect to such Called Principal, in Federal Reserve 
Statistical 


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<PAGE>

Release H.15 (519) (or any comparable successor publication) for actively 
traded U.S. Treasury securities having a constant maturity equal to the 
Remaining Average Life of such Called Principal as of such Settlement Date.  
Such implied yield shall be determined, if necessary, by (a) converting U.S. 
Treasury bill quotations to bond-equivalent yields in accordance with 
accepted financial practice and (b) interpolating linearly between (1) the 
actively traded U.S. Treasury security with the maturity closest to and equal 
to or greater than the Remaining Average Life and (2) the actively traded 
U.S. Treasury security with the maturity closest to and equal to or less than 
the Remaining Average Life.

        RELATED PERSON:  with respect to a Person, any trade or business, 
whether or not incorporated, which, as of any date of determination, would be 
treated as a single employer together with such Person under Section 414 of 
the Code.

        REMAINING AVERAGE LIFE:  with respect to the Called Principal of any 
Note, the number of years (calculated to the nearest one-twelfth year) 
obtained by dividing (i) such Called Principal into (ii) the sum of the 
products obtained by multiplying (a) each Remaining Scheduled Payment of such 
Called Principal (but not of interest thereon) by (b) the number of years 
(calculated to the nearest one-twelfth year) which will elapse between the 
Settlement Date with respect to such Called Principal and the scheduled due 
date of such Remaining Scheduled Payment.

        REMAINING SCHEDULED PAYMENTS:  with respect to the Called Principal 
of any Note, all payments of such Called Principal and interest thereon that 
would be due on or after the Settlement Date with respect to such Called 
Principal if no payment of such Called Principal were made prior to its 
scheduled due date, PROVIDED that if such Settlement Date is not a date on 
which interest payments are due to be made under the terms of the Notes, then 
the amount of the next succeeding scheduled interest payment will be reduced 
by the amount of interest accrued to such Settlement Date and required to be 
paid on such Settlement Date pursuant to Sections 9 or 11.

        REQUIRED HOLDERS:  the holders of at least 66-2/3% in principal 
amount of the Notes at the time outstanding.

        REQUISITE PERIOD:  the meaning specified in Section 10.1(e)(ii)(l).

        RESPONSIBLE OFFICER:  with respect to any Person, the President, any 
Vice President, the Chief Financial Officer, the Treasurer and the Secretary 
of such Person and any other officer of such Person who is responsible for 
compliance with or performance of any obligation under this Agreement or the 
other Operative Agreements, with respect to the Company, any such officer of 
the Managing General Partner and, in any case, any employee of the Company 
performing any of the above functions.

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        RESTRICTED AFFILIATE:  Northwestern Growth Corporation, a Delaware 
corporation, or any of its Subsidiaries as long as any such Person would 
otherwise be an Affiliate of the Company.

        RESTRICTED PAYMENT:  as to any Person, (a) any payment, dividend or 
other distribution, direct or indirect, in respect of any partnership 
interest (general or limited) in, or on account of any shares of any class of 
stock of, such Person, except a distribution payable solely in additional 
partnership interests in, or shares of stock of, such Person, and (b) any 
payment, direct or indirect, on account of the redemption, retirement, 
purchase or other acquisition of any partnership interest in, or any shares 
of any class of stock of, such Person now or hereafter outstanding or of any 
warrants, rights or options to acquire any such shares, except to the extent 
that the consideration therefor consists of shares of stock or partnership 
interests in of such Person, PROVIDED payments by the Company or a Restricted 
Subsidiary of the Company to either General Partner or any of its Affiliates 
for services rendered to or on behalf of the Company or any Restricted 
Subsidiary of the Company or expenses incurred in connection with the 
operation of the business of the Company or any Restricted Subsidiary of the 
Company (including, without limitation, reimbursement of expenses incurred 
under any employee benefit plan) including plans providing for the issuance 
of Units or options to acquire Units in the Public Partnership shall not be 
deemed to be Restricted Payments.

        RESTRICTED SUBSIDIARY:  any Wholly Owned Subsidiary of the Company 
(a) organized under the laws of the United States of America or any state 
thereof or the District of Columbia, (b) none of the capital stock or 
ownership interests of which is owned by Unrestricted Subsidiaries, (c) 
substantially all of the operating assets of which are located in, and 
substantially all of the business of which is conducted within the United 
States of America and the business of which consists principally of the  
wholesale and retail sale, distribution and storage of propane gas and/or 
natural gas and related petroleum derivative products and/or the related 
retail sale of supplies and equipment, including home appliances, and for the 
provision of related services and (d) designated by the Company as a 
Restricted Subsidiary, PROVIDED that (i) to the extent a newly formed or 
acquired Wholly Owned Subsidiary satisfying the requirements of the foregoing 
clauses (a), (b) and (c) is not declared either a Restricted Subsidiary or an 
Unrestricted Subsidiary within 90 days of its formation or acquisition, such 
Wholly Owned Subsidiary shall be deemed a Restricted Subsidiary and (ii) a 
Restricted Subsidiary may be designated as an Unrestricted Subsidiary in 
accordance with the provisions of Section 10.19(a). Solely for purposes of 
the representations and warranties made in Section 5 (other than Section 
5.4), PCI shall be deemed to be a Restricted Subsidiary as of the date of 
this Agreement.

        SECURITY DOCUMENTS:  the Trust Agreement, the Company Security 
Agreement, the Subsidiary Guarantee Agreement, the Perfection Certificate, 
and all other security agreements and documents and instruments executed and 
delivered in order to secure the 


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Indebtedness and/or perfect the Liens referred to in the Trust Agreement or 
to guarantee the Company's obligations hereunder and under the Notes.

        SETTLEMENT DATE:  shall mean, with respect to the Called Principal of 
any Note, the date on which such Called Principal is to be prepaid pursuant 
to Section 9.2, 9.3 or 9.4 or is declared to be or becomes immediately due 
and payable pursuant to Section 11, as the context requires.

        SUBSIDIARY:  of any Person, means any corporation, limited liability 
company, business trust, association, partnership, joint venture or other 
business entity at least a majority (by number of votes) of the stock of any 
class or classes (or equivalent interests) of which is at the time owned by 
such Person or by one or more Subsidiaries of such Person or by such Person 
and one or more Subsidiaries of such Person, if the holders of the stock of 
such class or classes (or equivalent interests) (a) are ordinarily, in the 
absence of contingencies, entitled to vote for the election of a majority of 
the directors (or Persons performing similar functions) of such business 
entity, even though the right so to vote has been suspended by the happening 
of such a contingency, or (b) are at the time entitled, as such holders, to 
vote for the election of the majority of the directors (or Persons performing 
similar functions) of such business entity, whether or not the right so to 
vote exists by reason of the happening of a contingency.  Unless the context 
otherwise requires, any reference to a Subsidiary shall mean a Subsidiary of 
the Company.

        SUBSIDIARY GUARANTEE AGREEMENT:  the Guarantee Agreement among the 
Qualifying Restricted Subsidiaries and the Trustee substantially in the form 
attached hereto as Exhibit I, as amended from time to time.

        SUBSTANTIAL PORTION:  the meaning specified in Section 7(a).

        SUPPLEMENTAL AGREEMENT:  an agreement between a Qualifying Restricted 
Subsidiary and the Trustee substantially in the form attached hereto as 
Exhibit J, as amended from time to time.

        TRUST AGREEMENT:  the Intercreditor and Trust Agreement, dated as of 
December 11, 1996, among the Company, the Qualifying Restricted Subsidiaries, 
the Trustee, the holders of the 1996 Notes and the other parties named 
therein, which the Administrative Agent and the Banks have joined as 
additional parties, substantially in the form attached hereto as Exhibit C, 
as amended from time to time.

        TRUSTEE:  U.S. Trust Company of Texas, N.A., as Trustee under the 
Trust Agreement, and its successors and assigns thereunder.

        UNDERWRITERS:  the underwriters named in the Underwriting Agreement.

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<PAGE>


        UNDERWRITING AGREEMENT:  the Underwriting Agreement, dated December 
7, 1998, among the Public Partnership, the Managing General Partner, the 
Company and the Underwriters, relating to securities of the Public 
Partnership registered under the Registration Statement.

        UNIFORM COMMERCIAL CODE:  the Uniform Commercial Code or similar 
statute in effect from time to time in any jurisdiction.

        UNITS:  the units to be issued and sold by the Public Partnership 
pursuant to the Underwriting Agreement, representing preference limited 
partnership interests in the Public Partnership.

        UNRESTRICTED SUBSIDIARY: any Subsidiary other than a Restricted 
Subsidiary which is organized under the laws of the United States of America 
or any state thereof or the District of Columbia and substantially all of the 
operating assets of which are located in, and substantially all of the 
business of which is conducted within the United States of America and which 
business consists principally of the distribution of propane gas or related 
supplies and equipment.

        WHOLLY OWNED:  as applied to any Subsidiary, a Subsidiary all of the 
outstanding shares (other than directors' qualifying shares, if required by 
law) of every class of stock or other equity interests of which are at the 
time owned by the Company or by one or more Wholly Owned Restricted 
Subsidiaries or by the Company and one or more Wholly Owned Restricted 
Subsidiaries.

        WORKING CAPITAL FACILITY:  that Working Capital Facility  under the 
Bank Credit Facilities which shall permit borrowings and the issuance of 
letters of credit for the Company thereunder in an aggregate amount 
outstanding at any time no greater than as permitted by Section 10.1(e) and 
which shall be secured by the Collateral pursuant to the Security Documents 
and any extension, renewal, refunding or replacement thereof otherwise 
permitted to be incurred and outstanding under Section 10.1.

        YEAR 2000 COMPLIANT:  shall mean that neither performance nor 
functionality of any of the Borrower's or its Subsidiaries' computer hardware 
or software is materially affected by dates prior to, on, or after December 
31, 1999.  In particular: (a) no value for any current date will cause any 
material interruption in operation; and (b) date based functionality must 
behave consistently for dates prior to, on and after December 31, 1999 in all 
material respects.

        YEAR 2000 PROBLEM:  means the risk that computer applications used by 
the Borrower and its Subsidiaries may be unable to recognize and perform 
properly date-sensitive functions involving any date prior to, on or after 
December 31, 1999.


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SECTION 14.  REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES.

        14.1.     NOTE REGISTER; OWNERSHIP OF NOTES.  Any Notes issued in 
substantially the form of Exhibit A are in "registered form".  The Company 
will keep at its principal office a register in which the Company will 
provide for the registration of Notes in registered form and the registration 
of transfers of Notes in registered form.  The Company and the Trustee may 
treat the Person in whose name any Note is registered on such register as the 
owner thereof for the purpose of receiving payment of the principal of and 
the Make Whole Amount or premium, if any, and interest on such Note and for 
all other purposes, whether or not such Note shall be overdue, and the 
Company shall not be affected by any notice to the contrary.  All references 
in this Agreement or in a Note to a "holder" of any Note shall mean the 
Person in whose name such Note is at the time registered on such register.

        14.2.     TRANSFER AND EXCHANGE OF NOTES.  Upon surrender of any Note 
for registration of transfer or for exchange to the Company at its principal 
office, the Company at its expense will execute and deliver in exchange 
therefor a new Note or Notes in denominations of at least $500,000 (except 
one Note may be issued in a lesser principal amount if the unpaid principal 
amount of the surrendered Note is not evenly divisible by, or is less than, 
$500,000), as requested by the holder or transferee, which aggregate the 
unpaid principal amount of such surrendered Note.  Each such new Note shall 
be in registered form.  Each such Note shall be dated so that there will be 
no loss of interest on such surrendered Note and otherwise of like tenor, and 
shall be registered in the name or names of such Person as such holder or 
transferee may request.  Any Note in lieu of which any such new Note has been 
executed and delivered shall not be deemed to be an outstanding Note for any 
purpose of this Agreement.

        14.3.     REPLACEMENT OF NOTES.  Upon receipt of evidence reasonably 
satisfactory to the Company of the loss, theft, destruction or mutilation of 
any Note and, in the case of any such loss, theft or destruction of any Note, 
upon delivery of an indemnity bond in such reasonable amount as the Company 
may determine (or, in the case of any Note held by you or another 
Institutional Investor holder or your or its nominee, of an unsecured 
indemnity agreement from you or such other holder), or, in the case of any 
such mutilation, upon the surrender of such Note for cancellation to the 
Company at its principal office, the Company at its expense will execute and 
deliver, in lieu thereof, a new Note in the unpaid principal amount of such 
lost, stolen, destroyed or mutilated Note, dated so that there will be no 
loss of interest on such Note and otherwise of like tenor.  Any Note in lieu 
of which any such new Note has been so executed and delivered by the Company 
shall not be deemed to be an outstanding Note for any purpose of this 
Agreement.

        14.4.     NOTES HELD BY COMPANY, ETC. DEEMED NOT OUTSTANDING.  For 
the purposes of determining whether the holders of the Notes of the requisite 
principal amount at the


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time outstanding have taken any action authorized by this Agreement or any 
other Operative Agreement with respect to the giving of consents or approvals 
or with respect to the acceleration upon an Event of Default, any Notes 
directly or indirectly owned by the Company, either General Partner or any of 
their respective Affiliates shall be disregarded and deemed not to be 
outstanding.

SECTION 15.  PAYMENTS ON NOTES.

        15.1.     PLACE OF PAYMENT.  Payments of principal, Make Whole 
Amount, Premium Amount or premium, if any, and interest becoming due and 
payable on the Notes shall be made at the principal office of the Trustee in 
the Borough of Manhattan, the City and State of New York by 12:00 noon, 
unless the Company, by written notice to each holder of any Notes, shall 
designate the principal office of another bank or trust company in such 
Borough as such place of payment, in which case the principal office of such 
other bank or trust company shall thereafter be such place of payment.

        15.2.     HOME OFFICE PAYMENT.  So long as you or your nominee shall 
be the holder of any Note, and notwithstanding anything contained in Section 
15.1 or in such Note to the contrary, the Company will pay all sums becoming 
due on such Note for principal, Make Whole Amount and Premium Amount, if any, 
and interest no later than 12:00 noon (New York City time) and by the method 
and at the address specified for such purpose in Schedule A, or by such other 
reasonable method or at such other address as you shall have from time to 
time specified to the Company in writing for such purpose, without the 
presentation or surrender of such Note or the making of any notation thereon, 
except that any Note paid or prepaid in full shall, after such payment or 
prepayment in full, be surrendered to the Company at its principal office or 
at the place of payment maintained by the Company pursuant to Section 15.1 
for cancellation.  Prior to any sale or other disposition of any Note held by 
you or your nominee you will, at your election, either endorse thereon the 
amount of principal paid thereon and the last date to which interest has been 
paid thereon or surrender such Note to the Company in exchange for a new Note 
or Notes pursuant to Section 14.2.  The Company will afford the benefits of 
this Section 15.2 to any Institutional Investor which is the direct or 
indirect transferee of any Note purchased by you under this Agreement and 
which has made the same agreement relating to such Note as you have made in 
this Section 15.2.

        SECTION 16.  EXPENSES, INDEMNIFICATION, ETC.

        (a)  Whether or not the transactions contemplated hereby shall be 
consummated, the Company will pay all reasonable expenses in connection with 
such transactions and in connection with any amendments or waivers (whether 
or not the same become effective) under or in respect of this Agreement, the 
other Operative Agreements or the Notes, including, without limitation:  (i) 
the cost and expenses of preparing and reproducing this Agreement, the other 
Operative Agreements and the Notes, of furnishing all opinions by counsel for 
the Company, the Restricted Subsidiaries or the General 


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<PAGE>

Partners (including any opinions requested by your special counsel, Debevoise 
& Plimpton, as to any legal matter arising hereunder) and all certificates on 
behalf of the Company, either General Partner or any Restricted Subsidiary, 
and of the Company's, either General Partner's or any Restricted Subsidiary's 
performance of and compliance with all agreements and conditions contained 
herein on its part to be performed or complied with; (ii) the cost of 
delivering to your principal office, insured to your satisfaction, the Notes 
issued in exchange for the Notes sold to you hereunder and any Notes 
delivered to you upon any substitution thereof pursuant to Section 14 and of 
your delivering any Notes, insured to your satisfaction, upon any such 
substitution; (iii) the reasonable fees, expenses and disbursements of your 
special counsel, Debevoise & Plimpton (or such other counsel as may be 
selected by the Note holders) and your local counsel in connection with such 
transactions and any such amendments or waivers; (iv) the costs and expenses, 
including attorneys' fees, incurred by you or any subsequent holder of a Note 
in enforcing (or determining whether or how to enforce) any rights under this 
Agreement, any other Operative Agreement or the Notes or in responding to any 
subpoena or other legal process in connection with this Agreement, any other 
Operative Agreement or the Notes or the transactions contemplated hereby or 
by reason of you or any subsequent holder of Notes having acquired any Note, 
including without limitation costs and expenses incurred in any bankruptcy 
case; (v) the cost and expenses of obtaining a Private Placement Number for 
the Notes; and (vi) the reasonable out-of-pocket expenses incurred by you in 
connection with such transactions and any such amendments or waivers, 
PROVIDED that the Company shall be required to pay the cost and expenses of 
only one firm (and any local counsel) retained by the Note holders in 
connection with any waivers or amendments.  The Company also will pay, and 
will save you and each holder of any Notes harmless from, all claims in 
respect of the fees, if any, of brokers and finders (unless engaged by you) 
and any and all liabilities with respect to any taxes (including interest and 
penalties) (other than income taxes) which may be payable in respect of the 
execution and delivery hereof, the issue of the Notes hereunder and any 
amendment or waiver under or in respect hereof or of the Notes.  In 
furtherance of the foregoing, on the date of the Closing the Company will pay 
the reasonable fees and disbursements of your special counsel which are 
reflected as unpaid in the statement of Debevoise & Plimpton, your special 
counsel, delivered to the Company prior to the date of the Closing; and 
thereafter the Company will pay, promptly upon receipt of supplemental 
statements therefor from time to time, additional fees, if any, and 
disbursements of your special counsel in connection with the transactions 
hereby contemplated (including unposted disbursements as of the date of the 
Closing).

        (b)  The Company will protect, indemnify and save harmless the 
Trustee and each present, future and former holder of any Note and their 
respective officers, directors, trustees, employees, agents and 
representatives (individually, an "Indemnified Party" and collectively, the 
"Indemnified Parties") from and against all losses, liabilities, 
obligations, claims, damages, penalties, causes of action, costs and expenses 
(including, without limitation, attorneys' fees and expenses) imposed upon or 
incurred by or asserted against 


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<PAGE>

any Indemnified Party by reason of (a) ownership of the Collateral, or any 
interest therein, or receipt of any rent or other sum therefrom, (b) any 
accident or injury to or death of persons or loss of or damage to property 
occurring on or about the Collateral or any part thereof, (c) any use, 
non-use or condition of the Collateral or any part thereof, (d) any failure 
on the part of the Company, either General Partner or any of their respective 
Subsidiaries or Affiliates to perform or comply with any of the terms of this 
Agreement or any other Operative Agreement, (e) the performance of any labor 
or services or the furnishing of any materials or other property in respect 
of the Collateral or any part thereof, (f) any negligence or tortious act on 
the part of the Company, either General Partner, any of their respective 
Subsidiaries or Affiliates or any of their respective agents, contractors, 
sublessees, licensees or invitees, (g) any work in connection with any 
alterations, changes or construction of the Collateral, (h) any other 
relationship that has arisen or may arise between the Company, either General 
Partner or any of their respective Subsidiaries or Affiliates and the 
Indemnified Parties or the Collateral as a result of the delivery or 
performance of this Agreement, any other Operative Agreement  or any action 
contemplated hereby or thereby or by any other document executed in 
connection herewith or therewith, (i) the presence or removal, or the 
discharge, spillage, leakage, emission, release, threat of release or 
disposal, of any Hazardous Materials on, under, about or from the Collateral 
or the noncompliance with any Legal Requirement relating thereto, whether 
arising prior to the issuance of the Notes or at any time thereafter and 
whether or not the Company, either General Partner or any of their respective 
Subsidiaries or Affiliates is responsible therefor or (j) the holding of, or 
any interest in, any sum deposited or paid under this Agreement, the Notes or 
any other Operative Agreement, PROVIDED that nothing contained herein shall 
be deemed to require the Company to indemnify the Indemnified Parties for 
conditions (other than matters covered by clause (f) above) first occurring 
subsequent to the earlier of (x) the taking of exclusive possession and 
control of the Collateral for operational purposes pursuant to Section 6.03 
of the Company Security Agreement, (y) the foreclosure of the Lien under any 
Security Document and the transfer of title to the Trustee, or (z) for their 
respective gross negligence or willful misconduct, or for their breach of 
their respective obligations under this Agreement or the other Operative 
Agreements.

        In case any action, claim, suit or proceeding is brought against an 
Indemnified Party by reason of any such occurrence, the Company may, and upon 
the request of such Indemnified Party will, at the Company's expense resist 
and defend such action, suit or proceeding or cause the same to be resisted 
and defended by counsel for the insurer of the liability or by counsel 
designated by the Company and reasonably satisfactory to the Indemnified 
Party, as the case may be, PROVIDED that any Indemnified Party shall be 
entitled to participate in any such action, suit or proceeding with counsel 
of its own choice but at its own expense, and PROVIDED FURTHER that if any 
Indemnified Party reasonably determines that a conflict of interest exists 
with respect to the representation by such counsel of such Indemnified Party, 
the Company shall pay the fees and expenses of counsel selected by such 
Indemnified Party.  In any event, if the Company fails to 


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<PAGE>

assume the defense within a reasonable time after any such request, the 
Indemnified Party may assume such defense or other indemnification obligation 
and the fees and expenses of its attorney will be paid by the Company.  The 
obligations of the Company under this Section 16 shall survive any 
termination or satisfaction of this Agreement.  Any amounts payable to any 
Indemnified Party under this Section 16 which are not paid within 15 days 
after written demand therefor by any Indemnified Party shall bear interest at 
a rate per annum equal to the rate of interest stated on the face of the 
Notes plus 2.0% from the date of such demand.  In the event that the Company 
shall be required to pay any indemnity under this Section 16, the Company 
shall pay the Indemnified Party an amount which, after deduction of all taxes 
required to be paid by such Indemnified Party in respect of the receipt or 
accrual thereof (but not for any taxes payable with respect to amounts 
received for the payment of income taxes), shall be equal to the amount of 
such indemnity.

        (c)  In connection with the Closing, the Managing General Partner and 
the Company are requesting that you make available for funding an amount 
equal to the principal amount specified opposite your name in Schedule A.  
If, for any reason, on the date scheduled by the Managing General Partner and 
the Company as the date for the Closing, you shall at their request have made 
such amount available, and (i) the closing conditions are not satisfied by 
11:00 a.m. on such scheduled date, (ii) the Managing General Partner and the 
Company do not, by 11:00 a.m. on such scheduled date reschedule such Closing 
for a subsequent date, and (iii) the Closing in fact does not occur on such 
scheduled date, the General Partners and the Company will protect, indemnify 
and hold you harmless from and against any and all losses resulting from your 
failure or inability to invest on the scheduled date for the Closing the 
purchase price of the Notes to be purchased by you, for the period ending on 
the next following Business Day at a rate of interest equal to or greater 
than the rate of interest on the Notes.

SECTION 17.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

        All representations and warranties contained in this Agreement or the 
other Operative Agreements, or made in writing by or on behalf of either 
General Partner, the Company, any Restricted Subsidiary or any of their 
Affiliates in connection with the transactions contemplated by this Agreement 
or the other Operative Agreements, shall survive the execution and delivery 
of this Agreement and the other Operative Agreements, any investigation at 
any time made by you or on your behalf, the purchase of the Notes by you 
under this Agreement and any disposition or payment of the Notes.  All 
statements contained in any certificate or other instrument delivered by or 
on behalf of the General Partners, the Company or any Restricted Subsidiary 
pursuant to this Agreement and/or the other Operative Agreements or in 
connection with any amendment, waiver or modification of this Agreement or 
any of the other Operative Agreements shall be deemed representations and 
warranties of the Company under this Agreement.


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<PAGE>


SECTION 18.  AMENDMENTS AND WAIVERS.

        Any term of this Agreement or of the Notes may be amended and the 
observance of any term of this Agreement or of the Notes may be waived 
(either generally or in a particular instance and either retroactively or 
prospectively) only with the written consent of the Company and the Required 
Holders, PROVIDED that, without the prior written consent of the holders of 
all the Notes at the time outstanding, no such amendment or waiver shall (a) 
change the maturity or the principal amount of, or change the rate of 
interest or the time of payment of interest on, or change the amount or the 
time of payment of any principal or Make Whole Amount or Premium Amount on 
any prepayment of, any Note, (b), subject to other requirements set forth in 
the Trust Agreement, release any Lien against the Collateral for the benefit 
of the holders of the Notes, (c) reduce the aforesaid percentage of the 
principal amount of the Notes the holders of which are required to consent to 
any such amendment or waiver or change the rights of the holders of a Note 
with respect thereto, (d) change the percentage of the principal amount of 
the Notes the holders of which may declare the Notes to be due and payable as 
provided in Section 11 or change the rights of the holders of a Note with 
respect thereto, (e) change the percentage of the principal amount of the 
Notes the holders of which may rescind and annul any such declaration as 
provided in Section 11 or (f) modify the provisions of Section 9.8 or this 
Section 18.  Any amendment or waiver effected in accordance with this Section 
18 shall be binding upon each holder of any Note at the time outstanding, 
each future holder of any Note, either General Partner and the Company.

SECTION 19.  NOTICES, ETC.

        Except as otherwise provided in this Agreement, notices and other 
communications under this Agreement shall be in writing and shall be 
delivered by hand, by express courier service or by registered or certified 
mail, return receipt requested, postage prepaid, addressed, (a) if to you, at 
the address set forth in Schedule A or at such other address as you shall 
have furnished to the Company in writing, except as otherwise provided in 
Section 15.2 with respect to payments on Notes held by you or your nominee, 
or (b) if to any other holder of any Note, at such address as such other 
holder shall have furnished to the Company in writing, or, until any such 
other holder so furnishes to the Company an address, then to and at the 
address of the last holder of such Note who has furnished an address to the 
Company, or (c) if to the Company or either General Partner, at the address 
set forth at the beginning of this Agreement to the attention of Senior Vice 
President and Chief Financial Officer, or at such other address, or to the 
attention of such other officer, as the Company shall have furnished to you 
and each such other holder in writing.


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<PAGE>


SECTION 20.    REPRODUCTION OF DOCUMENTS.

        This Agreement, each Operative Agreement and all documents relating 
thereto, including, without limitation, (a) consents, waivers and 
notifications which may hereafter be executed, (b) documents received by you 
at the Closing (except the Notes themselves), and (c) financial statements, 
certificates and other information previously or hereafter furnished to you, 
may be reproduced by you by any photographic, photostatic, microfilm, 
microcard, miniature photographic or other similar process and you may 
destroy any original document so reproduced.  Each General Partner and the 
Company agrees and stipulates that, to the extent permitted by applicable 
law, any such reproduction shall be admissible in evidence as the original 
itself in any judicial or administrative proceeding (whether or not the 
original is in existence and whether or not such reproduction was made by you 
in the regular course of business) and any enlargement, facsimile or further 
reproduction of such reproduction shall likewise be admissible in evidence.

SECTION 21.    MISCELLANEOUS.

        This Agreement shall be binding upon and inure to the benefit of and 
be enforceable by the respective successors and assigns of the parties 
hereto, whether so expressed or not, and, in particular, shall inure to the 
benefit of and be enforceable by any holder or holders at the time of the 
Notes or any part thereof, PROVIDED that the benefits of Sections 7, 14.3 and 
15.2 shall be limited as therein provided.  Except as stated in Section 17, 
this Agreement embodies the entire agreement and understanding among you, the 
General Partners and the Company and supersedes all prior agreements and 
understandings relating to the subject matter hereof.  The headings in this 
Agreement are for purposes of reference only and shall not limit or otherwise 
affect the meaning hereof. This Agreement may be executed in any number of 
counterparts, each of which shall be an original, but all of which together 
shall constitute one instrument.

SECTION 22.    SUBMISSION TO JURISDICTION.

        For the purpose of assuring that any holder of Notes may enforce its 
rights under this Agreement, the Notes and the other Operative Agreements, 
each General Partner and the Company, for itself and its successors and 
assigns, hereby, to the fullest extent permitted by applicable law, 
irrevocably (a) agrees that any legal or equitable action, suit or proceeding 
brought against it arising out of or relating to this Agreement, any other 
Operative Agreement and the Notes, or any transaction contemplated hereby or 
the subject matter of any of the foregoing or for recognition or enforcement 
of any judgment rendered in any such action, suit or proceeding may be 
instituted in any state or federal court sitting in the Borough of Manhattan 
in the State of New York, (b) waives any objection which it may now or 
hereafter have to the laying of venue of any such action, suit or proceeding 
brought in any such court, and hereby further irrevocably and unconditionally 
waives and agrees not to plead or claim that any such action, suit or 
proceeding brought in any such court has been brought in an inconvenient 
forum, or any 


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<PAGE>

right to require the proceeding to be conducted in any other jurisdiction by 
reason of its present or future domicile, (c) irrevocably submits itself to 
the non-exclusive jurisdiction of any state or federal court of competent 
jurisdiction sitting in the Borough of Manhattan in the State of New York for 
purposes of any such action, suit or proceeding, and (d) irrevocably waives 
any immunity from jurisdiction to which it might otherwise be entitled in any 
such action, suit or proceeding which may be instituted in any state or 
federal court sitting in the Borough of Manhattan in the State of New York, 
and irrevocably waives any immunity from, or objection to, the maintaining of 
an action against it to enforce any judgment for money obtained in any such 
action, suit or proceeding and any immunity from execution.

SECTION 23.    WAIVER OF JURY TRIAL.

        EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES THE 
RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING 
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER 
OPERATIVE AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE 
SUBJECT MATTER OF ANY OF THE FOREGOING.

SECTION 24.    GOVERNING LAW.

        THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE CITY OF NEW 
YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA.  THIS AGREEMENT AND 
(UNLESS OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND 
ALL CONSENTS AND WAIVERS PURSUANT TO, THIS AGREEMENT SHALL IN ALL RESPECTS BE 
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE 
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND 
PERFORMANCE.

SECTION 25.    CONFIDENTIAL INFORMATION.

        For the purposes of this Section 25, "Confidential Information" 
means information delivered to you by or on behalf of the Company or any 
Restricted Subsidiary in connection with the transactions contemplated by or 
otherwise pursuant to this Agreement that is proprietary in nature and that 
was clearly marked or labeled or otherwise adequately identified when 
received by you as being confidential information of the Company or such 
Restricted Subsidiary, PROVIDED that such term does not include information 
that (a) was publicly known or otherwise known to you prior to the time of 
such disclosure, (b) subsequently becomes publicly known through no act or 
omission by you or any person acting on your behalf, (c) otherwise becomes 
known to you other than 


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<PAGE>

through disclosure by the Company or any Restricted Subsidiary or (d) 
constitutes financial statements delivered to you under Section 7 that are 
otherwise publicly available.  You will maintain the confidentiality of such 
Confidential Information in accordance with procedures adopted by you in good 
faith to protect confidential information of third parties delivered to you, 
PROVIDED that you may deliver or disclose Confidential Information to (i) 
your directors, trustees, officers, employees, agents, attorneys and 
affiliates (to the extent such disclosure reasonably relates to the 
administration of the investment represented by your Notes), (ii) your 
financial advisors and other professional advisors who agree to hold 
confidential the Confidential Information substantially in accordance with 
the terms of this Section 25, (iii) any other holder of any Note, (iv) any 
Institutional Investor to which you sell or offer to sell such Note or any 
part thereof or any participation therein (if such Person has agreed in 
writing prior to its receipt of such Confidential Information to be bound by 
the provisions of this Section 25), (v) any Person from which you offer to 
purchase any security of the Company (if such Person has agreed in writing 
prior to its receipt of such Confidential Information to be bound by the 
provisions of this Section 25), (vi) any federal or state regulatory 
authority having jurisdiction over you, (vii) the National Association of 
Insurance Commissioners or any similar organization, or any nationally 
recognized rating agency that requires access to information about your 
investment portfolio or (viii) any other Person to which such delivery or 
disclosure may be necessary or appropriate (w) to effect compliance with any 
law, rule, regulation or order applicable to you, (x) in response to any 
subpoena or other legal process, (y) in connection with any litigation to 
which you are a party or (z) if an Event of Default has occurred and is 
continuing, to the extent you may reasonably determine such delivery and 
disclosure to be necessary or appropriate in the enforcement or for the 
protection of the rights and remedies under your Notes and this Agreement.  
Each holder of a Note, by its acceptance of a Note, will be deemed to have 
agreed to be bound by and to be entitled to the benefits of this Section 25 
as though it were a party to this Agreement.  On reasonable request by the 
Company in connection with the delivery to any holder of a Note of 
information required to be delivered to such holder under this Agreement or 
requested by such holder (other than a holder that is a party to this 
Agreement or its nominee), such holder will enter into an agreement with the 
Company embodying the provisions of this Section 25. 

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<PAGE>

        If you are in agreement with the foregoing, please sign the form of 
acceptance on the enclosed counterpart of this Agreement and return the same 
to the undersigned, whereupon this Agreement shall become a binding agreement 
between you and the undersigned.

                                    Very truly yours,

                                    CORNERSTONE PROPANE, L.P.

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

                                         By /s/ Ronald J. Goedde
                                           -------------------------------
                                           Name: Ronald J. Goedde
                                           Title: Executive Vice President 
                                                  and Chief Financial Officer


                                    CORNERSTONE PROPANE GP, INC.

                                         By /s/ Ronald J. Goedde
                                           -------------------------------
                                           Name: Ronald J. Goedde
                                           Title: Executive Vice President 
                                                  and Chief Financial Officer

                                    SYN INC.

                                         By /s/ Daniel K. Newell
                                           -------------------------------
                                           Name: Daniel K. Newell
                                           Title: Vice President


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<PAGE>

The foregoing Agreement is
hereby accepted and agreed
to as of the date first
above written.

ALLSTATE LIFE INSURANCE COMPANY


By /s/ Patricia W. Wilson
   -------------------------
   Name: Patricia W. Wilson


By /s/ Daniel C. Leimbach
   -------------------------
   Name: Daniel C. Leimbach

          Authorized Signatories


AMERICAN CENTURION LIFE ASSURANCE COMPANY


By /s/ Lorraine R. Hart
   -------------------------
   Name: Lorraine R. Hart
   Title: Vice President


AMERICAN PARTNERS LIFE INSURANCE COMPANY


By /s/ Lorraine R. Hart
   -------------------------
   Name: Lorraine R. Hart
   Title: Vice President



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<PAGE>

IDS LIFE INSURANCE COMPANY

By:  American Express Financial Corporation


By /s/ Lorraine R. Hart
   -------------------------
   Name: Lorraine R. Hart
   Title: Vice President


JEFFERSON-PILOT LIFE INSURANCE COMPANY



By /s/ Robert E. Whalen, II
   -------------------------
   Name: Robert E. Whalen, II
   Title: Second Vice President


NORTHERN LIFE INSURANCE COMPANY

By:  ReliaStar Investment Research, Inc.



By /s/ James V. Wittich
   -------------------------
   Name: James V. Wittich
   Title: Assistant Treasurer


THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY



By /s/ Richard A. Strait
   -------------------------
   Name: Richard A. Strait
   Title: Authorized Representative



                                      94

<PAGE>


PACIFIC LIFE INSURANCE COMPANY formerly
PACIFIC MUTUAL LIFE INSURANCE COMPANY



By /s/ Diane W. Dales                   By /s/ Peter S. Fiek
   -------------------------               ------------------------- 
   Name: Diane W. Dales                    Name: Peter S. Fiek
   Title: Assistant Vice President         Title: Assistant Secretary


RELIASTAR LIFE INSURANCE COMPANY

By:  ReliaStar Investment Research, Inc.



By /s/ James V. Wittich
   -------------------------
   Name: James V. Wittich
   Title: Authorized Representative


RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK

By:  ReliaStar Investment Research, Inc.


By /s/ James V. Wittich
   -------------------------
   Name: James V. Wittich
   Title: Vice President, Investments


RELIASTAR UNITED SERVICES LIFE INSURANCE COMPANY

By:  ReliaStar Investment Research, Inc.


By /s/ James V. Wittich
   -------------------------
   Name: James V. Wittich
   Title: Assistant Treasurer



                                      95