RECEIVABLE INTEREST SALE AGREEMENT

                         Dated as of September 26, 2000

                                     between

                        FERRELLGAS, L.P., as Originator,


                                       and

                      FERRELLGAS RECEIVABLES, LLC, as Buyer





                                TABLE OF CONTENTS
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                                                                                                                Page



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ARTICLE I.PURCHASE AND CONTRIBUTION...............................................................................1

   Section 1.1    Contribution of Contributed Interest............................................................1
   Section 1.2    Purchase of the Receivable Interest.............................................................2
   Section 1.3    Payment of the Purchase Price...................................................................2
   Section 1.4    Deemed Collections..............................................................................3
   Section 1.5    Payments and Computations, Etc..................................................................3
   Section 1.6    Intention of the Parties........................................................................3

ARTICLE II.PAYMENTS AND COLLECTIONS...............................................................................4

   Section 2.1    Collections Prior to Termination................................................................4
   Section 2.2    Collections Following Termination...............................................................4
   Section 2.3    Payment Recission...............................................................................4

ARTICLE III.REPRESENTATIONS AND WARRANTIES........................................................................5

   Section 3.1    Representations and Warranties of the Originator................................................5
      (a)   Existence and Power...................................................................................5
      (b)   Power and Authority; Due Authorization, Execution and Delivery........................................5
      (c)   No Conflict...........................................................................................5
      (d)   Governmental Authorization............................................................................5
      (e)   Actions, Suits........................................................................................5
      (f)   Binding Effect........................................................................................6
      (g)   Accuracy of Information...............................................................................6
      (h)   Use of Proceeds.......................................................................................6
      (i)   Good Title............................................................................................6
      (j)   Perfection............................................................................................6
      (k)   Places of Business and Locations of Records...........................................................6
      (l)   Material Adverse Effect...............................................................................7
      (m)      Names..............................................................................................7
      (n)   Ownership of Buyer....................................................................................7
      (o)   Not a Regulated Entity................................................................................7
      (p)   Compliance with Law...................................................................................7
      (q)   Compliance with Credit and Collection Policy..........................................................7
      (r)   Eligible Receivables..................................................................................7
      (s)   Payments to Originator................................................................................7
      (t)   Enforceability of Contracts...........................................................................8
      (u)   Accounting............................................................................................8
      (v)   Tax Status............................................................................................8

ARTICLE IV.CONDITIONS OF PURCHASE.................................................................................8

   Section 4.1    Conditions Precedent to Purchase................................................................8

ARTICLE V.COVENANTS...............................................................................................8

   Section 5.1    Financial Reporting.............................................................................8
      (a)   Originator's Annual Financial Statements..............................................................8
      (b)   Originator's Quarterly Financial Statements...........................................................9
      (c)   General Partner Annual Consolidated Statements........................................................9
   Section 5.2    Certificates; Other Information.................................................................9
      (a)   Independent Auditor's Certificate.....................................................................9
      (b)   Compliance Certificate................................................................................9
      (c)   SEC Reports...........................................................................................9
      (d)   Other Information.....................................................................................9
   Section 5.3    Notices........................................................................................10
   Section 5.4    Compliance with Laws...........................................................................10
   Section 5.5    Preservation of Existence, Etc.................................................................11
   Section 5.6    Payment of Obligations.........................................................................11
   Section 5.7    Audits.........................................................................................11
   Section 5.8    Keeping of Records and Books...................................................................12
   Section 5.9    Compliance with Contracts and Credit and Collection Policy.....................................12
   Section 5.10   Ownership......................................................................................12
   Section 5.11   Purchasers'Reliance............................................................................12
   Section 5.12   Collections....................................................................................13
   Section 5.13   Negative Covenants of Originator...............................................................13
      (a)   Name Change, Offices and Records.....................................................................13
      (b)   Change in Payment Instructions to Obligors...........................................................13
      (c)   Modifications to Contracts and Credit and Collection Policy..........................................13
      (d)   Sales, Adverse Claims................................................................................13
      (e)   Accounting for Purchase..............................................................................14
      (f)   Change in Business...................................................................................14
      (g)   Accounting Changes...................................................................................14

ARTICLE VI.ADMINISTRATION AND COLLECTION.........................................................................14

   Section 6.1    Designation of Servicer........................................................................14
   Section 6.2    Duties of Servicer.............................................................................14
   Section 6.3    Servicing Fee..................................................................................15

ARTICLE VII.TERMINATION EVENTS...................................................................................15

   Section 7.1    Termination Events.............................................................................15
      (a)   Non-Payment..........................................................................................15
      (b)   Representation or Warranty...........................................................................15
      (c)   Specific Defaults....................................................................................15
      (d)   Other Defaults.......................................................................................15
      (e)   Cross-Default........................................................................................15
      (f)   Insolvency; Voluntary Proceedings....................................................................16
      (g)   Involuntary Proceedings..............................................................................16
      (h)   ERISA................................................................................................17
      (i)   Monetary Judgments...................................................................................17
      (j)   Non-Monetary Judgments...............................................................................17
      (l)   Change of Control....................................................................................17
      (m)      Leverage Ratio....................................................................................17
      (n)   Interest Coverage Ratio..............................................................................17
      (o)   Excessive Contribution or Subordinated Note Balance..................................................17
   Section 7.2    Remedies.......................................................................................18

ARTICLE VIII.INDEMNIFICATION.....................................................................................18

   Section 8.1    Indemnities by Originator......................................................................18
   Section 8.2    Other Costs and Expenses.......................................................................20

ARTICLE IX.MISCELLANEOUS.........................................................................................20

   Section 9.1    Waivers and Amendments.........................................................................20
   Section 9.2    Notices........................................................................................21
   Section 9.3    Protection of Ownership Interests of Buyer.....................................................21
   Section 9.4    Confidentiality................................................................................22
   Section 9.5    Bankruptcy Petition............................................................................22
   Section 9.6    Limitation of Liability........................................................................23
   Section 9.7    CHOICE OF LAW..................................................................................23
   Section 9.8    CONSENT TO JURISDICTION........................................................................23
   Section 9.9    WAIVER OF JURY TRIAL...........................................................................24
   Section 9.10   Integration; Binding Effect; Survival of Terms.................................................24

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                       RECEIVABLE INTEREST SALE AGREEMENT

     This  Receivable  Interest Sale Agreement dated as of September 26, 2000 is
between  Ferrellgas,  L.P., a Delaware limited partnership  ("Originator"),  and
Ferrellgas  Receivables,  LLC, a Delaware limited liability  company  ("Buyer").
Unless defined elsewhere herein,  capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Exhibit I.

                             PRELIMINARY STATEMENTS

     On  the  terms  and  subject  to  the  conditions  hereinafter  set  forth,
Originator desires to sell a Receivable Interest,
         and  contribute a Contributed  Interest to Buyer,  and Buyer desires to
         purchase such Receivable Interest,  and accept the contribution of such
         Contributed Interest, from Originator.

     Originator and Buyer intend the  transactions  contemplated  hereby to be a
true  sale or other  outright  conveyance  of the  Receivable  Interest  and the
Contributed  Interest from  Originator to Buyer,  providing  Buyer with the full
benefits of ownership of the Receivable  Interest and the Contributed  Interest,
and  Originator  and Buyer do not intend  these  transactions  to be, or for any
purpose to be characterized as, loans from Buyer to Originator.

     From  time to time  after  the  date  hereof,  Buyer  will  sell  undivided
interests in the Receivable  Interest and the Contributed  Interest  pursuant to
that certain  Receivables  Purchase Agreement dated as of September 26, 2000 (as
the same may from time to time hereafter be amended,  supplemented,  restated or
otherwise   modified,   the  "Purchase   Agreement")  among  Buyer,  as  seller,
Originator, as initial Servicer, Jupiter Securitization Corporation ("Conduit"),
the  financial  institutions  from  time to time  party  thereto  as  "Financial
Institutions" (together with Conduit, the "Purchasers"),  and Bank One, NA (Main
Office Chicago) or any successor  agent  appointed  pursuant to the terms of the
Purchase  Agreement,  as agent for Conduit and such Financial  Institutions  (in
such capacity, the "Agent").

ARTICLE I.
                            PURCHASE AND CONTRIBUTION

Section 1.1 .  Contribution  of  Contributed  Interest.  On the date hereof,  in
consideration  of the issuance of all of Buyer's  Equity  Interests,  Originator
does hereby  contribute,  assign,  transfer,  set-over and  otherwise  convey to
Buyer,  without recourse (except to the extent expressly  provided herein),  and
Buyer does hereby accept from Originator as a contribution  to Buyer's  capital,
the  Contributed  Interest.  Subject to Section  7.1(o),  after the date  hereof
through and including the Termination  Date, the  Contributed  Interest shall be
adjusted  as of the  opening  of  business  on each  Business  Day on which  any
adjustment in the Receivable Interest occurs as provided in Section 1.3(c).

Section 1.2 Purchase of the Receivable  Interest.  Upon the terms and subject to
the conditions hereof, in consideration of the Purchase Price,  effective on the
date  hereof,  Originator  does hereby  sell,  assign,  transfer,  set-over  and
otherwise  convey to Buyer,  without  recourse  (except to the extent  expressly
provided  herein),  and Buyer  does  hereby  purchase  from  Originator,  all of
Originator's  right,  title  and  interest  in  the  Receivable  Interest.   The
Receivable  Interest  shall be  adjusted  as of the  opening of business on each
Business Day after the date hereof through and including the Termination Date in
accordance with Section 1.3(c).

Section 1.3       Payment of the Purchase Price.

(a) On the date hereof, upon satisfaction of the conditions  precedent set forth
in Article IV hereof,  Buyer shall pay Originator the initial Purchase Price for
the  Receivable  Interest  computed as of the Initial  Computation  Date, by (i)
deposit of immediately  available funds, no later than 2:00 p.m. (Chicago time),
to  Originator's  account  no.  4518054085  at Wells Fargo  Bank,  N.A.,  in San
Francisco,  California,  ABA No. 121000248  ("Originator's  Account"),  and (ii)
delivering the Subordinated Note referred to in clause (b) below.

(b) A  portion  of the  Purchase  Price to be paid by the Buyer may from time to
time  be  paid to the  Originator  after  the  consummation  of the  sale of the
Receivable  Interest.  Such unpaid  portion of the Purchase Price may be paid in
immediately available funds or, at Buyer's election,  subject to Section 7.1(o),
by increasing the amount outstanding under the Subordinated Note.

(c) The  Receivable  Interest  shall be adjusted on a daily basis because of the
daily  changes  that  occur in  respect of the  Variable  Purchased  Percentage.
Notwithstanding such daily adjustments,  the Buyer and the Originator agree that
the  Buyer  shall  only be  required  to  re-calculate  the  Variable  Purchased
Percentage  (i) on a monthly basis as of the last day of each calendar month (or
if such day is not a Business Day, the next  succeeding  Business Day),  (ii) on
the date of the occurrence of any change in the Funded Amount in accordance with
clause (d) below, and (iii) on the Termination Date. Such redetermined amount of
the  Variable  Purchased  Percentage  shall  be  deemed  to be the  value of the
Receivable  Interest for all purposes under this Agreement until such Receivable
Interest is redetermined pursuant to this clause (c).

(d) If the Funded Amount shall be increased or decreased on any date,  the Buyer
shall (i) in the case of an increase in the Funded Amount, pay to the Originator
the proceeds  received by it resulting from such increase as  consideration  for
the  purchase  of an  additional  portion of the  Receivable  Interest,  and the
Receivable  Interest  shall be adjusted  accordingly,  and (ii) in the case of a
decrease in the Funded Amount, use the proceeds of Collections (and if necessary
to obtain  additional  proceeds,  re-sell  to the  Originator  a portion  of the
Receivable  Interest)  to repay to the Agent for the  account of the  applicable
Purchaser(s),  the  amounts  required  to be  repaid  pursuant  to the  Purchase
Agreement,  and the  Receivable  Interest  shall  be  adjusted  accordingly.  In
addition,  if the Variable  Purchased  Percentage  would, but for the limitation
contained in the  definition  of such term,  ever exceed  100%,  the Buyer shall
repay to the Agent for the account of the applicable Purchaser(s),  such amounts
as may be  required to reduce the  Variable  Purchased  Percentage  to an amount
equal to or less than 100%.

Section 1.4       Deemed Collections.

(a) If on any day the  Outstanding  Balance of a Pool  Receivable  is either (i)
reduced as a result of any  defective or rejected  goods or  services,  any cash
discount or any  adjustment  by  Originator,  or (ii)  reduced or cancelled as a
result of a setoff in  respect of any claim by any  Person  (whether  such claim
arises out of the same or a related  transaction  or an unrelated  transaction),
Originator  shall be deemed to have  received on such day a  Collection  of such
Pool Receivable in the amount of such reduction or  cancellation.  If on any day
any of the representations or warranties in Section 3.1(h), (i), (j), (r) or (t)
is no longer  true with  respect  to any Pool  Receivable,  Originator  shall be
deemed to have  received on such day a  Collection  of such Pool  Receivable  in
full.

(b) If Originator is deemed to receive Collections pursuant to this Section 1.4,
the Receivable Interest shall be adjusted accordingly on the date of such deemed
receipt pursuant to Section 1.3(c).

Section 1.5       Payments and Computations, Etc.

(a) All  amounts to be paid or  deposited  by Buyer  hereunder  (except  amounts
payable by increasing the outstanding  principal  balance under the Subordinated
Note) shall be paid or deposited to Originator's  Account in accordance with the
terms hereof on the day when due in immediately  available funds. All amounts to
be paid or deposited by Originator  hereunder  shall be paid or deposited to the
Facility  Account  in  accordance  with the terms  hereof on the day when due in
immediately available funds.

(b) In the event that any payment owed by any Person hereunder  becomes due on a
day that is not a  Business  Day,  then such  payment  shall be made on the next
succeeding Business Day.

(c) If any Person fails to pay any amount hereunder when due, such Person agrees
to pay,  on  demand,  the  Default  Fee in respect  thereof  until paid in full;
provided,  however,  that such  Default  Fee shall  not at any time  exceed  the
maximum rate permitted by applicable law.

Section 1.6 Intention of the Parties.  It is the intention of the parties hereto
that  the  contribution  of  the  Contributed  Interest,  and  the  sale  of the
Receivable  Interest  hereunder,   shall  constitute  sales  or  other  outright
conveyances  which are absolute and  irrevocable and provide Buyer with the full
benefits of ownership of the Contributed  Interest and the Receivable  Interest.
The sale of the Receivable Interest and contribution of the Contributed Interest
hereunder are made without recourse to Originator;  provided,  however, that (i)
Originator  shall  be  liable  to  Buyer  for all  representations,  warranties,
covenants  and  indemnities  made by  Originator  pursuant  to the  terms of the
Transaction  Documents to which  Originator  is a party,  and (ii) such sale and
contribution  do not  constitute and are not intended to result in an assumption
by Buyer or any assignee  thereof of any  obligation  of Originator or any other
Person arising in connection with the Pool  Receivables,  the related  Contracts
and/or other Related Security or any other obligations of Originator. In view of
the  intention  of the parties  hereto that the  conveyances  of the  Receivable
Interest and the Contributed  Interest made hereunder shall  constitute sales or
other outright conveyances thereof rather than loans secured thereby, Originator
agrees  that it  will,  on or prior to the date  hereof,  mark its  master  data
processing  records relating to the Pool Receivables with a legend acceptable to
Buyer and to the Agent (as  Buyer's  assignee),  evidencing  that Buyer owns the
Receivable  Interest and the Contributed  Interest as provided in this Agreement
and to note in its financial  statements  that the Receivable  Interest has been
sold, and the Contributed Interest has been contributed,  to Buyer and have been
further sold or pledged to the Agent. Upon the request of Buyer or the Agent (as
Buyer's   assignee),   Originator  will  execute  and  file  such  financing  or
continuation statements,  or amendments thereto or assignments thereof, and such
other instruments or notices,  as may be necessary or appropriate to perfect and
maintain the perfection of Buyer's ownership of the Receivable  Interest and the
Contributed  Interest,  or as Buyer  or the  Agent  (as  Buyer's  assignee)  may
reasonably request.

ARTICLE II.
                            PAYMENTS AND COLLECTIONS

Section 2.1 Collections Prior to Termination.  On each Business Day prior to the
Termination  Date, after deduction by the Servicer of its Servicing Fee: (i) the
Originator's Percentage of any remaining Collections received by the Servicer on
such Business Day shall be deposited to the Originator's  Account,  and (ii) the
Buyer's Percentage then in effect of any remaining  Collections  received by the
Servicer  shall be, at the  Buyer's  option,  either  applied  to payment of any
amounts  owing on such  Business  Day by Buyer to  Originator  in respect of the
Subordinated  Note or deposited to the Facility  Account and then transferred to
the  Originator's  Account as payment of the Purchase  Price for the  Receivable
Interest.

Section 2.2 Collections  Following  Termination.  On the Termination Date and on
each day  thereafter  until  payment  in full of all  Aggregate  Unpaids,  after
deduction of the Servicing Fee: (i) the  Originator's  Percentage then in effect
of any remaining Collections received by the Servicer on such Business Day shall
be deposited to the Originator's  Account,  and (ii) the Buyer's Percentage then
in  effect  of any  remaining  Collections  received  by the  Servicer  shall be
deposited to the Facility Account.

Section 2.3 Payment Recission. No amount due and owing to either party hereunder
shall be considered  paid or applied  hereunder to the extent that, at any time,
all or any portion of such payment or application is rescinded by application of
law or judicial  authority,  or must  otherwise  be returned or refunded for any
reason. The paying party shall remain obligated for the amount of any payment or
application  so rescinded,  returned or refunded,  and shall promptly pay to the
Person who suffered such  recission,  return or refund) the full amount thereof,
plus  interest  thereon at the Default Fee from the date of any such  recission,
return or refunding.

ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of the Originator.  Originator hereby
represents  and warrants to Buyer and its assigns,  as of the date hereof and as
of each Business Day hereafter through and including the Termination Date that:

(a) Existence and Power.  Originator is a limited  partnership,  duly organized,
validly  existing and in good standing  under the laws of Delaware,  and is duly
qualified to do business and is in good standing as a foreign  partnership,  and
has  and  holds  all   partnership   power   and  all   governmental   licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction  in which its business is conducted  except where the failure to so
qualify or so hold could not  reasonably be expected to have a Material  Adverse
Effect.

(b)  Power  and  Authority;  Due  Authorization,  Execution  and  Delivery.  The
execution  and  delivery  by  Originator  of  this   Agreement  and  each  other
Transaction  Document  to  which  it is a  party,  and  the  performance  of its
obligations  hereunder and thereunder and,  Originator's  use of the proceeds of
the Purchase made hereunder, are within its partnership powers and authority and
have been duly authorized by all necessary  partnership action on its part. This
Agreement and each other Transaction Document to which Originator is a party has
been duly executed and delivered by Originator.

(c) No Conflict.  The execution and delivery by Originator of this Agreement and
each other  Transaction  Document to which it is a party, and the performance of
its  obligations  hereunder and  thereunder do not contravene or violate (i) its
certificate  of  formation  or  partnership  agreement,  (ii) any  law,  rule or
regulation  applicable  to it,  (iii)  any  restrictions  under  any  agreement,
contract  or  instrument  to  which  it is a party  or by which it or any of its
property is bound,  or (iv) any order,  writ,  judgment,  award,  injunction  or
decree  binding on or  affecting  it or its  property,  and do not result in the
creation or  imposition  of any  Adverse  Claim on assets of  Originator  or its
Subsidiaries (except as created under the Transaction Documents) except, in each
case, where such  contravention or violation could not reasonably be expected to
have a Material Adverse Effect; and no transaction  contemplated hereby requires
compliance with any bulk sales act or similar law.

(d)  Governmental  Authorization.   Other  than  the  filing  of  the  financing
statements required hereunder,  no authorization or approval or other action by,
and no notice to or filing with, any  governmental  authority or regulatory body
is required for the due execution  and delivery by Originator of this  Agreement
and each other  Transaction  Document to which it is a party and the performance
of its obligations hereunder and thereunder.

(e) Actions,  Suits. There are no actions,  suits or proceedings  pending, or to
the best of Originator's knowledge, threatened, against or affecting Originator,
or any of its properties,  in or before any  Governmental  Authority,  which (a)
purport to affect or pertain to this Agreement or any other Transaction Document
or any of the transactions  contemplated hereby or thereby; or (b) if determined
adversely to Originator, would reasonably be expected to have a Material Adverse
Effect.  No injunction,  writ,  temporary  restraining order or any order of any
nature has been issued by any court or other Governmental  Authority  purporting
to enjoin or restrain the  execution,  delivery or performance of this Agreement
or any other Transaction  Document,  or directing that the transactions provided
for herein or therein not be consummated as herein or therein provided.

(f) Binding Effect. This Agreement and each other Transaction  Document to which
Originator is a party  constitute  the legal,  valid and binding  obligations of
Originator  enforceable  against  Originator in accordance with their respective
terms,  except as such  enforcement  may be  limited by  applicable  bankruptcy,
insolvency,  reorganization  or  other  similar  laws  relating  to or  limiting
creditors' rights generally and by general  principles of equity  (regardless of
whether enforcement is sought in a proceeding in equity or at law).

(g) Accuracy of Information.  All information heretofore furnished by Originator
or any of its  Affiliates  to  Buyer  (or its  assigns)  for  purposes  of or in
connection with this Agreement,  any of the other  Transaction  Documents or any
transaction  contemplated  hereby  or  thereby  is,  and  all  such  information
hereafter  furnished by  Originator  or any of its  Affiliates  to Buyer (or its
assigns) will be, true and accurate in every  material  respect on the date such
information  is stated or certified and does not and will not contain any untrue
statement  of a material  fact or omit any material  fact  required to be stated
therein  or  necessary  to make the  statements  made  therein,  in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.

(h) Use of Proceeds.  No Purchase Price payment hereunder will be used (i) for a
purpose  that  violates,  or  would  be  inconsistent  with,  any  law,  rule or
regulation  applicable  to  Originator  or (ii) to acquire  any  security in any
transaction which is subject to Section 13 or 14 of the Securities  Exchange Act
of 1934, as amended.  (i) Good Title. On the Initial  Computation  Date and upon
the creation of each Pool  Receivable  coming into  existence  after the Initial
Computation  Date,  Originator (i) is the legal and beneficial owner of the Pool
Receivables  and (ii) is the legal and beneficial  owner of the  Collections and
Related  Security  with  respect  thereto,  in each case,  free and clear of any
Adverse Claim except as created by the Transaction Documents.

(j)  Perfection.  This  Agreement,  together  with the  filing of the  financing
statements  contemplated  hereby,  is  effective to transfer to Buyer (and Buyer
shall acquire from  Originator)  legal and equitable title to, with the right to
sell and encumber,  the Receivable Interest and the Contributed  Interest,  free
and clear of any Adverse Claim, except as created by the Transactions Documents.
There have been duly filed all financing statements or other similar instruments
or documents  necessary under the UCC (or any comparable law) of all appropriate
jurisdictions  to perfect Buyer's  ownership of the Receivable  Interest and the
Contributed Interest.

(k) Places of Business and Locations of Records.  Originator is organized  under
the laws of  Delaware.  The  principal  places of business  and chief  executive
office of Originator and the offices where it keeps all of its records regarding
the Receivable  Interest are located at the address(es) listed on Exhibit II, or
such other locations of which Buyer has been notified in accordance with Section
5.13(a) in  jurisdictions  where all action required by Section 5.13(a) has been
taken and completed.  Originator's  Federal  Employer  Identification  Number is
correctly set forth on Exhibit II.

(l) Material  Adverse  Effect.  Since April 30, 2000, no event has occurred that
would have a Material Adverse Effect.

(m) Names. In the five (5) years prior to the date of this Agreement, Originator
has not used any partnership  names, trade names or assumed names other than the
name in which it has executed this Agreement and as listed on Exhibit II.

(n) Ownership of Buyer.  Originator  owns,  directly or indirectly,  100% of the
issued and outstanding  Equity Interests of Buyer, free and clear of any Adverse
Claim. Such Equity Interests are validly issued,  fully paid and  nonassessable,
and there are no options,  warrants  or other  rights to acquire  securities  of
Buyer.

(o) Not a Regulated Entity. Originator is not an "investment company" within the
meaning of the  Investment  Company Act of 1940,  as amended,  or any  successor
statute.  Originator  is not  subject to  regulation  under the  Public  Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
any state  public  utilities  code,  or any other  Federal  or state  statute or
regulation  limiting its ability to incur  Indebtedness  or to sell interests in
the Pool Receivables.

(p)  Compliance  with Law.  Originator  has complied with all  applicable  laws,
rules, regulations, orders, writs, judgments,  injunctions, decrees or awards to
which it may be  subject,  except  where  the  failure  to so  comply  could not
reasonably be expected to have a Material Adverse Effect.  Each Pool Receivable,
together with the Contract related thereto,  does not contravene any laws, rules
or regulations  applicable thereto (including,  without limitation,  laws, rules
and regulations relating to truth in lending,  fair credit billing,  fair credit
reporting,  equal  credit  opportunity,   fair  debt  collection  practices  and
privacy),  and no part of such Contract is in violation of any such law, rule or
regulation, except where such contravention or violation could not reasonably be
expected to have a Material Adverse Effect.

(q) Compliance with Credit and Collection Policy. Originator has complied in all
material respects with the Credit and Collection Policy with regard to each Pool
Receivable and the related Contract,  and has not made any change to such Credit
and  Collection  Policy,  except such material  change as to which Buyer (or its
assigns) has been notified in accordance with Section 5.13(a).

(r) Eligible Receivables.  Each of the Receivables included as a Pool Receivable
in the Receivable  Interest or the Contributed  Interest on any day prior to the
Termination Date is an Eligible Receivable.

(s) Payments to  Originator.  Neither the sale by Originator  of the  Receivable
Interest,  nor the  contribution by Originator of the Contributed  Interest,  is
voidable under any section of the Federal Bankruptcy Code.

(t)  Enforceability  of  Contracts.  Each  Contract  with  respect  to each Pool
Receivable is effective to create,  and has created,  a legal, valid and binding
obligation  of the related  Obligor to pay the  Outstanding  Balance of the Pool
Receivable  created  thereunder and any accrued  interest  thereon,  enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws  relating  to or  limiting  creditors'  rights  generally  and  by  general
principles  of  equity  (regardless  of  whether  enforcement  is  sought  in  a
proceeding in equity or at law).

(u)  Accounting.  The manner in which  Originator  accounts  for the sale of the
Receivable  Interest and the  contribution of the Contributed  Interest does not
jeopardize   its   characterization   as  being  a  true  sale  or  an  absolute
contribution, as applicable.

(v) Tax  Status.  Originator  is  subject to  taxation  under the Code only as a
partnership and not as a corporation.

ARTICLE IV.
                             CONDITIONS OF PURCHASE

Section 4.1  Conditions  Precedent to Purchase.  The Purchase of the  Receivable
Interest under this  Agreement is subject to the  conditions  precedent that (a)
Buyer shall have been capitalized with the initial Contributed Interest, (b) the
Agent shall have received on or before the date of such purchase those documents
listed on  Schedule  A  hereto,  (c) all  conditions  precedent  to the  initial
purchase  under  the  Purchase  Agreement  shall  have been  satisfied,  (d) the
representations  and warranties set forth in Section 3.1 are true and correct on
and as of the  date  of the  Purchase,  and (e) no  event  has  occurred  and is
continuing,   or  would  result  from  the  Purchase,  that  will  constitute  a
Termination Event, and no event has occurred and is continuing,  or would result
from the Purchase, that would constitute a Potential Termination Event.

ARTICLE V.
                                    COVENANTS

Section 5.1 Financial  Reporting.  Originator shall deliver to the Buyer and the
Agent (as Buyer's  assignee),  in form and detail  satisfactory to the Buyer and
the Agent (as  Buyer's  assignee)  and  consistent  with the form and  detail of
financial  statements  and  projections  provided to the Buyer and the Agent (as
Buyer's  assignee) by Originator  and its  Affiliates  prior to the date of this
Agreement:

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

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

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

     Section 5.2 Certificates;  Other  Information.  Originator shall furnish to
the Buyer and the Agent (as Buyer's assignee):

(a) Independent  Auditor's  Certificate.  Concurrently  with the delivery of the
financial  statements  referred  to in  Section  5.1(a),  a  certificate  of the
Independent Auditor stating that in making the examination necessary therefor no
knowledge was obtained of any Termination Event or Potential  Termination Event,
except as specified in such certificate;

(b)  Compliance  Certificate.  Concurrently  with the delivery of the  financial
statements  referred to in  Sections  5.1(a) and (b), a  Compliance  Certificate
executed by a  Responsible  Officer with respect to the periods  covered by such
financial  statements  together  with  supporting  calculations  and such  other
supporting  detail  as the  Buyer and the  Agent  (as  Buyer's  assignee)  shall
require;

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

(d) Other Information.  Promptly, such additional information regarding the Pool
Receivables or the business,  financial or corporate affairs of Originator,  the
General Partner, the MLP or any Subsidiary as the Buyer or the Agent (as Buyer's
assignee) may from time to time request.

     Section 5.3 Notices.  Originator  shall  promptly  notify the Buyer and the
Agent (as Buyer's assignee):

(a)   Of the occurrence of any Potential Termination Event or Termination Event;

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

(c) The occurrence of a default or an event of default under any other financing
arrangement  pursuant to which  Originator,  the General Partner or the MLP is a
debtor or an obligor;

(d) From and after the time,  if any,  when either  Standard and Poor's  Ratings
Group or Moody's Investors  Service,  Inc. rates any Indebtedness of Originator,
any  downgrade  of which  Originator  becomes  aware in the  rating  of any such
Indebtedness  by either  such  rating  agency,  setting  forth the  Indebtedness
affected and the nature of such change;

(e) At least thirty (30) days prior to the  effectiveness of any material change
in or material  amendment  to the Credit and  Collection  Policy,  a copy of the
Credit and  Collection  Policy then in effect and a notice (A)  indicating  such
change or  amendment,  and (B) if such  proposed  change or  amendment  would be
reasonably likely to adversely affect the collectibility of the Pool Receivables
or decrease the credit quality of any newly created Pool Receivables, requesting
Buyer's consent thereto;

(f) Of any  material  change  in  accounting  policies  or  financial  reporting
practices by Originator or any of its consolidated Subsidiaries; and

(g) If any of the  representations  and  warranties  in Article III ceases to be
true and correct.

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

Section 5.4 Compliance with Laws.  Originator shall comply with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its business
(including  the  Federal  Fair  Labor  Standards  Act),  except  such  as may be
contested  in good  faith or as to which a bona  fide  dispute  may exist or the
failure  of which to comply  with could not  reasonably  be  expected  to have a
Material Adverse Effect.

Section 5.5       Preservation of Existence, Etc.  Originator shall:

(a) Preserve and maintain in full force and effect its partnership existence and
good standing under the laws of its state or jurisdiction of organization except
in connection with transactions permitted by the Credit Agreement;

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

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

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

Section 5.6 Payment of  Obligations.  Originator  shall pay and discharge as the
same shall  become due and  payable  (except to the extent the failure to so pay
and  discharge  could not  reasonably  be  expected  to have a Material  Adverse
Effect), all of its obligations and liabilities, including:

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

(b) All lawful claims which, if unpaid, would by law become a Adverse Claim upon
its  property,  unless  such  claims  are  being  contested  in  good  faith  by
appropriate  proceedings and adequate reserves in accordance with GAAP are being
maintained by Originator or such Subsidiary.

Section 5.7 Audits.  Originator will furnish to Buyer (or its assigns) from time
to time such  information  with respect to it and the Pool  Receivables as Buyer
(or its assigns) may  reasonably  request.  Originator  will,  from time to time
during  regular  business  hours as  requested by Buyer (or its  assigns),  upon
reasonable  notice  and at the sole  cost of  Originator,  permit  Buyer (or its
assigns) or their respective agents or  representatives  (i) to examine and make
copies of and abstracts  from all Records in the possession or under the control
of  Originator  relating  to the  Pool  Receivables  and the  Related  Security,
including,  without  limitation,  the related  Contracts,  and (ii) to visit the
offices and properties of Originator for the purpose of examining such materials
described in clause (i) above,  and to discuss matters  relating to Originator's
financial  condition  or the  Pool  Receivables  and  the  Related  Security  or
Originator's  performance under any of the Transaction Documents or Originator's
performance  under the Contracts and, in each case,  with any of the officers or
employees of Originator having knowledge of such matters.

Section 5.8 Keeping of Records and Books. Originator will maintain and implement
administrative  and operating  procedures  (including,  without  limitation,  an
ability to recreate  records  evidencing  Pool  Receivables  in the event of the
destruction  of the  originals  thereof),  and keep and maintain all  documents,
books,  records and other information  reasonably necessary or advisable for the
collection  of all Pool  Receivables  (including,  without  limitation,  records
adequate to permit the immediate  identification of each new Pool Receivable and
all Collections of and adjustments to each existing Pool Receivable). Originator
will  give  Buyer  (or  its  assigns)  notice  of  any  material  change  in the
administrative and operating procedures referred to in the previous sentence.

Section  5.9  Compliance  with  Contracts  and  Credit  and  Collection  Policy.
Originator  will timely and fully (i)  perform  and comply with all  provisions,
covenants and other  promises  required to be observed by it under the Contracts
related to the Pool Receivables, except where the failure to so comply could not
reasonably  be  expected  to  have a  material  adverse  impact  on the  overall
collectibility of the Pool Receivables, and (ii) comply in all respects with the
Credit and Collection  Policy in regard to each Pool  Receivable and the related
Contract, except where the failure to so comply could not reasonably be expected
to have a material  adverse  impact on the  overall  collectibility  of the Pool
Receivables.

Section 5.10 Ownership.  Originator will take all necessary  action to establish
and maintain,  irrevocably in Buyer, legal and equitable title to the Receivable
Interest  and the  Contributed  Interest,  free and clear of any Adverse  Claims
other than Adverse Claims arising under the  Transaction  Documents  (including,
without  limitation,  the filing of all  financing  statements  or other similar
instruments or documents  necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect Buyer's interest in the Receivable Interest
and the Contributed  Interest and such other action to perfect,  protect or more
fully  evidence the  interest of Buyer as Buyer (or its assigns) may  reasonably
request).

Section 5.11 Purchasers'  Reliance.  Originator  acknowledges that the Agent and
the Purchasers are entering into the  transactions  contemplated by the Purchase
Agreement in reliance  upon Buyer's  identity as a legal entity that is separate
from Originator and any Affiliates thereof.  Therefore,  from and after the date
of execution and delivery of this Agreement, Originator will take all reasonable
steps  including,  without  limitation,  all steps that Buyer or any assignee of
Buyer may from time to time reasonably request to maintain Buyer's identity as a
separate  legal entity and to make it manifest to third parties that Buyer is an
entity with assets and  liabilities  distinct from those of  Originator  and any
Affiliates  thereof and not just a division of Originator or any such Affiliate.
Without  limiting the  generality  of the foregoing and in addition to the other
covenants  set forth  herein,  Originator  (i) will not hold itself out to third
parties  as  liable  for the debts of Buyer nor  purport  to own the  Receivable
Interest or the Contributed Interest, (ii) will take all other actions necessary
on its  part to  ensure  that  Buyer  is at all  times  in  compliance  with the
covenants  set forth in Section  7.10 of the Purchase  Agreement  and (iii) will
cause  all  tax  liabilities   arising  in  connection  with  the   transactions
contemplated herein or otherwise to be allocated between Originator and Buyer on
an arm's-length  basis and in a manner  consistent with the procedures set forth
in U.S. Treasury Regulations ss.ss.1.1502-33(d) and 1.1552-1.

Section 5.12 Collections.  Originator,  individually or as Servicer,  will cause
all  Collections on the Pool  Receivables to be  concentrated no less often than
weekly into the Servicer's Concentration Account;  provided,  however, that upon
written  request  of Buyer (or its  assignee),  Originator,  individually  or as
Servicer,  will cause all such Collections to be concentrated  each Business Day
into  the  Servicer's  Concentration  Account.  Originator,  individually  or as
Servicer,  will sweep the Buyer's  Percentage of all such  Collections  from the
Servicer's  Concentration  Account no less than daily into the Facility  Account
and,  unless  the  Termination   Date  has  occurred,   immediately   thereafter
transferred to the Originator's Account.

Section  5.13  Negative  Covenants of  Originator.  Until the date on which this
Agreement  terminates in accordance with its terms,  Originator hereby covenants
that:

(a) Name  Change,  Offices  and  Records.  Originator  will not change its name,
identity or legal  structure  (within the meaning of Article 9 of any applicable
enactment of the UCC) or relocate its chief executive office or any office where
Records are kept unless it shall have: (i) given Buyer (or its assigns) at least
fifteen (15) days' prior written  notice thereof and (ii) delivered to Buyer (or
its assigns) all financing statements, instruments and other documents requested
by Buyer (or its assigns) in connection with such change or relocation.

(b) Change in Payment  Instructions  to Obligors.  Originator will not authorize
any Obligor to make  payment to any Lock-Box or  Collection  Account  (each,  as
defined  in the  Purchase  Agreement)  other  than one  which is swept  into the
Servicer's Concentration Account in accordance with Section 5.12.

(c) Modifications to Contracts and Credit and Collection Policy. Originator will
not make any change to the Credit and  Collection  Policy  that could  adversely
affect the collectibility of the Pool Receivables or decrease the credit quality
of any newly  created Pool  Receivables.  Except as  otherwise  permitted in its
capacity  as  Servicer  pursuant  to  Article  VIII of the  Purchase  Agreement,
Originator  will not  extend,  amend or  otherwise  modify the terms of any Pool
Receivable or any Contract  related  thereto  other than in accordance  with the
Credit and Collection Policy.

(d) Sales, Adverse Claims. Originator will not sell, assign (by operation of law
or otherwise)  or otherwise  dispose of, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon (including, without limitation,
the filing of any  financing  statement)  or with  respect  to,  the  Receivable
Interest, the Contributed Interest, or the Servicer's  Concentration Account, or
assign any right to receive  income with respect  thereto  (other than,  in each
case,  the  creation of the  interests  therein in favor of Buyer  provided  for
herein),  and Originator will defend the right,  title and interest of Buyer in,
to and under any of the foregoing property,  against all claims of third parties
claiming through or under Originator.

(e)  Accounting  for  Purchase.  Originator  will not,  and will not  permit any
Affiliate  to,  account  for  or  treat  (whether  in  financial  statements  or
otherwise)  the  transactions  contemplated  hereby in any manner other than the
sale of the Receivable  Interest and a contribution of the Contributed  Interest
by Originator to Buyer except to the extent that either such  transaction is not
recognized on account of  consolidated  financial  reporting in accordance  with
generally accepted accounting principles.

(f) Change in  Business.  Originator  shall not engage in any  material  line of
business  substantially  different  from those lines of  business  carried on by
Originator and the Restricted Subsidiaries on the date of this Agreement.

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

ARTICLE VI.
                          ADMINISTRATION AND COLLECTION

Section  6.1  Designation  of  Servicer.   The  servicing,   administration  and
collection  of the Pool  Receivables  shall be  conducted  by such  Person  (the
"Servicer") so designated from time to time in accordance with this Section 6.1.
Ferrellgas,  L.P.  is hereby  designated  as, and hereby  agrees to perform  the
duties and obligations of, the Servicer  pursuant to the terms of this Agreement
and the  Purchase  Agreement.  The Agent (as Buyer's  assignee)  may at any time
designate as Servicer any Person to succeed  Ferrellgas,  L.P. or any  successor
Servicer;  provided,  however,  that unless a  Termination  Event has  occurred,
replacement  of  the  Servicer  shall  not  result  in  the  occurrence  of  the
Termination Date.

Section 6.2       Duties of Servicer.

(a) The  Servicer  shall  take or cause to be taken all such  actions  as may be
necessary or advisable to collect each Pool Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy.

(b) The  Servicer  shall  administer  the  Collections  in  accordance  with the
procedures described in this Agreement and the Purchase Agreement.

(c) Any  payment by an Obligor  in  respect  of any  indebtedness  owed by it to
Originator  shall,  except as  otherwise  specified by such Obligor or otherwise
required by contract or law and unless  otherwise  instructed  by the Agent,  be
applied as a Collection of any Pool  Receivable of such Obligor  (starting  with
the  oldest  such Pool  Receivable)  to the extent of any  amounts  then due and
payable  thereunder  before  being  applied  to any  other  receivable  or other
obligation of such Obligor.

Section 6.3 Servicing Fee. In consideration  of Ferrellgas,  L.P.'s agreement to
act as Servicer hereunder and under the Purchase  Agreement,  the parties hereby
agree that, so long as  Ferrellgas,  L.P.  shall continue to perform as Servicer
hereunder and under the Purchase  Agreement,  as compensation  for its servicing
activities,  Ferrellgas,  L.P.  shall  be  entitled  to a  per  annum  fee  (the
"Servicing  Fee"),  payable  monthly  in  arrears  on the 20th day of each month
hereafter  (or, if any such date is not a Business  Day, on the next  succeeding
Business  Day),  determined  between the Servicer  and Buyer on an  arms'-length
basis  at a rate  not  to  exceed  2.0%  per  annum  of  the  average  aggregate
Outstanding  Balance of all Pool Receivables during the calendar month then most
recently ended (at any time while  Ferrellgas,  L.P. or one of its Affiliates is
acting as Servicer).


ARTICLE VII.
                               TERMINATION EVENTS

     Section 7.1  Termination  Events.  The occurrence of any one or more of the
following events shall constitute a Termination Event:

(a)  Non-Payment.  Originator fails to pay, within 5 days after the same becomes
due, any interest, fee or any other amount payable under this Agreement or under
any other Transaction Document; or

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

     (c)  Specific  Defaults.  Originator  fails to perform or observe any term,
covenant or agreement contained in any of Section 5.3(a), 5.12 or 5.13; or

(d) Other  Defaults.  Originator  fails to perform or observe  any other term or
covenant contained in this Agreement or any other Transaction Document, and such
default shall  continue  unremedied for a period of 30 days after the earlier of
(i) the date upon which a  Responsible  Officer knew or  reasonably  should have
known of such  failure or (ii) the date upon  which  written  notice  thereof is
given to Originator by Buyer or the Agent (as Buyer's assignee); or

(e)  Cross-Default.  (i) Any Event of Default under and as defined in the Credit
Agreement  or the  Synthetic  Lease  Documents  shall  occur and  either (A) the
administrative  agent thereunder  accelerates the Indebtedness  arising pursuant
thereto,  or (B) the  requisite  lenders  thereunder  shall  not have  agreed in
writing to waive such Event of  Default  or to  forbear  from  exercising  their
remedies as a result  thereof within 30 days after the  occurrence  thereof;  or
(ii) Originator,  the General Partner or any Restricted  Subsidiary (A) fails to
make any payment in respect of any Indebtedness (other than Indebtedness arising
pursuant to the Credit  Agreement),  Synthetic Lease Obligation  (other than one
arising under the Synthetic Lease Documents) or Contingent  Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000  when due (whether by scheduled  maturity,
required  prepayment,  acceleration,  demand,  or  otherwise)  and such  failure
continues after the applicable grace or notice period, if any,  specified in the
relevant  document  on the date of such  failure;  or (B)  fails to  perform  or
observe any other  condition  or  covenant,  or any other event  (including  any
termination   or  similar   event  in  respect   of  any   Accounts   Receivable
Securitization)   shall  occur  or  condition  exist,  under  any  agreement  or
instrument relating to any such Indebtedness  (other than Indebtedness  pursuant
to the Credit  Agreement),  Synthetic Lease  Obligation  (other than one arising
under the Synthetic Lease Documents) or Contingent Obligation,  and such failure
continues after the applicable grace or notice period, if any,  specified in the
relevant  document  on the date of such  failure if the effect of such  failure,
event or  condition  is to cause,  or to permit  the  holder or  holders of such
Indebtedness  or  beneficiary  or  beneficiaries  of such  Indebtedness  or such
Synthetic  Lease  Obligation  (or a trustee or agent on behalf of such holder or
holders or  beneficiary or  beneficiaries)  to cause such  Indebtedness  or such
Synthetic  Lease  Obligation  to be declared to be due and payable  prior to its
stated maturity or to cause such  Indebtedness,  Synthetic  Lease  Obligation or
Contingent  Obligation to be prepaid,  purchased or redeemed by Originator,  the
General Partner or any Restricted  Subsidiary,  or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded; or

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

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

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

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

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

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

(l)      Change of Control.  A Change of Control shall occur; or

(m) Leverage Ratio. Originator shall fail to maintain as of the last day of each
fiscal quarter a Leverage Ratio equal to or less than (i) 5.40 to 1.00 as of the
last day of each fiscal  quarter  ending  after July 31, 2000 and on or prior to
January  31,  2001,  and (ii)  4.90 to 1.00 as of the  last  day of each  fiscal
quarter ending after January 31, 2001. For purposes of this Section 7.1(m),  (x)
Funded Debt and Synthetic Lease  Obligations  shall be calculated as of the last
day of such fiscal  quarter and (y)  Consolidated  Cash Flow shall be calculated
for the most recently ended four consecutive fiscal quarters, provided, however,
that prior to or  concurrently  with each  delivery of a Compliance  Certificate
pursuant to Section 5.2(b),  Originator may elect to calculate Consolidated Cash
Flow for the most recently  ended eight  consecutive  fiscal  quarters (in which
case Consolidated Cash Flow shall be divided by two); or

(n) Interest Coverage Ratio.  Originator shall fail to maintain,  as of the last
day of each fiscal  quarter of  Originator,  an Interest  Coverage Ratio for the
fiscal  period  consisting  of such  fiscal  quarter  and the three  immediately
preceding  fiscal  quarters of at least (i) 2.15 to 1.00 for each such period of
four  fiscal  quarters  ending on or prior to January  31, 2001 and (ii) 2.40 to
1.00 each such period of four fiscal quarters ending after January 31, 2001; or

(o) Excessive Contribution or Subordinated Note Balance. The aggregate principal
amount  outstanding  under the  Subordinated  Note,  plus  (ii) the  Contributed
Interest,  plus (iii) all other  Investments that are not Permitted  Investments
(each,  as defined in the Indenture dated as of April 26, 1996 among the MLP and
Ferrellgas  Partners Finance Corp, as obligors,  Originator,  as guarantor,  and
American Bank National  Association,  as trustee) exceeds $30,000,000 at any one
time outstanding.

Section 7.2  Remedies.  Upon the  occurrence  and during the  continuation  of a
Termination Event, Buyer may take any of the following actions:  (i) declare the
Termination  Date  to  have  occurred,  whereupon  the  Termination  Date  shall
forthwith occur,  without demand,  protest or further notice of any kind, all of
which are hereby expressly waived by Originator;  provided,  however,  that upon
the occurrence of a Termination  Event described in Section 7.1(f) or (g), or of
an actual or deemed  entry of an order for relief  with  respect  to  Originator
under the Federal  Bankruptcy  Code, the  Termination  Date shall  automatically
occur,  without  demand,  protest  or any  notice of any kind,  all of which are
hereby  expressly  waived by Originator and (ii) to the fullest extent permitted
by applicable law, declare that the Default Fee shall accrue with respect to any
amounts then due and owing by Originator to Buyer. The aforementioned rights and
remedies  shall be  without  limitation  and shall be in  addition  to all other
rights and remedies of Buyer and its assigns otherwise available under any other
provision of this Agreement, by operation of law, at equity or otherwise, all of
which are hereby expressly preserved,  including, without limitation, all rights
and remedies provided under the UCC, all of which rights shall be cumulative.

ARTICLE VIII.
                                 INDEMNIFICATION

Section 8.1  Indemnities by Originator.  Without  limiting any other rights that
Buyer may have hereunder or under  applicable law,  Originator  hereby agrees to
indemnify (and pay upon demand to) Buyer and its assigns,  officers,  directors,
agents and employees (each, an "Indemnified Party") from and against any and all
damages, losses, claims, taxes,  liabilities,  costs, expenses and for all other
amounts payable,  including  reasonable  attorneys' fees (which attorneys may be
employees of Buyer or any such assign) and  disbursements  (all of the foregoing
being  collectively  referred to as  "Indemnified  Amounts")  awarded against or
incurred by any of them  arising out of or as a result of this  Agreement or the
acquisition,  either directly or indirectly, by Buyer of the Receivable Interest
and/or the Contributed Interest, excluding, however:

                  (a) Indemnified Amounts to the extent that a final judgment of
         a court of competent  jurisdiction holds that such Indemnified  Amounts
         resulted from gross negligence or willful misconduct on the part of the
         Indemnified Party seeking indemnification;

                  (b) Indemnified Amounts to the extent the same includes losses
         in respect of Pool Receivables that are uncollectible on account of the
         insolvency,  bankruptcy  or lack  of  creditworthiness  of the  related
         Obligor; or

                  (c)  taxes   imposed  by  the   jurisdiction   in  which  such
         Indemnified  Party's  principal  executive  office  is  located,  on or
         measured  by the overall  net income of such  Indemnified  Party to the
         extent  that  the  computation  of such  taxes is  consistent  with the
         characterization  for income tax  purposes  of the  acquisition  by the
         Purchasers  of Purchaser  Interests  under the Purchase  Agreement as a
         loan or loans  by the  Purchasers  to Buyer  secured  by,  among  other
         things, the Receivable Interest and the Contributed Interest;

provided,  however,  that  nothing  contained in this  sentence  shall limit the
liability of Originator or limit the recourse of Buyer to Originator for amounts
otherwise specifically provided to be paid by Originator under the terms of this
Agreement.  Without  limiting the  generality of the foregoing  indemnification,
Originator  shall indemnify Buyer for Indemnified  Amounts  (including,  without
limitation,  losses in respect of uncollectible Pool Receivables,  regardless of
whether reimbursement therefor would constitute recourse to Originator) relating
to or resulting from:

                           (i) any representation or warranty made by Originator
                  (or any officers of  Originator)  under or in connection  with
                  this Agreement,  any other  Transaction  Document or any other
                  information or report delivered by Originator  pursuant hereto
                  or thereto that shall have been false or  incorrect  when made
                  or deemed made;

                           (ii) the  failure by  Originator,  to comply with any
         applicable  law, rule or regulation with respect to any Pool Receivable
         or  Contract  related  thereto,   or  the  nonconformity  of  any  Pool
         Receivable or Contract  included  therein with any such applicable law,
         rule or  regulation or any failure of Originator to keep or perform any
         of its obligations, express or implied, with respect to any Contract;

                           (iii)  any  failure  of  Originator  to  perform  its
         duties,   covenants  or  other   obligations  in  accordance  with  the
         provisions of this Agreement or any other Transaction Document;

                           (iv)  any  products  liability,  personal  injury  or
         damage suit or other similar claim arising out of or in connection with
         merchandise, insurance or services that are the subject of any Contract
         or any Pool Receivable;

                           (v) any dispute, claim, offset or defense (other than
         discharge in  bankruptcy  of the Obligor) of the Obligor to the payment
         of any Pool Receivable (including,  without limitation, a defense based
         on such Pool  Receivable  or the  related  Contract  not being a legal,
         valid and binding obligation of such Obligor  enforceable against it in
         accordance with its terms),  or any other claim resulting from the sale
         of the  merchandise or service  related to such Pool  Receivable or the
         furnishing or failure to furnish such merchandise or services;

                           (vi) the commingling of Collections  allocable to the
         Receivable Interest or the Contributed  Interest at any time with other
         funds;

                           (vii) any  investigation,  litigation  or  proceeding
         related  to or arising  from this  Agreement  or any other  Transaction
         Document, the transactions contemplated hereby, the use of the proceeds
         of any Purchase Price payment, the ownership of the Receivable Interest
         or the Contributed Interest or any other  investigation,  litigation or
         proceeding  relating  to  Originator  in which  any  Indemnified  Party
         becomes  involved as a result of any of the  transactions  contemplated
         hereby;

                           (viii) any  inability to litigate  any claim  against
         any  Obligor  in  respect  of any Pool  Receivable  as a result of such
         Obligor  being  immune  from civil and  commercial  law and suit on the
         grounds of  sovereignty  or otherwise  from any legal  action,  suit or
         proceeding;

     (ix) any Termination Event described in Section 7.1(f) or (g);

                           (x) any failure to vest and maintain vested in Buyer,
         or to transfer to Buyer,  legal and  equitable  title to, and ownership
         of, the Receivable Interest and the Contributed Interest free and clear
         of any Adverse Claim;

                           (xi)  the  failure  to have  filed,  or any  delay in
         filing,  financing statements or other similar instruments or documents
         under the UCC of any applicable  jurisdiction or other  applicable laws
         with respect to the Receivable  Interest and the Contributed  Interest,
         and the proceeds of any thereof, whether at the time of the Purchase or
         at any subsequent time;

                           (xii) any  action or  omission  by  Originator  which
         reduces  or  impairs  the  rights  of Buyer  with  respect  to any Pool
         Receivable or the value of any such Pool Receivable; and

                           (xiii) any attempt by any Person to void the Purchase
         hereunder under statutory provisions or common law or equitable action.

Section 8.2 Other Costs and Expenses.  Originator shall pay all reasonable costs
and  out-of-pocket  expenses in connection with the  preparation,  execution and
delivery of this Agreement.  Originator shall pay to Buyer on demand any and all
costs and  expenses of Buyer,  if any,  including  reasonable  counsel  fees and
expenses in  connection  with the  enforcement  of this  Agreement and the other
documents  delivered  hereunder  and in  connection  with any  restructuring  or
workout of this  Agreement  or such  documents,  or the  administration  of this
Agreement following a Termination Event.

ARTICLE IX.
                                  MISCELLANEOUS

Section 9.1       Waivers and Amendments.

(a) No failure or delay on the part of Buyer (or its assigns) in exercising  any
power,  right or remedy under this Agreement  shall operate as a waiver thereof,
nor shall any  single or partial  exercise  of any such  power,  right or remedy
preclude any other further  exercise thereof or the exercise of any other power,
right or remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive  of any  rights or  remedies  provided  by law.  Any waiver of this
Agreement shall be effective only in the specific  instance and for the specific
purpose for which given.

(b) No provision  of this  Agreement  or the  Subordinated  Note may be amended,
supplemented,  modified or waived  except in writing  signed by  Originator  and
Buyer and, to the extent  required under the Purchase  Agreement,  the Agent and
the Financial Institutions or the Required Financial Institutions.

Section 9.2 Notices. All communications and notices provided for hereunder shall
be  in  writing   (including  bank  wire,   telecopy  or  electronic   facsimile
transmission or similar  writing) and shall be given to the other parties hereto
at their  respective  addresses or telecopy  numbers set forth on the  signature
pages  hereof or at such other  address or  telecopy  number as such  Person may
hereafter specify for the purpose of notice to the other party hereto. Each such
notice or other communication shall be effective (a) if given by telecopy,  upon
the receipt  thereof,  (b) if given by mail,  three (3) Business  Days after the
time such  communication  is  deposited  in the mail with  first  class  postage
prepaid  or (c) if  given by any  other  means,  when  received  at the  address
specified in this Section 7.2.

Section 9.3       Protection of Ownership Interests of Buyer.

(a) Originator  agrees that from time to time, at its expense,  it will promptly
execute and deliver all  instruments and documents,  and take all actions,  that
may be necessary or  desirable,  or that Buyer (or its assigns) may request,  to
perfect,  protect or more fully evidence the interest of Buyer hereunder and the
Receivable  Interest and the  Contributed  Interest,  or to enable Buyer (or its
assigns) to exercise and enforce  their rights and  remedies  hereunder.  At any
time, Buyer (or its assigns) may, at Originator's sole cost and expense,  direct
Originator to notify the Obligors of Pool Receivables of the ownership interests
of Buyer under this Agreement and may also, at any time after the occurrence and
continuation of a Termination Event,  direct that payments of all amounts due or
that become due under any or all Pool  Receivables  be made directly to Buyer or
its designee.

(b) If Originator fails to perform any of its obligations  hereunder,  Buyer (or
its assigns) may (but shall not be required  to) perform,  or cause  performance
of, such obligations, and Buyer's (or such assigns') costs and expenses incurred
in  connection  therewith  shall be payable by Originator as provided in Section
6.2. Originator  irrevocably  authorizes Buyer (and its assigns) at any time and
from time to time in the sole discretion of Buyer (or its assigns), and appoints
Buyer  (and its  assigns)  as its  attorney(ies)-in-fact,  to act on  behalf  of
Originator (i) to, after the occurrence and  continuance of a Termination  Event
execute  on behalf of  Originator  as debtor  and to file  financing  statements
necessary or desirable in Buyer's (or its assigns')  sole  discretion to perfect
and to maintain the perfection and priority of the interest of Buyer in the Pool
Receivables  and (ii) after the  occurrence  and  continuance  of a  Termination
Event, to file a carbon, photographic or other reproduction of this Agreement or
any  financing  statement  with  respect  to the  Receivable  Interest  and  the
Contributed  Interest as a financing  statement in such offices as Buyer (or its
assigns) in their sole  discretion deem necessary or desirable to perfect and to
maintain  the  perfection  and  priority of Buyer's  interest in the  Receivable
Interest  and the  Contributed  Interest.  This  appointment  is coupled with an
interest and is irrevocable.

Section 9.4       Confidentiality.

(a) Originator shall maintain and shall cause each of its employees and officers
to maintain the  confidentiality of the Fee Letter and the other confidential or
proprietary  information  with  respect  to the  Agent  and  Conduit  and  their
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions  contemplated herein,  except that
Originator  and its officers and  employees  may disclose  such  information  to
Originator's   external  accountants  and  attorneys  and  as  required  by  any
applicable law or order of any judicial or administrative proceeding.

(b) Originator  hereby  consents to the disclosure of any nonpublic  information
with  respect  to it (i) to Buyer,  the Agent,  the  Financial  Institutions  or
Conduit, (ii) to any prospective or actual assignee or participant of any of the
Persons  described in clause (i), (iii) to any rating agency,  Commercial  Paper
dealer or provider of a surety,  guaranty or credit or liquidity  enhancement to
Conduit or any entity  organized for the purpose of purchasing,  or making loans
secured by, financial assets for which Bank One acts as the administrative agent
and  (iv)  to  any  officers,  directors,  employees,  outside  accountants  and
attorneys of any of the foregoing,  provided each such Person is informed of the
confidential  nature of such  information and, in the case of a Person described
in clause  (ii),  agrees in writing to keep such  information  confidential.  In
addition,  the  Purchasers  and  the  Agent  may  disclose  any  such  nonpublic
information pursuant to any law, rule, regulation,  direction,  request or order
of any judicial,  administrative or regulatory authority or proceedings (whether
or not having the force or effect of law).

(c) Buyer shall  maintain and shall cause each of its  employees and officers to
maintain the confidentiality of the confidential or proprietary information with
respect to Originator,  the Obligors and their respective businesses obtained by
it in connection with the due diligence  evaluations,  structuring,  negotiating
and  execution  of  the  Transaction  Documents,  and  the  consummation  of the
transactions  contemplated herein and any other activities of Buyer arising from
or related to the transactions contemplated herein provided,  however, that each
of Buyer and its  employees  and officers  shall be  permitted to disclose  such
confidential or proprietary information:  (i) to the Persons described in clause
(b) above, and (ii) to the extent required pursuant to any applicable law, rule,
regulation,  direction,  request  or order of any  judicial,  administrative  or
regulatory authority or proceedings with competent  jurisdiction (whether or not
having the force or effect of law) so long as such  required  disclosure is made
under  seal to the extent  permitted  by  applicable  law or by rule of court or
other applicable body.

Section 9.5 Bankruptcy Petition.  (a) Originator and Buyer each hereby covenants
and  agrees  that,  prior to the date  that is one  year and one day  after  the
payment in full of all outstanding senior  indebtedness of Conduit,  it will not
institute against,  or join any other Person in instituting  against Conduit any
bankruptcy,  reorganization,  arrangement, insolvency or liquidation proceedings
or other similar  proceeding under the laws of the United States or any state of
the United States.

                  (b)  Originator  covenants and agrees that,  prior to the date
that is one  year  and one day  after  the  payment  in full of all  outstanding
obligations  of Buyer  under  the  Purchase  Agreement,  it will  not  institute
against, or join any other Person in instituting against,  Buyer any bankruptcy,
reorganization,  arrangement,  insolvency or  liquidation  proceedings  or other
similar  proceeding  under  the laws of the  United  States  or any state of the
United States.

Section 9.6  Limitation of  Liability.  Except with respect to any claim arising
out of the willful  misconduct or gross negligence of Conduit,  the Agent or any
Financial  Institution,  no claim may be made by  Originator or any other Person
against  Conduit,  the Agent or any Financial  Institution  or their  respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect,  consequential  or punitive damages in respect of any claim for breach
of contract or any other  theory of  liability  arising out of or related to the
transactions  contemplated  by this  Agreement,  or any act,  omission  or event
occurring in connection therewith;  and Originator hereby waives,  releases, and
agrees not to sue upon any claim for any such  damages,  whether or not  accrued
and whether or not known or suspected to exist in its favor.

Section 9.7 CHOICE OF LAW.  THIS  AGREEMENT  SHALL BE GOVERNED AND  CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, without regard to the principles
of  conflicts  of laws  thereof  (except  in the case of the  other  Transaction
Documents,  to the extent otherwise  expressly stated therein) AND EXCEPT TO THE
EXTENT THAT THE PERFECTION OF THE OWNERSHIP  INTERESTS OR SECURITY  INTERESTS OF
BUYER OR THE AGENT IN THE RECEIVABLE  INTEREST AND THE  CONTRIBUTED  INTEREST IS
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF texas.

Section 9.8  CONSENT TO  JURISDICTION.  NOTWITHSTANDING  THE CHOICE OF TEXAS LAW
PURSUANT  TO  SECTION  9.7,   ORIGINATOR  HEREBY  IRREVOCABLY   SUBMITS  TO  THE
NON-EXCLUSIVE  JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK COUNTY, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO
THIS  AGREEMENT  AND  ORIGINATOR  HEREBY  IRREVOCABLY  AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR  PROCEEDING  MAY BE HEARD AND  DETERMINED  IN ANY SUCH
COURT AND  IRREVOCABLY  WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER  HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN  INCONVENIENT  FORUM.  NOTHING  HEREIN SHALL LIMIT THE RIGHT OF
BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS  AGAINST ORIGINATOR IN THE COURTS OF
ANY OTHER JURISDICTION.

Section 9.9 WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY
IN ANY  JUDICIAL  PROCEEDING  INVOLVING,  DIRECTLY  OR  INDIRECTLY,  ANY  MATTER
(WHETHER  SOUNDING IN TORT,  CONTRACT OR  OTHERWISE)  IN ANY WAY ARISING OUT OF,
RELATED  TO,  OR  CONNECTED  WITH  THIS  AGREEMENT,  ANY  DOCUMENT  EXECUTED  BY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP  ESTABLISHED HEREUNDER
OR THEREUNDER.

Section 9.10      Integration; Binding Effect; Survival of Terms.

(a) This  Agreement and each other  Transaction  Document  contain the final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof  superseding  all prior
oral or written understandings.

(b) This Agreement shall be binding upon and inure to the benefit of Originator,
Buyer and their  respective  successors  and permitted  assigns  (including  any
trustee  in  bankruptcy).  Originator  may  not  assign  any of its  rights  and
obligations  hereunder or any interest  herein without the prior written consent
of Buyer. Buyer may assign at any time its rights and obligations  hereunder and
interests herein to any other Person without the consent of Originator.  Without
limiting the  foregoing,  Originator  acknowledges  that Buyer,  pursuant to the
Purchase Agreement,  may assign to the Agent, for the benefit of the Purchasers,
its rights,  remedies,  powers and  privileges  hereunder and that the Agent may
further  assign  such  rights,  remedies,  powers and  privileges  to the extent
permitted in the Purchase  Agreement.  Originator  agrees that the Agent, as the
assignee of Buyer, shall,  subject to the terms of the Purchase Agreement,  have
the right to enforce  this  Agreement  and to exercise  directly  all of Buyer's
rights and remedies under this Agreement  (including,  without  limitation,  the
right to give or  withhold  any  consents or  approvals  of Buyer to be given or
withheld  hereunder) and Originator  agrees to cooperate fully with the Agent in
the  exercise of such  rights and  remedies.  This  Agreement  shall  create and
constitute the continuing  obligations of the parties hereto in accordance  with
its  terms and  shall  remain in full  force  and  effect  until  terminated  in
accordance with its terms; provided,  however, that the rights and remedies with
respect to (i) any breach of any  representation and warranty made by Originator
pursuant to Article  II; (ii) the  indemnification  and  payment  provisions  of
Article VIII;  and (iii)  Section 9.5 shall be continuing  and shall survive any
termination of this Agreement.

Section 9.11 Counterparts;  Severability; Section References. This Agreement may
be executed in any number of  counterparts  and by different  parties  hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original and all of which when taken together shall  constitute one and the same
Agreement.   Any   provisions  of  this   Agreement   which  are  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.  Unless otherwise expressly indicated, all references herein
to  "Article,"  "Section,"  "Schedule"  or  "Exhibit"  shall mean  articles  and
sections of, and schedules and exhibits to, this Agreement.



<PAGE>

 IN WITNESS WHEREOF,  the parties hereto have
                  caused this  Agreement to be executed  and  delivered by their
                  duly
authorized officers as of the date hereof.

FERRELLGAS, L.P.

By:  Ferrellgas, Inc., its General Partner


By:
Name:                      Kevin T. Kelly
Title:                     Chief Financial Officer

Address:

Ferrellgas, L.P.
One Liberty Plaza
Liberty, Missouri 64068
Attention:  Chief Financial Officer
Telephone:  (816) 792-6901
Facsimile:  (816) 792-6979




FERRELLGAS RECEIVABLES, LLC


By:
Name:                      Kevin T. Kelly
Title:                     Chief Financial Officer
Address:
                  One Allen Center
                  500 Dallas Street, Suite 2700
                  Houston, TX  77002

                  Attention:  John Briscoe
                  Phone:   (713) 844-6309
                  Fax:     (713) 844-6527


(a)

<PAGE>


                                    EXHIBIT I

                                   DEFINITIONS

                  This is Exhibit I to the Agreement (as  hereinafter  defined).
As used in the  Agreement  and the  Exhibits,  Schedules  and  Annexes  thereto,
capitalized  terms have the meanings set forth in this Exhibit I (such  meanings
to be equally  applicable  to the  singular  and  plural  forms  thereof).  If a
capitalized  term is used in the  Agreement,  or any Exhibit,  Schedule or Annex
thereto, and not otherwise defined therein or in this Exhibit I, such term shall
have the meaning assigned thereto in Exhibit I to the Purchase Agreement.

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

                  "Adjusted Pool Amount" means, on any date of determination, an
amount to equal to the quotient of the Funded Amount divided by 0.80.

                  "Adverse Claim" means any security interest, mortgage, deed of
trust,  pledge,  hypothecation,   assignment,  charge  or  deposit  arrangement,
encumbrance,  lien (statutory or other) or preferential  arrangement of any kind
or nature  whatsoever  in respect of any property  (including  those created by,
arising  under or evidenced  by any  conditional  sale or other title  retention
agreement,  the interest of a lessor under a capital lease,  any financing lease
having  substantially  the same economic effect as any of the foregoing,  or the
filing of any  financing  statement  naming the owner of the asset to which such
lien relates as debtor,  under the UCC or any comparable law) and any contingent
or other  agreement  to provide  any of the  foregoing,  but not  including  the
interest of a lessor under an operating lease.

                  "Affiliate"  means, as to any Person,  any other Person which,
directly or  indirectly,  is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person,  whether
through the ownership of voting securities, by contract, or otherwise.

     "Agent"  has the  meaning set forth in the  Preliminary  Statements  to the
Agreement.

     "Aggregate Unpaids" has the meaning set forth in the Purchase Agreement.

                  "Agreement"  means the  Receivable  Interest  Sale  Agreement,
dated as of September 26, 2000, between Originator and Buyer, as the same may be
amended, restated or otherwise modified.

                  "Asset Sale" has the meaning specified in the CreditAgreement.

                  "Business Day" means any day on which banks are not authorized
or  required  to  close  in New  York,  New York or  Chicago,  Illinois  and The
Depository Trust Company of New York is open for business.

     "Buyer" has the meaning set forth in the preamble to the Agreement.

                  "Buyer's Percentage" means, on any date of determination,  the
sum  of  the  Variable  Purchased   Percentage  plus  the  Variable  Contributed
Percentage.

                  "Calculation  Period"  means (a) the period  beginning  on the
date  hereof and ending on October 20,  2000,  and (b)  thereafter,  each period
beginning  on a  Settlement  Date  and  ending  on the day  preceding  the  next
succeeding Settlement Date.

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

                  "Capital   Lease   Obligation"   means,   at  the   time   any
determination thereof is to be made, the amount of the liability in respect of a
capital  lease that would at such time be so required to be  capitalized  on the
balance sheet in accordance with GAAP.

                  "Change of Control" means (a) the sale,  lease,  conveyance or
other disposition of all or substantially all of the Originator's  assets to any
Person or group (as such term is used in Section  13(d)(3) of the Exchange  Act)
other than James E. Ferrell,  the Related  Parties and any Person of which James
E. Ferrell and the Related Parties beneficially own in the aggregate 51% or more
of the voting Capital Interests (or if such Person is a partnership, 51% or more
of the  general  partner  interests),  (b) the  liquidation  or  dissolution  of
Originator or the General Partner, and/or (c) the occurrence of any transaction,
the  result  of  which  is  that  James  E.  Ferrell  and  the  Related  Parties
beneficially own in the aggregate,  directly or indirectly, less than 51% of the
total voting power entitled to vote for the election of directors of the General
Partner.

                  "Charged-Off  Receivable" means a Receivable:  (i) as to which
the Obligor thereof has taken any action, or suffered any event to occur, of the
type  described in Section  7.1(f) or (g) (as if  references  to the  Originator
therein  refer to such  Obligor);  (ii) as to which the  Obligor  thereof,  if a
natural  person,  is  deceased,  (iii)  which,  consistent  with the  Credit and
Collection Policy, would be written off the Originator's books as uncollectible,
or (iv)  which has been  identified  by the  Originator,  Buyer or  Servicer  as
uncollectible.

                  "Code"  means the Internal  Revenue Code of 1986,  as amended,
and regulations promulgated thereunder.

                  "Collections" means, with respect to any Pool Receivable,  all
cash  collections  and other cash  proceeds in respect of such Pool  Receivable,
including,  without  limitation,  all Finance  Charges or other related  amounts
accruing in respect  thereof  and all cash  proceeds  of Related  Security  with
respect to such Pool Receivable.

                  "Compliance  Certificate"  means a certificate  in the form of
Exhibit III hereto duly executed by a Responsible Officer of Originator.

     "Conduit"  has the meaning set forth in the  Preliminary  Statements to the
Agreement.

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

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

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

                  "Contingent Obligation" means, as to any Person, any direct or
indirect  liability of that Person,  whether or not contingent,  with or without
recourse: (a) with respect to any Indebtedness,  lease, dividend,  distribution,
letter of credit or other  obligation  (the  "primary  obligations")  of another
Person (the "primary  obligor"),  including any obligation of that Person (i) to
purchase,  repurchase  or  otherwise  acquire such  primary  obligations  or any
security therefor, (ii) to advance or provide funds for the payment or discharge
of any such primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance  sheet  item,  level of income or  financial  condition  of the  primary
obligor,  (iii) to purchase  property,  securities or services primarily for the
purpose of assuring the owner of any such primary  obligation  of the ability of
the  primary  obligor  to make  payment  of  such  primary  obligation,  or (iv)
otherwise to assure or hold  harmless the holder of any such primary  obligation
against  loss in respect  thereof  (each,  a  "Guaranty  Obligation");  (b) with
respect to any Surety  Instrument  (other than any Letter of Credit)  issued for
the account of that Person or as to which that  Person is  otherwise  liable for
reimbursement of drawings or payments;  (c) to purchase any materials,  supplies
or other  property  from,  or to obtain the services of,  another  Person if the
relevant contract or other related document or obligation  requires that payment
for such materials,  supplies or other property, or for such services,  shall be
made  regardless  of  whether  delivery  of such  materials,  supplies  or other
property  is ever made or  tendered,  or such  services  are ever  performed  or
tendered;  or (d) in  respect  of any  Hedging  Obligation.  The  amount  of any
Contingent  Obligation  shall,  in the case of Guaranty  Obligations,  be deemed
equal to the stated or determinable  amount of the primary obligation in respect
of  which  such   Guaranty   Obligation   is  made  or,  if  not  stated  or  if
indeterminable, the maximum reasonably anticipated liability in respect thereof,
and in the case of other Contingent  Obligations,  shall be equal to the maximum
reasonably anticipated liability in respect thereof.

                  "Contract" means, with respect to any Pool Receivable, any and
all instruments,  agreements,  invoices or other writings pursuant to which such
Pool Receivable arises or which evidences such Pool Receivable.

                  "Contractual   Obligation"   means,  as  to  any  Person,  any
provision  of  any  security   issued  by  such  Person  or  of  any  agreement,
undertaking,  contract, indenture,  mortgage, deed of trust or other instrument,
document or  agreement  to which such Person is a party or by which it or any of
its property is bound.

                  "Contributed Interest" means a specified dollar amount of Pool
Receivables which equates to a variable undivided percentage interest (less than
or  equal  to  100%) in and to the  Pool  Receivables,  the  associated  Related
Security and Collections and all proceeds of the foregoing equal to the Variable
Contributed Percentage.

                  "Credit  Agreement"  means  that  certain  Third  Amended  and
Restated  Credit  Agreement  dated as of April 18, 2000,  among  Originator,  as
borrower,  the General  Partner,  the financial  institutions  from time to time
party  thereto,  and  Bank  of  America,   N.A.,  as  administrative  agent  and
documentation  agent,  as amended from time to time in accordance with the terms
thereof.

                  "Credit and Collection Policy" means  Originator's  credit and
collection policies and practices relating to Contracts and Receivables existing
on the date hereof and summarized in Exhibit V, as modified from time to time in
accordance with the Agreement.

     "Deemed  Collections" means Collections deemed to be received by Originator
in accordance with Section 1.4 of the Agreement.

                  "Default Fee" means a per annum rate of interest  equal to the
sum of (i) the Prime  Rate,  plus (ii) 2% per annum  (computed  for actual  days
elapsed on the basis of a 365/366-day year).

                  "Defaulted  Receivable"  means a  Receivable  as to which  any
payment,  or part thereof,  remains unpaid for 61 or more days from the original
invoice date for such payment.

                  "Discount  Factor"  means a percentage  calculated  to provide
Buyer with a reasonable  return on its  investment  in the  Receivable  Interest
after taking  account of (i) the time value of money based upon the  anticipated
dates of collection of the Pool  Receivables  and the cost to Buyer of financing
its investment in the Receivable  Interest  during such period and (ii) the risk
of nonpayment by the Obligors.  Originator and Buyer may agree from time to time
to change  the  Discount  Factor  based on  changes  in one or more of the items
affecting  the  calculation  thereof,  provided  that any change to the Discount
Factor shall take effect as of the commencement of a Calculation  Period,  shall
apply only  prospectively  and shall not affect the Purchase  Price payment made
prior to the Calculation  Period during which Originator and Buyer agree to make
such change.

     "Dollars," "dollars" and "$" each mean lawful money of the United States.

                  "Eligible Receivable" means, at any time, a Receivable:

(i) the  Obligor of which (a) if a natural  person,  is a resident of the United
States or, if a corporation or other business  organization,  is organized under
the laws of the United States or any political  subdivision  thereof and has its
chief executive  office in the United States;  (b) is not an Affiliate of any of
the parties hereto; and (c) is not a government or a governmental subdivision or
agency  against which  assignments  of claims may only be assigned in compliance
with the  Federal  Assignment  of Claims Act or similar  legislation  unless the
aggregate Outstanding Balance of all Pool Receivables from such Obligors is less
than 2% of the aggregate Outstanding Balance of all Pool Receivables,

(ii) the  Obligor of which is not the  Obligor  on  Defaulted  Receivables,  the
aggregate  Outstanding  Balance of which  exceeds  10% of such  Obligor's  total
Receivables,

(iii) which is not a Defaulted Receivable or a Charged-Off Receivable,

(iv)  which  by its  terms is due and  payable  within  30 days of the  original
billing date therefor and has not had its payment terms extended,

     (v) which is an "account" within the meaning of Article 9 of the UCC of all
applicable jurisdictions,

(vi) which is  denominated  and  payable  only in United  States  dollars in the
United States,

(vii) which arises under an invoice, which, together with such Receivable, is in
full force and effect and constitutes the legal, valid and binding obligation of
the related  Obligor  enforceable  against such Obligor in  accordance  with its
terms subject to no offset, counterclaim or other defense,

(viii)  which  arises  under an invoice  which (A) does not  require the Obligor
under such invoice to consent to the transfer,  sale or assignment of the rights
and duties of Originator or any of its assignees under such invoice and (B) does
not contain a confidentiality provision that purports to restrict the ability of
Buyer or any of its  assigns  to  exercise  its  rights  under  the  Transaction
Documents, including, without limitation, its right to review such invoice,

(ix)  which  arises  under an  invoice  that  contains  an  obligation  to pay a
specified  sum of  money,  contingent  only  upon  the  sale of  propane  or the
provision of services by Originator,

(x) which,  together with the invoice related  thereto,  does not contravene any
law, rule or regulation applicable thereto (including,  without limitation,  any
law, rule and regulation relating to truth in lending, fair credit billing, fair
credit reporting,  equal credit opportunity,  fair debt collection practices and
privacy) and with respect to which no part of the invoice  related thereto is in
violation of any such law, rule or regulation,

     (xi) which satisfies all material requirements of the Credit and Collection
Policy,

(xii) which was generated in the ordinary course of Originator's business,

(xiii) which arises solely from the sale of propane or the provision of services
to the related  Obligor by Originator,  and not by any other Person (in whole or
in part),

(xiv) as to which the Agent has not notified  Originator or Buyer that the Agent
has determined,  in the exercise of its commercially reasonable credit judgment,
that such  Receivable or class of  Receivables  is not acceptable as an Eligible
Receivable,

(xv) which is not subject to any right of rescission, set-off, counterclaim, any
other defense  (including  defenses  arising out of violations of usury laws) of
the applicable  Obligor against  Originator or any other Adverse Claim,  and the
Obligor  thereon  holds no right as against  Originator  to cause  Originator to
repurchase  the  propane  the  sale  of  which  shall  have  given  rise to such
Receivable  (except  with  respect to sale  discounts  effected  pursuant to the
invoice,  or  defective  goods  returned  in  accordance  with the  terms of the
invoice),

(xvi) as to which  Originator has satisfied and fully  performed all obligations
on its part with respect to such Receivable  required to be fulfilled by it, and
no further action is required to be performed by any Person with respect thereto
other than payment thereon by the applicable Obligor,

(xvii) in which Buyer's undivided  ownership  interest therein is free and clear
of any Adverse Claim, and

(xviii) of which the Obligor and its Affiliates  (considered as if they were one
and the same  Obligor)  are not the  Obligors  on more than 2% of the  aggregate
Outstanding Balance of all Receivables.

                  "Environmental  Laws" means all federal,  state or local laws,
statutes, common law duties, rules, regulations,  ordinances and codes, together
with  all   administrative   orders,   directed  duties,   requests,   licenses,
authorizations   and  permits  of,  and  agreements   with,   any   Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters.

                  "Equity  Interests" means Capital  Interests and all warrants,
options or other rights to acquire  Capital  Interests  (but  excluding any debt
security that is convertible into, or exchangeable for, Capital Interests).

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended, and regulations promulgated thereunder.

                  "ERISA  Event" means (a) a Reportable  Event with respect to a
Pension  Plan;  (b) a withdrawal  by  Originator  or the General  Partner from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a  substantial  employer  (as  defined  in  Section  4001(a)(2)  of  ERISA) or a
cessation  of  operations  which is treated as such a withdrawal  under  Section
4062(e)  of ERISA;  (c) the  filing of a notice  of  intent  to  terminate,  the
treatment of a plan  amendment as a  termination  under Section 4041 or 4041A of
ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan
subject to Title IV of ERISA; (d) a failure by Originator or the General Partner
to make  required  contributions  to a Pension  Plan or other  Plan  subject  to
Section 412 of the Code;  (e) an event or condition  which might  reasonably  be
expected to constitute  grounds under Section 4042 of ERISA for the  termination
of, or the  appointment  of a trustee to  administer,  any Pension Plan; (f) the
imposition  of any liability  under Title IV of ERISA,  other than PBGC premiums
due but not  delinquent  under  Section 4007 of ERISA,  upon  Originator  or the
General  Partner;  or (g) an application for a funding waiver or an extension of
any amortization  period pursuant to Section 412 of the Code with respect to any
Pension Plan.

     "Event of Default" has the meaning specified in the Credit Agreement.

                  "Exchange Act" means the Securities  Exchange Act of 1934, and
regulations promulgated thereunder.

     "Facility  Account"  means  Buyer's  account no.  4496823691 at Wells Fargo
Bank, in Dallas, Texas, ABA No. 121000248.

     "FCI ESOT" means the employee stock ownership  trust of Ferrell  Companies,
Inc. organized under Section 4975(e)(7) of the Code.

                  "Finance  Charges"  means,  with  respect to a  Contract,  any
finance,  interest,  late payment charges or similar charges owing by an Obligor
pursuant to such Contract.

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

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

                  "Funded Amount" means, as of any date of determination through
and including the Termination  Date, the Aggregate Capital (under and as defined
in the Purchase Agreement) then outstanding.

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

                  "GAAP" means  generally  accepted  accounting  principles  set
forth from time to time in the opinions  and  pronouncements  of the  Accounting
Principles Board and the American  Institute of Certified Public Accountants and
statements and  pronouncements of the Financial  Accounting  Standards Board (or
agencies with similar  functions of comparable  stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.

                  "General   Partner"   means   Ferrellgas,   Inc.,  a  Delaware
corporation and the sole general partner of Originator.

                  "Governmental  Authority" means any nation or government,  any
state or other  political  subdivision  thereof,  any  central  bank (or similar
monetary or regulatory  authority)  thereof,  any entity  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled,  through
stock or capital ownership or otherwise, by any of the foregoing.

                  "Growth-Related  Capital  Expenditures" means, with respect to
any Person,  all capital  expenditures by such Person made to improve or enhance
the existing  capital  assets or to increase the customer base of such Person or
to acquire or construct new capital assets (but excluding  capital  expenditures
made to  maintain,  up to the level  thereof  that  existed  at the time of such
expenditure, the operating capacity of the capital assets of such Person as such
assets existed at the time of such expenditure).

                  "Guarantor" has the meaning specified in the Credit Agreement.

     "Guaranty  Obligation"  has the  meaning  specified  in the  definition  of
"Contingent Obligation."

                  "Hedging  Obligations"  means, with respect to any Person, the
obligations  of such Person under (a) interest  rate swap  agreements,  interest
rate cap agreements and interest rate collar agreements and (b) other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates.

                  "Indebtedness" of any Person means, without  duplication:  (a)
all indebtedness for borrowed money; (b) all obligations  issued,  undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent  reimbursement or payment  obligations with respect to Surety
Instruments;  (d) all  obligations  evidenced  by notes,  bonds,  debentures  or
similar instruments,  including  obligations so evidenced incurred in connection
with the  acquisition of property,  assets or businesses;  (e) 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
bank under such agreement in the event of default are limited to repossession or
sale of such  property);  (f) all  Capital  Lease  Obligations;  (g) all Hedging
Obligations;   (h)  all   obligations   in   respect  of   Accounts   Receivable
Securitizations  (as  defined in the  Credit  Agreement);  (i) all  indebtedness
referred to in clauses (a) through (h) above secured by (or for which the holder
of such  Indebtedness  has an existing  right,  contingent or  otherwise,  to be
secured  by) any  Adverse  Claim upon or in  property  (including  accounts  and
contracts rights) owned by such Person,  even though such Person has not assumed
or become  liable for the  payment of such  Indebtedness;  and (j) all  Guaranty
Obligations  in respect of  indebtedness  or  obligations of others of the kinds
referred  to  in  clauses  (a)  through  (i)  above;  provided,   however,  that
"Indebtedness" shall not include Synthetic Lease Obligations.

                  "Indemnified Amounts" has the meaning specified in Section 8.1
                  "Indemnified Party" has the meaning specified in Section 8.1.

     "Independent Auditor" has the meaning specified in Section 5.1(a).

     "Initial  Computation  Date" means the close of business on  September  25,
2000.

                  "Insolvency   Proceeding"   means  (a)  any  case,  action  or
proceeding  before  any  court  or  other  Governmental  Authority  relating  to
bankruptcy, reorganization,  insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors,  or (b) any general  assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other similar
arrangement  in respect of a Person's  creditors  generally  or any  substantial
portion of a Person's creditors; undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.

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

"Letter of Credit" has the meaning provided in the Credit Agreement.

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

                  "Loan" has the meaning provided in the Credit Agreement.

                  "Material  Adverse Effect" means (i) a material adverse change
in, or a material  adverse effect upon, the  operations,  business,  properties,
condition  (financial or otherwise) or prospects of Originator;  (ii) a material
impairment of the ability of  Originator or any  Subsidiary to perform under any
Transaction  Document to which it is a party;  (iii) a material  adverse  effect
upon the legality, validity, binding effect or enforceability against Originator
or any  Subsidiary of any  Transaction  Document to which it is a party;  (iv) a
material  adverse  effect  upon  Originator's,   Buyer's,  the  Agent's  or  any
Purchaser's  interest in the Pool  Receivables  generally or in any  significant
portion of the Pool  Receivables,  or (v) a  material  adverse  effect  upon the
collectibility  of the Pool Receivables  generally or of any material portion of
the Pool Receivables.

                  "Minimum  Receivables   Percentage"  means,  on  any  date  of
determination  through and including the Termination Date, a variable  undivided
interest in and to the Pool  Receivables and the associated  Collections and all
proceeds of the foregoing,  which interest is equal to the percentage equal to a
fraction, the numerator of which is equal to the Adjusted Pool Amount as of such
date of determination, and the denominator of which is the aggregate Outstanding
Balance of all Pool  Receivables as of the close of business on the Business Day
immediately preceding the date of determination.

                  "MLP" means  Ferrellgas  Partners,  L.P.,  a Delaware  limited
partnership and the sole limited partner of the Originator.

                  "Net  Income"  means,  with  respect  to  Originator  and  the
Restricted  Subsidiaries,  the net income (loss) of such Persons,  determined in
accordance  with GAAP and before any  reduction  in respect of  preferred  stock
dividends,  excluding,  however, (a) any gain (but not loss),  together with any
related provision for taxes on such gain (but not loss),  realized in connection
with (i) any asset sale (including, without limitation, dispositions pursuant to
sale and leaseback  transactions),  or (ii) the disposition of any securities or
the  extinguishment  of any  Indebtedness of Originator or any of the Restricted
Subsidiaries,  and (b) any extraordinary gain (but not loss),  together with any
related provision for taxes on such extraordinary gain (but not loss); provided,
however,  that all costs and expenses with respect to the  redemption of the 10%
Series A Fixed Rate  Senior  Notes due 2001 that were issued by  Originator  and
Ferrellgas Finance Corp.  pursuant to that certain Indenture dated as of July 5,
1994 among the Originator,  Ferrellgas Finance Corp. and Norwest Bank Minnesota,
National Association, including, without limitation, cash premiums, tender offer
premiums,  consent  payments and all fees and expenses in connection  therewith,
shall be added back to the Net Income of the Originator,  the General Partner or
the Restricted  Subsidiaries to the extent that they were deducted from such Net
Income in accordance with GAAP.

     "Non-Recourse   Subsidiary"  has  the  meaning   specified  in  the  Credit
Agreement.

     "Obligor" means a Person obligated to make payments pursuant to a Contract.

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

     "Originator" has the meaning set forth in the preamble to the Agreement.

     "Originator's Account" has the meaning set forth in Section 1.3(a).

                  "Originator's Percentage" means, on any date of determination,
100% minus the Buyer's Percentage on such date.

                  "Outstanding Balance" of any Pool Receivable at any time means
the then outstanding principal balance thereof.

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

                  "PBGC" means the Pension Benefit Guaranty Corporation,  or any
Governmental Authority succeeding to any of its principal functions under ERISA.

                  "Pension  Plan"  means a pension  plan (as  defined in Section
3(2) of ERISA)  subject to Title IV of ERISA  which  Originator  or the  General
Partner sponsors, maintains, or to which it makes, is making, or is obligated to
make contributions,  or in the case of a multiple employer plan (as described in
Section  4064(a)  of  ERISA)  has  made  contributions  at any time  during  the
immediately preceding five (5) plan years.

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

                  "Plan"  means an employee  benefit plan (as defined in Section
3(3) of ERISA) which Originator  sponsors or maintains or to which Originator or
the General Partner makes, is making, or is obligated to make  contributions and
includes any Pension Plan.

                  "Pool   Receivables"   means,   collectively,   all   Eligible
Receivables   existing  on  the  Initial   Computation  Date  and  all  Eligible
Receivables arising after the Initial Computation Date through and including the
Termination  Date,  and "Pool  Receivable"  means any such  Eligible  Receivable
individually.  For the avoidance of doubt, a Receivable shall cease to be a Pool
Receivable if on any day prior to the Termination  Date, such Receivable  ceases
to be an Eligible  Receivable,  but shall continue to be a Pool Receivable if it
ceases to be an Eligible Receivable on or after the Termination Date.

                  "Potential  Termination  Event" means an event which, with the
passage of time or the giving of notice, or both, would constitute a Termination
Event.

                  "Prime Rate" means a rate per annum equal to the prime rate of
interest announced from time to time by Bank One, NA or its Originator (which is
not necessarily  the lowest rate charged to any customer),  changing when and as
said prime rate changes

                  "Purchase"  means the purchase  pursuant to Section  1.2(a) of
the Agreement by Buyer from Originator of the Receivable Interest, together with
all related rights in connection therewith.

     "Purchase   Agreement"  has  the  meaning  set  forth  in  the  Preliminary
Statements to the Agreement.

                  "Purchase  Price"  means,  on any date of  determination,  the
aggregate  price to be paid by Buyer to Originator for the Receivable  Interest,
which price shall equal (a) the product of (i) the Variable Purchased Percentage
on such date, multiplied by (ii) the Outstanding Balance of the Pool Receivables
as of  the  close  of  business  on the  Business  Day  preceding  the  date  of
determination,  multiplied  by (iii) one minus the Discount  Factor in effect on
such date.

                  "Receivable"  means each account receivable owed to Originator
(at the time it arises,  and before  giving effect to any transfer or conveyance
under  the  Agreement),  arising  in  connection  with  the sale of  propane  or
provision of related services by Originator,  including, without limitation, the
obligation to pay any Finance Charges with respect thereto.  Accounts receivable
arising  from  any one  transaction,  including,  without  limitation,  accounts
receivable  represented  by a single  invoice,  shall  constitute  a  Receivable
separate  from a Receivable  consisting  of the accounts  arising from any other
transaction;  provided,  further, that any account receivable referred to in the
immediately  preceding sentence shall be a Receivable  regardless or whether the
account  debtor or  Originator  treats  such  obligation  as a separate  payment
obligation.

                  "Receivable  Interest" means a specified dollar amount of Pool
Receivables which equates to a variable undivided  percentage interest (equal to
the  Variable  Purchased  Percentage)  in  and  to  the  Pool  Receivables,  the
associated Related Security and Collections and all proceeds of the foregoing.

                  "Records" means, with respect to any Pool Receivable,  (i) any
and  all  customer  information  regarding  payment  history  of the  applicable
Obligor,  propane gallons delivered to the applicable Obligor, timing of propane
gallons delivered to the applicable Obligor, payment terms and prices charged to
the  applicable  Obligor,  and (ii) any and all invoices  evidencing  all or any
portion of the amount  owing  under such Pool  Receivable,  whether  each of the
foregoing is in paper or electronic form.

                  "Related Party" means (a) the spouse or any lineal  descendant
of James E.  Ferrell,  (b) any trust for his  benefit or for the  benefit of his
spouse or any such lineal descendants, (c) any corporation, partnership or other
entity in which James E. Ferrell  and/or such other  Persons  referred to in the
foregoing clauses (a) and (b) are the direct record and beneficial owners of all
of the  voting  and  nonvoting  Equity  Interests,  (d) the FCI  ESOT or (e) any
participant  in the FCI ESOT whose ESOT  account  has been  allocated  shares of
Ferrell Companies, Inc.

                  "Related Security" means, with respect to any Pool Receivable:

     (i) all Records related to such Pool Receivable, and

                           (ii) all proceeds of such Pool Receivable or Records.

                  "Reportable  Event"  means  any of the  events  set  forth  in
Section  4043(b)  of ERISA or the  regulations  thereunder,  other than any such
event for which the 30-day  notice  requirement  under  ERISA has been waived in
regulations issued by the PBGC.

                  "Requirement  of  Law"  means,  as  to  any  Person,  any  law
(statutory  or  common),  treaty,  rule or  regulation  or  determination  of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the  Person or any of its  property  or to which  the  Person or any of its
property is subject.

                  "Responsible  Officer" means the chief executive officer,  the
president,  the chief financial  officer or the treasurer of the General Partner
or any other officer having  substantially the same authority and responsibility
to act for the General Partner on behalf of Originator.

     "Restricted Subsidiary" has the meaning provided in the Credit Agreement.

                  "SEC" means the  Securities  and Exchange  Commission,  or any
Governmental Authority succeeding to any of its principal functions.

                  "Servicer" has the meaning specified in Section 6.1.

     "Servicer's Concentration Account" means account no. 4496823683 in the name
of the Servicer at Wells Fargo Bank in Dallas, Texas, ABA No. 121000248.

                  "Servicing Fee" has the meaning set forth in Section 6.3.

     "Settlement Date" has the meaning set forth in the Purchase Agreement.

                  "Subordinated Loan" means a loan from Originator to Buyer of a
portion of the  Purchase  Price that is  evidenced by and payable as provided in
the Subordinated Note.

                  "Subordinated  Note" means a subordinated  promissory  note of
the Buyer payable to the order of the  Originator in  substantially  the form of
Exhibit V hereto,  which  promissory  note shall  evidence  that  portion of the
Purchase  Price owing by the Buyer to the  Originator  at any time in respect of
the Receivable Interest owned by the Buyer at such time.

                  "Subsidiary"   means,   with   respect  to  any  Person,   any
corporation,  limited  liability  company,  partnership,  association  or  other
business  entity of which more than 50% of the total  voting  power of shares of
Capital Interests entitled (without regard to the occurrence of any contingency)
to vote in the election of directors,  managers or trustees  thereof (or, in the
case of a limited  partnership,  more than 50% of either the  general  partners'
Capital  Interests or the limited  partners'  Capital  Interests) is at the time
owned or controlled,  directly or  indirectly,  by such Person or one or more of
the other Subsidiaries of that Person or a combination thereof. Unless otherwise
indicated  in  this  Agreement,  "Subsidiary"  shall  mean a  Subsidiary  of the
Originator.  Notwithstanding the foregoing, any Subsidiary of Originator that is
designated a  "Non-Recourse  Subsidiary"  pursuant to the definition  thereof in
this  Agreement  shall,  for so long as all of the  statements in the definition
thereof remain true, not be deemed a Subsidiary of the Originator.

                  "Surety  Instruments"  means all letters of credit  (including
standby and commercial),  bankers' acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.

                  "Synthetic Lease" means each arrangement,  however  described,
under which the  obligor  accounts  for its  interest  in the  property  covered
thereby  under GAAP as lessee of a lease which is not a capital lease under GAAP
and accounts for its interest in the property covered thereby for Federal income
tax purposes as the owner.

                  "Synthetic  Lease  Documents"  means,  collectively,  (i) that
certain  Lease  Intended  as  Security  dated as of  December  1,  1999  between
Ferrellgas, LP, as lessee, and First Security Bank, National Association, in its
capacity as  Certificate  Trustee,  a lessor,  (ii) that  certain  Participation
Agreement (Ferrellgas, LP Trust No. 1999-A), dated as of December 1, 1999, among
Ferrellgas, LP, as lessee; Ferrellgas,  Inc., as general partner, First Security
Bank, National Association, as certificate trustee; First Security Trust Company
of Nevada,  as agent;  and various  certificate  purchasers  and  lenders  named
therein, together with all exhibits, schedules and appendices thereto, and (iii)
each of the  "Operative  Documents"  and  "Loan  Documents"  as  defined  in the
participation agreement described in clause (ii) above.

                  "Synthetic Lease Interest  Component"  means,  with respect to
any  Person  for any  period,  the  portion  of rent  paid or  payable  (without
duplication) for such period under Synthetic Leases of such Person that would be
treated as interest in accordance  with  Financial  Accounting  Standards  Board
Statement No. 13 if such  Synthetic  Leases were treated as capital leases under
GAAP.

                  "Synthetic  Lease  Obligation"  means,  as to any Person  with
respect to any Synthetic Lease at any time of  determination,  the amount of the
liability of such Person in respect of such Synthetic  Lease that would (if such
lease was required to be  classified  and  accounted for as a capital lease on a
balance  sheet  of such  Person  in  accordance  with  GAAP) be  required  to be
capitalized on the balance sheet of such Person at such time.

                  "Synthetic Lease Principal  Component"  means, with respect to
any Person for any period, the portion of rent (exclusive of the Synthetic Lease
Interest Component) paid or payable (without  duplication) for such period under
Synthetic  Leases of such Person that was deducted in  calculating  Consolidated
Net Income of such Person for such period.

                  "Termination  Date"  means  the  earliest  to occur of (i) the
Facility  Termination Date under and as defined in the Purchase Agreement,  (ii)
the Business Day immediately  prior to the occurrence of a Termination Event set
forth in Section  7.1(f) or (g) with respect to  Originator,  (iii) the Business
Day specified in a written notice from Buyer (or the Agent, as Buyer's assignee)
to Originator  following the occurrence of any other Termination Event, and (iv)
the date  which is 30  Business  Days  after  receipt  by the Agent (as  Buyer's
assignee) of written  notice from  Originator  that it wishes to  terminate  the
facility evidenced by this Agreement.

     "Termination  Event"  has the  meaning  set  forth  in  Section  7.1 of the
Agreement.

                  "Transaction Documents" means,  collectively,  this Agreement,
the Purchase  Agreement,  and all other  instruments,  documents and  agreements
executed and delivered by Originator in connection herewith or therewith.

                  "UCC" means the Uniform  Commercial  Code as from time to time
in effect in the specified jurisdiction.

                  "Unfunded  Pension  Liability"  means  the  excess of a Plan's
benefit  liabilities under Section  4001(a)(16) of ERISA, over the current value
of that Plan's assets,  determined in accordance with the  assumptions  used for
funding the Pension Plan pursuant to Section 412 of the Code for the  applicable
plan year.

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

                  "Variable  Contributed  Percentage"  means,  on  any  date  of
determination  through and including the Termination Date, a variable  undivided
interest in and to the Pool Receivables and the associated  Related Security and
Collections  and all proceeds of the  foregoing,  which interest is equal to the
percentage of the aggregate  Outstanding  Balance of all Pool  Receivables as of
the close of business on the  Business  Day  immediately  preceding  the date of
determination  which has been  transferred by the Originator to the Buyer in the
form of an equity capital contribution.

                  "Variable   Purchased   Percentage"  means,  on  any  date  of
determination   through  and  including  the   Termination   Date,  the  Minimum
Receivables Percentage on such date minus the Variable Contributed Percentage on
such date;  provided  that,  (a) from and after the  Termination  Date until the
Aggregate Unpaids have been  indefeasibly  paid in full, the Variable  Purchased
Percentage shall be equal to the Variable Purchased Percentage  determined as of
the date immediately preceding the Termination Date, (b) from and after the date
on which the Aggregate Unpaids have been indefeasibly paid in full, the Variable
Purchased  Percentage  shall  be zero,  and (c) at no time  shall  the  Variable
Purchased Percentage exceed 100%.

                  "Wholly-Owned  Subsidiary"  means a Subsidiary of which all of
the  outstanding  Capital  Interests or other  ownership  interests  (other than
directors'  qualifying shares) or, in the case of a limited partnership,  all of
the  partners'  Capital  Interests  (other  than  up  to  a 1%  general  partner
interest),  is  owned,   beneficially  and  of  record,  by  the  Originator,  a
Wholly-Owned Subsidiary of Originator or both.

                  All accounting terms not specifically  defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York,  and not  specifically  defined  herein,  are used  herein as
defined in such Article 9.



<PAGE>



                                   Exhibit II

     Principal  Place of  Business  and Chief  Executive  Office;  Locations  of
Records;
               Federal Employer Identification Number; Other Names


Chief Executive Office and Principal Place of Business:

                           One Liberty Plaza
                           Liberty, Missouri 64068

Location of Records:

                  .........Same as above

Federal Employer Identification Number:

                  .........43-1698481

Partnership, Trade and Assumed Names:

         Names currently used:......        Ferrellgas, L.P.
                  ..................        Thermogas
                  ..................        Elk Grove Gas & Oil, Inc.
                  ..................        Foothill Propane, Inc.
                  ..................        Puget Propane

         Name previously used:......A-One Propane
                  ..................        Folgers Gas
                  ..................        Gas Plus, Inc.
                  ..................        Pacific Propane, Inc.
                  ..................        Propane Service Center
                  ..................        Seacrist Fuels
                  ..................        Tynes Gas & Appliance



<PAGE>


                                   Exhibit III

                         Form of Compliance Certificate

                  This  Compliance  Certificate  is  furnished  pursuant to that
certain  Receivable  Interest  Sale  Agreement  dated as of September  26, 2000,
between Ferrellgas,  L.P.  ("Originator") and Ferrellgas  Receivables,  LLC (the
"Agreement").  Capitalized  terms used and not otherwise defined herein are used
with the meanings attributed thereto in the Agreement.

                  THE UNDERSIGNED HEREBY CERTIFIES THAT:

                  1.       I am the duly elected ______________ of Originator.

                  2. I have reviewed the terms of the Agreement and I have made,
or have  caused  to be made  under my  supervision,  a  detailed  review  of the
transactions  and  conditions  of  Originator  and its  Subsidiaries  during the
accounting period covered by the attached financial statements.

                  3. The examinations described in paragraph 2 did not disclose,
and I have no  knowledge  of, the  existence  of any  condition  or event  which
constitutes a Termination Event or a Potential  Termination  Event, as each such
term is  defined  under the  Agreement,  during or at the end of the  accounting
period  covered by the attached  financial  statements or as of the date of this
Certificate, except as set forth below.

                  4. Described below are the exceptions,  if any, to paragraph 3
by listing,  in detail,  the nature of the condition or event, the period during
which it has existed and the action which  Originator has taken,  is taking,  or
proposes to take with respect to each such condition or event:

                  The foregoing  certifications,  together with the computations
set forth in Schedule I hereto and the financial  statements delivered with this
Certificate  in  support  hereof,  are  made  and  delivered  this  ____  day of
__________, 20__.

                                                 ------------------------------
                                                     [Name]


<PAGE>

                                   Exhibit IV

                          Credit and Collection Policy

                                   [attached]


<PAGE>


                                    Exhibit V

                           [Form of] Subordinated Note

                                SUBORDINATED NOTE


                  1.  Note.  FOR VALUE  RECEIVED,  the  undersigned,  Ferrellgas
Receivables,  LLC, a  Delaware  limited  liability  company  ("Buyer"),  hereby
unconditionally  promises to pay to the order of  Ferrellgas,  L.P.,  a Delaware
limited partnership ("Seller"),  in lawful money of the United States of America
and in  immediately  available  funds,  on or  before  the  date  following  the
Termination  Date  which is one year and one day after the date on which (i) the
Receivables  Interest (as defined in the  Receivables  Interest  Sale  Agreement
hereinafter  described)  has been  reduced  to zero  and  (ii) all  indemnities,
adjustments  and other amounts which may be owed  thereunder in connection  with
the Receivable  Interest (as defined in the Receivables  Interest Sale Agreement
hereinafter  described) have been paid (the  "Collection  Date"),  the aggregate
unpaid  principal sum outstanding of all  Subordinated  Loans (as defined in the
Receivables  Interest Sale Agreement  hereinafter  described)  made from time to
time by Seller to Buyer  pursuant  to and in  accordance  with the terms of that
certain  Receivables  Interest  Sale  Agreement  dated as of September 26, 2000,
between  Seller  and Buyer (as  amended,  restated,  supplemented  or  otherwise
modified  from  time  to  time,  the  "Receivables  Interest  Sale  Agreement").
Reference to Section 1.3 of the  Receivables  Interest Sale  Agreement is hereby
made for a statement of the terms and conditions under which the loans evidenced
hereby  have been and will be made.  Capitalized  terms  used and not  otherwise
defined herein shall have the meanings ascribed to such terms in the Receivables
Interest Sale Agreement.

                  2.  Interest.  Buyer  further  promises to pay interest on the
outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to the one month LIBOR rate  published  on the first
business  day of each  month on or after  September  1, 2000 in The Wall  Street
Journal ("LIBOR"),  changing on the first business day of each month;  provided,
however,  that if Buyer shall  default in the payment of any  principal  hereof,
Buyer promises to pay, on demand,  interest at a rate per annum equal to the sum
of LIBOR plus  2.00% per annum on any such  unpaid  amounts,  from the date such
payment is due to the date of actual  payment.  Interest shall be payable on the
first Business Day of each month in arrears;  provided,  however, that Buyer may
elect on the date any  interest  payment is due  hereunder to defer such payment
and upon such  election the amount of interest due but unpaid on such date shall
constitute principal under this Subordinated Note. The outstanding  principal of
any loan made  under  this  Subordinated  Note  shall be due and  payable on the
Collection  Date and may be repaid or  prepaid  at any time  without  premium or
penalty.

                  3.  Principal  Payments.  Seller is authorized and directed by
Buyer to enter on the grid attached hereto,  or, at its option, in its books and
records,  the date and amount of each loan made by it which is evidenced by this
Subordinated Note and the amount of each payment of principal made by Buyer, and
absent manifest error, such entries shall constitute prima facie evidence of the
accuracy of the  information  so entered;  provided  that neither the failure of
Seller to make any such entry or any error therein shall expand, limit or affect
the obligations of Buyer hereunder.

                  4. Subordination.  Seller shall have the right to receive, and
Buyer  shall  have the  right  to make,  any and all  payments  and  prepayments
relating to the loans made under this  Subordinated  Note;  provided  that after
giving effect to any such payment or prepayment,  the  Receivable  Interest plus
the Contributed  Interest equals or exceeds the Minimum Receivables  Percentage.
Seller hereby agrees that at any time during which the  conditions  set forth in
the proviso of the immediately preceding sentence shall not be satisfied, Seller
shall  be  subordinate  in  right  of  payment  to  the  prior  payment  of  any
indebtedness  or obligation of Buyer owing to the Agent or any Purchaser  (each,
as defined below) under that certain Receivables Purchase Agreement, dated as of
September  26,  2000,  by  and  among  Buyer,   Seller,  as  Servicer,   various
"Purchasers"  from time to time party  thereto,  and Bank One,  NA (Main  Office
Chicago),  as the "Agent"  (as  amended,  restated,  supplemented  or  otherwise
modified  from  time  to  time,  the  "Receivables  Purchase  Agreement").   The
subordination provisions contained herein are for the direct benefit of, and may
be  enforced  by, the Agent and the  Purchasers  and/or any of their  respective
assignees (collectively,  the "Senior Claimants") under the Receivables Purchase
Agreement. Until the date on which the "Aggregate Capital" outstanding under the
Receivables  Purchase  Agreement has been repaid in full and all  obligations of
Buyer  and/or the  Servicer  thereunder  and under the "Fee  Letter"  referenced
therein  (all such  obligations,  collectively,  the "Senior  Claim")  have been
indefeasibly  paid and  satisfied in full,  Seller shall not  institute  against
Buyer any  proceeding  of the type  described  in  Section  7.1(f) or (g) of the
Receivables  Interest Sale Agreement  unless and until the  Collection  Date has
occurred.  Should any payment,  distribution or security or proceeds  thereof be
received  by Seller in  violation  of this  Section 4,  Seller  agrees that such
payment shall be segregated,  received and held in trust for the benefit of, and
deemed to be the property of, and shall be  immediately  paid over and delivered
to the Agent for the benefit of the Senior Claimants.

                  5.  Bankruptcy;   Insolvency.   Upon  the  occurrence  of  any
proceeding  of the type  described in Section  7.1(f) or (g) of the  Receivables
Interest Sale Agreement  involving  Buyer as debtor,  then and in any such event
the Senior  Claimants  shall  receive  payment in full of all  amounts due or to
become due on or in  respect  of the  Aggregate  Capital  and the  Senior  Claim
(including  "CP  Costs"  and  "Yield"  as  defined  and as  accruing  under  the
Receivables  Purchase  Agreement after the  commencement of any such proceeding,
whether or not any or all of such CP Costs or Yield is an allowable claim in any
such proceeding) before Seller is entitled to receive payment on account of this
Subordinated  Note,  and to that end, any payment or  distribution  of assets of
Buyer of any kind or character,  whether in cash,  securities or other property,
in any applicable insolvency proceeding,  which would otherwise be payable to or
deliverable  upon  or  with  respect  to  any  or all  indebtedness  under  this
Subordinated  Note, is hereby  assigned to and shall be paid or delivered by the
Person  making such  payment or  delivery  (whether a trustee in  bankruptcy,  a
receiver,  custodian or liquidating  trustee or otherwise) directly to the Agent
for  application to, or as collateral for the payment of, the Senior Claim until
such Senior Claim shall have been paid in full and satisfied.

                  6. Amendments.  The terms of this Subordinated Note may not be
amended or otherwise modified without the prior written consent of the Agent for
the benefit of the Purchasers.

                  7.  GOVERNING  LAW. THIS  SUBORDINATED  NOTE HAS BEEN MADE AND
DELIVERED  AT  HOUSTON,  TEXAS,  AND SHALL BE  INTERPRETED  AND THE  RIGHTS  AND
LIABILITIES  OF THE PARTIES  HERETO  DETERMINED IN ACCORDANCE  WITH THE LAWS AND
DECISIONS  OF THE STATE OF  TEXAS.  WHEREVER  POSSIBLE  EACH  PROVISION  OF THIS
SUBORDINATED  NOTE SHALL BE  INTERPRETED  IN SUCH MANNER AS TO BE EFFECTIVE  AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL
BE PROHIBITED  BY OR INVALID  UNDER  APPLICABLE  LAW,  SUCH  PROVISION  SHALL BE
INEFFECTIVE  TO  THE  EXTENT  OF  SUCH   PROHIBITION   OR  INVALIDITY,   WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SUBORDINATED NOTE.

                  8. Waivers. All parties hereto, whether as makers,  endorsers,
or otherwise,  severally  waive  presentment  for payment,  demand,  protest and
notice of  dishonor.  Seller  additionally  expressly  waives  all notice of the
acceptance by any Senior Claimant of the  subordination  and other provisions of
this Subordinated Note and expressly waives reliance by any Senior Claimant upon
the subordination and other provisions herein provided.

                  9.  Assignment.  This  Subordinated  Note may not be assigned,
pledged or otherwise  transferred to any party without the prior written consent
of the Agent, and any such attempted transfer shall be void.

                                   FERRELLGAS RECEIVABLES, LLC


                                   By:_____________________________
                                      Name: Kevin T. Kelly
                                      Title:Chief Financial Officer





<PAGE>


                          Schedule to Subordinated Note

                  SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>

<S>                               <C>                <C>                   <C>                   <C>
                                Amount of                                  Unpaid Principal
                            Subordinated Loan     Amount of Principal           Balance           Notation Made by
          Date                                            Paid


</TABLE>




<PAGE>



                                   Schedule A

                       DOCUMENTS TO BE DELIVERED TO BUYER
                           ON OR PRIOR TO THE PURCHASE

1. Executed copies of the Receivable  Interest Sale Agreement,  duly executed by
the parties thereto.

2.   Certificate of Originator's [Assistant] Secretary certifying the incumbency
     and   signatures  of  its  officers  who  are  authorized  to  execute  the
     Transaction  Documents  to which it is a party  and  attaching  each of the
     following:

(b)      Copy of the  Resolutions  of the  Board  of  Directors  of the  General
         Partner certified by its Secretary, authorizing Originator's execution,
         delivery and performance of the Receivable  Interest Sale Agreement and
         the other documents to be delivered by it thereunder.

(c)      Certificate  of Limited  Partnership  of  Originator  certified  by the
         Secretary  of State of Delaware on or within  thirty (30) days prior to
         the  initial  Purchase  (as  defined in the  Receivable  Interest  Sale
         Agreement).

(d)      Good  Standing  Certificates  for  Originator  and the General  Partner
         issued by the  Secretaries  of State of its state of  organization  and
         each jurisdiction  where it has material  operations,  each of which is
         listed below:

                  i.       Delaware
                  ii.      Missouri

(e) A copy of Originator's Partnership Agreement.

3.   Pre-filing state and federal tax lien,  judgment lien and UCC lien searches
     against Originator from the following jurisdictions:

                  a.       Delaware SOS
                  b.       Missouri SOS
                  c.       Clay County, MO

4.   Duly executed financing  statements,  in form suitable for filing under the
     UCC, in all  jurisdictions  as may be necessary or, in the opinion of Buyer
     (or its assigns), desirable, under the UCC of all appropriate jurisdictions
     or  any  comparable  law  in  order  to  perfect  the  ownership  interests
     contemplated by the Receivable Interest Sale Agreement.

5.   Time stamped receipt copies of proper UCC termination  statements,  if any,
     necessary to release all security  interests and other rights of any Person
     in the Pool Receivables,  Contracts or Related Security  previously granted
     by Originator.

6.   A favorable opinion of legal counsel for Originator  reasonably  acceptable
     to Buyer (or its assigns)  which  addresses the following  matters and such
     other matters as Buyer (or its assigns) may reasonably request:

                  --Each  of  Originator   and  its  General   Partner  is  duly
organized, validly existing, and in good standing under the laws of its state of
organization.

                  --Each of Originator and its General Partner has all requisite
authority to conduct its business in each  jurisdiction  where  failure to be so
qualified would have a material adverse effect on its business.

                  --The  execution and delivery by Originator of the  Receivable
Interest  Sale  Agreement and each other  Transaction  Document to which it is a
party  and  its  performance  of  its  obligations  thereunder  have  been  duly
authorized by all necessary action and proceedings on the part of Originator and
the General Partner and will not:

                  (a) require  any action by or in respect  of, or filing  with,
         any governmental body, agency or official (other than the filing of UCC
         financing statements);

                  (b) contravene,  or constitute a default under,  any provision
         of applicable law or regulation or of its Organization  Documents or of
         any material agreement,  judgment,  injunction,  order, decree or other
         instrument binding upon Originator,  the MLP or the General Partner [to
         include the Credit  Agreement,  both Note Purchase  Agreements  and the
         Indenture]; or

                  (c) result in the creation or  imposition of any Adverse Claim
         on assets of the General Partner, Originator or any of their respective
         Subsidiaries  (except as contemplated  by the Receivable  Interest Sale
         Agreement and the Purchase Agreement).

                  --The  Receivable  Interest  Sale  Agreement  and  each  other
Transaction Document to which it is a party has been duly executed and delivered
by  Originator  and  constitutes  the legal,  valid,  and binding  obligation of
Originator  enforceable in accordance  with its terms,  except to the extent the
enforcement  thereof may be limited by  bankruptcy,  insolvency  or similar laws
affecting the enforcement of creditors' rights generally and subject also to the
availability of equitable remedies if equitable remedies are sought.

                  --The provisions of the Receivable Interest Sale Agreement are
effective  to  create a valid  security  interest  in favor of Buyer in all Pool
Receivables and upon the filing of financing  statements,  Buyer shall acquire a
first priority, perfected security interest in such Receivables.

                  --To the best of the opinion  giver's  knowledge,  there is no
action,  suit or other  proceeding  against  Originator,  General Partner or any
Affiliate of Originator or General  Partner,  which would  materially  adversely
affect the business or  financial  condition of  Originator  and its  Affiliates
taken as a whole or which  would  materially  adversely  affect  the  ability of
Originator to perform its obligations  under the Transaction  Documents to which
it is a party.

7.   A "true sale/true  contribution"  opinion and  "substantive  consolidation"
     opinion  of  counsel  for  Originator  with  respect  to  the  transactions
     contemplated by the Receivable Interest Sale Agreement.

8.   A Certificate  of a Responsible  Officer of Originator  certifying  that no
     Termination  Event or Potential  Termination Event exists as of the date of
     the Purchase or will result therefrom, and that each of the representations
     and warranties  made by Originator in any of the  Transaction  Documents to
     which it is a party is true and correct as of such date.

9.   Executed copies of (i) all consents from and  authorizations by any Persons
     and (ii) all waivers and amendments to existing credit facilities, that are
     necessary in connection with the Receivable Interest Sale Agreement.