<PAGE>

                                                                   EXHIBIT 10.40

                                      LEASE

THIS LEASE is made between the Landlord and the Tenant named below effective as
of the date that this Lease is last executed by Landlord and Tenant.

                        BASIC LEASE TERMS AND INFORMATION

LANDLORD: BR Partners Three, LLC, an
Indiana limited liability company
ADDRESS FOR MAIL AND DELIVERIES: c/o Lauth Property Group,
9777 North College Avenue,
Indianapolis, Indiana 46280, Attention -
President
TELEPHONE: (317) 848-6500
FACSIMILE: (317) 848-6511
ELECTRONIC ADDRESS: www.lauthproperty.com

TENANT: Platinum Propane of Los Angeles,
LLC, a California limited liability company.
ADDRESS FOR MAIL AND DELIVERIES: 104
Cambridge Plaza Drive, Winston-Salem, North
Carolina 27104
TELEPHONE: (336) 659-6958
FACSIMILE: (336) 331-6958
ELECTRONIC ADDRESS: dslone@bluerhino.com

PREMISES:  The land more particularly
described in EXHIBIT "A" attached hereto.
LEASE TERM:  180 months from the Rent
Commencement Date plus the number of
months and partial months between the
Commencement Date and the Rent
Commencement Date

COMMENCEMENT DATE:                  Per Section 1 below.
RENT COMMENCEMENT DATE:             July 1, 2003
LEASE EXPIRATION DATE:              June 30, 2018, subject to Section 1 below.

MONTHLY BASE RENT SCHEDULE:

<TABLE>
<CAPTION>
Months    Monthly Amount    Annual Rent
----------------------------------------
<S>       <C>              <C>
1-12         $  10,788     $  129,456.00
13-24        $  11,058     $  132,697.00
25-36        $  11,335     $  136,014.00
37-48        $  11,618     $  139,415.00
</TABLE>

<PAGE>

<TABLE>
<S>          <C>           <C>
  48-60      $  11,908     $  142,900.00
  61-72      $  12,206     $  146,472.00
  73-84      $  12,511     $     150,134
  85-96      $  12,824     $     153,888
 97-108      $  13,145     $     157,735
109-120      $  13,473     $     161,678
121-132      $  13,810     $     165,720
133-144      $  14,155     $     169,863
145-156      $  14,509     $     174,110
157-168      $  14,872     $     178,463
169-180      $  15,244     $     182,924
</TABLE>

SECURITY DEPOSIT:                   $ None

OUTSIDE BROKER:                     Patrick Zimmer of Development Advisors

ADDENDA:                            None

         1.       GRANTING CLAUSE. In consideration of the obligation of Tenant
to pay rent as herein provided and in consideration of the other terms,
covenants, and conditions hereof, Landlord leases to Tenant, and Tenant takes
from Landlord, the Premises, to have and to hold for the Lease Term, subject to
the terms, covenants and conditions of this Lease. The Lease Term shall commence
on the date that Landlord acquires title to the Premises and shall end on the
Lease Expiration Date, unless sooner terminated as provided herein. Upon the
Commencement Date Landlord and Tenant shall execute a Rent Commencement Date
Agreement as described in EXHIBIT "C" attached hereto, which shall become part
of this Lease. This lease shall immediately and automatically terminate upon (a)
the full execution and delivery of a building lease of the Premises between
Landlord and Tenant (the "Building Lease") and (b) the closing of a loan between
Landlord and the lender financing Landlord's construction of Tenant's facility
for the refurbishing, refilling and distributing of propane tanks. In such
event, all Rent due hereunder shall be prorated as of the commencement date of
the Building Lease. Either party shall, upon the request of the other, sign a
written termination of this Lease.

         2.       INTENTIONALLY DELETED.

         3.       USE. No improvements shall be constructed at the Premises and
no items, whether considered real or personal property, will be placed upon or
stored at the Premises without Landlord's permission, which shall be exercised
in Landlord's sole discretion. Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise, or vibrations to emanate from the
Premises, or take any other action that would constitute a nuisance or would
disturb, unreasonably interfere with, or endanger Landlord or any other party.
Tenant, at its sole expense, shall cause the Premises to comply with all laws,
orders, judgments, ordinances, regulations, codes, directives, permits,
licenses, covenants and restrictions now or hereafter applicable to the Premises
(collectively, "Legal Requirements"). Tenant will not use or permit the Premises
to be used for any purpose or in any manner that would (a) void any insurance on
the Premises; (b) increase the insurance risk; or (c) be prohibited by any
applicable laws, rules regulations, ordinances, or restrictions of any
government entity; or (d) violate any applicable

                                       2

<PAGE>

agreements to which Tenant is bound or of which Tenant has notice. If any
increase in the cost of any insurance on the Premises is caused by Tenant's use
or occupation of the Premises, or because Tenant vacates the Premises, then
Tenant shall pay the amount of such increase to Landlord. Any occupation of the
Premises by Tenant prior to the Commencement Date shall be subject to all
obligations of Tenant under this Lease.

         4.       BASE RENT. Throughout the Lease Term, Tenant shall pay Base
Rent in the amount set forth above. Tenant promises to pay to Landlord in
advance, without demand, deduction or set-off, monthly installments of Base Rent
and Additional Rent on or before the first day of each calendar month commencing
on the Rent Commencement Date. If the Lease Term commences or expires on a date
other than the first day or the last day of a calendar month, respectively, then
the Rent payable for such partial calendar month shall be an amount equal to the
monthly installment of Rent otherwise then in effect, divided by the number of
days in the full calendar month during which the Lease Term commences or
expires, respectively, and multiplied by the number of days in the partial
calendar month after and including the Commencement Date or before and including
the date of expiration, respectively, and provided further that the Rent for any
partial calendar month at the commencement of the Initial Lease Term shall be
payable on the first day of the first full calendar month during the Lease Term.
All sums, liabilities, obligations and other amounts which Tenant is required to
pay or discharge pursuant to this Lease in addition to Base Rent, including
without limitation assessments or charges due and payable to any applicable
ownership associations, together with any interest, penalty, or other sum which
may be added for late payment thereof, shall constitute additional rent
hereunder (herein called "Additional Rent"). In the event of any failure on the
part of Tenant to pay or discharge any of the foregoing, Landlord shall have all
rights, powers and remedies provided for herein (or by law or equity or
otherwise) in the case of nonpayment of Base Rent. All payments required to be
made by Tenant to Landlord hereunder shall be payable at such address as
Landlord may specify from time to time by written notice delivered in accordance
herewith. The obligation of Tenant to pay Base Rent and Additional Rent
(sometimes hereinafter collectively referred to as "Rent") and the obligations
of Landlord under this Lease are independent obligations. Tenant shall have no
right at any time to abate, reduce, or set-off any Rent due hereunder.

         5.       LATE CHARGES. Any amount not paid by Tenant after its due date
in accordance with the terms of this Lease shall bear interest from such due
date until paid in full at the lesser of (i) the highest rate permitted by
applicable law or (ii) the greater of twelve percent (12%) per annum or the
Prime Rate (as reported in the Wall Street Journal) of interest ("Prime Rate")
plus four percent (4%) per annum. It is expressly the intent of Landlord and
Tenant at all times to comply with applicable law governing the maximum rate or
amount of any interest payable on or in connection with this Lease. If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord's and
Tenant's express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.

                                       3

<PAGE>

         6.       SECURITY DEPOSIT. The requirement for a Security Deposit has
been waived by Landlord.

         7.       INTENTIONALLY DELETED.

         8.       TAXES. Tenant shall pay before the time when due, all taxes,
payments in lieu of taxes, assessments and governmental charges that accrue
against the Premises, including without limitation the special tax levied by
Community Facilities District No. 89-1 (Agua Mansa Industrial Center)
(collectively referred to as "Taxes") during the Lease Term. Landlord may
contest by appropriate legal proceedings the amount, validity, or application of
any Taxes or liens thereof. All capital levies or other taxes assessed or
imposed on Landlord upon the Rent payable to Landlord under this Lease and any
franchise tax, excise, transaction, sales or privilege tax, assessment, levy or
charge measured by or based, in whole or in part, upon such Rents from the
Premises or any portion thereof shall be paid by Tenant or upon demand;
provided, however, in no event shall Tenant be liable for any net income taxes
imposed on Landlord unless such net income taxes are in substitution for any
Taxes payable hereunder. If any such tax or excise is levied or assessed
directly against Tenant, then Tenant shall be responsible for and shall pay the
same at such times and in such manner as the taxing authority shall require.
Tenant shall furnish to Landlord evidence of payment of any amount payable under
this Paragraph before the same is due and shall furnish to Landlord, within ten
(10) days after reasonable demand by Landlord, proof of the payment of any other
amount which is the obligation of Tenant hereunder. In the event that Landlord
becomes obligated to a mortgagee to make payments for taxes and assessments in
accordance with the terms of the mortgage, upon notice thereof by Landlord,
Tenant shall pay to Landlord on the payment dates for Base Rent, the amounts
required by the mortgagee. Tenant shall not be liable to Landlord, any mortgagee
or third party for any taxes and assessments with respect to the Premises for
which Tenant has deposited available funds with Landlord to pay such taxes and
assessments. Tenant shall satisfy the requirements of any public or private
incentives, abatements or other benefits awarded to Tenant or the Premises, and
Tenant shall indemnify and hold Landlord harmless from any loss, cost or damage,
including but not limited to reasonable attorneys fees resulting at any time
during the Lease Term or thereafter as a result of Tenant's failure to satisfy
such requirements.

         9.       INSURANCE.

         Tenant, at its expense, shall maintain during the Lease Term (i)
worker's compensation insurance with no less than the minimum limits required by
law; (ii) employer's liability insurance with such limits as required by law;
(iii) a minimum of twelve (12) months of business interruption insurance; and
(iv) general commercial liability insurance, with a minimum limit of $1,000,000
per occurrence and a minimum umbrella limit of $1,000,000, for a total minimum
combined general liability and umbrella limit of $2,000,000 (together with such
additional umbrella coverage as Landlord may reasonably require) for property
damage, personal injuries, bodily injuries, or deaths of persons occurring in or
about the Premises (v) pollution liability insurance covering any hazardous
material or chemicals. Landlord may from time to time require reasonable
increases in any such limits. The general commercial liability policy shall name
Landlord as an additional insured, insure on an occurrence and not a claims-made
basis, be issued by insurance companies which have an A.M. Best rating of A- or
better, not be cancelable unless 30 days prior written notice shall have been
given to Landlord, contain a contractual

                                       4

<PAGE>

liability endorsement and provide primary coverage to Landlord (any policy
issued to Landlord providing duplicate or similar coverage shall be deemed
excess over Tenant's policies). Such policies or certificates thereof shall be
delivered to Landlord by Tenant prior to the Commencement Date and upon each
renewal of said insurance.

         Landlord and its agents, employees and contractors shall not be liable
for, and Tenant hereby waives all claims against such parties for, business
interruption and losses occasioned thereby sustained by Tenant or any person
claiming through Tenant resulting from any accident or occurrence in or upon the
Premises from any cause whatsoever, including without limitation, damage caused
in whole or in part, directly or indirectly, by the negligence of Landlord or
its agents, employees or contractors.

         10.      INTENTIONALLY DELETED.

         11.      CONDEMNATION. If all of the Premises should be taken for any
public or quasi-public use under governmental law, ordinance, or regulation, or
by right of eminent domain, or by private purchase in lieu thereof (a "Taking"
or "Taken"), then upon written notice by Landlord this Lease shall terminate and
Base Rent shall be apportioned as of said date. If part of the Premises shall be
Taken, and this Lease is not terminated as provided above, then Base Rent
payable hereunder during the unexpired Lease Term shall not abate or be reduced.
In the event of any such Taking, Landlord shall be entitled to receive the
entire award, compensation or proceeds from any such Taking without any payment
to Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if any, in
such award. Tenant shall have the right, to the extent that same shall not
diminish Landlord's award, to make a separate claim against the condemning
authority (but not Landlord) for moving expenses and damage to Tenant's Trade
Fixtures.

         12.      INDEMNIFICATION. Tenant will protect, indemnify and save
harmless Landlord from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by
or asserted against the other party by reason of the occurrence or existence of
any of the following during the Lease Term or thereafter: (a) ownership of the
Premises or any interest therein or receipt of any rent or other sum therefrom,
(b) any accident, injury to or death of persons or loss of or damage to property
occurring on or about the Premises or any part thereof or occurring on or about
the adjoining sidewalks, curbs, loading docks, stairs, vaults and vault space,
if any, streets or ways as a result of or in connection with the other party's
use or occupancy of the Premises, (c) any occupancy, use, nonuse or condition of
the Premises or any part thereof or any use, nonuse or condition of the
adjoining sidewalks, curbs, vaults and vault space, if any, streets or ways
resulting from the other party's use or occupancy of the Premises, (d) any
failure on the part of the other party to perform or comply with any of the
terms of this Lease, or (e) performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or any
part thereof. In case any action, suit or proceeding is brought against Landlord
by reason of any such occurrence, the other party, upon request, and at that
other party's expense, shall resist and defend such action, suit or proceeding
or cause the same to be resisted and defended by counsel designated and
reasonably approved by the parties. The obligations of the parties under this
Paragraph shall survive any termination of this Lease. The furnishing of
insurance required hereunder shall not be deemed to limit either party's
obligations under this Paragraph.

                                       5

<PAGE>

         13.      INTENTIONALLY DELETED.

         14.      INTENTIONALLY DELETED.

         15.      SIGNS. No signs shall be installed at or placed upon the
Premises.

         16.      ASSIGNMENT AND SUBLETTING. Without Landlord's prior written
consent, Tenant shall not assign this Lease or sublease the Premises or any part
thereof or mortgage, pledge, or hypothecate its leasehold interest or grant any
concession or license within the Premises and any attempt to do any of the
foregoing shall be void and of no effect. For purposes of this Paragraph, a
direct or indirect transfer of substantially all of the ownership interests or
the control of Tenant shall be deemed an assignment of this Lease. Landlord
agrees not to unreasonably withhold consent to a transfer if the transferee is a
subsidiary or parent company of Tenant and such transferee has a financial
condition, creditworthiness and business reputation equal to or greater than
that of Tenant's. Tenant shall reimburse Landlord for all of Landlord's
reasonable out-of-pocket expenses in connection with any assignment or sublease.
Upon Landlord's receipt of Tenant's written notice of a desire to assign or
sublet the Premises, or any part thereof, Landlord may, by giving written notice
to Tenant within thirty (30) days after receipt of Tenant's notice, terminate
this Lease as of the date specified in Tenant's notice for the commencement of
the proposed assignment or sublease. Notwithstanding any assignment or
subletting, Tenant and any guarantor or surety of Tenant's obligations under
this Lease shall at all times remain fully responsible and liable for the
payment of the Rent and for compliance with all of Tenant's other obligations
under this Lease (regardless of whether Landlord's approval has been obtained
for any such assignments or sublettings). In the event that the rent due and
payable by a sublessee or assignee (or a combination of the rental payable under
such sublease or assignment plus any bonus or other consideration therefor or
incident thereto) exceeds the Rent payable under this Lease, then Tenant shall
be bound and obligated to pay Landlord as Additional Rent hereunder all such
excess rental and other excess consideration within ten (10) days following
receipt thereof by Tenant. Without in any way limiting Landlord's right to
refuse to consent to any assignment or subletting of this Lease, Landlord
reserves the right to refuse to give such consent if in Landlord's opinion (i)
the Premises may be in any way adversely affected; (ii) the business reputation
of the proposed assignee or subtenant is unacceptable; or (iii) the financial
worth or creditworthiness of the proposed assignee or subtenant is less than
that of Tenant.

         If this Lease be assigned or if the Premises be subleased (whether in
whole or in part) or in the event of the mortgage, pledge or hypothecation of
Tenant's leasehold interest or grant of any concession or license within the
Premises or if the Premises be occupied in whole or in part by anyone other than
Tenant, then upon a default by Tenant hereunder Landlord may collect Rent from
the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold
interest was hypothecated, concessionee or licensee or other occupant and,
except to the extent set forth in the preceding Paragraph, apply the amount
collected to the Rent payable hereunder; and all such rentals collected by
Tenant shall be held in trust for Landlord and immediately forwarded to
Landlord. No such transaction or collection of Rent for application thereof by
Landlord, however, shall be deemed a waiver of these provisions or a release of
Tenant from the further performance by Tenant of its covenants, duties or
obligations hereunder.

                                       6

<PAGE>

         17.      INSPECTION AND ACCESS. Landlord and its agents,
representatives and contractors may enter the Premises during Tenant's normal
business hours or in the event of an emergency to inspect the Premises and to
make such repairs as may be required or permitted pursuant to this Lease and for
any other business purpose. Landlord and Landlord's representatives may enter
the Premises during business hours for the purpose of showing the Premises to
prospective purchasers and, during the last year of the Lease Term, to
prospective tenants. Landlord may erect a suitable sign on the Premises stating
the Premises are available to let or for sale. Landlord may grant easements,
make public dedications, designate common areas and create restrictions on or
about the Premises, provided that no such easement, dedication, designation or
restriction materially interferes with Tenant's use or occupancy of the
Premises. At Landlord's request, Tenant shall execute such instruments as may be
necessary for such easements, dedications or restrictions.

         18.      SURRENDER. Upon the expiration of the Lease Term or earlier
termination of Tenant's right of possession, Tenant shall surrender the Premises
to Landlord in the same condition as received, condemnation covered by the
Condemnation Paragraph excepted. All obligations of Tenant hereunder not fully
performed as of the termination of the Lease Term shall survive the termination
of the Lease Term, including without limitation, indemnity obligations, and
obligations concerning the condition and repair of the Premises.

         19.      HOLDING OVER. If Tenant retains possession of the Premises
after the termination of the Lease Term, unless otherwise agreed in writing,
such possession shall be subject to immediate termination by Landlord at any
time, and all of the other terms and provisions of this Lease (excluding any
expansion or renewal option or other similar right or option) shall be
applicable during such holdover period, except that Tenant shall pay Landlord
from time to time, upon demand, as Base Rent for the holdover period, an amount
equal to double the Base Rent in effect on the termination date, computed on a
monthly basis for each month or part thereof during such holding over. All other
payments shall continue under the terms of this Lease. In addition, Tenant shall
be liable for all damages incurred by Landlord as a result of such holding over.
No holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided.

         20.      EVENTS OF DEFAULT. Each of the following events shall be an
event of default ("Event of Default") by Tenant under this Lease:

                  (i)      Tenant shall fail to pay any installment of Base
         Rent, Additional Rent or any other payment required herein when due;
         provided that no more than two (2) times per twelve (12) month period,
         Landlord shall give Tenant written notice of such Event of Default and
         Tenant may cure such Event of Default by tendering the delinquent
         payment within five (5) days of the receipt of Landlord's notice.

                  (ii)     Tenant or any guarantor or surety of Tenant's
         obligations hereunder shall (A) make a general assignment for the
         benefit of creditors; (B) commence any case, proceeding or other action
         seeking to have an order for relief entered on its behalf as a debtor
         or adjudicate it as bankrupt or insolvent, or seeking reorganization,
         arrangement, adjustment, liquidation, dissolution or composition of it
         or its debts or seeking appointment of a receiver, trustee, custodian
         or other similar official for it or for all or of

                                       7

<PAGE>

         any substantial part of its property (collectively a "proceeding for
         relief"); (C) become the subject of any proceeding for relief which is
         not dismissed within sixty (60) days of its filing or entry; or (D) die
         or suffer a legal disability (if Tenant, guarantor, or surety is an
         individual) or be dissolved or otherwise fail to maintain its legal
         existence (if Tenant, guarantor or surety is a corporation, partnership
         or other entity).

                  (iii)    Any insurance required to be maintained by Tenant
         pursuant to this Lease shall be cancelled or terminated or shall expire
         or shall be reduced or materially changed, except, in each case, as
         permitted in this Lease.

                  (iv)     Tenant shall not occupy or shall vacate the Premises
         or shall fail to continuously operate its business at the Premises for
         the Permitted Use set forth herein, whether or not Tenant is in
         monetary or other default under this Lease.

                  (v)      Tenant shall attempt or there shall occur any
         assignment, subleasing or other transfer of Tenant's interest in or
         with respect to this Lease except as otherwise permitted in this Lease.

                  (vi)     Tenant shall fail to discharge any lien placed upon
         the Premises in violation of this Lease within thirty (30) days after
         any such lien or encumbrance is filed against the Premises.

                  (vii)    Tenant shall fail to comply with any provision of
         this Lease other than those specifically referred to in this Paragraph,
         and except as otherwise expressly provided therein, such default shall
         continue for more than thirty (30) days after Landlord shall have given
         Tenant written notice of such default.

         21.      LANDLORD'S REMEDIES. Upon each occurrence of an Event of
Default and so long as such Event of Default shall be continuing, Landlord may
at any time thereafter at its election terminate this Lease or Tenant's right of
possession (but Tenant shall remain liable as hereinafter provided), and/or
pursue any other remedies at law or in equity. Upon the termination of this
Lease or termination of Tenant's right of possession, it shall be lawful for
Landlord, without formal demand or notice of any kind, to reenter the Premises
by summary dispossession proceedings or any other action or proceeding
authorized by law and to remove Tenant and all persons and property therefrom.
If Landlord re-enters the Premises, Landlord shall have the right to keep in
place and use, or remove and store, all of the furniture, fixtures and equipment
at the Premises.

         If Landlord terminates this Lease, Landlord may recover from Tenant the
sum of: (i) all Base Rent, Additional Rent and all other amounts accrued
hereunder to the date of such termination; (ii) the cost of reletting the whole
or any part of the Premises, including without limitation, brokerage fees and/or
leasing commissions incurred by Landlord; (iii) all reasonable expenses incurred
by Landlord in pursuing its remedies, including reasonable attorneys' fees and
court costs; and (iv) the then present value of the Base Rent Additional Rent
and other amounts payable by Tenant under this Lease as would otherwise have
been required to be paid by Tenant to Landlord during the period following the
termination of this Lease measured from the date of such termination to the
expiration date stated in this Lease. Such present value shall be calculated

                                       8

<PAGE>

at a discount rate equal to the 90-day U. S. Treasury bill rate at the date of
such termination.

         If Landlord terminates Tenant's right of possession (but not this
Lease), Landlord may, but shall be under no obligation to, relet the Premises
for the account of Tenant for such rent and upon such terms as shall be
satisfactory to Landlord without thereby releasing Tenant from any liability
hereunder and without demand or notice of any kind to Tenant. For the purpose of
such reletting Landlord is authorized to make any repairs, changes, alterations,
or additions in or to the Premises as Landlord deems reasonably necessary or
desirable without notice to Tenant. If the Premises are not relet, then Tenant
shall pay to Landlord as damages a sum equal to the amount of the Rent reserved
in this Lease for such period or periods, plus the cost of recovering possession
of the Premises (including attorneys' fees and costs of suit), the unpaid Base
Rent, Additional Rent and other amounts accrued hereunder at the time from time
to time. Notwithstanding any such reletting without termination, Landlord may at
any time thereafter elect in writing to terminate this Lease for such previous
breach.

         Any law, usage, or custom to the contrary notwithstanding, Landlord
shall have the right at all times to enforce the provisions of this Lease in
strict accordance with the terms hereof. The failure of Landlord at any time to
enforce its rights under this Lease strictly in accordance with same shall not
be construed as having created a custom in any way or manner contrary to the
specific terms, provisions, and covenants of this Lease or as having modified
the same. Tenant and Landlord further agree that forbearance or waiver by
Landlord to enforce its rights pursuant to this Lease or at law or in equity,
shall not be a waiver of Landlord's right to enforce one or more of its rights
in connection with any subsequent default. A receipt by Landlord of rent or
other payment with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by Landlord of any provision of
this Lease shall be deemed to have been made unless expressed in writing and
signed by Landlord. To the greatest extent permitted by law, Tenant waives the
service of notice of Landlord's intention to re-enter as provided for in any
statute, or to institute legal proceedings to that end, and also waives all
right of redemption in case Tenant shall be dispossessed by a judgment or by
warrant of any court or judge. The terms "enter," "reenter," "entry" or
"re-entry," as used in this Lease, are not restricted to their technical legal
meanings. Any reletting of the Premise shall be on such terms and conditions as
Landlord in its sole discretion may determine (including, without limitation, a
term different than the remaining Lease Term, rental concessions, alterations
and repair of the Premises, lease of less than the entire Premises to any tenant
and leasing any or all other portions of the Project before reletting the
Premises). Landlord shall not be liable, nor shall Tenant's obligations
hereunder be diminished because of, Landlord's failure to relet the Premises or
collect rent due in respect of such reletting.

         22.      LIMITATION OF LIABILITY OF LANDLORD. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within sixty (60) days after written notice from Tenant specifying
such failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of sixty (60) days, then after such period of
time as is reasonably necessary). All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, Tenant may not terminate this Lease
for breach of Landlord's obligations hereunder. All such obligations of Landlord
under this Lease will be binding upon Landlord only during the period of its
ownership of the Premises and not

                                       9

<PAGE>

thereafter. The term "Landlord" in this Lease shall mean only the owner, for the
time being of the Premises, and in the event of the transfer by such owner of
its interest in the Premises, such owner shall thereupon be released and
discharged from all obligations of Landlord thereafter accruing, but such
obligations shall be binding during the Lease Term upon each new owner for the
duration of such owner's ownership. Any liability of Landlord under this Lease
shall be limited solely to its interest in the Premises, and in no event shall
any personal liability be asserted against Landlord in connection with this
Lease nor shall any recourse be had to any other property or assets of Landlord.

         23.      WAIVER OF JURY TRIAL. TENANT AND LANDLORD WAIVE ANY RIGHT TO
TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING
OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

         24.      SUBORDINATION. This Lease and Tenant's interest and rights
hereunder are and shall be subject and subordinate at all times to the lien of
any mortgage, now existing or hereafter created on or against the Premises, and
all amendments, restatements, renewals, modifications, consolidations,
refinancing, assignments and extensions thereof, without the necessity of any
further instrument or act on the part of Tenant. Tenant agrees, at the election
of the holder of any such mortgage, to attorn to any such holder. Tenant agrees
upon demand to execute, acknowledge and deliver such instruments, confirming
such subordination and such instruments of attornment as shall be requested by
any such holder; provided that such instruments include non-disturbance
provisions whereby the mortgagee agrees that if there is no Event of Default and
the mortgagee succeeds to the interest of Landlord by foreclosure of the
mortgage, deed-in-lieu thereof of any other action or proceeding taken or
instituted under or in connection with the mortgage, Tenant's rights and
privileges under the Lease and its use, possession and enjoyment of the Premises
demised by the Lease shall not be disturbed, interfered with or terminated by
reason of such foreclosure, deed-in-lieu thereof or other action or proceeding,
and the Lease shall remain in full force and effect as a direct indenture of
lease between the mortgagee and Tenant. Tenant hereby appoints Landlord attorney
in fact for Tenant irrevocably (such power of attorney being coupled with an
interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of the Tenant and to cause any such instrument
to be recorded. Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant's consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
mortgage without regard to their respective dates of execution, delivery or
recording and in that event such holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such mortgage and had been assigned to such holder.
The term "mortgage" whenever used in this Lease shall be deemed to include deeds
of trust, security assignments and any other encumbrances, and any reference to
the "holder" of a mortgage shall be deemed to include the beneficiary under a
deed of trust.

         25.      MECHANIC'S LIENS. Tenant has no express or implied authority
to create or place any lien or encumbrance of any kind upon, or in any manner to
bind the interest of Landlord or Tenant in the Premises or to charge the Rent
payable hereunder for any claim in favor of any

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person dealing with Tenant, including those who may furnish materials or perform
labor for any construction or repairs. Tenant covenants and agrees that it will
pay or cause to be paid all sums legally due and payable by it on account of any
labor performed or materials furnished in connection with any work performed on
the Premises and that it will indemnify and hold Landlord harmless from all
loss, cost or expense based on or arising out of asserted claims or liens
against the leasehold estate or against the interest of Landlord in the Premises
or under this Lease. Tenant shall give Landlord immediate written notice of the
placing of any lien or encumbrance against the Premises and cause such lien or
encumbrance to be discharged within thirty (30) days of the filing or recording
thereof; provided, however, Tenant may contest such liens or encumbrances as
long as such contest prevents foreclosure of the lien or encumbrance and Tenant
causes such lien or encumbrance to be bonded or insured over in a manner
satisfactory to Landlord within such 30 day period.

         26.      ESTOPPEL CERTIFICATES. Tenant agrees, from time to time,
within ten (10) business days after request of Landlord, to execute and deliver
to Landlord, or Landlord's designee, any estoppel certificate requested by
Landlord, stating that this Lease is in full force and effect, the date to which
Rent has been paid, that Landlord is not in default hereunder (or specifying in
detail the nature of Landlord's default), the expiration date of this Lease and
such other matters pertaining to this Lease as may be requested by Landlord.
Tenant's obligation to furnish each estoppel certificate in a timely fashion is
a material inducement for Landlord's execution of this Lease. No cure or grace
period provided in this Lease shall apply to Tenant's obligations to timely
deliver an estoppel certificate.

         27.      ENVIRONMENTAL REQUIREMENTS. Tenant shall not permit or cause
any party to bring any other Hazardous Materials upon the Premises or transport,
store, use, generate, manufacture or release any Hazardous Material in or about
the Premises. Tenant, at its sole cost and expense, shall cause in the Premises
to be in strict compliance with all Environmental Requirements, and shall
remediate in a manner satisfactory to Landlord any Hazardous Materials released
on, under, to or from the Premises by Tenant, its agents, employees,
contractors, subtenants or invitees. Tenant shall complete and certify to
disclosure statements as requested by Landlord from time to time relating to
Tenant's transportation, storage, use, generation, manufacture, or release of
Hazardous Materials on the Premises. The term "Environmental Requirements" means
all applicable past, present and future statutes, regulations, ordinances,
rules, codes, judgments, orders or other similar enactments of any governmental
authority or agency regulating or relating to health, safety or environmental
conditions on, under, or about the Premises or the environment, including
without limitation, the following: the Comprehensive Environmental Response,
Compensation and Liability Act; the Resource and Conservation Recovery Act; and
all state and local counterparts thereto, and any regulations or policies
promulgated or issued thereunder. The term "Hazardous Material(s)" means and
includes (i) any substance, material, waste, pollutant or contaminant listed or
defined as hazardous or toxic under any Environmental Requirements; (ii)
asbestos; (iii) petroleum, including crude oil or any fraction thereof; and (iv)
natural gas or synthetic gas usable for fuel (or mixtures of natural gas and
such synthetic gas). As defined in Environmental Requirements, Tenant is and
shall be deemed to be the "operator" of Tenant's "facility" and the "owner" of
all Hazardous Materials brought on the Premises by Tenant, its agents,
employees, contractors or invitees, and the wastes, by-products, or residues
generated, resulting or produced therefrom.

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<PAGE>

         Tenant shall indemnify, defend, and hold Landlord harmless from and
against any and all losses (including, without limitation, diminution in value
of the Premises and loss of rental income from the Premises), claims, demands,
actions, suits, damages (including, without limitation, punitive damages),
expenses (including, without limitation, remediation, removal, repair,
corrective action or cleanup expenses), and costs (including, without
limitation, actual attorneys' fees, consultant fees or expert fees and
including, without limitation removal or management of any asbestos brought into
the Premises or disturbed in breach of the requirements of this Paragraph,
regardless of whether such removal or management is required by law) which are
brought or recoverable against, or suffered or incurred by Landlord as a result
of any release of Hazardous Materials for which Tenant is obligated to remediate
as provided above or any other breach of the requirements under this Paragraph
by Tenant, its agents, employees, contractors, subtenants, assignees or
invitees, regardless of whether Tenant had knowledge of such noncompliance. The
obligations of Tenant under this Paragraph shall survive any termination of this
Lease.

         Landlord shall have access to, and a right to perform inspections and
tests of, the Premises to determine Tenant's compliance with Environmental
Requirements, its obligations under this Paragraph, or the environmental
condition of the Premises. Access shall be granted to Landlord upon Landlord's
prior notice to Tenant and at such times so as to minimize, so far as may be
reasonable under the circumstances, any disturbance to Tenant's operations. Such
inspections and tests shall be conducted at Landlord's expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement, in which case Tenant shall reimburse Landlord for the reasonable
cost of such inspection and tests. Landlord's receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant.

         28.      FORCE MAJEURE. Landlord shall not be held responsible for
delays in the performance of its obligations hereunder when caused by strikes,
lockouts, unusual weather, labor disputes, acts of God, inability to obtain
labor or materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, governmental controls, delay in issuance
of permits, enemy or hostile governmental action, civil commotion, fire or other
casualty, and other causes beyond the reasonable control of Landlord ("Force
Majeure").

         29.      ENTIRE AGREEMENT. This Lease constitutes the complete
agreement of Landlord and Tenant with respect to the subject matter hereof. No
representations, inducements, promises or agreements, oral or written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this Lease. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.

         30.      SEVERABILITY. Each provision contained in this Lease shall be
construed to be separate and independent and the breach of any provision by
Landlord shall not discharge or relieve Tenant from Tenant's obligation to
observe and perform each of its obligations under this Lease. If any clause or
provision of this Lease is illegal, invalid or unenforceable under present or
future laws, then and in that event, it is the intention of the parties hereto
that the remainder of this Lease shall not be affected thereby. It is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there be

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<PAGE>

added, as a part of this Lease, a clause or provision as similar in terms to
such illegal, invalid or unenforceable clause or provision as may be possible
and be legal, valid and enforceable.

         31.      BROKERS. Tenant represents and warrants that it has dealt with
no broker, agent or other person in connection with this transaction and that no
broker, agent or other person brought about this transaction, other than Lauth
Property Group, Inc. and the broker, if any, set forth on the first page of this
Lease. Tenant agrees to indemnity and hold Landlord harmless from and against
any claims by any other broker, agent or other person claiming a commission or
other form of compensation by virtue of having dealt with Tenant with regard to
this leasing transaction.

         32.      RIGHT OF FIRST OFFER. In the event Landlord desires to sell
its fee estate in the entire Premise and provided that no Event of Default has
occurred under this Lease that has not been cured by Tenant, Tenant shall have a
one time right of first offer to purchase the Premises ("Right of First Offer").
The Right of First Offer shall operate in the following manner: (i) Landlord
shall provide written notice to Tenant that Landlord desires to sell its fee
estate in the entire Premises, which notice shall include the price and other
material terms applicable to Landlord's offer to sell the Premises (the "Notice
of Offer"); (ii) Tenant shall have fifteen (15) days to notify Landlord whether
Tenant elects to purchase the Premises under the exact terms contained in the
Notice of Offer, and Tenant's failure to respond during such fifteen (15) day
period constitutes Tenant's waiver of its Right of First Offer; and (iii) if
Tenant has waived its Right of First Offer, then Landlord may offer to sell the
Premises to third parties provided that the terms offered to third parties are
not materially different from those contained in the Notice of Offer and the
selling price is no less than eighty-five percent (85%) of the price contained
in the Notice of Offer. If Landlord offers the Premises to third parties and the
terms are materially different from those contained in the Notice of Offer or
the selling price is less than eighty-five percent (85%) of the price contained
in the Notice of Offer, then Landlord must repeat the Right of First Offer
procedure outlined above. In the event Tenant elects to purchase the Premises in
accordance with the terms of the Notice of Offer, the purchase price as set
forth in the Notice of Offer shall be paid by Tenant to Landlord in cash, within
thirty (30) days after Tenant's acceptance of the Notice of Offer terms.
Further, in the event that Tenant has waived its one time Right of First Offer
and upon Landlord's request, Tenant shall provide within five (5) days of
Landlord's request a written statement to Landlord and any third parties
designated by Landlord that Tenant waived its Right of First Offer. This Right
of First Offer is a one time right that shall expire upon Tenant's waiver or
failure to exercise such one time right.

         33.      OPTION TO PURCHASE. Any time (i) after Landlord has provided
Tenant notice that Landlord has determined it will be unable to obtain the
necessary governmental approvals, including without limitation any approvals
required by the U.S. Department of the Interior, Fish and Wildlife Service, to
construct Tenant's facility for the refurbishing, refilling and distributing of
propane tanks but (ii) prior to July 1, 2005, Tenant shall have the option to
purchase the Premises, upon and subject to the terms and conditions contained in
this Section 33. If Tenant should exercise the option to purchase herein
granted, the purchase price for the Premises shall be One Million One Hundred
Thirty-Five Thousand Six Hundred Seventeen and no/100 Dollars ($1,135,617.00).
If Tenant desires to exercise the option to purchase herein granted, Tenant
shall give Landlord written notice of such fact no later than January 1, 2005.
Such notice shall constitute an irrevocable commitment by Tenant to purchase the
Premises. Failure of Tenant to

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<PAGE>

give timely notice of exercise of its option to purchase pursuant to this
Section 33 shall constitute a waiver of all rights of Tenant under this Section
33. If Tenant shall have exercised the option to purchase pursuant to the terms
of this Section 33, Tenant by July 1, 2005 shall pay the purchase price to
Landlord and Landlord shall deliver to Tenant a recordable limited warranty
deed, conveying the Premises to Tenant subject only to real estate taxes, any
easements, restrictions or encumbrances of record, and any easements,
restrictions, liens or encumbrances made or suffered by Tenant. All closing
costs, the costs of any transfer taxes, documentary or stamps taxes and title
evidence, and any amounts due pursuant to the California Revenue and Taxation
Code Section 18662 shall be paid by Tenant.

         34.      MISCELLANEOUS.

                           (a)      Any payments or charges due from Tenant to
                  Landlord hereunder shall be considered Rent for all purposes
                  of this Lease.

                           (b)      If and when included within the term
                  "Tenant," as used in this instrument, there is more than one
                  person, firm or corporation, each shall be jointly and
                  severally liable for the obligations of Tenant.

                           (c)      All notices required or permitted to be
                  given under this Lease shall be in writing and shall be sent
                  by a reputable national overnight courier service, postage
                  prepaid, or by hand delivery addressed to the parties at their
                  addresses specified in the Basic Lease Terms and Information
                  section of this Lease. Either party may by notice given
                  aforesaid change its address for all subsequent notices.
                  Except where otherwise expressly provided to the contrary,
                  notice shall be deemed given upon delivery.

                           (d)      Except as otherwise expressly provided in
                  this Lease or as otherwise required by law, Landlord retains
                  the absolute right to withhold any consent or approval.

                           (e)      At Landlord's request, Tenant shall furnish
                  Landlord with true and complete copies of its most recent
                  annual and quarterly financial statements prepared by Tenant
                  or Tenant's accountants and any other financial information or
                  summaries that Tenant typically provides to its lenders or
                  shareholders.

                           (f)      This Lease shall not be filed in any public
                  record. Upon the request of either party, the parties shall
                  execute and file a memorandum of lease, which shall not
                  disclose any of the financial terms of this Lease but shall
                  disclose the Lease Term.

                           (g)      The normal rule of construction to the
                  effect that any ambiguities are to be resolved against the
                  drafting party shall not be employed in the interpretation of
                  this Lease or any exhibits or amendments hereto.

                           (h)      The submission by Landlord to Tenant of this
                  Lease shall have no binding force or effect, shall not
                  constitute an option for the leasing of the

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<PAGE>

                  Premises, nor confer any right or impose any obligations upon
                  either party until execution of this Lease by both parties.

                           (i)      Words of any gender used in this Lease shall
                  be held and construed to include any other gender, and words
                  in the singular number shall be held to include the plural,
                  unless the context otherwise requires. The captions inserted
                  in this Lease are for convenience only and in no way define,
                  limit or otherwise describe the scope or intent of this Lease,
                  or any provision hereof, or in any way affect the
                  interpretation of this Lease.

                           (j)      Construction and interpretation of this
                  Lease shall be governed by the laws of the state in which the
                  Premises are located, excluding any principles of conflicts of
                  laws.

                           (k)      Time is of the essence as to the performance
                  of Landlord and Tenant's obligations under this Lease.

                           (l)      All exhibits and addenda attached hereto are
                  hereby incorporated into this Lease and made a part hereof. In
                  the event of any conflict between such exhibits or addenda and
                  the terms of this Lease, such exhibits or addenda shall
                  control.

                           (m)      Landlord shall provide Tenant with a copy of
                  the final survey, title commitment and title exception
                  documents procured by Landlord during the development of the
                  Premises.

                           (n)      The parties acknowledge that this Lease is
                  contingent upon Landlord acquiring title to the land described
                  in EXHIBIT "A".

                           (o)      As partial consideration for this Lease,
                  Landlord requires that Tenant's parent company, Blue Rhino
                  Corporation, a Delaware corporation, guarantee the full
                  performance of this Lease to be kept and performed by Tenant,
                  including the payment of all Rent and other charges to accrue
                  thereunder.

Signature page to follow.

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<PAGE>

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day
and year first above written.

TENANT:                                           LANDLORD:

PLATINUM PROPANE OF LOS ANGELES, LLC              BR PARTNERS THREE, LLC

By: Blue Rhino Corporation, Manager

                                                  By: /s/ Gregory C. Gurnik
                                                  Printed: Gregory C. Gurnik
                                                  Title: a Manager

    By: /s/ David Slone
    Printed: David Slone
    Title: VP Technical Operations
Execution Date: May 14, 2003                      Execution Date: May 14, 2003

                                LIST OF EXHIBITS

         EXHIBIT "A"  -Premises with Depiction

         EXHIBIT "B" - Rent Commencement Agreement

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