FERRELLGAS, L.P.

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

                             NOTE PURCHASE AGREEMENT

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




                            DATED AS OF JULY 1, 1998




                        Re:    $109,000,000  6.99% Senior  Notes,  Series A, due
                               August 1, 2005  $37,000,000  7.08% Senior  Notes,
                               Series B, due  August 1, 2006  $52,000,000  7.12%
                               Senior  Notes,  Series  C,  due  August  1,  2008
                               $82,000,000  7.24%  Senior  Notes,  Series D, due
                               August 1, 2010  $70,000,000  7.42% Senior  Notes,
                               Series E, due August 1, 2013












<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

SECTION                                                       HEADING                                                         PAGE

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


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


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


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

       Section 4.1.            Representations and Warranties....................................................................2
       Section 4.2.            Performance; No Default...........................................................................2
       Section 4.3.            Compliance Certificates...........................................................................3
       Section 4.4.            Opinions of Counsel...............................................................................3
       Section 4.5.            Purchase Permitted by Applicable Law, Etc.........................................................3
       Section 4.6.            Related Transactions..............................................................................4
       Section 4.7.            Payment of Special Counsel Fees...................................................................4
       Section 4.8.            Private Placement Numbers.........................................................................4
       Section 4.9.            Changes in Structure..............................................................................4
       Section 4.10.           Redemption of Senior Notes........................................................................4
       Section 4.11.           Rating............................................................................................4
       Section 4.12.           Proceedings and Documents.........................................................................4

SECTION 5.                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................4

       Section 5.1.            Organization; Power and Authority; Ownership......................................................4
       Section 5.2.            Authorization, Etc................................................................................5
       Section 5.3.            Disclosure........................................................................................5
       Section 5.4.            Organization and Ownership of Shares of Subsidiaries..............................................5
       Section 5.5.            Financial Statements..............................................................................6
       Section 5.6.            Compliance with Laws, Other Instruments, Etc......................................................6
       Section 5.7.            Governmental Authorizations, Etc..................................................................7
       Section 5.8.            Litigation; Observance of Agreements, Statutes and Orders.........................................7
       Section 5.9.            Taxes.............................................................................................7
       Section 5.10.           Title to Property; Leases.........................................................................7
       Section 5.11.           Licenses, Permits, Etc............................................................................8
       Section 5.12.           Compliance with ERISA.............................................................................8
       Section 5.13.           Private Offering by the Company...................................................................9
       Section 5.14.           Use of Proceeds; Margin Regulations...............................................................9
       Section 5.15.           Existing Indebtedness; Future Liens...............................................................9
       Section 5.16.           Foreign Assets Control Regulations, Etc..........................................................10
       Section 5.17.           Status under Certain Statutes....................................................................10
       Section 5.18.           Environmental Matters............................................................................10

SECTION 6.                 REPRESENTATIONS OF THE PURCHASER.....................................................................11

       Section 6.1.            Purchase for Investment..........................................................................11
       Section 6.2.            Source of Funds..................................................................................11

SECTION 7.                 INFORMATION AS TO COMPANY............................................................................12

       Section 7.1.            Financial and Business Information...............................................................12
       Section 7.2.            Officer's Certificate............................................................................15
       Section 7.3.            Inspection.......................................................................................15
       Section 7.4.            Change in Status of Subsidiaries.................................................................16

SECTION 8.                 PREPAYMENT OF THE NOTES..............................................................................16

       Section 8.1.            Prepayments......................................................................................16
       Section 8.2.            Optional Prepayments with Make-Whole Amount......................................................16
       Section 8.3.            Allocation of Partial Prepayments................................................................17
       Section 8.4.            Maturity; Surrender, Etc.........................................................................17
       Section 8.5.            Purchase of Notes................................................................................17
       Section 8.6.            Make-Whole Amount................................................................................17

SECTION 9.                 AFFIRMATIVE COVENANTS................................................................................19

       Section 9.1.            Compliance with Law..............................................................................19
       Section 9.2.            Insurance........................................................................................19
       Section 9.3.            Maintenance of Properties........................................................................19
       Section 9.4.            Payment of Taxes.................................................................................20
       Section 9.5.            Partnership Existence, Etc.......................................................................20
       Section 9.6.            Ranking..........................................................................................20

SECTION 10.                NEGATIVE COVENANTS...................................................................................20

       Section 10.1.           Incurrence of Debt...............................................................................20
       Section 10.2.           Guaranty of MLP Notes............................................................................22
       Section 10.3.           Restricted Subsidiary Debt.......................................................................23
       Section 10.4.           Liens............................................................................................23
       Section 10.5.           Restricted Payments..............................................................................25
       Section 10.6.           Restrictions on Dividends of Subsidiaries, Etc...................................................26
       Section 10.7.           Mergers and Consolidations.......................................................................26
       Section 10.8.           Sale of Assets; Sale of Stock....................................................................27
       Section 10.9.           Nature of Business...............................................................................29
       Section 10.10.          Transactions with Affiliates.....................................................................29
       Section 10.11.          Certain Refinancings.............................................................................29

SECTION 11.                EVENTS OF DEFAULT....................................................................................29


SECTION 12.                REMEDIES ON DEFAULT, ETC.............................................................................32

       Section 12.1.           Acceleration.....................................................................................32
       Section 12.2.           Other Remedies...................................................................................32
       Section 12.3.           Rescission.......................................................................................32
       Section 12.4.           No Waivers or Election of Remedies, Expenses, Etc................................................33

SECTION 13.                REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................................................33

       Section 13.1.           Registration of Notes............................................................................33
       Section 13.2.           Transfer and Exchange of Notes...................................................................33
       Section 13.3.           Replacement of Notes.............................................................................34

SECTION 14.                PAYMENTS ON NOTES....................................................................................34

       Section 14.1.           Place of Payment.................................................................................34
       Section 14.2.           Home Office Payment..............................................................................34

SECTION 15.                EXPENSES, ETC........................................................................................35

       Section 15.1.           Transaction Expenses.............................................................................35
       Section 15.2.           Survival.........................................................................................35

SECTION 16.                SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.........................................36


SECTION 17.                AMENDMENT AND WAIVER.................................................................................36

       Section 17.1.           Requirements.....................................................................................36
       Section 17.2.           Solicitation of Holders of Notes.................................................................36
       Section 17.3.           Binding Effect, Etc..............................................................................37
       Section 17.4.           Notes Held by Company, Etc.......................................................................37

SECTION 18.                NOTICES..............................................................................................37


SECTION 19.                REPRODUCTION OF DOCUMENTS............................................................................38


SECTION 20.                CONFIDENTIAL INFORMATION.............................................................................38


SECTION 21.                SUBSTITUTION OF PURCHASER............................................................................39


SECTION 22.                MISCELLANEOUS........................................................................................39

       Section 22.1.           Successors and Assigns...........................................................................39
       Section 22.2.           Payments Due on Non-Business Days................................................................39
       Section 22.3.           Severability.....................................................................................40
       Section 22.4.           Construction.....................................................................................40
       Section 22.5.           Counterparts.....................................................................................40
       Section 22.6.           Governing Law....................................................................................40

Signatures......................................................................................................................40

</TABLE>

<PAGE>


SCHEDULE A                 --     INFORMATION RELATING TO PURCHASERS

SCHEDULE B                 --     DEFINED TERMS

SCHEDULE 5.1               --     Ownership of Company

SCHEDULE 5.3               --     Disclosure Materials

SCHEDULE 5.4              --     Subsidiaries of the Company and Ownership of
                                 Subsidiary Equity Interest

SCHEDULE 5.5               --     Financial Statements

SCHEDULE 5.8               --     Certain Litigation

SCHEDULE 5.11              --     Patents, etc.

SCHEDULE 5.14              --     Use of Proceeds

SCHEDULE 5.15              --     Existing Indebtedness and Liens

EXHIBIT 1-A                --     Form of Series A Note

EXHIBIT 1-B                --     Form of Series B Note

EXHIBIT 1-C                --     Form of Series C Note

EXHIBIT 1-D                --     Form of Series D Note

EXHIBIT 1-E                --     Form of Series E Note

EXHIBIT 4.4(a)            --     Form of Opinion of Special Counsel for the 
                                 Company

EXHIBIT 4.4(b)            --     Form of Opinion of Special Counsel for the 
                                 Purchasers

EXHIBIT 10.1              --     Subordination Provisions Applicable to 
                                 Subordinated Debt


<PAGE>

                                FERRELLGAS, L.P.
                                One Liberty Plaza
                             Liberty, Missouri 64068

                         $109,000,000  6.99% Senior Notes,  Series A, due August
                           1, 2005 $37,000,000 7.08% Senior Notes, Series B, due
                           August 1, 2006 $52,000,000 7.12% Senior Notes, Series
                           C, due August 1, 2008 $82,000,000 7.24% Senior Notes,
                           Series D, due August 1, 2010 $70,000,000 7.42% Senior
                           Notes, Series E, due August 1, 2013



                                                                     Dated as of
                                                                    July 1, 1998

TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         FERRELLGAS,  L.P.,  a Delaware  limited  partnership  (the  "Company"),
agrees with the Purchasers listed in the attached Schedule A as follows:


SECTION 1.               AUTHORIZATION OF NOTES.

         The Company will authorize the issue and sale of $350,000,000 aggregate
principal  amount of its Senior Notes,  comprised of  $109,000,000  6.99% Senior
Notes,  Series A, due August 1, 2005 (the "Series A Notes"),  $37,000,000  7.08%
Senior Notes,  Series B, due August 1, 2006 (the "Series B Notes"),  $52,000,000
7.12%  Senior  Notes,  Series C, due  August 1,  2008  (the  "Series C  Notes"),
$82,000,000  7.24%  Senior  Notes,  Series D, due August 1, 2010 (the  "Series D
Notes"),  and $70,000,000 7.42% Senior Notes,  Series E, due August 1, 2013 (the
"Series E Notes") (said Series A Notes, Series B Notes, Series C Notes, Series D
Notes and Series E Notes being herein collectively called the "Notes", such term
to include any such notes issued in substitution therefor pursuant to Section 13
of this Agreement (as hereinafter  defined)).  The Series A, B, C, D and E Notes
shall be  substantially  in the  respective  forms set out in Exhibit 1, in each
case with such changes  therefrom,  if any, as may be approved by each Purchaser
and the Company. Certain capitalized terms used in this Agreement are defined in
Schedule B;  references to a "Schedule" or an "Exhibit"  are,  unless  otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.


SECTION 2.               SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each  Purchaser  and each  Purchaser  will  purchase  from the
Company, at the Closing provided for in Section 3, Notes in the principal amount
and of the series specified  opposite such Purchaser's name in Schedule A at the
purchase price of 100% of the principal amount thereof.  The obligations of each
Purchaser  hereunder are several and not joint  obligations  and each  Purchaser
shall have no obligation  and no liability to any Person for the  performance or
nonperformance by any other Purchaser hereunder.


SECTION 3.               CLOSING.

         The sale and purchase of the Notes to be  purchased  by each  Purchaser
shall  occur at the  offices of Chapman  and  Cutler,  111 West  Monroe  Street,
Chicago, Illinois 60603 at 10:00 A.M. Chicago time, at a closing (the "Closing")
on such  Business Day prior to August 15, 1998 as may be  designated by at least
five Business Days' prior written notice to the  Purchasers.  At the Closing the
Company  will  deliver  to each  Purchaser  the  Notes of any such  series to be
purchased  by such  Purchaser  in the form of a single Note of each series to be
purchased by such  Purchaser (or such greater number of Notes of any such series
in  denominations  of at least $100,000 as such Purchaser may request) dated the
date of the Closing and registered in such  Purchaser's  name (or in the name of
such Purchaser's nominee),  against delivery by such Purchaser to the Company or
its order of  immediately  available  funds in the amount of the purchase  price
therefor by wire transfer of immediately  available funds for the account of the
Company to Norwest Bank  Minnesota,  as cashiering  agent, at such trust account
number as shall be designated  by the Company in the notice of Closing  referred
to above.  If at the Closing the Company  shall fail to tender such Notes to any
Purchaser  as  provided  above  in  this  Section  3,  or any of the  conditions
specified  in  Section  4 shall  not  have  been  fulfilled  to any  Purchaser's
satisfaction, such Purchaser shall, at such Purchaser's election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
such Purchaser may have by reason of such failure or such nonfulfillment.


SECTION 4.               CONDITIONS TO CLOSING.

         The  obligation of each  Purchaser to purchase and pay for the Notes to
be sold to such  Purchaser at the Closing is subject to the  fulfillment to such
Purchaser's  satisfaction,  prior  to  or  at  the  Closing,  of  the  following
conditions:

Section  4.1.Representations and Warranties.  The representations and warranties
of the Company in this  Agreement  shall be correct when made and at the time of
the Closing.

Section  4.2.Performance;  No Default.  The  Company  shall have  performed  and
complied with all agreements and conditions contained in this Agreement required
to be  performed or complied  with by it prior to or at the  Closing,  and after
giving  effect to the issue and sale of the Notes  (and the  application  of the
proceeds  thereof as  contemplated  by  Schedule  5.14),  no Default or Event of
Default  shall have  occurred  and be  continuing.  Neither  the Company nor any
Subsidiary  shall  have  entered  into  any  transaction  since  the date of the
Memorandum that would have been prohibited by Section 10 hereof had such Section
applied since such date.

Section 4.3.Compliance Certificates.

                   (a) Officer's  Certificate.  The Company shall have delivered
         to such  Purchaser  an  Officer's  Certificate,  dated  the date of the
         Closing,  certifying that the conditions specified in Sections 4.1, 4.2
         and 4.9 have been fulfilled.

                   (b) Secretary's  Certificate.  The General Partner shall have
         delivered  to  such  Purchaser  a  certificate  certifying  as  to  the
         resolutions  attached  thereto  and other  proceedings  relating to the
         authorization, execution and delivery of the Notes and this Agreement.

                   (c) ERISA Certificate.  If such Purchaser shall have made the
         disclosures  referred to in Section 6.2(b),  (c) or (e), such Purchaser
         shall have received the certificate  from the Company  described in the
         last paragraph of Section 6.2 and such certificate shall state that (i)
         the  Company  is  neither a "party  in  interest"  nor a  "disqualified
         person" (as defined in Section 4975(e)(2) of the Code), with respect to
         any plan  identified  pursuant  to  Section  6.2(b) or (e) or (ii) with
         respect to any plan, identified pursuant to Section 6.2(c), neither the
         Company nor any  "affiliate"  (as  defined in Section  V(c) of the QPAM
         Exemption)  has, at such time or during the  immediately  preceding one
         year,  exercised  the  authority  to appoint or  terminate  the QPAM as
         manager of the assets of any plan  identified  in writing  pursuant  to
         Section  6.2(c) or to  negotiate  the terms of said  QPAM's  management
         agreement on behalf of any such identified plans.

Section 4.4.Opinions of Counsel.  Such Purchaser shall have received opinions in
form and substance satisfactory to such Purchaser, dated the date of the Closing
(a) from Bryan Cave LLP,  special counsel for the Company,  covering the matters
set forth in Exhibit  4.4(a) and  covering  such other  matters  incident to the
transactions  contemplated  hereby as such Purchaser or such Purchaser's counsel
may reasonably  request (and the Company hereby instructs its counsel to deliver
such opinion to such Purchaser) and (b) from Chapman and Cutler, the Purchasers'
special counsel in connection with such transactions,  substantially in the form
set forth in Exhibit  4.4(b) and covering  such other  matters  incident to such
transactions as such Purchaser may reasonably request.

Section  4.5.Purchase  Permitted  by  Applicable  Law,  Etc.  On the date of the
Closing  each  purchase  of  Notes  shall  (a)  be  permitted  by the  laws  and
regulations of each  jurisdiction  to which each  Purchaser is subject,  without
recourse to provisions  (such as Section  1405(a)(8)  of the New York  Insurance
Law) permitting limited  investments by insurance  companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation  (including,  without limitation,  Regulation T, U or X of the
Board of  Governors  of the  Federal  Reserve  System)  and (c) not  subject any
Purchaser to any tax,  penalty or liability  under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by any Purchaser,  such Purchaser  shall have received an Officer's
Certificate  certifying  as to  such  matters  of fact  as  such  Purchaser  may
reasonably  specify to enable such Purchaser to determine  whether such purchase
is so permitted.

Section 4.6.Related Transactions. The Company shall have consummated the sale of
the entire  principal  amount of the Notes  scheduled  to be sold on the Closing
Date pursuant to this Agreement.

Section  4.7.Payment of Special Counsel Fees. Without limiting the provisions of
Section  15.1,  the  Company  shall have paid on or before the Closing the fees,
charges and  disbursements  of the Purchasers'  special  counsel  referred to in
Section 4.4 to the extent  reflected in a statement of such counsel  rendered to
the Company at least one Business Day prior to the Closing.

Section  4.8.Private  Placement  Numbers.  A Private  Placement Number issued by
Standard & Poor's  CUSIP  Service  Bureau (in  cooperation  with the  Securities
Valuation Office of the National  Association of Insurance  Commissioners) shall
have been obtained for each series of the Notes.

Section  4.9.Changes  in  Structure.  The  Company  shall not have  changed  its
jurisdiction of organization or been a party to any merger or consolidation  and
shall not have succeeded to all or any  substantial  part of the  liabilities of
any other entity,  at any time  following the date of the most recent  financial
statements referred to in Schedule 5.5.

Section  4.10.Redemption of Senior Notes. The Company shall have given notice of
redemption  of the  entire  principal  amount of the  Senior  Notes  issued  and
outstanding  under the  Indenture  dated as of July 5,  1994  (the  "Indenture")
between the  Company,  Ferrellgas  Finance  Corp.  and Norwest  Bank  Minnesota,
National Association (the "Trustee") in accordance with the terms thereof, which
redemption  shall  be made on the  first  Business  Day  following  the  date of
Closing; and concurrently with the issuance and sale of the Notes hereunder, the
Company shall irrevocably  deposit with the Trustee an amount sufficient for the
redemption of such Senior Notes on such Business Day.

Section 4.11.Rating. Prior to the date of Closing, the Notes shall have received
a rating of "BBB" or better from Fitch IBCA, Inc.

Section  4.12.Proceedings and Documents.  All proceedings in connection with the
transactions  contemplated  by this Agreement and all documents and  instruments
incident to such  transactions  shall be satisfactory to such Purchaser and such
Purchaser's  special counsel,  and such Purchaser and such  Purchaser's  special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as such Purchaser or such  Purchaser's  special counsel
may reasonably request.


SECTION 5.               REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to each Purchaser that:

Section  5.1.Organization;  Power and  Authority;  Ownership.  The  Company is a
limited partnership duly organized,  validly existing and in good standing under
the laws of the  State of  Delaware,  and is duly  licensed  or  qualified  as a
foreign  partnership and is in good standing in each  jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the  power and  authority  to own or hold  under  lease  the  properties  it
purports to own or hold under lease,  to transact the business it transacts  and
proposes to transact, to execute and deliver this Agreement and the Notes and to
perform the  provisions  hereof and thereof.  The name of each Person holding an
equity  interest in the Company  (including a description  of the nature of such
interest) is set forth on Schedule 5.1.

Section  5.2.Authorization,  Etc.  This  Agreement  and the Notes have been duly
authorized  by all  necessary  action  on the  part  of the  Company,  and  this
Agreement  constitutes,  and upon execution and delivery  thereof each Note will
constitute,  a legal,  valid and binding  obligation of the Company  enforceable
against the Company in accordance with its terms,  except as such enforceability
may  be  limited  by  (i)  applicable  bankruptcy,  insolvency,  reorganization,
moratorium or other similar laws affecting the enforcement of creditors'  rights
generally  and (ii) general  principles  of equity  (regardless  of whether such
enforceability is considered in a proceeding in equity or at law).

Section 5.3.Disclosure.  The Company,  through its agent,  BancAmerica Robertson
Stephens,  has  delivered  to  each  Purchaser  a copy  of a  Private  Placement
Memorandum,  dated May, 1998 (the  "Memorandum"),  relating to the  transactions
contemplated hereby. The Memorandum fairly describes,  in all material respects,
the general  nature of the business and principal  properties of the Company and
its  Restricted  Subsidiaries.   Except  as  disclosed  in  Schedule  5.3,  this
Agreement,  the  Memorandum,  the  documents,  certificates  or  other  writings
delivered to each  Purchaser by or on behalf of the Company in  connection  with
the  transactions  contemplated  hereby and the financial  statements  listed in
Schedule  5.5,  taken as a whole,  do not  contain  any  untrue  statement  of a
material  fact or  omit  to  state  any  material  fact  necessary  to make  the
statements therein not misleading in light of the circumstances under which they
were made.  Except as disclosed in the  Memorandum or as expressly  described in
Schedule  5.3,  or in one of  the  documents,  certificates  or  other  writings
identified therein, or in the financial statements listed in Schedule 5.5, since
July 31, 1997, there has been no change in the financial condition,  operations,
business,  properties  or  prospects  of the  Company  or any of its  Restricted
Subsidiaries  except  changes that  individually  or in the aggregate  could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company  that could  reasonably  be  expected to have a Material  Adverse
Effect that has not been set forth herein or in the  Memorandum  or in the other
documents,  certificates and other writings delivered to each Purchaser by or on
behalf of the Company  specifically  for use in connection with the transactions
contemplated hereby.

Section  5.4.Organization  and Ownership of Shares of Subsidiaries;  Affiliates.
(a) Schedule 5.4 contains  (except as noted therein)  complete and correct lists
(i) of the Company's  Subsidiaries,  showing, as to each Subsidiary,  its status
(whether a Restricted or Unrestricted Subsidiary), the correct name thereof, the
jurisdiction of its organization,  and the percentage of shares of each class of
its capital stock or similar equity interests  outstanding  owned by the Company
and  each  other  Subsidiary,  (ii)  of the  Company's  Affiliates,  other  than
Subsidiaries, and (iii) of the Company's directors and senior officers.

           (b) All of the outstanding  shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued,  are fully paid and nonassessable
and are owned by the  Company or another  Subsidiary  free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).

           (c)  Each  Restricted  Subsidiary  identified  in  Schedule  5.4 is a
corporation or other legal entity duly organized,  validly  existing and in good
standing  under  the  laws  of its  jurisdiction  of  organization,  and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such  qualification is required by law, other than
those  jurisdictions  as to which  the  failure  to be so  qualified  or in good
standing could not, individually or in the aggregate,  reasonably be expected to
have a  Material  Adverse  Effect.  Each  such  Restricted  Subsidiary  has  the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact.

           (d) No Restricted  Subsidiary is a party to, or otherwise subject to,
any  legal  restriction  or  any  agreement  (other  than  this  Agreement,  the
agreements listed on Schedule 5.4 and customary limitations imposed by corporate
law  statutes)  restricting  the ability of such  Restricted  Subsidiary  to pay
dividends out of profits or make any other similar  distributions  of profits to
the Company or any of its Restricted  Subsidiaries that owns outstanding  shares
of capital stock or similar equity interests of such Restricted Subsidiary.

Section  5.5.Financial  Statements.  The Company has delivered to each Purchaser
copies  of  the  financial   statements  of  the  Company  and  its   Restricted
Subsidiaries listed on Schedule 5.5. All of said financial statements (including
in each case the related  schedules  and notes)  fairly  present in all material
respects the consolidated  financial  position of the Company and its Restricted
Subsidiaries as of the respective  dates specified in such financial  statements
and the  consolidated  results  of  their  operations  and  cash  flows  for the
respective  periods so specified and have been prepared in accordance  with GAAP
consistently  applied throughout the periods involved except as set forth in the
notes thereto  (subject,  in the case of any interim  financial  statements,  to
normal year-end adjustments).

Section  5.6.Compliance  with  Laws,  Other  Instruments,  Etc.  The  execution,
delivery and performance by the Company of this Agreement and the Notes will not
(a)  contravene,  result in any breach of, or  constitute  a default  under,  or
result in the  creation of any Lien in respect of any property of the Company or
any Restricted Subsidiary under, any indenture,  mortgage,  deed of trust, loan,
purchase or credit agreement, lease, partnership agreement, corporate charter or
by-laws,  or any other  agreement  or  instrument  to which the  Company  or any
Restricted  Subsidiary  is bound  or by  which  the  Company  or any  Restricted
Subsidiary or any of their respective  properties may be bound or affected,  (b)
conflict  with  or  result  in a  breach  of  any of the  terms,  conditions  or
provisions  of any Material  order,  judgment,  decree,  or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Restricted
Subsidiary or (c) violate any provision of any Material statute or other rule or
regulation  of any  Governmental  Authority  applicable  to the  Company  or any
Restricted Subsidiary.

Section   5.7.Governmental   Authorizations,   Etc.  No  consent,   approval  or
authorization of, or registration,  filing or declaration with, any Governmental
Authority is required in connection with the execution,  delivery or performance
by the Company of this Agreement or the Notes.

Section  5.8.Litigation;  Observance  of  Agreements,  Statutes and Orders.  (a)
Except as disclosed in Schedule 5.8, there are no actions,  suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any  Restricted  Subsidiary  or any  property  of the  Company or any
Restricted  Subsidiary  in any court or  before  any  arbitrator  of any kind or
before or by any Governmental Authority that,  individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

           (b) Neither the Company nor any  Restricted  Subsidiary is in default
under any term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment,  decree or ruling of any court,  arbitrator
or Governmental  Authority or is in violation of any applicable law,  ordinance,
rule or regulation  (including  without  limitation  Environmental  Laws) of any
Governmental  Authority,  which  default or  violation,  individually  or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

Section  5.9.Taxes.  The Company and its Restricted  Subsidiaries have filed all
tax returns that are required to have been filed in any  jurisdiction,  and have
paid all taxes shown to be due and  payable on such  returns and all other taxes
and  assessments  levied  upon  them or  their  properties,  assets,  income  or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (a)
the amount of which is not individually or in the aggregate  Material or (b) the
amount,  applicability or validity of which is currently being contested in good
faith by  appropriate  proceedings  and with  respect to which the  Company or a
Restricted Subsidiary,  as the case may be, has established adequate reserves in
accordance  with  GAAP.  The  Company  knows of no basis  for any  other  tax or
assessment that could  reasonably be expected to have a Material Adverse Effect.
The  charges,  accruals  and  reserves  on the  books  of the  Company  and  its
Restricted  Subsidiaries  in respect of  Federal,  state or other  taxes for all
fiscal periods are adequate.

Section  5.10.Title  to  Property;   Leases.  The  Company  and  its  Restricted
Subsidiaries have good and sufficient title to their respective  properties that
individually  or in the aggregate are  Material,  including all such  properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported  to have been  acquired  by the Company or any  Restricted  Subsidiary
after said date (except as sold or otherwise  disposed of in the ordinary course
of business),  in each case free and clear of Liens that  individually or in the
aggregate would have a Material Adverse Effect.  All leases that individually or
in the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.

Section 5.11.Licenses, Permits, Etc.  Except as disclosed in Schedule 5.11,

                   (a)  the  Company  and  its  Restricted  Subsidiaries  own or
         possess all licenses,  permits,  franchises,  authorizations,  patents,
         copyrights,  service  marks,  trademarks  and  trade  names,  or rights
         thereto,  that  individually or in the aggregate are Material,  without
         known conflict with the rights of others;

                   (b) to the best  knowledge of the Company,  no product of the
         Company or any of its Restricted Subsidiaries infringes in any material
         respect  any  license,  permit,   franchise,   authorization,   patent,
         copyright,  service mark, trademark, trade name or other right owned by
         any other Person; and

                   (c)  to  the  best  knowledge  of the  Company,  there  is no
         Material  violation by any Person of any right of the Company or any of
         its  Restricted  Subsidiaries  with  respect to any patent,  copyright,
         service mark, trademark, trade name or other right owned or used by the
         Company or any of its Restricted Subsidiaries.

Section  5.12.Compliance  with ERISA.  (a) The Company and each ERISA  Affiliate
have operated and administered  each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could not
reasonably  be  expected  to result in a Material  Adverse  Effect.  Neither the
Company nor any ERISA  Affiliate has incurred any liability  pursuant to Title I
or IV of ERISA or the penalty or excise tax  provisions  of the Code relating to
employee  benefit  plans  (as  defined  in  Section 3 of  ERISA),  and no event,
transaction  or  condition  has  occurred  or exists  that could  reasonably  be
expected to result in the incurrence of any such liability by the Company or any
ERISA  Affiliate,  or in the  imposition  of  any  Lien  on  any of the  rights,
properties  or assets of the  Company  or any ERISA  Affiliate,  in either  case
pursuant to Title I or IV of ERISA or to such  penalty or excise tax  provisions
or to Section  401(a)(29)  or 412 of the Code,  other than such  liabilities  or
Liens as would not be individually or in the aggregate Material.

           (b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans),  determined as of the end of such
Plan's most recently  ended plan year on the basis of the actuarial  assumptions
specified for funding  purposes in such Plan's most recent  actuarial  valuation
report,  did not exceed the  aggregate  current value of the assets of such Plan
allocable to such benefit  liabilities.  The term "benefit  liabilities" has the
meaning  specified  in Section 4001 of ERISA and the terms  "current  value" and
"present value" have the meanings specified in Section 3 of ERISA.

           (c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities  (and are not subject to contingent  withdrawal  liabilities)  under
Section  4201  or  4204  of  ERISA  in  respect  of  Multiemployer   Plans  that
individually or in the aggregate are Material.

           (d) The expected post-retirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial  Accounting  Standards  Board  Statement  No. 106,  without  regard to
liabilities  attributable to continuation  coverage mandated by Section 4980B of
the Code) of the Company and its Restricted Subsidiaries is not Material.

           (e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction  that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of each Purchaser's  representation  in Section
6.2 as to the sources of the funds to be used to pay the  purchase  price of the
Notes to be purchased by such Purchaser.

Section  5.13.Private  Offering by the  Company.  Neither the Company nor anyone
acting on its behalf has offered the Notes or any  similar  securities  for sale
to, or solicited any offer to buy any of the same from, or otherwise  approached
or negotiated in respect  thereof with, any Person other than the Purchasers and
not more than 55 other institutional  investors,  each of which has been offered
the Notes at a private  sale for  investment.  Neither  the  Company  nor anyone
acting on its behalf has taken,  or will take, any action that would subject the
issuance or sale of the Notes to the  registration  requirements of Section 5 of
the Securities Act.

Section  5.14.Use of Proceeds;  Margin  Regulations.  The Company will apply the
proceeds of the sale of the Notes as set forth in Schedule  5.14. No part of the
proceeds  from  the  sale of the  Notes  hereunder  will be  used,  directly  or
indirectly,  for the purpose of buying or carrying  any margin  stock within the
meaning of Regulation U of the Board of Governors of the Federal  Reserve System
(12 CFR 221),  or for the  purpose  of  buying or  carrying  or  trading  in any
securities under such  circumstances as to involve the Company in a violation of
Regulation  X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation  of  Regulation  T of said Board (12 CFR 220).  Margin  stock does not
constitute more than 0% of the value of the  consolidated  assets of the Company
and its  Restricted  Subsidiaries  and the  Company  does not  have any  present
intention  that margin stock will  constitute  more than 0% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.

Section 5.15.Existing Indebtedness; Future Liens. (a) Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the Company and its
Restricted  Subsidiaries as of June 30, 1998, since which date there has been no
Material  change in the amounts,  interest  rates,  sinking  funds,  installment
payments or  maturities  of the  Indebtedness  of the Company or its  Restricted
Subsidiaries.  Neither the Company nor any  Restricted  Subsidiary is in default
and no waiver of default is currently in effect, in the payment of any principal
or interest on any Indebtedness of the Company or such Restricted Subsidiary and
no event or condition  exists with respect to any Indebtedness of the Company or
any Restricted Subsidiary that would permit (or that with notice or the lapse of
time, or both,  would permit) one or more Persons to cause such  Indebtedness to
become  due and  payable  before  its stated  maturity  or before its  regularly
scheduled dates of payment.

           (b) Except as disclosed in Schedule 5.15, neither the Company nor any
Restricted  Subsidiary  has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,  whether
now owned or  hereafter  acquired,  to be  subject  to a Lien not  permitted  by
Section 10.4.

Section  5.16.Foreign Assets Control  Regulations,  Etc. Neither the sale of the
Notes by the Company  hereunder nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations  of the United  States  Treasury  Department  (31 CFR,  Subtitle  B,
Chapter V, as amended) or any enabling  legislation or executive  order relating
thereto.

Section  5.17.Status  under  Certain  Statutes.  Neither  the  Company  nor  any
Restricted  Subsidiary is an "investment  company"  registered or required to be
registered under the Investment  Company Act of 1940, as amended,  or is subject
to regulation  under the Public Utility Holding Company Act of 1935, as amended,
the ICC  Termination  Act of 1995,  as  amended,  or the  Federal  Power Act, as
amended.

Section  5.18.Environmental  Matters.  Neither the  Company  nor any  Restricted
Subsidiary  has  knowledge of any claim or has received any notice of any claim,
and no proceeding has been  instituted  raising any claim against the Company or
any of its Restricted  Subsidiaries  or any of their  respective real properties
now or  formerly  owned,  leased  or  operated  by any of them or other  assets,
alleging any damage to the environment or violation of any  Environmental  Laws,
except,  in each case,  such as could not  reasonably be expected to result in a
Material  Adverse  Effect.  Except as otherwise  disclosed to each  Purchaser in
writing:

                   (a) neither the Company  nor any  Restricted  Subsidiary  has
         knowledge  of any facts which  would give rise to any claim,  public or
         private,   of  violation  of  Environmental   Laws  or  damage  to  the
         environment  emanating from, occurring on or in any way related to real
         properties now or formerly owned,  leased or operated by any of them or
         to other assets or their use,  except,  in each case, such as could not
         reasonably be expected to result in a Material Adverse Effect;

                   (b)  neither   the   Company   nor  any  of  its   Restricted
         Subsidiaries has stored any Hazardous  Materials on real properties now
         or formerly owned, leased or operated by any of them or has disposed of
         any Hazardous  Materials in a manner contrary to any Environmental Laws
         in each case in any manner that could  reasonably be expected to result
         in a Material Adverse Effect; and

                   (c) all buildings on all real properties now owned, leased or
         operated by the Company or any of its  Restricted  Subsidiaries  are in
         compliance with applicable  Environmental Laws, except where failure to
         comply could not reasonably be expected to result in a Material Adverse
         Effect.


SECTION 6.               REPRESENTATIONS OF THE PURCHASER.

Section  6.1.Purchase for Investment.  Each Purchaser  represents that (a) it is
purchasing  the Notes for its own account or for one or more  separate  accounts
maintained  by it or for the  account of one or more  pension or trust funds and
not with a view to the  distribution  thereof,  provided that the disposition of
such  Purchaser's or such pension or trust funds' property shall at all times be
within such  Purchaser's or such pension or trust funds' control,  and (b) it is
an "accredited  investor"  within the meaning of Rule 501 of Regulation D of the
Securities  Act.  Each  Purchaser  understands  that  the  Notes  have  not been
registered  under  the  Securities  Act and  may be  resold  only if  registered
pursuant  to the  provisions  of the  Securities  Act  or if an  exemption  from
registration  is  available,  except  under  circumstances  where  neither  such
registration  nor such an  exemption is required by law, and that the Company is
not required to register the Notes.

Section 6.2.Source of Funds. Each Purchaser  represents that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source")  to be  used  by it to pay  the  purchase  price  of the  Notes  to be
purchased by it hereunder:

                   (a) the  Source is an  "insurance  company  general  account"
         within  the  meaning  of  Department  of Labor  Prohibited  Transaction
         Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
         benefit plan,  treating as a single plan,  all plans  maintained by the
         same  employer  or  employee  organization,  with  respect to which the
         amount  of  the  general  account  reserves  and  liabilities  for  all
         contracts held by or on behalf of such plan,  exceeds ten percent (10%)
         of  the  total  reserves  and   liabilities  of  such  general  account
         (exclusive of separate account  liabilities) plus surplus, as set forth
         in the NAIC Annual  Statement for such  Purchaser  most recently  filed
         with such Purchaser's state of domicile; or

                   (b) the  Source is either  (i) an  insurance  company  pooled
         separate  account,  within the meaning of PTE 90-1 (issued  January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and,  except as such Purchaser has
         disclosed to the Company in writing  pursuant to this paragraph (b), no
         employee benefit plan or group of plans maintained by the same employer
         or employee organization  beneficially owns more than 10% of all assets
         allocated  to such pooled  separate  account or  collective  investment
         fund; or

                   (c) the Source  constitutes  assets of an  "investment  fund"
         (within  the  meaning  of Part V of the QPAM  Exemption)  managed  by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM  Exemption),  no employee benefit plan's assets that
         are included in such investment  fund, when combined with the assets of
         all other employee benefit plans  established or maintained by the same
         employer or by an affiliate  (within the meaning of Section  V(c)(1) of
         the  QPAM   Exemption)  of  such  employer  or  by  the  same  employee
         organization  and managed by such QPAM,  exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part I(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a person controlling
         or  controlled  by the QPAM  (applying  the  definition of "control" in
         Section V(e) of the QPAM  Exemption)  owns a 5% or more interest in the
         Company  and (i) the  identity  of such  QPAM and (ii) the names of all
         employee  benefit  plans whose assets are  included in such  investment
         fund have been  disclosed  to the  Company in writing  pursuant to this
         paragraph (c); or

                   (d)     the Source is a governmental plan; or

                   (e) the Source is one or more employee  benefit  plans,  or a
         separate  account  or  trust  fund  comprised  of one or more  employee
         benefit  plans,  each of which has been  identified  to the  Company in
         writing pursuant to this paragraph (e);

                   (f)     the Source does not  include  assets of any  employee
         benefit  plan, other than a plan exempt from the coverage of ERISA; or

                  (g)  the  Source  is an  insurance  company  separate  account
         maintained solely in connection with the fixed contractual  obligations
         of the insurance company under which the amounts payable,  or credited,
         to  any  employee  benefit  plan  (or  its  related  trust)  and to any
         participant or  beneficiary of such plan  (including any annuitant) are
         not  affected  in any  manner  by  the  investment  performance  of the
         separate account.

If any Purchaser or any subsequent  transferee of the Notes  indicates that such
Purchaser  or such  transferee  is relying on any  representation  contained  in
paragraph  (b),  (c) or (e)  above,  the  Company  shall  deliver on the date of
Closing or on the date of transfer,  as applicable,  a certificate,  which shall
state  whether  (i) it is a party in  interest  or a  "disqualified  person" (as
defined in Section  4975(e)(2) of the Code), with respect to any plan identified
pursuant  to  paragraphs  (b) or (e)  above,  or (ii) with  respect to any plan,
identified  pursuant to paragraph (c) above,  whether it or any  "affiliate" (as
defined in Section V(c) of the QPAM  Exemption) has at such time, and during the
immediately  preceding one year, exercised the authority to appoint or terminate
said QPAM as manager of any plan identified in writing pursuant to paragraph (c)
above or to negotiate the terms of said QPAM's management agreement on behalf of
any such  identified  plan.  As used in this Section  6.2,  the terms  "employee
benefit plan",  "governmental  plan", "party in interest" and "separate account"
shall have the respective meanings assigned to such terms in Section 3 of ERISA.


SECTION 7.               INFORMATION AS TO COMPANY; STATUS OF SUBSIDIARIES.

Section  7.1.Financial  and Business  Information.  The Company shall deliver to
each holder of Notes that is an Institutional Investor:

                   (a)  Quarterly  Statements -- within 60 days after the end of
         each quarterly  fiscal period in each fiscal year of the Company (other
         than the last  quarterly  fiscal  period  of each  such  fiscal  year),
         duplicate copies of,

                            (i)     an  unaudited  consolidated  balance  sheet
                  of the Company  and its  Restricted
                  Subsidiaries as at the end of such quarter, and

                           (ii)  unaudited  consolidated  statements  of income,
                  changes in partners'  equity and cash flows of the Company and
                  its Restricted Subsidiaries, for such quarter and (in the case
                  of the  second  and third  quarters)  for the  portion  of the
                  fiscal year ending with such quarter,

         setting  forth in each case in  comparative  form the  figures  for the
         corresponding  periods in the previous  fiscal year,  all in reasonable
         detail,  prepared  in  accordance  with GAAP  applicable  to  quarterly
         financial  statements  generally,  and certified by a Senior  Financial
         Officer as fairly presenting,  in all material respects,  the financial
         position  of the  companies  being  reported  on and their  results  of
         operations  and cash flows,  subject to changes  resulting from normal,
         recurring year-end adjustments,  provided that delivery within the time
         period  specified above of copies of the Company's  Quarterly Report on
         Form 10-Q prepared in  compliance  with the  requirements  therefor and
         filed with the  Securities and Exchange  Commission  shall be deemed to
         satisfy the requirements of this Section 7.1(a);

                   (b)     Annual  Statements -- within 120 days after the end 
         of each fiscal year of the  Company,
         duplicate copies of,

     (i) a consolidated balance sheet of the Company
         and its  Restricted  Subsidiaries, as at the end of such year, and

                           (ii)     consolidated  statements of income, changes 
         in partners' equity and cash flows of the Company and its Restricted
         Subsidiaries, for such year,

         setting  forth in each case in  comparative  form the  figures  for the
         previous fiscal year, all in reasonable detail,  prepared in accordance
         with GAAP, and accompanied by

                            (A) an  opinion  thereon  of  independent  certified
                  public  accountants  of recognized  national  standing,  which
                  opinion  shall state that such  financial  statements  present
                  fairly, in all material  respects,  the financial  position of
                  the  companies  being  reported  upon  and  their  results  of
                  operations and cash flows and have been prepared in conformity
                  with GAAP,  and that the  examination  of such  accountants in
                  connection  with such  financial  statements  has been made in
                  accordance with generally  accepted  auditing  standards,  and
                  that such audit  provides a reasonable  basis for such opinion
                  in the circumstances, and

                            (B) a certificate of such  accountants  stating that
                  they have reviewed this Agreement and stating further whether,
                  in making their audit, they have become aware of any condition
                  or  event  that  then  constitutes  a  Default  or an Event of
                  Default,  and,  if they are aware that any such  condition  or
                  event  then  exists,  specifying  the nature and period of the
                  existence  thereof (it being  understood that such accountants
                  shall not be liable,  directly or indirectly,  for any failure
                  to obtain  knowledge of any Default or Event of Default unless
                  such  accountants  should have obtained  knowledge  thereof in
                  making an audit in accordance with generally accepted auditing
                  standards or did not make such an audit),

         provided that the delivery  within the time period  specified  above of
         the Company's Annual Report on Form 10-K for such fiscal year (together
         with the Company's  annual  report to  shareholders,  if any,  prepared
         pursuant to Rule 14a-3 under the Exchange  Act)  prepared in accordance
         with the  requirements  therefor  and  filed  with the  Securities  and
         Exchange  Commission,   together  with  the  accountant's   certificate
         described  in  clause  (B)  above,  shall  be  deemed  to  satisfy  the
         requirements of this Section 7.1(b);

                   (c) SEC and Other  Reports --  promptly  upon their  becoming
         available,   one  copy  of  each  regular  or  periodic  report,   each
         registration  statement (without exhibits except as expressly requested
         by such holder),  and each prospectus and all amendments  thereto filed
         by the Company or any  Restricted  Subsidiary  with the  Securities and
         Exchange Commission and of all press releases and other statements made
         available generally by the Company or any Restricted  Subsidiary to the
         public concerning developments that are Material;

                   (d) Notice of Default or Event of Default -- promptly, and in
         any  event  within  five  Business  Days  after a  Responsible  Officer
         becoming  aware of the  existence of any Default or Event of Default or
         that any Person has given any notice or taken any action  with  respect
         to a claimed default  hereunder or that any Person has given any notice
         or taken any  action  with  respect  to a claimed  default  of the type
         referred to in Section 11(f),  a written  notice  specifying the nature
         and period of  existence  thereof and what action the Company is taking
         or proposes to take with respect thereto;

                   (e) ERISA  Matters -- promptly,  and in any event within five
         Business Days after a Responsible  Officer becoming aware of any of the
         following,  a written  notice  setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                            (i) with respect to any Plan, any reportable  event,
                  as  defined in  section  4043(b) of ERISA and the  regulations
                  thereunder,  for  which  notice  thereof  has not been  waived
                  pursuant to such  regulations as in effect on the date hereof;
                  or

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

                          (iii) any event,  transaction  or condition that could
                  result in the  incurrence  of any  liability by the Company or
                  any ERISA Affiliate  pursuant to Title I or IV of ERISA or the
                  penalty  or excise  tax  provisions  of the Code  relating  to
                  employee  benefit  plans,  or in the imposition of any Lien on
                  any of the rights,  properties or assets of the Company or any
                  ERISA  Affiliate  pursuant  to  Title I or IV of ERISA or such
                  penalty or excise tax  provisions,  if such liability or Lien,
                  taken  together with any other such  liabilities or Liens then
                  existing,  could  reasonably  be  expected  to have a Material
                  Adverse Effect;

                   (f) Notices from Governmental  Authority -- promptly,  and in
         any event  within 30 days of receipt  thereof,  copies of any notice to
         the  Company or any  Restricted  Subsidiary  from any  Federal or state
         Governmental  Authority relating to any order, ruling, statute or other
         law or regulation that could  reasonably be expected to have a Material
         Adverse Effect; and

                   (g) Requested Information -- with reasonable promptness, such
         other  data  and  information  relating  to the  business,  operations,
         affairs,  financial  condition,  assets or properties of the Company or
         any of its  Restricted  Subsidiaries  or relating to the ability of the
         Company to perform  its  obligations  hereunder  and under the Notes as
         from time to time may be  reasonably  requested  by any such  holder of
         Notes.

Section 7.2.Officer's Certificate. Each set of financial statements delivered to
a holder of Notes  pursuant to Section  7.1(a) or Section 7.1(b) hereof shall be
accompanied by a certificate of a Senior Financial Officer setting forth:

                   (a)  Covenant   Compliance  --  the  information   (including
         detailed  calculations)  required  in order to  establish  whether  the
         Company was in compliance with the requirements of Section 10.1 through
         Section 10.8 hereof,  inclusive,  during the quarterly or annual period
         covered by the statements then being furnished  (including with respect
         to each such Section, where applicable, the calculations of the maximum
         or minimum amount, ratio or percentage, as the case may be, permissible
         under the terms of such  Sections,  and the  calculation of the amount,
         ratio or percentage then in existence); and

                   (b) Event of Default -- a  statement  that such  officer  has
         reviewed the relevant  terms hereof and has made, or caused to be made,
         under  his  or her  supervision,  a  review  of  the  transactions  and
         conditions  of the Company  and its  Restricted  Subsidiaries  from the
         beginning of the quarterly or annual period  covered by the  statements
         then  being  furnished  to the date of the  certificate  and that  such
         review shall not have disclosed the existence during such period of any
         condition  or event that  constitutes  a Default or an Event of Default
         or,  if any such  condition  or event  existed  or  exists  (including,
         without  limitation,  any such event or  condition  resulting  from the
         failure of the Company or any Restricted  Subsidiary to comply with any
         Environmental  Law),  specifying  the nature  and  period of  existence
         thereof  and what  action the  Company  shall have taken or proposes to
         take with respect thereto.

Section  7.3.Inspection.  The Company shall permit the  representatives  of each
holder of Notes that is an Institutional Investor:

                   (a) No Default  -- if no  Default  or Event of  Default  then
         exists,  at the expense of such holder and upon reasonable prior notice
         to the Company, to visit the principal executive office of the Company,
         to discuss the  affairs,  finances  and accounts of the Company and its
         Restricted  Subsidiaries  with the  Company's  officers,  and (with the
         consent  of  the  Company,  which  consent  will  not  be  unreasonably
         withheld) its independent public accountants,  and (with the consent of
         the Company,  which consent will not be unreasonably withheld) to visit
         the other  offices and  properties  of the Company and each  Restricted
         Subsidiary,  all  at  such  reasonable  times  and as  often  as may be
         reasonably requested in writing; and

                   (b) Default -- if a Default or Event of Default  then exists,
         at the expense of the Company,  to visit and inspect any of the offices
         or properties of the Company or any Restricted  Subsidiary,  to examine
         all their  respective  books of  account,  records,  reports  and other
         papers,  to make copies and extracts  therefrom,  and to discuss  their
         respective  affairs,   finances  and  accounts  with  their  respective
         officers and independent  public accountants (and by this provision the
         Company  authorizes said  accountants to discuss the affairs,  finances
         and accounts of the Company and its  Restricted  Subsidiaries),  all at
         such times and as often as may be requested.

Section 7.4.Change in Status of Subsidiaries. (a) So long as no Default or Event
of Default  shall have occurred and be  continuing,  the Company may at any time
and from time to time, upon not less than 30 days' prior written notice given to
each Holder,  designate a previously  Restricted  Subsidiary as an  Unrestricted
Subsidiary or a previously  Unrestricted  Subsidiary (including a new Subsidiary
designated  on the date of its  formation or  acquisition)  which  satisfies the
requirements  of clauses (i), (ii) and (iii) of the  definition  of  "Restricted
Subsidiary" as a Restricted  Subsidiary,  provided that  immediately  after such
designation and after giving effect thereto no Default or Event of Default shall
have  occurred  and  be  continuing,   and  provided  further  that  after  such
designation the status of such Subsidiary had not been changed more than twice.

           (b) Any notice of  designation  pursuant to this Section 7.4 shall be
accompanied  by a  certificate  signed by a  Responsible  Officer of the Company
stating  that the  provisions  of this  Section 7.4 have been  complied  with in
connection  with such  designation  and  setting  forth  the name of each  other
Subsidiary  (if any)  which has or will  become a  Restricted  Subsidiary  or an
Unrestricted Subsidiary, as the case may be, as a result of such designation.


SECTION 8.               PREPAYMENT OF THE NOTES.

Section 8.1.Prepayments. The entire outstanding principal amount of the Series A
Notes shall be due on August 1, 2005, the entire outstanding principal amount of
the  Series B Notes  shall be due on  August 1,  2006,  the  entire  outstanding
principal  amount of the  Series C Notes  shall be due on August  1,  2008,  the
entire outstanding principal amount of the Series D Notes shall be due on August
1, 2010, and the entire outstanding principal amount of the Series E Notes shall
be due on August 1, 2013.  Except as set forth in Section 8.2, the Notes may not
be prepaid prior to maturity at the option of the Company.

Section 8.2.Optional Prepayments with Make-Whole Amount. The Company may, at its
option,  upon notice as provided below,  prepay at any time all, or from time to
time any part of, the Notes of any series, in an amount not less than $5,000,000
in the case of a partial  prepayment  of any  series,  at 100% of the  principal
amount so prepaid,  together with interest  accrued  thereon to the date of such
prepayment,  plus the Make-Whole  Amount determined for the prepayment date with
respect to such principal amount.  The Company will give each holder of Notes of
any series being prepaid written notice of each optional  prepayment  under this
Section  8.2 not less than 30 days and not more  than 60 days  prior to the date
fixed for such  prepayment.  Each such  notice  shall  specify  such  date,  the
aggregate  principal  amount of the Notes of such  series to be  prepaid on such
date, the principal amount of each Note of such series held by such holder to be
prepaid (determined in accordance with Section 8.3), and the interest to be paid
on the prepayment date with respect to such principal amount being prepaid,  and
shall be accompanied by a certificate  of a Senior  Financial  Officer as to the
estimated  Make-Whole Amount due in connection with such prepayment  (calculated
as if the date of such notice were the date of the  prepayment),  setting  forth
the details of such computation. Two Business Days prior to such prepayment, the
Company  shall  deliver  to each  holder  of  Notes a  certificate  of a  Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.

Section  8.3.Allocation  of  Partial  Prepayments.  In the case of each  partial
prepayment of the Notes of any series, the principal amount of the Notes of such
series to be prepaid shall be allocated among all of the Notes of such series at
the time outstanding in proportion, as nearly as practicable,  to the respective
unpaid principal amounts thereof not theretofore called for prepayment.

Section 8.4.Maturity; Surrender, Etc. In the case of each prepayment of Notes of
any series pursuant to this Section 8, the principal amount of each Note of such
series to be prepaid  shall  mature and become due and payable on the date fixed
for such prepayment,  together with interest on such principal amount accrued to
such date and the  applicable  Make-Whole  Amount,  if any.  From and after such
date, unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as aforesaid,
interest  on such  principal  amount  shall  cease to  accrue.  Any Note paid or
prepaid in full shall be  surrendered to the Company and cancelled and shall not
be reissued, and no Note shall be issued in lieu of any prepaid principal amount
of any Note.

Section  8.5.Purchase  of Notes.  The  Company  will not and will not permit any
Affiliate  to  purchase,  redeem,  prepay  or  otherwise  acquire,  directly  or
indirectly,  any of the outstanding  Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement,  and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate  pursuant
to any payment,  prepayment  or purchase of Notes  pursuant to any  provision of
this  Agreement and no Notes may be issued in  substitution  or exchange for any
such Notes.

Section  8.6.Make-Whole Amount. The term "Make-Whole Amount" means, with respect
to any Note, an amount equal to the excess,  if any, of the Discounted  Value of
the Remaining  Scheduled  Payments with respect to the Called  Principal of such
Note over the amount of such  Called  Principal,  provided  that the  Make-Whole
Amount may in no event be less than zero.  For the purposes of  determining  the
Make-Whole Amount, the following terms have the following meanings:

                  "Called  Principal"  means,  with  respect  to any  Note,  the
         principal of such Note that is to be prepaid pursuant to Section 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "Discounted Value" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called  Principal  from their  respective
         scheduled due dates to the Settlement  Date with respect to such Called
         Principal,  in  accordance  with accepted  financial  practice and at a
         discount  factor  (applied on the same periodic  basis as that on which
         interest on the Notes is payable) equal to the Reinvestment  Yield with
         respect to such Called Principal.

                  "Reinvestment   Yield"  means,  with  respect  to  the  Called
         Principal of any Note,  0.50% over the yield to maturity implied by (i)
         the  yields  reported,  as of 10:00  A.M.  (New York City  time) on the
         second  Business Day preceding the Settlement Date with respect to such
         Called  Principal,  on the  display  designated  as  "Page  500" on the
         Telerate  Access Service (or such other display as may replace Page 500
         on the  Telerate  Access  Service) for  actively  traded U.S.  Treasury
         securities  having a maturity  equal to the  Remaining  Average Life of
         such  Called  Principal  as of such  Settlement  Date,  or (ii) if such
         yields are not  reported  as of such time or the yields  reported as of
         such time are not ascertainable,  the Treasury Constant Maturity Series
         Yields reported,  for the latest day for which such yields have been so
         reported as of the second  Business Day preceding the  Settlement  Date
         with respect to such Called Principal,  in Federal Reserve  Statistical
         Release  H.15  (519)  (or any  comparable  successor  publication)  for
         actively traded U.S.  Treasury  securities  having a constant  maturity
         equal to the Remaining Average Life of such Called Principal as of such
         Settlement  Date. Such implied yield will be determined,  if necessary,
         by (a)  converting  U.S.  Treasury bill  quotations to  bond-equivalent
         yields  in  accordance  with  accepted   financial   practice  and  (b)
         interpolating  linearly  between (1) the actively traded U.S.  Treasury
         security  with the maturity  closest to and greater than the  Remaining
         Average Life and (2) the actively  traded U.S.  Treasury  security with
         the maturity closest to and less than the Remaining Average Life.

                  "Remaining  Average  Life"  means,  with respect to any Called
         Principal,  the number of years (calculated to the nearest  one-twelfth
         year) obtained by dividing (i) such Called  Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal  component of
         each Remaining  Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will  elapse  between  the  Settlement  Date with  respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "Remaining  Scheduled  Payments"  means,  with  respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest  thereon  that  would be due  after the  Settlement  Date with
         respect to such Called Principal if no payment of such Called Principal
         were  made  prior to its  scheduled  due  date,  provided  that if such
         Settlement Date is not a date on which interest  payments are due to be
         made  under  the  terms  of the  Notes,  then  the  amount  of the next
         succeeding  scheduled interest payment will be reduced by the amount of
         interest  accrued to such  Settlement  Date and  required to be paid on
         such Settlement Date pursuant to Section 8.2 or 12.1.

                  "Settlement  Date" means, with respect to the Called Principal
         of any Note,  the date on which such Called  Principal is to be prepaid
         pursuant to Section 8.2 or has become or is declared to be  immediately
         due and payable pursuant to Section 12.1, as the context requires.


SECTION 9.               AFFIRMATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are outstanding:

Section  9.1.Compliance  with Law. The Company will,  and will cause each of its
Subsidiaries  to,  comply with all laws,  ordinances  or  governmental  rules or
regulations  to which each of them is subject,  including,  without  limitation,
Environmental  Laws,  and will  obtain  and  maintain  in effect  all  licenses,
certificates,   permits,   franchises  and  other  governmental   authorizations
necessary to the ownership of their  respective  properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance  with such laws,  ordinances or governmental rules or regulations
or  failures  to  obtain or  maintain  in effect  such  licenses,  certificates,
permits,   franchises   and  other   governmental   authorizations   could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

Section  9.2.Insurance.  The Company will, and will cause each of its Restricted
Subsidiaries  to,  maintain,  with  financially  sound and  reputable  insurers,
insurance with respect to their  respective  properties  and businesses  against
such  casualties  and  contingencies,  of such types,  on such terms and in such
amounts (including  deductibles,  co-insurance and  self-insurance,  if adequate
reserves are  maintained  with  respect  thereto) as is customary in the case of
entities of established  reputations  engaged in the same or a similar  business
and similarly  situated and consistent with the existing practice of the Company
and its Restricted Subsidiaries as of the date hereof.

Section 9.3.Maintenance of Properties.  The Company will, and will cause each of
its Restricted Subsidiaries to, maintain and keep, or cause to be maintained and
kept,  their respective  properties in good repair,  working order and condition
(other  than  ordinary  wear and  tear),  so that  the  business  carried  on in
connection therewith may be properly conducted at all times,  provided that this
Section  shall  not  prevent  the  Company  or any  Restricted  Subsidiary  from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance  is  desirable in the conduct of its business and the Company has
concluded that such discontinuance could not,  individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

Section  9.4.Payment  of Taxes.  The  Company  will,  and will cause each of its
Subsidiaries  to, file all tax returns  required to be filed in any jurisdiction
and to pay and  discharge  all taxes shown to be due and payable on such returns
and all other taxes,  assessments,  governmental  charges,  or levies imposed on
them or any of their  properties,  assets,  income or franchises,  to the extent
such taxes and  assessments  have  become due and  payable  and before they have
become delinquent and all claims for which sums have become due and payable that
have or might  become a Lien on  properties  or  assets  of the  Company  or any
Subsidiary,  provided that neither the Company nor any  Subsidiary  need pay any
such tax or  assessment or claims if (i) the amount,  applicability  or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in  appropriate  proceedings,  and the  Company  or a  Subsidiary  has
established  adequate  reserves therefor in accordance with GAAP on the books of
the  Company or such  Subsidiary  or (ii) the  nonpayment  of all such taxes and
assessments in the aggregate could not reasonably be expected to have a Material
Adverse Effect.

Section 9.5.Partnership  Existence,  Etc. The Company will at all times preserve
its existence and its status as a partnership  and keep in full force and effect
its  partnership  existence  and its status as a  partnership  not  taxable as a
corporation for U.S.  federal income tax purposes.  Subject to Sections 10.7 and
10.8,  the Company will at all times  preserve and keep in full force and effect
the  corporate  or  partnership  existence,  as the case may be,  of each of its
Restricted  Subsidiaries  (unless  merged  into  the  Company  or  a  Restricted
Subsidiary)  and all rights and  franchises  of the Company  and its  Restricted
Subsidiaries  unless, in the good faith judgment of the Company, the termination
of or failure to preserve  and keep in full force and effect such  corporate  or
partnership  existence,  right or franchise  could not,  individually  or in the
aggregate, have a Material Adverse Effect.

Section 9.6.Ranking. The Company will ensure that, at all times, all liabilities
of the Company  under the Notes will rank in right of payment  either pari passu
or senior to all other Debt of the Company except for Debt which is preferred as
a result of being  secured as  permitted  by Section  10.4 (but then only to the
extent of such security).


SECTION 10.              NEGATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are outstanding:

Section  10.1.Incurrence  of Debt. The Company will not, and will not permit any
Restricted  Subsidiary  to,  directly  or  indirectly,  create,  incur,  assume,
guarantee,  or otherwise  become directly or indirectly  liable with respect to,
any Debt, other than:

                   (a)     Debt evidenced by the Notes;

                   (b)  Debt  of the  Company  and its  Restricted  Subsidiaries
         outstanding  on the date of the Closing and  disclosed in Schedule 5.15
         (other than Debt of the Company under the Credit Agreement or under the
         MLP Note Guaranty  referred to in Section  10.2),  and any  extensions,
         refundings,  renewals and refinancings (collectively,  a "Refinancing")
         thereof,  provided that (i) the principal  amount of the Debt resulting
         from such Refinancing shall not exceed the outstanding principal amount
         of such Debt being  Refinanced,  together with any accrued interest and
         premium with respect thereto and any and all costs and expenses related
         to such Refinancing,  (ii) the maturity date of the Debt resulting from
         such  Refinancing  shall not be earlier than the  maturity  date of the
         Debt being  Refinanced,  (iii) the average life to maturity of the Debt
         resulting from such Refinancing shall not be less than the average life
         to maturity of the Debt being  Refinanced  and (iv) no Default or Event
         of Default exists at the time of such Refinancing;

                   (c) Debt of the Company and its Restricted Subsidiaries if on
         the date the Company or such Restricted  Subsidiary becomes liable with
         respect to any such Debt and  immediately  after giving effect  thereto
         and the concurrent retirement of any other Debt:

                            (i)     no Default or Event of Default exists; and

                           (ii)     any such Debt of a  Restricted  Subsidiary  
         is  permitted  pursuant  to Section 10.3; and

                          (iii)  the  ratio of  Consolidated  Cash  Flow for the
                  period of four consecutive  fiscal quarters ending on, or most
                  recently  ended prior to, such date to  Consolidated  Interest
                  Expense is not less than 2.25 to 1; and

                           (iv) the ratio of  Consolidated  Debt to Consolidated
                  Cash Flow for the period of four  consecutive  fiscal quarters
                  ending on, or most  recently  ended prior to, such date is not
                  greater than 5.00 to 1;

                   (d)  Debt  of the  Company  and its  Restricted  Subsidiaries
         incurred under a Working  Capital  Facility if, on the date the Company
         or such Restricted  Subsidiary  becomes liable with respect to any such
         Debt and  immediately  after giving effect  thereto and the  concurrent
         retirement of any other such Debt, the Debt outstanding thereunder will
         not exceed  Consolidated  Cash Flow for the period of four  consecutive
         fiscal  quarters ending on, or most recently ended prior to, such date,
         provided  that there shall have been during the  immediately  preceding
         four  consecutive  fiscal  quarters a period of at least 30 consecutive
         days on each of which the Company and its Restricted Subsidiaries would
         have been  permitted  to (but did not) incur on such day under  Section
         10.1(c)  (without  reference  to the  condition  stated in  clause  (i)
         thereof)  Debt in the  amount  of the  average  daily  balance  of Debt
         outstanding  under the Working Capital Facility for such 30-day period,
         provided  further  that any such  Debt of a  Restricted  Subsidiary  is
         permitted pursuant to Section 10.3;

                   (e)  Subordinated  Debt of the  Company  if on the  date  the
         Company becomes liable with respect to any such  Subordinated  Debt and
         immediately  after giving effect thereto and the concurrent  retirement
         of any other Debt, the aggregate amount of all outstanding Subordinated
         Debt of the Company shall not exceed $50,000,000;

                   (f) Debt of the Company and its Restricted  Subsidiaries to a
         seller of assets or shares  purchased by the Company or any  Restricted
         Subsidiary  if on the date the Company  becomes  liable with respect to
         any such Debt and  immediately  after  giving  effect  thereto  and the
         concurrent  retirement of any other Debt,  the aggregate  amount of all
         outstanding Debt of the Company to all such sellers of assets or shares
         shall not exceed $60,000,000, provided that the agreement or instrument
         pursuant  to which such Debt is  incurred  (i)  contains  no  financial
         covenants   more   restrictive   on  the  Company  or  its   Restricted
         Subsidiaries  than those  contained in this Agreement and (ii) contains
         no events of default (other than in respect of payment of principal and
         interest on such Debt and in respect of the accuracy of representations
         and  warranties  made by the  Company  or its  Restricted  Subsidiaries
         thereunder)  which are capable of occurring  prior to the occurrence of
         any Event of Default,  and provided,  further,  that any such Debt of a
         Restricted Subsidiary is permitted pursuant to Section 10.3; and

                   (g) Debt of the Company under the "Facility B Commitments" or
         the "Facility C Commitments" pursuant to the Credit Agreement if on the
         date the  Company  becomes  liable  with  respect  to any such Debt and
         immediately  after giving effect thereto and the concurrent  retirement
         of any other Debt, the incurrence of such Debt would be permitted under
         Section  10.1(c) and any  Refinancing  thereof,  provided  that (i) the
         principal amount of the Debt resulting from such Refinancing  shall not
         exceed the outstanding  principal amount of such Debt being Refinanced,
         together with any accrued interest and premium with respect thereto and
         any and all costs and expenses  related to such  Refinancing,  (ii) the
         maturity date of the Debt resulting from such Refinancing  shall not be
         earlier than the maturity date of the Debt being Refinanced,  (iii) the
         average life to maturity of the Debt  resulting  from such  Refinancing
         shall not be less than the  average  life to maturity of the Debt being
         Refinanced,  and (iv) the other terms  applicable to the Debt resulting
         from such Refinancing shall not be more onerous to the Company than the
         terms  applicable to the Debt being  Refinanced,  provided further that
         the aggregate amount of all such Debt of the Company  permitted by this
         clause (g) shall not exceed $75,000,000.

For the  purposes  of this  Section  10.1,  any  Person  becoming  a  Restricted
Subsidiary  after the date  hereof  shall be  deemed,  at the time it  becomes a
Restricted  Subsidiary,  to have incurred all of its then outstanding  Debt, and
any Person  Refinancing  any Debt shall be deemed to have  incurred such Debt at
the time of such Refinancing.

Section  10.2.Guaranty  of MLP Notes.  The Company  will not permit the Guaranty
executed in favor of the holders of the 9-3/8% Senior  Secured  Notes,  due 2006
(the "MLP Senior  Notes")  issued by Ferrellgas  Partners,  L.P. (the "MLP Notes
Guaranty")  to become  effective  pursuant  to the terms  thereof as long as any
obligations, indebtedness or otherwise, of the Company are outstanding under the
Notes. Accordingly, the earliest date that the Subsidiary Guaranty Effectiveness
Date (as defined in the  Indenture  pursuant to which the MLP Senior  Notes were
issued) can occur is 91 days following the indefeasible discharge in full of all
of the obligations of the Company under the Notes and this Agreement.

Section 10.3.Restricted Subsidiary Debt. The Company will not at any time permit
any Restricted  Subsidiary to, directly or indirectly,  create,  incur,  assume,
guarantee,  have  outstanding,   or  otherwise  become  or  remain  directly  or
indirectly liable with respect to, any Debt other than:

                   (a)     Debt of a Restricted Subsidiary permitted pursuant to
                           Section 10.1(b);

                   (b)     Debt of a Restricted Subsidiary to the Company or a
                           Wholly-Owned Restricted Subsidiary;

                   (c) secured Debt of a Restricted  Subsidiary secured by Liens
         permitted by Section  10.4(h),  and any Refinancing  thereof,  provided
         that  (i)  the  principal  amount  of  the  Debt  resulting  from  such
         Refinancing  shall not exceed the outstanding  principal amount of such
         Debt being  Refinanced,  together with any accrued interest and premium
         with respect thereto and any and all costs and expenses related to such
         Refinancing,  (ii) the maturity  date of the Debt  resulting  from such
         Refinancing  shall not be earlier  than the  maturity  date of the Debt
         being  Refinanced,  (iii)  the  average  life to  maturity  of the Debt
         resulting from such Refinancing shall not be less than the average life
         to maturity of the Debt being  Refinanced  and (iv) no Default or Event
         of Default exists at the time of such Refinancing;

                   (d)  Debt of a  Restricted  Subsidiary  in  addition  to that
         otherwise  permitted by the foregoing  provisions of this Section 10.3,
         provided that on the date the Restricted Subsidiary incurs or otherwise
         becomes liable with respect to any such additional Debt and immediately
         after giving effect thereto and the concurrent  retirement of any other
         Debt,

                            (i)     no Default or Event of Default exists, and

                           (ii)     Priority Debt does not exceed 12.5% of 
          Consolidated Assets.

         For the purposes of this Section 10.3, any Person becoming a Restricted
Subsidiary  after the date  hereof  shall be  deemed,  at the time it  becomes a
Restricted  Subsidiary,  to have incurred all of its then outstanding  Debt, and
any Person  Refinancing  any Debt shall be deemed to have  incurred such Debt at
the time of such  Refinancing.  Also for purposes of this Section 10.3, the Debt
of any  Restricted  Subsidiary to any  Wholly-Owned  Restricted  Subsidiary  the
shares of which are sold by the Company pursuant to Section  10.8(c)(1)(B) shall
be deemed to have been incurred at the time of such sale.

Section  10.4.Liens.  The  Company  will  not,  and will not  permit  any of its
Restricted  Subsidiaries  to, directly or indirectly  create,  incur,  assume or
permit to exist (upon the happening of a contingency  or otherwise)  any Lien on
or with respect to any property or asset  (including,  without  limitation,  any
document  or  instrument  in respect  of goods or  accounts  receivable)  of the
Company  or any  such  Restricted  Subsidiary,  whether  now  owned  or  held or
hereafter acquired,  or any income or profits therefrom,  or assign or otherwise
convey any right to receive income or profits, except:

                   (a)     Liens for property taxes,  assessments or other
         governmental  charges which are not yet due and payable;

                   (b)  statutory  Liens of  landlords  and  Liens of  carriers,
         warehousemen,  mechanics,  materialmen and other similar Liens, in each
         case,  incurred in the ordinary course of business for sums not yet due
         and payable;

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

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

                   (e)  leases  or  subleases  granted  to  others,   easements,
         rights-of-way,  restrictions and other similar charges or encumbrances,
         in each case  incidental  to, and not  interfering  with,  the ordinary
         conduct  of the  business  of  the  Company  or  any of its  Restricted
         Subsidiaries,  provided  that  such  Liens  do not,  in the  aggregate,
         materially detract from the value of such property or impair the use of
         such property;

                   (f)     Liens on  property  or  assets  of the  Company  or 
         any of its  Restricted  Subsidiaries securing Debt owing to the 
          Company or to a Wholly-Owned Restricted Subsidiary;

                   (g)     Liens  existing on the date of the Closing and  
         securing the Debt of the Company and its Restricted Subsidiaries shown
         as having "Security" pledged on Schedule 5.15;

                   (h)  any  Lien  created  to  secure  all or any  part  of the
         purchase price, or to secure Debt incurred or assumed to pay all or any
         part of the purchase price or cost of construction, of property (or any
         improvement  thereon)  acquired  or  constructed  by the  Company  or a
         Restricted Subsidiary after the date of the Closing, provided that

                            (i)     any such Lien shall  extend  solely to the 
         item or items of such  property  (or improvement thereon) so acquired 
         or constructed,

                           (ii) the principal  amount of the Debt secured by any
                  such  Lien  shall at no time  exceed  an  amount  equal to the
                  lesser  of (A) the  cost  to the  Company  or such  Restricted
                  Subsidiary  of  the  property  (or  improvement   thereon)  so
                  acquired  or  constructed  and (B) the Fair  Market  Value (as
                  determined  in good  faith by the  board of  directors  of the
                  General Partner) of such property (or improvement  thereon) at
                  the time of such acquisition or construction, and

                          (iii)     any such Lien  shall be  created  
                   contemporaneously  with,  or within  270 days
                  after, the acquisition or construction of such property;

                   (i)     Liens on property or assets of any Restricted  
               Subsidiary  securing  Indebtedness  owing
         to the Company or to a Wholly-Owned Restricted Subsidiary;

                   (j) any Lien  existing on  property  of a Person  immediately
         prior to its being  consolidated  with or merged  into the Company or a
         Restricted Subsidiary, or any Lien existing on any property acquired by
         the Company or any  Restricted  Subsidiary at the time such property is
         so acquired  (whether or not the Debt secured  thereby  shall have been
         assumed),  provided  that (i) no such Lien shall  have been  created or
         assumed  in  contemplation  of such  consolidation  or  merger  or such
         acquisition of property, and (ii) each such Lien shall extend solely to
         the item or items of property so acquired;

                   (k) Liens on personal property leased under leases (including
         synthetic  leases)  entered into by the Company which are accounted for
         as operating leases in accordance with GAAP;

                   (l) any  Lien  renewing,  extending  or  refunding  any  Lien
         permitted by paragraphs (g), (h) or (j) of this Section 10.4,  provided
         that (i) the principal  amount of Debt secured by such Lien immediately
         prior to such  extension,  renewal or refunding is not increased or the
         maturity thereof  reduced,  (ii) such Lien is not extended to any other
         property,  and (iii)  immediately  after  such  extension,  renewal  or
         refunding no Default or Event of Default would exist; and

                   (m) other Liens  securing  Debt not  otherwise  permitted  by
         paragraphs (a) through (l),  provided that on the date any such Lien is
         created, incurred or assumed and immediately after giving effect to the
         incurrence  of any related Debt and the  concurrent  retirement  of any
         other Debt, Priority Debt does not exceed 12.5% of Consolidated Assets.

For the  purposes  of this  Section  10.4,  any  Person  becoming  a  Restricted
Subsidiary after the date of this Agreement shall be deemed to have incurred all
of its then  outstanding  Liens at the time it becomes a Restricted  Subsidiary,
and any Person  Refinancing any Debt secured by any Lien shall be deemed to have
incurred such Lien at the time of such Refinancing.

Section 10.5.Restricted Payments.

           (a) Limitation.  The Company will not, and will not permit any of its
Restricted Subsidiaries to, at any time, declare or make, or incur any liability
to declare or make,  any Restricted  Payment  provided that the Company may make
one Restricted Payment in each fiscal quarter if:

                   (i)     the amount of such Restricted Payment would not 
 exceed the sum of

                            (A)     Available Cash for the immediately preceding
 fiscal quarter, plus

                            (B) the  lesser of (1) the  amount of any  Available
                  Cash for the first 45 days of such fiscal quarter, and (2) the
                  excess of the aggregate  amount of Debt that the Company could
                  have incurred under the Working Capital  Facility  pursuant to
                  Section  10.1(d) over the actual  amount of loans  outstanding
                  thereunder  at the  end of the  immediately  preceding  fiscal
                  quarter;

                  (ii) the ratio of  Consolidated  Cash  Flow for the  period of
         eight  consecutive  fiscal  quarters  ending on, or most recently ended
         prior to, such time to Consolidated Interest Expense for such period is
         greater than 2.0 to 1; and

                 (iii)     no Default or Event of Default would exist;

provided,  further,  that the Company may declare or order, and make, pay or set
apart a Restricted Payment out of the Restricted Payment Reserve if at such time
(I) no Default or Event of Default  exists,  and (II) the ratio of  Consolidated
Cash Flow for the period of eight consecutive fiscal quarters ending on, or most
recently  ended prior to, such time to  Consolidated  Interest  Expense for such
period is greater than 1.25 to 1. For purposes of this Section 10.5, "Restricted
Payment  Reserve"  means,  as of the date of  determination,  the  excess of the
cumulative  amount, if any, of Restricted Payment  Contributions  generated each
prior fiscal year  commencing  with the fiscal year ended July 31, 1999 over the
cumulative amount of all Restricted Payments previously made from the Restricted
Payment Reserve, and "Restricted Payment  Contribution" means an amount equal to
the excess of (x) Consolidated  Cash Flow for a fiscal year, over (y) the sum of
(I)  consolidated  cash  interest  expense  of the  Company  and its  Restricted
Subsidiaries during such fiscal year, plus (II) Maintenance Capital Expenditures
incurred by the  Company  during such  fiscal  year,  plus (III) the  cumulative
amount of Restricted Payments made during such fiscal year.

           (b) Time of Payment.  The Company will not, nor will it permit any of
its Subsidiaries  to, authorize a Restricted  Payment that is not payable within
60 days of authorization.

Section  10.6.Restrictions  on Dividends of Subsidiaries,  Etc. The Company will
not, and will not permit any of its Restricted  Subsidiaries  to, enter into any
agreement which would restrict any Restricted  Subsidiary's  ability or right to
pay dividends to, or make advances to or Investments in, the Company or, if such
Restricted  Subsidiary  is not  directly  owned  by the  Company,  the  "parent"
Subsidiary of such Restricted Subsidiary.

Section  10.7.Mergers  and  Consolidations.  The Company  will not, and will not
permit any Restricted  Subsidiary to, consolidate with or be a party to a merger
with any other  Person or convey,  transfer  or lease  substantially  all of its
assets  in a  single  transaction  or  series  of  transactions  to any  Person;
provided, however, that:

                   (a) any Restricted  Subsidiary may merge or consolidate  with
         or into the Company or any Wholly-Owned  Restricted  Subsidiary so long
         as in any merger or  consolidation  involving the Company,  the Company
         shall be the surviving or continuing corporation; and

                   (b) the  Company  may  consolidate  or merge  with any  other
         Person  if  (i)  the  surviving  entity  is a  solvent  partnership  or
         corporation  organized and existing under the laws of the United States
         of America or any State thereof,  (ii) the surviving  entity  expressly
         assumes in writing the Company's  obligations  under the Notes and this
         Agreement, (iii) at the time of such consolidation or merger, and after
         giving  effect  thereto,  no  Default  or Event of  Default  shall have
         occurred  and be  continuing,  and (iv) the  surviving  entity would be
         permitted by the provisions of Section 10.1(c) hereof to incur at least
         $1.00 of  additional  Debt owing to a Person  other  than a  Restricted
         Subsidiary of the surviving entity.

Section  10.8.Sale of Assets;  Sale of Stock. (a) The Company will not, and will
not permit any  Restricted  Subsidiary  to, sell,  lease,  transfer,  abandon or
otherwise dispose of assets (except assets sold for fair market value (x) in the
ordinary course of business or (y) in a Sale and Leaseback Transaction within 90
days  following the  acquisition  or  construction  thereof);  provided that the
foregoing restrictions do not apply to:

                   (1)     the sale, lease,  transfer or other disposition of
         assets of a Restricted  Subsidiary to
         the Company or a Wholly-Owned Restricted Subsidiary;

                   (2)     the sale of  assets  for cash or other  property  to 
         a Person or  Persons  if all of the following conditions are met:

                            (i) such  assets  (valued  at net book  value at the
                  time of such sale) do not,  together  with all other assets of
                  the  Company  and  its  Restricted   Subsidiaries   previously
                  disposed  of  (valued  at net  book  value at the time of such
                  disposition) (other than in the ordinary course of business or
                  in a Sale and Leaseback  Transaction  within 90 days following
                  the  acquisition  or  construction  thereof)  during  the same
                  fiscal  year  exceed  10%  of   Consolidated   Assets   (which
                  Consolidated  Assets shall be determined as of the last day of
                  the fiscal  year ending on, or most  recently  ended prior to,
                  such sale); and

                           (ii) in the opinion of the board of  directors of the
                  General  Partner,  the sale is for Fair Market Value and is in
                  the best interests of the Company.

         provided,  however,  that for  purposes of the  foregoing  calculation,
         there  shall not be included  any assets the  proceeds of which were or
         are  applied  within  180  days of the date of sale of such  assets  to
         either (A) the  acquisition  of fixed assets  useful and intended to be
         used in the operation of the business of the Company and its Restricted
         Subsidiaries  within the  limitations of Section 10.9 and having a Fair
         Market Value (as  determined in good faith by the board of directors of
         the  General  Partner) at least equal to that of the assets so disposed
         of, or (B) the  prepayment at any  applicable  prepayment  premium,  of
         Senior Debt  selected by the Company of the Company or such  Restricted
         Subsidiary  that sold such assets.  It is understood  and agreed by the
         Company that any such  proceeds  paid and applied to the  prepayment of
         the Notes as hereinabove provided shall be prepaid as and to the extent
         provided in Section 8.2.

           (b) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class  (including as "stock" for the purposes of
this  Section  10.8,  any  warrants,  rights or options to purchase or otherwise
acquire stock or other Securities exchangeable for or convertible into stock) of
such  Restricted   Subsidiary  to  any  Person  other  than  the  Company  or  a
Wholly-Owned  Restricted  Subsidiary,  except  for  the  purpose  of  qualifying
directors,  or except in  satisfaction  of the validly  pre-existing  preemptive
rights of minority  stockholders in connection with the simultaneous issuance of
stock to the Company and/or a Restricted  Subsidiary  whereby the Company and/or
such Restricted  Subsidiary  maintain their same proportionate  interest in such
Restricted Subsidiary.

           (c) The Company will not sell,  transfer or otherwise  dispose of any
shares of stock of any Restricted  Subsidiary  (except to qualify  directors) or
any  Debt of any  Restricted  Subsidiary,  and will not  permit  any  Restricted
Subsidiary to sell, transfer or otherwise dispose of (except to the Company or a
Wholly-Owned Restricted Subsidiary) any shares of stock or any Debt of any other
Restricted Subsidiary, unless:

                   (1)     either

                            (A)  in  the  case  of  such  a  sale,  transfer  or
                  disposition  of shares of stock or Debt,  simultaneously  with
                  such sale, transfer,  or disposition,  all shares of stock and
                  all Debt of such  Restricted  Subsidiary  at the time owned by
                  the Company and by every other Restricted  Subsidiary shall be
                  sold,  transferred  or  disposed  of as an  entirety,  and the
                  Restricted  Subsidiary  being  disposed  of shall not have any
                  continuing  investment in the Company or any other  Restricted
                  Subsidiary not being simultaneously disposed of; or

                            (B)  in  the  case  of  such  a  sale,  transfer  or
                  disposition  of  shares of  stock,  at the time of such  sale,
                  transfer or disposition and after giving effect  thereto,  (i)
                  no Default or Event of Default  exists,  and (ii) the minority
                  interests in the Restricted Subsidiary the shares of which are
                  being disposed of, after giving effect to such sale,  transfer
                  or disposition, would not exceed 20%;

                   (2) said  shares of stock and Debt are sold,  transferred  or
         otherwise  disposed  of to a Person,  for a cash  consideration  and on
         terms  reasonably  deemed  by the  board of  directors  of the  General
         Partner to be adequate and satisfactory; and

                   (3)     such sale or other disposition is permitted by 
Section 10.8(a).

Section  10.9.Nature  of  Business.  Neither  the  Company  nor  any  Restricted
Subsidiary will engage in any business if, as a result thereof,  the Company and
its Restricted  Subsidiaries would not be principally and predominantly  engaged
in the  business  of  retail  and  wholesale  propane  sales  and  purchases  of
inventory,  operation  of related  propane  distribution  networks  and  storage
facilities and the acquisitions, operations and maintenance of such facilities.

Section  10.10.Transactions  with Affiliates.  The Company will not and will not
permit any  Restricted  Subsidiary  to enter into  directly  or  indirectly  any
transaction or group of related  transactions  (including without limitation the
purchase,  lease, sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate,  except in the ordinary  course and pursuant to
the reasonable  requirements  of the Company's or such  Restricted  Subsidiary's
business and upon fair and reasonable  terms no less favorable to the Company or
such Restricted Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.

Section  10.11.Certain  Refinancings.  Notwithstanding the provisions of Section
10.1 or  10.3,  the  Company  will  not,  and  will not  permit  any  Restricted
Subsidiary  to,  incur  any  Debt for the  purpose  of  refinancing  the Debt of
Ferrellgas  Partners,  L.P.,  a Delaware  limited  partnership  and the  limited
partner of the  Company,  or any other entity  owning an equity  interest in the
Company, provided that the Company may incur Debt for the purpose of refinancing
the Debt of Ferrellgas Partners,  L.P. so long as it is a limited partner in the
Company and so long as such incurrence is:

                   (a)     otherwise permitted by the provisions of 
     Section 10.1; and

                   (b) after giving  effect to the issuance of such Debt and the
         concurrent  issuance or  retirement  of any other  Debt,  no Default or
         Event of Default exists and either:

                            (i) either Fitch IBCA,  Inc.  shall have  assigned a
                  rating of at least  BBB- to the  Notes,  or  Standard & Poor's
                  Ratings Group, a division of McGraw Hill,  shall have assigned
                  a rating of at least  BBB- to the Notes or  Moody's  Investors
                  Service, Inc. shall have assigned a rating of at least Baa3 to
                  the Notes; or

                           (ii) (A) the ratio of Consolidated  Cash Flow for the
                  period of four consecutive  fiscal quarters ending on, or most
                  recently  ended prior to, the date of issuance of such Debt to
                  Consolidated  Interest Expense is not less than 2.75 to 1; and
                  (B) the ratio of Consolidated  Debt to Consolidated  Cash Flow
                  for the period of four consecutive  fiscal quarters ending on,
                  or most recently ended prior to, such date is not greater than
                  4.50 to 1.


SECTION 11.              EVENTS OF DEFAULT.

         An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

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

                   (b)     the  Company  defaults  in the  payment of any 
        interest  on any Note for more than five
         Business Days after the same becomes due and payable; or

                   (c)     the Company  defaults in the  performance  of or 
         compliance  with any term  contained in
         Section 7.1(d) or Section 10; or

                   (d) the Company  defaults in the performance of or compliance
         with any  term  contained  herein  (other  than  those  referred  to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible  Officer
         obtaining  actual  knowledge  of such  default  and  (ii)  the  Company
         receiving written notice of such default from any holder of a Note (any
         such written  notice to be  identified  as a "notice of default" and to
         refer specifically to this paragraph (d) of Section 11); or

                   (e) any  representation  or warranty made in writing by or on
         behalf  of  the  Company  or by any  officer  of the  Company  in  this
         Agreement  or  in  any  writing   furnished  in  connection   with  the
         transactions contemplated hereby proves to have been false or incorrect
         in any material respect on the date as of which made; or

                   (f)  (i)  the  Company  or any  Restricted  Subsidiary  is in
         default (as  principal or as guarantor or other  surety) in the payment
         of any principal of or premium or make-whole  amount or interest on any
         Indebtedness that is outstanding in an aggregate principal amount of at
         least  $10,000,000  beyond any period of grace  provided  with  respect
         thereto, or (ii) the Company or any Restricted Subsidiary is in default
         in the  performance  of or compliance  with any term of any evidence of
         any  Indebtedness in an aggregate  outstanding  principal  amount of at
         least  $10,000,000  or of any  mortgage,  indenture or other  agreement
         relating thereto or any other condition exists, and as a consequence of
         such default or condition  such  Indebtedness  has become,  or has been
         declared  (or  one  or  more  Persons  are  entitled  to  declare  such
         Indebtedness  to be),  due and  payable  before its stated  maturity or
         before  its  regularly  scheduled  dates  of  payment,  or  (iii)  as a
         consequence of the occurrence or continuation of any event or condition
         (other  than  the  passage  of  time  or the  right  of the  holder  of
         Indebtedness to convert such Indebtedness into equity  interests),  (x)
         the  Company  or any  Restricted  Subsidiary  has become  obligated  to
         purchase or repay  Indebtedness  before its regular  maturity or before
         its regularly  scheduled  dates of payment in an aggregate  outstanding
         principal  amount of at least  $10,000,000,  or (y) one or more Persons
         have the right to require the Company or any  Restricted  Subsidiary so
         to purchase or repay such Indebtedness; or

                   (g)  the  Company,  the  General  Partner  or any  Restricted
         Subsidiary  (i) is  generally  not  paying,  or admits in  writing  its
         inability to pay, its debts as they become due, (ii) files, or consents
         by answer or  otherwise  to the filing  against  it of, a petition  for
         relief  or  reorganization  or  arrangement  or any other  petition  in
         bankruptcy,  for  liquidation or to take  advantage of any  bankruptcy,
         insolvency,  reorganization,  moratorium  or other  similar  law of any
         jurisdiction,  (iii)  makes  an  assignment  for  the  benefit  of  its
         creditors,  (iv) consents to the appointment of a custodian,  receiver,
         trustee or other officer with similar powers with respect to it or with
         respect to any substantial part of its property,  (v) is adjudicated as
         insolvent or to be liquidated,  or (vi) takes action for the purpose of
         any of the foregoing; or

                   (h)  a  court  or   governmental   authority   of   competent
         jurisdiction  enters  an  order  appointing,  without  consent  by  the
         Company,  the  General  Partner or any  Subsidiary  of the  Company,  a
         custodian,  receiver, trustee or other officer with similar powers with
         respect to it or with respect to any substantial  part of its property,
         or  constituting an order for relief or approving a petition for relief
         or   reorganization   or  any  other  petition  in  bankruptcy  or  for
         liquidation or to take advantage of any bankruptcy or insolvency law of
         any   jurisdiction,   or  ordering  the   dissolution,   winding-up  or
         liquidation  of the Company,  the General  Partner or any Subsidiary of
         the Company,  or any such petition  shall be filed against the Company,
         the General  Partner or any Subsidiary of the Company and such petition
         shall not be dismissed or appointment discharged within 120 days; or

                   (i) a final  judgment or  judgments  for the payment of money
         aggregating in excess of $10,000,000  are rendered  against one or more
         of the Company and its Restricted  Subsidiaries and which judgments are
         not, within 60 days after entry thereof,  bonded,  discharged or stayed
         pending  appeal,  or are  not  discharged  within  60  days  after  the
         expiration of such stay; or

                   (j) If (i) any Plan shall fail to satisfy the minimum funding
         standards  of ERISA or the Code for any plan year or part  thereof or a
         waiver of such  standards or extension  of any  amortization  period is
         sought or  granted  under  Section  412 of the  Code,  (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably  expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under  Section  4042 of ERISA to  terminate  or  appoint a  trustee  to
         administer  any Plan or the PBGC shall have notified the Company or any
         ERISA  Affiliate  that  a  Plan  may  become  a  subject  of  any  such
         proceedings,   (iii)  the   aggregate   "amount  of  unfunded   benefit
         liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under
         all Plans,  determined  in  accordance  with  Title IV of ERISA,  shall
         exceed $10,000,000,  (iv) the Company or any ERISA Affiliate shall have
         incurred or is reasonably  expected to incur any liability  pursuant to
         Title I or IV of ERISA or the penalty or excise tax  provisions  of the
         Code relating to employee  benefit plans,  (v) the Company or any ERISA
         Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
         any Restricted  Subsidiary  establishes or amends any employee  welfare
         benefit plan that provides post-employment welfare benefits in a manner
         that would  increase  the  liability  of the Company or any  Restricted
         Subsidiary  thereunder;  and any such  event  or  events  described  in
         clauses (i) through (vi) above,  either  individually  or together with
         any other such event or events,  could reasonably be expected to have a
         Material Adverse Effect.

As used in  Section  11(j),  the terms  "employee  benefit  plan" and  "employee
welfare benefit plan" shall have the respective  meanings assigned to such terms
in Section 3 of ERISA.


SECTION 12.              REMEDIES ON DEFAULT, ETC.

Section  12.1.Acceleration.  (a) If an  Event of  Default  with  respect  to the
Company or the General  Partner  described in paragraph (g) or (h) of Section 11
(other  than an Event of Default  described  in clause (i) of  paragraph  (g) or
described in clause (vi) of paragraph (g) by virtue of the fact that such clause
encompasses  clause  (i) of  paragraph  (g)) has  occurred,  all the Notes  then
outstanding shall automatically become immediately due and payable.

           (b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 33-1/3% in  principal  amount of the Notes at the
time outstanding may at any time at its or their option, by notice or notices to
the Company,  declare all the Notes then  outstanding to be immediately  due and
payable.

           (c) If any Event of  Default  described  in  paragraph  (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time  outstanding  affected by such Event of Default may at any time,  at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.

         Upon any Note's  becoming  due and  payable  under this  Section  12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire  unpaid  principal  amount of such Note,  plus (i) all accrued and unpaid
interest  thereon and (ii) the Make-Whole  Amount  determined in respect of such
principal  amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest  or  further  notice,  all of  which  are  hereby  waived.  The  Company
acknowledges,  and the parties hereto agree,  that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically  provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are  accelerated  as a result of an Event of  Default,  is  intended  to provide
compensation for the deprivation of such right under such circumstances.

Section 12.2.Other Remedies. If any Default or Event of Default has occurred and
is continuing,  and  irrespective  of whether any Notes have become or have been
declared  immediately due and payable under Section 12.1, the holder of any Note
at the time  outstanding  may  proceed to protect and enforce the rights of such
holder  by an action at law,  suit in  equity or other  appropriate  proceeding,
whether for the specific performance of any agreement contained herein or in any
Note,  or for an  injunction  against a violation  of any of the terms hereof or
thereof,  or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.

Section 12.3.Rescission.  At any time after any Notes have been declared due and
payable  pursuant to clause (b) or (c) of Section 12.1,  the holders of not less
than 51% in principal amount of the Notes then outstanding, by written notice to
the Company,  may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole  Amount, if any, on any Notes that are due and payable and are unpaid
other  than by reason of such  declaration,  and all  interest  on such  overdue
principal  and  Make-Whole  Amount,  if any,  and (to the  extent  permitted  by
applicable  law) any overdue  interest  in respect of the Notes,  at the Default
Rate, (b) all Events of Default and Defaults,  other than non-payment of amounts
that have  become due solely by reason of such  declaration,  have been cured or
have been waived  pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due  pursuant  hereto or to the Notes.  No
rescission  and  annulment  under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.

Section  12.4.No  Waivers or Election of Remedies,  Expenses,  Etc. No course of
dealing  and no delay on the part of any  holder of any Note in  exercising  any
right, power or remedy shall operate as a waiver thereof or otherwise  prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this  Agreement or by any Note upon any holder thereof shall be exclusive of any
other right,  power or remedy  referred to herein or therein or now or hereafter
available  at law, in equity,  by statute or  otherwise.  Without  limiting  the
obligations  of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further  amount as shall be  sufficient to cover all
costs and  expenses of such holder  incurred in any  enforcement  or  collection
under this Section 12,  including,  without  limitation,  reasonable  attorneys'
fees, expenses and disbursements.


SECTION 13.              REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

Section  13.1.Registration  of Notes.  The Company  shall keep at its  principal
executive  office a register for the  registration and registration of transfers
of  Notes.  The name and  address  of each  holder  of one or more  Notes,  each
transfer  thereof  and the name and  address of each  transferee  of one or more
Notes  shall  be  registered  in such  register.  Prior to due  presentment  for
registration of transfer,  the Person in whose name any Note shall be registered
shall be deemed and  treated as the owner and holder  thereof  for all  purposes
hereof,  and the Company shall not be affected by any notice or knowledge to the
contrary.  The  Company  shall  give  to  any  holder  of  a  Note  that  is  an
Institutional  Investor promptly upon request  therefor,  a complete and correct
copy of the names  and  addresses  of all  registered  holders  of Notes of each
series.

Section  13.2.Transfer  and Exchange of Notes. Upon surrender of any Note at the
principal  executive  office of the  Company  for  registration  of  transfer or
exchange  (and in the case of a surrender  for  registration  of transfer,  duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered  holder of such Note or its attorney  duly  authorized in writing and
accompanied  by the address for notices of each  transferee of such Note or part
thereof),  the Company  shall  execute and  deliver,  at the  Company's  expense
(except as provided  below),  one or more new Notes (as  requested by the holder
thereof) of the same  series in exchange  therefor,  in an  aggregate  principal
amount equal to the unpaid principal  amount of the surrendered  Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of the series of Notes being  surrendered as set forth
in Exhibit  1-A,  1-B,  1-C,  1-D or 1-E, as the case may be. Each such new Note
shall be dated and bear interest from the date to which interest shall have been
paid on the  surrendered  Note or dated the date of the  surrendered  Note if no
interest shall have been paid thereon.  The Company may require payment of a sum
sufficient to cover any stamp tax or  governmental  charge imposed in respect of
any such transfer of Notes.  Notes shall not be transferred in  denominations of
less than  $100,000,  provided that if necessary to enable the  registration  of
transfer  by a holder  of its  entire  holding  of  Notes,  one Note may be in a
denomination of less than $100,000. Any transferee,  by its acceptance of a Note
registered  in its name (or the name of its  nominee),  shall be  deemed to have
made the representation set forth in Section 6.2.

Section  13.3.Replacement  of Notes.  Upon  receipt by the  Company of  evidence
reasonably  satisfactory  to it  of  the  ownership  of  and  the  loss,  theft,
destruction  or mutilation of any Note (which  evidence shall be, in the case of
an  Institutional  Investor,  notice  from such  Institutional  Investor of such
ownership and such loss, theft, destruction or mutilation), and

                   (a) in the case of loss,  theft or destruction,  of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original  Purchaser or another  holder of a
         Note with a minimum net worth of at least  $50,000,000,  such  Person's
         own   unsecured   agreement  of   indemnity   shall  be  deemed  to  be
         satisfactory), or

                   (b)     in the case of mutilation, upon surrender and 
cancellation thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note of the same series as such lost, stolen, destroyed or mutilated Note, dated
and bearing  interest  from the date to which  interest  shall have been paid on
such lost,  stolen,  destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.


SECTION 14.              PAYMENTS ON NOTES.

Section 14.1.Place of Payment.  Subject to Section 14.2,  payments of principal,
Make-Whole  Amount,  if any, and interest  becoming due and payable on the Notes
shall be made in  Liberty,  Missouri at the  principal  office of the Company in
such  jurisdiction.  The Company may at any time,  by notice to each holder of a
Note,  change the place of payment of the Notes so long as such place of payment
shall be either the principal office of the Company in such  jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

Section  14.2.Home Office Payment.  So long as any Purchaser or such Purchaser's
nominee shall be the holder of any Note, and notwithstanding  anything contained
in Section 14.1 or in such Note to the  contrary,  the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address  specified for such purpose for such  Purchaser
on  Schedule  A, or by  such  other  method  or at such  other  address  as such
Purchaser  shall have from time to time  specified to the Company in writing for
such purpose,  without the  presentation or surrender of such Note or the making
of any notation  thereon,  except that upon written  request of the Company made
concurrently with or reasonably  promptly after payment or prepayment in full of
any Note, such Purchaser shall surrender such Note for cancellation,  reasonably
promptly  after any such  request,  to the  Company at its  principal  executive
office  or at the place of  payment  most  recently  designated  by the  Company
pursuant to Section  14.1.  Prior to any sale or other  disposition  of any Note
held by any Purchaser or such  Purchaser's  nominee such Purchaser  will, at its
election,  either  endorse  thereon the amount of principal paid thereon and the
last date to which  interest has been paid thereon or surrender such Note to the
Company  in  exchange  for a new Note or Notes  pursuant  to Section  13.2.  The
Company  will afford the  benefits  of this  Section  14.2 to any  Institutional
Investor that is the direct or indirect  transferee of any Note purchased by any
Purchaser under this Agreement and that has made the same agreement  relating to
such Note as such Purchaser has made in this Section 14.2.


SECTION 15.              EXPENSES, ETC.

Section 15.1.Transaction  Expenses. Whether or not the transactions contemplated
hereby are consummated,  the Company will pay all costs and expenses  (including
reasonable  attorneys'  fees of a special  counsel and, if reasonably  required,
local or other  counsel)  incurred  by each  Purchaser  or  holder  of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents  under or in respect of this  Agreement or the Notes (whether or not
such  amendment,  waiver  or  consent  becomes  effective),  including,  without
limitation:  (a) the costs and expenses  incurred in enforcing or defending  (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative  demand issued in connection  with this Agreement or the Notes, or
by  reason  of being a holder  of any  Note,  and (b) the  costs  and  expenses,
including  financial  advisors' fees, incurred in connection with the insolvency
or  bankruptcy  of the  Company  or any  Subsidiary  or in  connection  with any
work-out or  restructuring of the  transactions  contemplated  hereby and by the
Notes.  The Company will pay, and will save each Purchaser and each other holder
of a Note harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders  (other  than those  retained by such  Purchaser  or
holder).

Section 15.2.Survival. The obligations of the Company under this Section 15 will
survive  the  payment or transfer of any Note,  the  enforcement,  amendment  or
waiver of any provision of this Agreement or the Notes,  and the  termination of
this Agreement.


   SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

         All representations  and warranties  contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any  Purchaser  of any Note or portion  thereof or  interest  therein and the
payment of any Note, and may be relied upon by any subsequent  holder of a Note,
regardless  of any  investigation  made  at any  time  by or on  behalf  of such
Purchaser  or any  other  holder  of a Note.  All  statements  contained  in any
certificate  or  other  instrument  delivered  by or on  behalf  of the  Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement.  Subject to the preceding sentence, this Agreement
and the Notes  embody  the  entire  agreement  and  understanding  between  each
Purchaser and the Company and supersede all prior agreements and  understandings
relating to the subject matter hereof.


SECTION 17.              AMENDMENT AND WAIVER.

Section 17.1.Requirements.  This Agreement and the Notes may be amended, and the
observance  of  any  term  hereof  or  of  the  Notes  may  be  waived   (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders,  except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof,  or any defined term
(as it is used therein),  will be effective as to any Purchaser unless consented
to by such  Purchaser  in  writing,  and (b) no such  amendment  or waiver  may,
without the written  consent of the holder of each Note at the time  outstanding
affected  thereby,  (i)  subject to the  provisions  of Section 12  relating  to
acceleration  or  rescission,  change  the amount or time of any  prepayment  or
payment  of  principal  of, or reduce  the rate or change the time of payment or
method of  computation  of interest or of the  Make-Whole  Amount on, the Notes,
(ii) change the  percentage of the principal  amount of the Notes the holders of
which are required to consent to any such  amendment  or waiver,  or (iii) amend
any of Sections 8, 11(a), 11(b), 12, 17 or 20.

Section 17.2.Solicitation of Holders of Notes.

           (a)  Solicitation.  The Company will provide each holder of the Notes
(irrespective  of  the  amount  of  Notes  then  owned  by it)  with  sufficient
information,  sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and  considered  decision with respect to
any proposed  amendment,  waiver or consent in respect of any of the  provisions
hereof or of the Notes.  The Company will  deliver  executed or true and correct
copies of each amendment,  waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding  Notes  promptly  following the
date on which it is  executed  and  delivered  by, or  receives  the  consent or
approval of, the requisite holders of Notes.

           (b) Payment. The Company will not directly or indirectly pay or cause
to be paid  any  remuneration,  whether  by way of  supplemental  or  additional
interest,  fee or otherwise,  or grant any  security,  to any holder of Notes as
consideration  for or as an  inducement  to the  entering  into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof or of
the Notes  unless  such  remuneration  is  concurrently  paid,  or  security  is
concurrently  granted,  on the same terms,  ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.

Section  17.3.Binding  Effect,  Etc.  Any  amendment  or waiver  consented to as
provided  in this  Section  17 applies  equally  to all  holders of Notes and is
binding  upon them and upon each future  holder of any Note and upon the Company
without  regard to whether such Note has been marked to indicate such  amendment
or waiver.  No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising  any rights  hereunder or
under any Note  shall  operate  as a waiver of any  rights of any holder of such
Note. As used herein,  the term "this  Agreement" and  references  thereto shall
mean this Agreement as it may from time to time be amended or supplemented.

Section  17.4.Notes Held by Company,  Etc. Solely for the purpose of determining
whether the  holders of the  requisite  percentage  of the  aggregate  principal
amount of Notes then outstanding approved or consented to any amendment,  waiver
or consent to be given under this  Agreement or the Notes,  or have directed the
taking  of any  action  provided  herein  or in the  Notes to be taken  upon the
direction of the holders of a specified  percentage of the  aggregate  principal
amount of Notes then  outstanding,  Notes  directly or  indirectly  owned by the
Company or any of its Affiliates shall be deemed not to be outstanding.


SECTION 18.              NOTICES.

         All notices  and  communications  provided  for  hereunder  shall be in
writing  and sent (a) by  telefacsimile  if the  sender  on the same day sends a
confirming  copy of such  notice  by a  recognized  overnight  delivery  service
(charges  prepaid),  or (b) by registered or certified  mail with return receipt
requested (postage prepaid),  or (c) by a recognized  overnight delivery service
(with charges prepaid). Any such notice must be sent:

                   (i) if to a Purchaser or such  Purchaser's  nominee,  to such
         Purchaser or such Purchaser's nominee at the address specified for such
         communications  for such Purchaser  signature on Schedule A, or at such
         other address as such Purchaser or such Purchaser's  nominee shall have
         specified to the Company in writing,

                  (ii)     if to any other  holder of any  Note,  to such holder
         at such  address  as such  other holder shall have specified to the 
         Company in writing, or

                 (iii) if to the  Company,  to the  Company at its  address  set
         forth  at the  beginning  hereof  to  the  attention  of the  Assistant
         Treasurer, or at such other address as the Company shall have specified
         to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.


SECTION 19.              REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating thereto,  including,  without
limitation,  (a)  consents,  waivers and  modifications  that may  hereafter  be
executed,  (b) documents  received by each Purchaser at the Closing  (except the
Notes  themselves),  and  (c)  financial  statements,   certificates  and  other
information  previously  or  hereafter  furnished  to  each  Purchaser,  may  be
reproduced  by  such  Purchaser  by any  photographic,  photostatic,  microfilm,
microcard,  miniature  photographic  or other similar process and such Purchaser
may  destroy  any  original  document  so  reproduced.  The  Company  agrees and
stipulates   that,  to  the  extent   permitted  by  applicable  law,  any  such
reproduction  shall be  admissible  in  evidence as the  original  itself in any
judicial  or  administrative  proceeding  (whether  or not  the  original  is in
existence and whether or not such reproduction was made by such Purchaser in the
regular  course  of  business)  and  any   enlargement,   facsimile  or  further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not  prohibit  the  Company  or any other  holder of Notes from
contesting  any such  reproduction  to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.


SECTION 20.              CONFIDENTIAL INFORMATION.

         For the purposes of this Section 20,  "Confidential  Information" means
information  delivered  to any  Purchaser  by or on behalf of the Company or any
Subsidiary  in connection  with the  transactions  contemplated  by or otherwise
pursuant to this  Agreement  that is  proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified in writing when received by
such  Purchaser  as  being  confidential  information  of the  Company  or  such
Subsidiary,  provided that such term does not include  information  that (a) was
publicly known or otherwise  known to such  Purchaser  prior to the time of such
disclosure,  (b) subsequently  becomes publicly known through no act or omission
by such Purchaser or any Person acting on such Purchaser's behalf, (c) otherwise
becomes known to such Purchaser other than through  disclosure by the Company or
any  Subsidiary  or (d)  constitutes  financial  statements  delivered  to  such
Purchaser  under  Section  7.1  that  are  otherwise  publicly  available.  Each
Purchaser will maintain the confidentiality of such Confidential  Information in
accordance  with  procedures  adopted by such Purchaser in good faith to protect
confidential information of third parties delivered to such Purchaser,  provided
that such Purchaser may deliver or disclose Confidential Information to (i) such
Purchaser's directors,  trustees,  officers,  employees,  agents,  attorneys and
affiliates   (to  the  extent  such   disclosure   reasonably   relates  to  the
administration of the investment  represented by such Purchaser's  Notes),  (ii)
such Purchaser's financial advisors and other professional advisors who agree to
hold confidential the Confidential Information  substantially in accordance with
the terms of this  Section  20,  (iii) any  other  holder of any Note,  (iv) any
Institutional Investor to which such Purchaser sells or offers to sell such Note
or any part thereof or any  participation  therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (v) any Person from which such Purchaser  offers
to  purchase  any  security of the Company (if such Person has agreed in writing
prior  to its  receipt  of such  Confidential  Information  to be  bound  by the
provisions of this Section 20), (vi) any federal or state  regulatory  authority
having  jurisdiction  over such  Purchaser,  (vii) the National  Association  of
Insurance   Commissioners  or  any  similar  organization,   or  any  nationally
recognized  rating  agency  that  requires  access  to  information  about  such
Purchaser's  investment  portfolio,  or (viii)  any other  Person to which  such
delivery or disclosure may be necessary or appropriate (w) to effect  compliance
with any law, Rule,  regulation or order  applicable to such  Purchaser,  (x) in
response to any  subpoena or other legal  process,  (y) in  connection  with any
litigation to which such  Purchaser is a party or (z) if an Event of Default has
occurred  and is  continuing,  to  the  extent  such  Purchaser  may  reasonably
determine  such delivery and  disclosure to be necessary or  appropriate  in the
enforcement  or for  the  protection  of the  rights  and  remedies  under  such
Purchaser's  Notes and this Agreement.  Each holder of a Note, by its acceptance
of a Note,  will be deemed to have  agreed to be bound by and to be  entitled to
the benefits of this Section 20 as though it were a party to this Agreement.  On
reasonable  request by the Company in connection with the delivery to any holder
of a Note of  information  required to be  delivered  to such holder  under this
Agreement or  requested  by such holder  (other than a holder that is a party to
this  Agreement or its nominee),  such holder will enter into an agreement  with
the Company embodying the provisions of this Section 20.


SECTION 21.              SUBSTITUTION OF PURCHASER.

         Each  Purchaser  shall  have the  right to  substitute  any one of such
Purchaser's  Affiliates  as the  purchaser of the Notes that such  Purchaser has
agreed to purchase  hereunder,  by written  notice to the Company,  which notice
shall be signed by both such  Purchaser and such  Purchaser's  Affiliate,  shall
contain  such  Affiliate's  agreement  to be bound by this  Agreement  and shall
contain a  confirmation  by such Affiliate of the accuracy with respect to it of
the  representations  set forth in  Section  6.  Upon  receipt  of such  notice,
wherever  the word  "Purchaser"  is used in this  Agreement  (other than in this
Section  21),  such word shall be deemed to refer to such  Affiliate  in lieu of
such  Purchaser.  In the  event  that  such  Affiliate  is so  substituted  as a
purchaser  hereunder and such Affiliate  thereafter  transfers to such Purchaser
all of the Notes then held by such  Affiliate,  upon  receipt by the  Company of
notice of such transfer, wherever the word "Purchaser" is used in this Agreement
(other than in this Section 21), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to such Purchaser, and such Purchaser shall have
all the rights of an original holder of the Notes under this Agreement.


SECTION 22.              MISCELLANEOUS.

Section   22.1.Successors  and  Assigns.  All  covenants  and  other  agreements
contained in this  Agreement  by or on behalf of any of the parties  hereto bind
and inure to the benefit of their respective  successors and assigns (including,
without  limitation,  any  subsequent  holder of a Note) whether so expressed or
not.

Section  22.2.Payments Due on Non-Business  Days.  Anything in this Agreement or
the Notes to the  contrary  notwithstanding,  any  payment  of  principal  of or
Make-Whole  Amount or  interest  on any Note that is due on a date  other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the  computation of the interest  payable on such
next succeeding Business Day.

Section 22.3.Severability. Any provision of this Agreement that is 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 (to the full  extent  permitted  by law) not  invalidate  or
render unenforceable such provision in any other jurisdiction.

Section  22.4.Construction.  Each covenant  contained  herein shall be construed
(absent  express  provision to the contrary) as being  independent of each other
covenant  contained  herein,  so that compliance with any one covenant shall not
(absent such an express contrary  provision) be deemed to excuse compliance with
any other covenant.  Where any provision  herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be  applicable  whether  such  action is taken  directly or  indirectly  by such
Person.

Section  22.5.Counterparts.  This  Agreement  may be  executed  in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one  instrument.  Each  counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

Section  22.6.Governing  Law. This Agreement  shall be construed and enforced in
accordance  with, and the rights of the parties shall be governed by, the law of
the State of  Illinois  excluding  choice-of-law  principles  of the law of such
State that would require the  application  of the laws of a  jurisdiction  other
than such State.

                                    * * * * *

         The  execution  hereof by the  Purchasers  shall  constitute a contract
among the Company and the Purchasers for the uses and purposes  hereinabove  set
forth.  This  Agreement  may be  executed  in any number of  counterparts,  each
executed  counterpart  constituting  an  original  but  all  together  only  one
agreement.

                              Very truly yours,

                              FERRELLGAS, L.P.

                              By Ferrellgas, Inc., its general partner



                               By__________________________________________
                               Its_________________________________________




<PAGE>



                                   SCHEDULE B
                          (to Note Purchase Agreement)
                                  DEFINED TERMS


GENERAL PROVISIONS

         Where the  character  or amount  of any asset or  liability  or item of
income or expense is required to be  determined  or any  consolidation  or other
accounting  computation  is  required  to be  made  for  the  purposes  of  this
Agreement,  the same  shall  be done in  accordance  with  GAAP,  to the  extent
applicable,  except  where such  principles  are  inconsistent  with the express
requirements of this Agreement.


DEFINITIONS

         As used herein,  the following  terms have the respective  meanings set
forth below or set forth in the Section hereof following such term:

         "Affiliate" means, at any time, and with respect to any Person, (a) any
other  Person  that at such time  directly  or  indirectly  through  one or more
intermediaries  Controls,  or is Controlled by, or is under common Control with,
such first Person, (b) any Person  beneficially  owning or holding,  directly or
indirectly, 10% or more of any class of voting or equity interests of such first
Person or any  subsidiary of such first Person or any  corporation of which such
first Person and the subsidiaries of such first Person beneficially own or hold,
in the aggregate,  directly or indirectly, 10% or more of any class of voting or
equity interests,  and (c) any officer or director of such first Person. As used
in this definition,  "Control" means the possession,  directly or indirectly, of
the power to direct or cause the direction of the  management  and policies of a
Person,  whether  through the  ownership  of voting  securities,  by contract or
otherwise.  Unless the context otherwise  clearly requires,  any reference to an
"Affiliate" is a reference to an Affiliate (other than a Restricted  Subsidiary)
of the Company.

         "Asset  Acquisition"  means (a) an  Investment  by the  Company  or any
Restricted  Subsidiary  in any other Person  pursuant to which such Person shall
become a  Restricted  Subsidiary  or shall be merged with or into the Company or
any Restricted Subsidiary,  (b) the acquisition by the Company or any Restricted
Subsidiary  of the assets of any Person  (other  than a  Restricted  Subsidiary)
which  constitutes all or substantially  all of the assets of such Person or (c)
the  acquisition by the Company or any Restricted  Subsidiary of any division or
line of business of any Person (other than a Restricted Subsidiary).

         "Asset Sale" means any Transfer except:

                   (a)     any

                            (i)     Transfer  from  a  Restricted  Subsidiary  
                  to  the  Company  or a  Wholly-Owned
                  Restricted Subsidiary;

                           (ii)     Transfer from the Company to a Wholly-Owned 
                  Restricted Subsidiary; and

                          (iii)  Transfer  from  the  Company  to  a  Restricted
                  Subsidiary (other than a Wholly-Owned  Restricted  Subsidiary)
                  or  from  a  Restricted   Subsidiary  to  another   Restricted
                  Subsidiary (other than a Wholly-Owned  Restricted Subsidiary),
                  which in either case is for Fair Market Value,

         so long as immediately before and immediately after the consummation of
         any such Transfer and after giving effect thereto,  no Default or Event
         of Default exists; and

                   (b)     any Transfer made in the ordinary  course of business
         and  involving  only property that is inventory held for sale.

         "Available Cash" means with respect to any period and without 
          duplication:

                   (a)     the sum of:

                            (i) all cash  receipts  of the  Company  during such
                  period  from  all  sources  (including,   without  limitation,
                  distributions   of  cash   received  by  the  Company  from  a
                  Subsidiary  and  borrowings  made  under the  Working  Capital
                  Facility); and

                           (ii) any  reduction  with respect to such period in a
                  cash  reserve  previously  established  pursuant to clause (b)
                  (ii) below (either by reversal or utilization)  from the level
                  of such reserve at the end of the prior period;

                   (b)     less  the sum of:

                            (i) all cash  disbursements  of the  Company  during
                  such period including,  without limitation,  disbursements for
                  operating  expenses,  taxes, if any, debt service  (including,
                  without  limitation,  the  payment of  principal,  premium and
                  interest),   redemption  of  Partnership  Interests,   capital
                  expenditures,  contributions, if any, to a Subsidiary and cash
                  distributions  to the General Partner and the Limited Partners
                  (but only to the extent  that such cash  distributions  to the
                  General Partner and the Limited Partners exceed Available Cash
                  for the immediately preceding fiscal quarter); and

                           (ii) any cash  reserves  established  with respect to
                  such period, and any increase with respect to such period in a
                  cash reserve  previously  established  pursuant to this clause
                  (b) (ii)  from the  level  of such  reserve  at the end of the
                  prior  period,   in  such  amounts  as  the  General   Partner
                  determines  in its  reasonable  discretion  to be necessary or
                  appropriate  (A) to  provide  for the  proper  conduct  of the
                  business  of  the  Company  (including,   without  limitation,
                  reserves   for   future   capital   expenditures   or  capital
                  contributions  to a  Subsidiary)  or (B) to provide  funds for
                  distributions  to the General Partner and the Limited Partners
                  in respect of any one or more of the next four fiscal quarters
                  or (C)  because  the  distribution  of such  amounts  would be
                  prohibited  by  applicable  law  or  by  any  loan  agreement,
                  security  agreement,   mortgage,   debt  instrument  or  other
                  agreement or  obligation to which the Company is a party or by
                  which it is bound or its assets are subject.

Notwithstanding the foregoing (x) disbursements (including,  without limitation,
contributions  to a Subsidiary or  disbursements on behalf of a Subsidiary) made
or  reserves  established,  increased  or  reduced  after the end of any  fiscal
quarter but on or before the date on which the Company makes its distribution of
Available  Cash in respect of such fiscal  quarter  pursuant  to Section  5.3(a)
shall be  deemed to have been  made,  established,  increased  or  reduced,  for
purposes of determining  Available  Cash, with respect to such fiscal quarter if
the General  Partner so determines and (y) "Available  Cash" with respect to any
period  shall not include any cash  receipts or  reductions  in reserves or take
into  account  any  disbursements   made  or  reserves   established  after  the
Liquidation Date.

         For purposes of the definition of "Available  Cash" the following terms
have the following meanings:

                  "Additional  Limited  Partner" means a Person  admitted to the
         Company  as  a  Limited  Partner   pursuant  to  Section  11.6  of  the
         Partnership Agreement and who is shown as such on the books and records
         of the Company,

                  "Departing  Partner" means a former General Partner,  from and
         after the  effective  date of any  withdrawal or removal of such former
         General  Partner  pursuant  to  Section  12.1  or  Section  12.2 of the
         Partnership Agreement.

                  "Initial  Limited Partner means Ferrellgas  Partners,  L.P., a
Delaware limited partnership.

                  "Limited  Partner"  means the  Initial  Limited  Partner,  the
         General Partner  pursuant to Section 4.2 of the Partnership  Agreement,
         each  Substituted  Limited  Partner,  if any, each  Additional  Limited
         Partner and any  Departing  Partner  upon the change of its status from
         General  Partner to Limited  Partner  pursuant  to Section  12.3 of the
         Partnership Agreement, but excluding any such Person from and after the
         time it withdraws from the Company.

                  "Liquidation  Date"  means (a) in the case of an event  giving
         rise to the dissolution of the Company of the type described in clauses
         (a) and (b) of the first  sentence of Section  13.2 of the  Partnership
         Agreement,  the date on which the  applicable  time period during which
         the General Partner and the Limited Partners have the right to elect to
         reconstitute  the Company and continue its business has expired without
         such an  election  being  made,  and (b) in the case of any other event
         giving rise to the  dissolution of the Company,  the date on which such
         event occurs.

     "Partnership  Agreement"  means the  Agreement  of Limited  Partnership  of
Ferrellgas,  L.P.  dated as of July 5, 1995 among the  General  Partner  and the
Initial Limited Partner.

     "Partnership  Interest"  means the  interest  of the  General  Partner or a
Limited Partner in the Company.

                  "Substituted  Limited  Partner" means a Person who is admitted
         as a Limited  Partner to the Company  pursuant  to Section  11.3 of the
         Partnership  Agreement in place of and with all the rights of a Limited
         Partner and who is shown as a Limited  Partner on the books and records
         of the Company.

         "Business  Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday,  a Sunday or a day on which  commercial banks in New York
City are required or  authorized  to be closed,  and (b) for the purposes of any
other provision of this Agreement,  any day other than a Saturday, a Sunday or a
day on which commercial banks in San Francisco, California, Chicago, Illinois or
Kansas City, Missouri are required or authorized to be closed.

         "Capital  Lease" means,  at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         "Capital  Lease  Obligation"  means,  with  respect to any Person and a
Capital  Lease,  the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance  with GAAP,  appear as a liability
on a balance sheet of such Person.

         "Closing" is defined in Section 3.

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

         "Company" means Ferrellgas, L.P., Delaware limited partnership.

         "Confidential Information" is defined in Section 20.

         "Consolidated  Assets"  means,  at any time,  the  total  assets of the
Company  and its  Restricted  Subsidiaries  which  would be shown as assets on a
consolidated balance sheet of the Company and its Restricted  Subsidiaries as of
such time  prepared  in  accordance  with GAAP,  after  eliminating  all amounts
properly attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries.

         "Consolidated  Cash Flow" means, in respect of any period,  the excess,
if any, of (a) the sum of,  without  duplication,  the amounts for such  period,
taken as a single  accounting  period,  of (i)  Consolidated Net Income for such
period,  plus (ii) to the extent deducted in the  determination  of Consolidated
Net Income for such period,  after  excluding  amounts  attributable to minority
interests in Subsidiaries and without  duplication,  (A)  Consolidated  Non-Cash
Charges,  (B)  Consolidated  Interest  Expense and (C)  Consolidated  Income Tax
Expense, over (b) any non-cash items increasing Consolidated Net Income for such
period to the  extent  that such  items  constitute  reversals  of  Consolidated
Non-Cash  Charges  for  a  previous  period  and  which  were  included  in  the
computation of  Consolidated  Cash Flow for such previous period pursuant to the
provisions  of  the  preceding   clause  (a),   provided  that  in   calculating
Consolidated Cash Flow for any such period,  (1) Consolidated Cash Flow shall be
calculated  after  giving  effect on a pro forma basis for such  period,  in all
respects in accordance with GAAP, to any Asset Acquisitions (including,  without
limitation any Asset  Acquisition  by the Company or any  Restricted  Subsidiary
giving rise to the need to determine  Consolidated  Cash Flow as a result of the
Company or one of its Restricted Subsidiaries (including any Person that becomes
a  Restricted  Subsidiary  as result of any such Asset  Acquisition)  incurring,
assuming or otherwise  becoming liable for any Debt) occurring during the period
commencing  on the first day of such  period to and  including  the date of such
determination,  as if such Asset  Acquisition  occurred on the first day of such
period and (2)  Consolidated  Cash Flow  attributable  to any assets or property
subject to an Asset Sale by the Company or any Restricted Subsidiary on or prior
to the date of such determination shall be deemed to be zero for such period.

         "Consolidated  Debt" means, as of any date of determination,  the total
of all Debt of the Company and its Restricted  Subsidiaries  outstanding on such
date,  after  eliminating all offsetting  debits and credits between the Company
and its Restricted Subsidiaries and all other items required to be eliminated in
the  course of the  preparation  of  consolidated  financial  statements  of the
Company and its Restricted Subsidiaries in accordance with GAAP.

         "Consolidated  Income Tax Expense"  means,  with respect to any period,
all provisions for Federal, state, local and foreign income taxes of the Company
and its Restricted  Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.

         "Consolidated  Interest Expense" means, with respect to any period, the
sum  (without  duplication)  of the  following  (in each case,  eliminating  all
offsetting   debits  and  credits   between  the  Company  and  its   Restricted
Subsidiaries  and all other items required to be eliminated in the course of the
preparation  of  consolidated  financial  statements  of  the  Company  and  its
Restricted Subsidiaries in accordance with GAAP): (a) all interest in respect of
Debt of the Company and its  Restricted  Subsidiaries  whether earned or accrued
(including  non-cash  interest  payments and imputed  interest on Capital  Lease
Obligations)  deducted in determining  Consolidated  Net Income for such period,
and (b) all debt  discount and expense  amortized or required to be amortized in
the determination of Consolidated Net Income for such period,  provided that for
purposes of making any computation  pursuant to Section 10.1(c)(iii) and Section
10.11  (including any calculation of Consolidated  Cash Flow relating  thereto),
Consolidated  Interest  Expense  shall be determined on a pro forma basis giving
effect to the incurrence of Debt (and the application of proceeds thereof) which
is the subject of such  computation  as if such Debt had been  incurred (and the
proceeds thereof applied) on the first day of such period.

         "Consolidated Net Income" means, with reference to any period,  the net
income (or loss) of the Company and its Restricted  Subsidiaries for such period
(taken as a cumulative  whole),  as determined in  accordance  with GAAP,  after
eliminating  all  offsetting  debits and  credits  between  the  Company and its
Restricted  Subsidiaries  and all other items  required to be  eliminated in the
course of the  preparation of consolidated  financial  statements of the Company
and its Restricted  Subsidiaries  in accordance  with GAAP,  provided that there
shall be excluded:

                   (a) the income (or loss) of any Person  accrued  prior to the
         date it becomes a Subsidiary or is merged into or consolidated with the
         Company  or a  Subsidiary,  and the  income  (or  loss) of any  Person,
         substantially  all of the  assets of which  have been  acquired  in any
         manner, realized by such other Person prior to the date of acquisition,

                   (b)  the  income  (or  loss)  of  any  Person  (other  than a
         Subsidiary)  in which the Company or any  Subsidiary  has an  ownership
         interest,  except to the extent that any such income has been  actually
         received  by the  Company  or  such  Subsidiary  in the  form  of  cash
         dividends or similar cash distributions,

                   (c) the undistributed  earnings of any Restricted  Subsidiary
         to the extent that the  declaration  or payment of dividends or similar
         distributions  by  such  Restricted  Subsidiary  is  not  at  the  time
         permitted  by the terms of its  charter or any  agreement,  instrument,
         judgment,  decree,  order,  statute,  rule or  governmental  regulation
         applicable to such Restricted Subsidiary,

                   (d) any aggregate net gain or loss during such period arising
         from the sale,  conversion,  exchange or other  disposition  of capital
         assets (such term to include,  without limitation,  (i) all non-current
         assets and, without duplication, and (ii) the following, whether or not
         current:  all  fixed  assets,  whether  tangible  or  intangible,   all
         inventory sold in conjunction with the disposition of fixed assets, and
         all Securities), and

                   (e) any net income or gain or loss  during  such  period from
         (i) any change in accounting  principles in accordance  with GAAP, (ii)
         any prior period  adjustments  resulting  from any change in accounting
         principles in accordance with GAAP, or (iii) any extraordinary items.

         "Consolidated  Non-Cash Charges" means, with respect to any period, the
aggregate  depreciation  and  amortization  (other  than  amortization  of  debt
discount),  and any non-cash employee  compensation expenses for such period, in
each case,  reducing  Consolidated  Net Income of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP.

         "Credit  Agreement"  means  the  Second  Amended  and  Restated  Credit
Agreement  dated July 2, 1998,  between the Company and the banks named therein,
as the same may be amended and supplemented from time to time.

         "Debt" means, with respect to any Person, without duplication,

                   (a)     its liabilities for borrowed money;

                   (b)  its  liabilities  for the  deferred  purchase  price  of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including,  without limitation, all
         liabilities  created or  arising  under any  conditional  sale or other
         title retention agreement with respect to any such property);

                   (c)     its Capital Lease Obligations;

                   (d) all  liabilities  for borrowed  money secured by any Lien
         with  respect to any property  owned by such Person  (whether or not it
         has assumed or otherwise become liable for such liabilities); and

                   (e)     any Guaranty of such Person with respect to  
         liabilities  of a type  described in any of
         clauses (a) through (d) hereof.

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person  remains  legally
liable in respect thereof  notwithstanding that any such obligation is deemed to
be extinguished under GAAP.

         "Default"  means an event or condition  the  occurrence or existence of
which would,  with the lapse of time or the giving of notice or both,  become an
Event of Default.

         "Default  Rate"  means with  respect to any Note that rate of  interest
that is the  greater of (i) 2% per annum  above the rate of  interest  stated in
clause  (a) of the  first  paragraph  of such  Note or (ii) 2% over  the rate of
interest  publicly  announced  by  Wells  Fargo  Bank,  N.A.  in San  Francisco,
California as its "base" or "prime" rate.

         "Distribution" means, in respect of any corporation, association or 
other business entity:

                   (a) dividends or other  distributions  or payments on capital
         stock or other  equity  interest of such  corporation,  association  or
         other  business  entity  (except  distributions  in such stock or other
         equity interest); and

                   (b) the  redemption,  retirement,  purchase or acquisition of
         such stock or other equity  interests  or of warrants,  rights or other
         options to purchase such stock or other equity  interests  (except when
         solely in exchange  for such stock or other  equity  interests)  unless
         made, contemporaneously,  from the net proceeds of a sale of such stock
         or other equity interests.

         "Environmental  Laws"  means any and all  Federal,  state,  local,  and
foreign statutes,  laws,  regulations,  ordinances,  rules,  judgments,  orders,
decrees,  permits,  concessions,  grants,  franchises,  licenses,  agreements or
governmental  restrictions  relating  to  pollution  and the  protection  of the
environment or the release of any materials into the environment,  including but
not limited to those related to hazardous  substances  or wastes,  air emissions
and discharges to waste or public systems.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time, and the rules and regulations  promulgated thereunder
from time to time in effect.

         "ERISA   Affiliate"  means  any  trade  or  business  (whether  or  not
incorporated)  that is treated as a single  employer  together  with the Company
under Section 414 of the Code.

         "Event of Default" is defined in Section 11.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Fair  Market  Value"  means,  at any  time  and  with  respect  to any
property,  the  sale  value  of such  property  that  would  be  realized  in an
arm's-length  sale at such time  between an informed  and  willing  buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

         "General Partner" means Ferrellgas, Inc., a Delaware corporation.

         "Governmental Authority" means

                   (a)     the government of

                            (i)     the  United  States  of  America  or any 
                  State or other  political  subdivision
                  thereof, or

                           (ii)     any  jurisdiction  in which the Company or 
                  any  Subsidiary  conducts all or any
                  part of its business,  or which asserts  jurisdiction  
                  over any  properties of the Company or any
                  Subsidiary, or

                   (b)     any entity exercising  executive,  legislative,  
         judicial,  regulatory or administrative
         functions of, or pertaining to, any such government.

         "Guaranty"  means, with respect to any Person,  any obligation  (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness,  dividend or other  obligation  of any other Person in any manner,
whether  directly or  indirectly,  including  (without  limitation)  obligations
incurred through an agreement, contingent or otherwise, by such Person:

                   (a)     to purchase  such  Indebtedness  or  obligation  or 
         any property  constituting  security
         therefor;

                   (b) to  advance  or  supply  funds  (i) for the  purchase  or
         payment of such  Indebtedness  or  obligation,  or (ii) to maintain any
         working  capital  or  other  balance  sheet  condition  or  any  income
         statement condition of any other Person or otherwise to advance or make
         available  funds for the  purchase or payment of such  Indebtedness  or
         obligation;

                   (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such Indebtedness or
         obligation  of the ability of any other  Person to make  payment of the
         Indebtedness or obligation; or

                   (d)     otherwise  to assure  the  owner of such  
         Indebtedness  or  obligation  against  loss in
         respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

         "Hazardous  Material" means any and all pollutants,  toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal  of which may be  required  or the  generation,  manufacture,  refining,
production, processing, treatment, storage, handling, transportation,  transfer,
use, disposal, release, discharge,  spillage, seepage, or filtration of which is
or  shall  be  restricted,   prohibited  or  penalized  by  any  applicable  law
(including, without limitation,  asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

         "Holder" or "holder"  means,  with  respect to any Note,  the Person in
whose name such Note is  registered  in the register  maintained  by the Company
pursuant to Section 13.1.

         "Indebtedness" with respect to any Person means, at any time, without 
          duplication,

                   (a)     its  liabilities  for  borrowed  money and its 
         redemption  obligations  in  respect  of
         mandatorily redeemable Preferred Stock;

                   (b)  its  liabilities  for the  deferred  purchase  price  of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including all  liabilities  created
         or  arising  under  any  conditional  sale  or  other  title  retention
         agreement with respect to any such property);

                   (c)     all  liabilities  appearing on its balance sheet in 
         accordance  with GAAP in respect of
         Capital Leases;

                   (d) all  liabilities  for borrowed  money secured by any Lien
         with  respect to any property  owned by such Person  (whether or not it
         has assumed or otherwise become liable for such liabilities);

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

                   (f)     any Guaranty of such Person with respect to  
         liabilities  of a type  described in any of
         clauses (a) through (e) hereof.

Indebtedness  of any Person shall include all  obligations of such Person of the
character described in clauses (a) through (f) to the extent such Person remains
legally liable in respect  thereof  notwithstanding  that any such obligation is
deemed to be extinguished under GAAP.

         "Institutional  Investor"  means (a) any original  purchaser of a Note,
(b) any holder of a Note holding more than 2% of the aggregate  principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association  or other  financial  institution,  any pension plan, any investment
company,  any  insurance  company,  any broker or dealer,  or any other  similar
financial institution or entity, regardless of legal form.

         "Investment"  means  any  investment,  made in cash or by  delivery  of
property,  by the  Company  or any of  its  Restricted  Subsidiaries  (i) in any
Person,  whether by acquisition of stock,  Indebtedness or other  obligations or
Security, or by loan, Guaranty,  advance,  capital contribution or otherwise, or
(ii) in any property that would be classified as  Investments on a balance sheet
prepared in accordance with GAAP.

         "Lien" means, with respect to any Person,  any mortgage,  lien, pledge,
charge, security interest or other encumbrance,  or any interest or title of any
vendor,  lessor,  lender or other  secured  party to or of such Person under any
conditional  sale or other title retention  agreement or Capital Lease,  upon or
with respect to any property or asset of such Person  (including  in the case of
stock,   stockholder  agreements,   voting  trust  agreements  and  all  similar
arrangements).

         "Maintenance Capital Expenditures" means cash 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 the Company and its
Restricted Subsidiaries, taken as a whole, as such assets existed at the time of
such expenditure.

         "Make-Whole Amount" is defined in Section 8.6.

         "Material"  means  material in relation  to the  business,  operations,
affairs, financial condition, assets, properties or prospects of the Company and
its Restricted Subsidiaries taken as a whole.

         "Material  Adverse  Effect" means a material  adverse effect on (a) the
business, operations,  affairs, financial condition, assets or properties of the
Company and its Restricted  Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its  obligations  under this Agreement and the Notes,  or
(c) the validity or enforceability of this Agreement or the Notes.

         "Memorandum" is defined in Section 5.3.

         "Multiemployer  Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).

         "Notes",  "Series A Notes", "Series B Notes", "Series C Notes", "Series
D Notes" and "Series E Notes" are defined in Section 1.

         "Officer's  Certificate"  means a  certificate  of a  Senior  Financial
Officer or of any other officer of the Company whose responsibilities  extend to
the subject matter of such certificate.

         "PBGC" means the Pension Benefit Guaranty  Corporation  referred to and
defined in ERISA or any successor thereto.

         "Person" means an individual,  partnership, joint venture, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         "Plan" means an "employee  benefit plan" (as defined in Section 3(3) of
ERISA) that is or,  within the preceding  five years,  has been  established  or
maintained,  or to which  contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA  Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

         "Preferred  Stock"  means any class of capital  stock of a  corporation
that is preferred  over any other class of capital stock of such  corporation as
to the payment of  dividends  or the payment of any amount upon  liquidation  or
dissolution of such corporation.

         "Priority Debt" means, without duplication,  the sum of (a) all Debt of
the  Company  and its  Restricted  Subsidiaries  secured by Liens  permitted  by
Section  10.4(m),  and  (b)  all  Debt of  Restricted  Subsidiaries  that is not
permitted by Section 10.3(a), (b) or (c).

         "property"  or  "properties"  means,   unless  otherwise   specifically
limited,  real or personal property of any kind, tangible or intangible,  choate
or inchoate.

         "QPAM  Exemption" means  Prohibited  Transaction  Class Exemption 84-14
issued by the United States Department of Labor.

         "Refinancing" is defined in Section 10.1(b).

         "Required  Holders"  means, at any time, the holders of at least 51% in
principal amount of the Notes at the time  outstanding  (exclusive of Notes then
owned by the Company or any of its Affiliates).

         "Responsible  Officer" means any Senior Financial Officer and any other
officer  of the  Company  with  responsibility  for  the  administration  of the
relevant portion of this Agreement.

         "Restricted  Payment" means any Distribution in respect of the Company.
For purposes of this  Agreement,  the amount of any  Restricted  Payment made in
property  shall be the greater of (x) the Fair Market Value of such property (as
determined  in good faith by the board of  directors  (or  equivalent  governing
body) of the Person making such  Restricted  Payment) and (y) the net book value
thereof on the books of such Person,  in each case  determined as of the date on
which such Restricted Payment is made.

         "Restricted Subsidiary" means any Subsidiary (i) of which more than 80%
of the  Voting  Stock is  beneficially  owned,  directly  or  indirectly  by the
Company,  (ii) which is  organized  under the laws of the  United  States or any
State  thereof,  (iii)  which  maintains  substantially  all of its  assets  and
conducts  substantially  all of its business within the United States,  and (iv)
which is properly  designated  as such by the Company in the most recent  notice
(or, prior to any such notice,  on Schedule 5.4) with respect to such Subsidiary
given by the  Company  pursuant  to and in  accordance  with the  provisions  of
Section 7.4.

         "Sale and Leaseback  Transaction"  means,  with respect to a Person and
property, a transaction or series of transactions  pursuant to which such Person
sells  such  property  with  the  intent  at the  time  of  entering  into  such
transaction or transactions of leasing such property for a term in excess of six
months.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Security" has the meaning set forth in section 2(a)(1) of the
Securities Act of 1933, as amended.

         "Senior   Debt"  means  (a)  any  Debt  of  the  Company   (other  than
Subordinated Debt) and (b) any Debt of any Restricted Subsidiary.

         "Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

         "Subordinated Debt" means any Debt of the Company that shall contain or
have applicable thereto subordination  provisions  substantially in the form set
forth in Exhibit 10.1 attached hereto providing for the subordination thereof to
the Notes,  or other  provisions  as may be  approved  in  writing  prior to the
incurrence  thereof  by the  Holders  of not  less  than  66-2/3%  in  aggregate
principal amount or the outstanding Notes.

         "Subsidiary"  means, as to any Person, any corporation,  association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests  to  enable  it or them (as a group)  ordinarily,  in the  absence  of
contingencies,  to elect a majority  of the  directors  (or  Persons  performing
similar  functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries (unless such partnership can and does ordinarily
take major business  actions without the prior approval of such Person or one or
more of its  Subsidiaries).  Unless the context otherwise clearly requires,  any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.

         "Subsidiary  Stock"  means the stock (or any  options  or  warrants  to
purchase stock or other  Securities  exchangeable for or convertible into stock)
of any Restricted Subsidiary.

         "Transfer" means, with respect to any Person,  any transaction in which
such  Person  sells,  conveys,  abandons,  transfers,  leases  (as  lessor),  or
otherwise disposes of (including,  without limitation, in connection with a Sale
Leaseback  Transaction),  any of its property,  including,  without  limitation,
Subsidiary Stock.

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

         "Voting  Stock"  means  (i)  Securities  of any class of  classes,  the
holders of which are ordinarily,  in the absence of  contingencies,  entitled to
elect a majority of the directors (or Persons  performing  similar functions) or
(ii) in the case of a partnership or joint venture,  interests in the profits or
capital  thereof  entitling  the  holders of such  interests  to  approve  major
business actions.

         "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary  one hundred  percent (100%) of all of the equity  interests  (except
directors' qualifying shares) and voting interests of which are owned by any one
or  more  of  the  Company  and  the  Company's  other  Wholly-Owned  Restricted
Subsidiaries at such time.

         "Working  Capital  Facility"  means the Debt facility made available to
the Company for working  capital  purposes  under the  "Facility A  Commitments"
pursuant to the Credit  Agreement  dated June 30, 1998,  between the Company and
the  banks  named  therein,  as  from  time to time  amended,  supplemented  and
Refinanced and any other credit  agreement from time to time entered into by the
Company  and its  Restricted  Subsidiaries  for  purposes of  obtaining  working
capital Debt.


<PAGE>

                                   EXHIBIT 1-A
                          (to Note Purchase Agreement)

                             [FORM OF SERIES A NOTE]

                                FERRELLGAS, L.P.

                 6.99% SENIOR NOTE, SERIES A, DUE AUGUST 1, 2005


         FOR VALUE RECEIVED,  the undersigned,  FERRELLGAS,  L.P. (herein called
the "Company"),  a limited partnership  organized and existing under the laws of
the State of  Delaware,  hereby  promises to pay to  [_____________________]  or
registered assigns,  the principal sum of [______________]  DOLLARS on August 1,
2005 with  interest  (computed on the basis of a 360-day  year of twelve  30-day
months)  (a) on the unpaid  balance  thereof at the rate of 6.99% per annum from
the date hereof,  payable semiannually,  on the first day of February and August
in each year,  commencing  with the February or August next  succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent  permitted  by law on any  overdue  payment  (including  any  overdue
prepayment)  of  principal,  any  overdue  payment of  interest  and any overdue
payment of any  Make-Whole  Amount (as  defined in the Note  Purchase  Agreement
referred to below),  payable semiannually as aforesaid (or, at the option of the
registered  holder  hereof,  on  demand),  at a rate per annum from time to time
equal to the greater of (i) 8.99% or (ii) 2% over the rate of interest  publicly
announced  by  Wells  Fargo  Bank,  N.A.  from  time to  time in San  Francisco,
California as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at the principal  office of the Company in Liberty,  Missouri or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

         This Note is one of the 6.99% Senior Notes, Series A (herein called the
"Series A Notes"),  issued pursuant to the Note Purchase Agreement,  dated as of
July 1, 1998 (as from time to time  amended,  the  "Note  Purchase  Agreement"),
between  the  Company and the  Purchasers  named  therein and is entitled to the
benefits  thereof.  Each holder of this Note will be deemed,  by its  acceptance
hereof,  (i) to have  agreed  to the  confidentiality  provisions  set  forth in
Section  20  of  the  Note  Purchase   Agreement  and  (ii)  to  have  made  the
representation set forth in Section 6.2 of the Note Purchase Agreement.

         This Note is a  registered  Series A Note and,  as provided in the Note
Purchase  Agreement,  upon surrender of this Note for  registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the  registered  holder hereof or such holder's  attorney duly  authorized in
writing,  a new Series A Note for a like principal amount will be issued to, and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

         This Note is subject to optional  prepayment,  in whole or from time to
time in part,  at the  times  and on the terms  specified  in the Note  Purchase
Agreement, but not otherwise.

         If an Event of  Default,  as  defined in the Note  Purchase  Agreement,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

         This Note shall be construed and enforced in accordance  with,  and the
rights of the issuer  and holder  hereof  shall be  governed  by, the law of the
State of Illinois  excluding  choice-of-law  principles of the law of such State
that would require the application of the laws of a jurisdiction other than such
State.

                                   FERRELLGAS, L.P.

                                   By Ferrellgas, Inc., its general partner


                                   By___________________________________________
                                   Its__________________________________________


<PAGE>



                                   EXHIBIT 1-B
                          (to Note Purchase Agreement)

                             [FORM OF SERIES B NOTE]

                                FERRELLGAS, L.P.

                 7.08% SENIOR NOTE, SERIES B, DUE AUGUST 1, 2006


         FOR VALUE RECEIVED,  the undersigned,  FERRELLGAS,  L.P. (herein called
the "Company"),  a limited partnership  organized and existing under the laws of
the State of  Delaware,  hereby  promises to pay to  [_____________________]  or
registered assigns,  the principal sum of [______________]  DOLLARS on August 1,
2006 with  interest  (computed on the basis of a 360-day  year of twelve  30-day
months)  (a) on the unpaid  balance  thereof at the rate of 7.08% per annum from
the date hereof,  payable semiannually,  on the first day of February and August
in each year,  commencing  with the February or August next  succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent  permitted  by law on any  overdue  payment  (including  any  overdue
prepayment)  of  principal,  any  overdue  payment of  interest  and any overdue
payment of any  Make-Whole  Amount (as  defined in the Note  Purchase  Agreement
referred to below),  payable semiannually as aforesaid (or, at the option of the
registered  holder  hereof,  on  demand),  at a rate per annum from time to time
equal to the greater of (i) 9.08% or (ii) 2% over the rate of interest  publicly
announced  by  Wells  Fargo  Bank,  N.A.  from  time to  time in San  Francisco,
California as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at the principal  office of the Company in Liberty,  Missouri or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

         This Note is one of the 7.08% Senior Notes, Series B (herein called the
"Series B Notes"), issued pursuant to Note Purchase Agreement,  dated as of July
1, 1998 (as from time to time amended, the "Note Purchase  Agreement"),  between
the Company and the  Purchasers  named  therein and is entitled to the  benefits
thereof.  Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality  provisions set forth in Section 20 of the
Note Purchase  Agreement and (ii) to have made the  representation  set forth in
Section 6.2 of the Note Purchase Agreement.

         This Note is a  registered  Series B Note and,  as provided in the Note
Purchase  Agreement,  upon surrender of this Note for  registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the  registered  holder hereof or such holder's  attorney duly  authorized in
writing,  a new Series B Note for a like principal amount will be issued to, and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

         This Note is subject to optional  prepayment,  in whole or from time to
time in part,  at the  times  and on the terms  specified  in the Note  Purchase
Agreement, but not otherwise.

         If an Event of  Default,  as  defined in the Note  Purchase  Agreement,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

         This Note shall be construed and enforced in accordance  with,  and the
rights of the issuer  and holder  hereof  shall be  governed  by, the law of the
State of Illinois  excluding  choice-of-law  principles of the law of such State
that would require the application of the laws of a jurisdiction other than such
State.

                                FERRELLGAS, L.P.

                                By Ferrellgas, Inc., its general partner


                                By_________________________________________
                                Its____________________________________________


<PAGE>


                                   EXHIBIT 1-C
                          (to Note Purchase Agreement)
                             [FORM OF SERIES C NOTE]

                                FERRELLGAS, L.P.

                 7.12% SENIOR NOTE, SERIES C, DUE AUGUST 1, 2008

         FOR VALUE RECEIVED,  the undersigned,  FERRELLGAS,  L.P. (herein called
the "Company"),  a limited partnership  organized and existing under the laws of
the State of  Delaware,  hereby  promises to pay to  [_____________________]  or
registered assigns,  the principal sum of [______________]  DOLLARS on August 1,
2008 with  interest  (computed on the basis of a 360-day  year of twelve  30-day
months)  (a) on the unpaid  balance  thereof at the rate of 7.12% per annum from
the date hereof,  payable semiannually,  on the first day of February and August
in each year,  commencing  with the February or August next  succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent  permitted  by law on any  overdue  payment  (including  any  overdue
prepayment)  of  principal,  any  overdue  payment of  interest  and any overdue
payment of any  Make-Whole  Amount (as  defined in the Note  Purchase  Agreement
referred to below),  payable semiannually as aforesaid (or, at the option of the
registered  holder  hereof,  on  demand),  at a rate per annum from time to time
equal to the greater of (i) 9.12% or (ii) 2% over the rate of interest  publicly
announced  by  Wells  Fargo  Bank,  N.A.  from  time to  time in San  Francisco,
California as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at the  principal  office of the Company in Liberty  Missouri or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

         This Note is one of the 7.12% Senior Notes, Series C (herein called the
"Series C Notes"), issued pursuant to Note Purchase Agreement,  dated as of July
1, 1998 (as from time to time amended, the "Note Purchase  Agreement"),  between
the Company and the  Purchasers  named  therein and is entitled to the  benefits
thereof.  Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality  provisions set forth in Section 20 of the
Note Purchase  Agreement and (ii) to have made the  representation  set forth in
Section 6.2 of the Note Purchase Agreement.

         This Note is a  registered  Series C Note and,  as provided in the Note
Purchase  Agreement,  upon surrender of this Note for  registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the  registered  holder hereof or such holder's  attorney duly  authorized in
writing,  a new Series C Note for a like principal amount will be issued to, and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

         This Note is subject to optional  prepayment,  in whole or from time to
time in part,  at the  times  and on the terms  specified  in the Note  Purchase
Agreement, but not otherwise.

         If an Event of  Default,  as  defined in the Note  Purchase  Agreement,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

         This Note shall be construed and enforced in accordance  with,  and the
rights of the issuer  and holder  hereof  shall be  governed  by, the law of the
State of Illinois  excluding  choice-of-law  principles of the law of such State
that would require the application of the laws of a jurisdiction other than such
State.

                                  FERRELLGAS, L.P.

                                  By Ferrellgas, Inc., its general partner


                                  By___________________________________________
                                  Its__________________________________________


<PAGE>


                                   EXHIBIT 1-D
                          (to Note Purchase Agreement)
                             [FORM OF SERIES D NOTE]

                                FERRELLGAS, L.P.

                 7.24% SENIOR NOTE, SERIES D, DUE AUGUST 1, 2010

         FOR VALUE RECEIVED,  the undersigned,  FERRELLGAS,  L.P. (herein called
the "Company"),  a limited partnership  organized and existing under the laws of
the State of  Delaware,  hereby  promises to pay to  [_____________________]  or
registered assigns,  the principal sum of [______________]  DOLLARS on August 1,
2010 with  interest  (computed on the basis of a 360-day  year of twelve  30-day
months)  (a) on the unpaid  balance  thereof at the rate of 7.24% per annum from
the date hereof,  payable semiannually,  on the first day of February and August
in each year,  commencing  with the February or August next  succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent  permitted  by law on any  overdue  payment  (including  any  overdue
prepayment)  of  principal,  any  overdue  payment of  interest  and any overdue
payment of any  Make-Whole  Amount (as  defined in the Note  Purchase  Agreement
referred to below),  payable semiannually as aforesaid (or, at the option of the
registered  holder  hereof,  on  demand),  at a rate per annum from time to time
equal to the greater of (i) 9.24% or (ii) 2% over the rate of interest  publicly
announced  by  Wells  Fargo  Bank,  N.A.  from  time to  time in San  Francisco,
California as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at the  principal  office of the Company in Liberty  Missouri or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

         This Note is one of the 7.24% Senior Notes, Series D (herein called the
"Series D Notes"), issued pursuant to Note Purchase Agreement,  dated as of July
1, 1998 (as from time to time amended, the "Note Purchase  Agreement"),  between
the Company and the  Purchasers  named  therein and is entitled to the  benefits
thereof.  Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality  provisions set forth in Section 20 of the
Note Purchase  Agreement and (ii) to have made the  representation  set forth in
Section 6.2 of the Note Purchase Agreement.

         This Note is a  registered  Series D Note and,  as provided in the Note
Purchase  Agreement,  upon surrender of this Note for  registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the  registered  holder hereof or such holder's  attorney duly  authorized in
writing,  a new Series D Note for a like principal amount will be issued to, and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

         This Note is subject to optional  prepayment,  in whole or from time to
time in part,  at the  times  and on the terms  specified  in the Note  Purchase
Agreement, but not otherwise.

         If an Event of  Default,  as  defined in the Note  Purchase  Agreement,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

         This Note shall be construed and enforced in accordance  with,  and the
rights of the issuer  and holder  hereof  shall be  governed  by, the law of the
State of Illinois  excluding  choice-of-law  principles of the law of such State
that would require the application of the laws of a jurisdiction other than such
State.

                                     FERRELLGAS, L.P.

                                     By Ferrellgas, Inc., its general partner


                                     By______________________________________
                                     Its____________________________________


<PAGE>



                                   EXHIBIT 1-E
                          (to Note Purchase Agreement)
                             [FORM OF SERIES E NOTE]

                                FERRELLGAS, L.P.

                 7.42% SENIOR NOTE, SERIES E, DUE AUGUST 1, 2013


         FOR VALUE RECEIVED,  the undersigned,  FERRELLGAS,  L.P. (herein called
the "Company"),  a limited partnership  organized and existing under the laws of
the State of  Delaware,  hereby  promises to pay to  [_____________________]  or
registered assigns,  the principal sum of [______________]  DOLLARS on August 1,
2013 with  interest  (computed on the basis of a 360-day  year of twelve  30-day
months)  (a) on the unpaid  balance  thereof at the rate of 7.42% per annum from
the date hereof,  payable semiannually,  on the first day of February and August
in each year,  commencing  with the February or August next  succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent  permitted  by law on any  overdue  payment  (including  any  overdue
prepayment)  of  principal,  any  overdue  payment of  interest  and any overdue
payment of any  Make-Whole  Amount (as  defined in the Note  Purchase  Agreement
referred to below),  payable semiannually as aforesaid (or, at the option of the
registered  holder  hereof,  on  demand),  at a rate per annum from time to time
equal to the greater of (i) 9.42% or (ii) 2% over the rate of interest  publicly
announced  by  Wells  Fargo  Bank,  N.A.  from  time to  time in San  Francisco,
California as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at the  principal  office of the Company in Liberty  Missouri or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

         This Note is one of the 7.42% Senior Notes, Series E (herein called the
"Series E Notes"), issued pursuant to Note Purchase Agreement,  dated as of July
1, 1998 (as from time to time amended, the "Note Purchase  Agreement"),  between
the Company and the  Purchasers  named  therein and is entitled to the  benefits
thereof.  Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality  provisions set forth in Section 20 of the
Note Purchase  Agreement and (ii) to have made the  representation  set forth in
Section 6.2 of the Note Purchase Agreement.

         This Note is a  registered  Series E Note and,  as provided in the Note
Purchase  Agreement,  upon surrender of this Note for  registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the  registered  holder hereof or such holder's  attorney duly  authorized in
writing,  a new Series E Note for a like principal amount will be issued to, and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

         This Note is subject to optional  prepayment,  in whole or from time to
time in part,  at the  times  and on the terms  specified  in the Note  Purchase
Agreement, but not otherwise.

         If an Event of  Default,  as  defined in the Note  Purchase  Agreement,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

         This Note shall be construed and enforced in accordance  with,  and the
rights of the issuer  and holder  hereof  shall be  governed  by, the law of the
State of Illinois  excluding  choice-of-law  principles of the law of such State
that would require the application of the laws of a jurisdiction other than such
State.

                        FERRELLGAS, L.P.

                        By Ferrellgas, Inc., its general partner


                        By____________________________________________________
                         Its___________________________________________________


<PAGE>


                                 EXHIBIT 4.4(a)
                          (to Note Purchase Agreement)
               FORM OF OPINION OF SPECIAL COUNSEL FOR THE COMPANY

         The closing opinion of Bryan Cave LLP, special counsel for the Company,
its  Restricted  Subsidiaries  and the General  Partner,  which is called for by
Section  4.4(a) of the Note Purchase  Agreement,  shall be dated the date of the
Closing and addressed to the Purchasers, shall be satisfactory in scope and form
to the Purchasers and shall be to the effect that:

                    1.  The  Company  is a  partnership,  duly  formed,  validly
         existing and in good standing  under the laws of the State of Delaware,
         has the partnership power and authority to execute and perform the Note
         Purchase  Agreement  and to  issue  the  Notes  and has  the  requisite
         partnership power and authority to conduct its business in all material
         respects as presently  conducted and, based solely on  certificates  of
         foreign  qualification  provided  by the  Secretary  of  State  of each
         jurisdiction,  is duly qualified or registered as a foreign partnership
         to  transact  business  in,  and  is  in  good  standing  as a  foreign
         partnership in each  jurisdiction set forth on Schedule I hereto,  and,
         to our knowledge,  such  jurisdictions  are the only  jurisdictions  in
         which the Company conducts any business that requires  qualification or
         registration to conduct business as a foreign partnership, except where
         the failure to so qualify or register would not have a Material Adverse
         Effect.

                    2.  Each   Restricted   Subsidiary   of  the  Company  is  a
         corporation or limited  partnership duly incorporated or formed, as the
         case may be,  validly  existing and in good standing  under the laws of
         its  jurisdiction of  incorporation or formation and, based solely upon
         certificates  of foreign  qualification  provided by the  Secretary  of
         State  of each  jurisdiction,  is duly  qualified  or  registered  as a
         foreign corporation or limited partnership to transact business in, and
         is in good standing as a foreign  corporation or limited partnership in
         each  jurisdiction  set  forth  on  Schedule  II  hereto,  and,  to our
         knowledge,  such  jurisdictions are the only jurisdictions in which the
         Restricted  Subsidiaries  of the  Company  conduct  any  business  that
         requires qualification or registration to conduct business as a foreign
         corporation or  partnership,  except where the failure to so qualify or
         register  would not have a material  adverse effect upon the respective
         Restricted  Subsidiaries;  and all of the issued and outstanding shares
         of capital stock or other  ownership  interests of each such Restricted
         Subsidiary, as applicable, have been validly issued, are fully paid and
         non-assessable   and  the  Company   and/or  one  or  more   Restricted
         Subsidiaries  is the  holder  of record  of such  shares  or  ownership
         interests.

                    3. The Note Purchase  Agreement has been duly  authorized by
         all necessary  partnership action on the part of the Company,  has been
         duly executed and delivered by the Company and  constitutes  the legal,
         valid and binding  obligation of the Company  enforceable in accordance
         with its terms, except to the extent that enforceability may be limited
         by applicable bankruptcy, insolvency, fraudulent conveyance and similar
         laws affecting  creditors' rights generally,  and general principles of
         equity  (regardless of whether the enforceability of such principles is
         considered in a proceeding in equity or at law).

                    4. The  Notes  have been duly  authorized  by all  necessary
         partnership action on the part of the Company,  have been duly executed
         and delivered by the Company, and when paid for by the Purchasers, will
         constitute  the legal,  valid and  binding  obligations  of the Company
         enforceable  in  accordance  with their terms,  subject to  bankruptcy,
         insolvency, fraudulent conveyance and similar laws affecting creditors'
         rights  generally,  and general  principles  of equity  (regardless  of
         whether  the   application  of  such  principles  is  considered  in  a
         proceeding in equity or at law).

                    5. No  approval,  consent,  registration,  qualification  or
         other  action  on the part of, or filing  with any  governmental  body,
         Federal,  state or local,  is required for the execution,  delivery and
         performance  by the  Company  of the  Note  Purchase  Agreement  or the
         execution,  delivery  and  performance  by the  Company  of the  Notes,
         except,  in each case,  such  approvals,  consents,  registrations,  or
         qualifications  as have been obtained,  or set forth or contemplated in
         the Note Purchase Agreement.

                    6. The  issuance  and sale of the Notes  and the  execution,
         delivery and performance by the Company of the Note Purchase  Agreement
         do not violate applicable  provisions of statutory law applicable to or
         binding  on the  Company  or any  order of any  court  or  governmental
         authority or agency applicable to or binding on the Company, or violate
         or result in any breach of any of the  provisions  of or  constitute  a
         default  under,  or result in the creation or imposition of a Lien with
         respect to, any material  bond,  note,  debenture or other  evidence of
         indebtedness or any material indenture,  mortgage,  deed of trust, loan
         agreement,  contract,  lease or other  material  instrument  for  money
         borrowed  known to us to which the  Company  is a party or by which the
         Company is bound or to which the  property  of the  Company is subject,
         nor will such action result in a breach or violation of the Certificate
         of  Formation  or Articles of  Partnership  of the  Company;  provided,
         however,  that,  for  purposes  of  this  paragraph  6, no  opinion  is
         expressed  with  respect  to Federal or state  securities  laws,  other
         antifraud laws and fraudulent transfer laws.

                    7. The  issuance,  sale  and  delivery  of the  Notes by the
         Company  under  the  circumstances  contemplated  by the Note  Purchase
         Agreement do not, under existing law,  require the  registration of the
         Notes  under  the   Securities   Act  of  1933,  as  amended,   or  the
         qualification  of an  indenture  in  respect  thereof  under  the Trust
         Indenture Act of 1939, as amended.

                    8.  To  our  knowledge,  there  are  no  actions,  suits  or
         proceedings  pending or  overtly  threatened  by written  communication
         against the Company or any Restricted Subsidiary in any court or before
         any arbitrator of any kind or before or by any  Governmental  Authority
         either (i) which purport to affect the Note  Purchase  Agreement or the
         Notes, or (ii) that, individually or in the aggregate, could reasonably
         be expected to have a Material Adverse Effect.

                    9. The  issuance of the Notes and the use of the proceeds of
         the sale of the  Notes in  accordance  with  the  provisions  of and as
         contemplated  by  the  Note  Purchase  Agreement  (including,   without
         limitation,  the  representations  and warranties set forth in the Note
         Purchase  Agreement) do not violate or conflict with Regulation T, U or
         X of the Board of Governors of the Federal Reserve System.

                   10.     The  Company  is  not  an  "investment   company,"  
          or  a  company  "controlled"  by  an
         "investment company," under the Investment Company Act of 1940, as 
               amended.

                   11. A court sitting in the State of Missouri will look to the
         conflict of law rules of the State of Missouri to  determine  which law
         governs.  Under the conflict of law rules of the State of  Missouri,  a
         court  sitting  in the  State of  Missouri  should  give  effect to the
         contractual choice of law clause in the Note Purchase Agreement and the
         Notes  electing   Illinois  law  assuming  that  the  Purchasers   have
         reasonable  contacts  with the  State of  Illinois,  including  without
         limitation, that Allstate Life Insurance Company, one of the Purchasers
         is headquartered in the State of Illinois,  that many of the Purchasers
         have offices or agents in the State of Illinois, that the Notes will be
         delivered in the State of Illinois,  and that counsel to the Purchasers
         is located in the State of Illinois.

         The opinion of Bryan Cave LLP shall be limited to the laws of the State
of Missouri,  the Delaware Revised Uniform Limited  Partnership Act, the general
business  corporation  law of the State of Delaware  and the Federal laws of the
United  States.  In rendering the opinions set forth in  paragraphs  (3) and (4)
above,  Bryan Cave LLP shall  assume that the laws of  Missouri  govern the Note
Purchase Agreement and the Notes. The opinion of Bryan Cave LLP shall cover such
other matters relating to the sale of the Notes as the Purchasers may reasonably
request.  With respect to matters of fact on which such  opinion is based,  such
counsel  shall  be  entitled  to  rely on  appropriate  certificates  of  public
officials  and officers of the Company and upon  representations  of the Company
and the  Purchasers  delivered in  connection  with the issuance and sale of the
Notes.



<PAGE>

                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)
                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

         The  closing  opinion of Chapman and  Cutler,  special  counsel for the
Purchasers,  called for by Section 4.4(b) of the Note Purchase Agreement,  shall
be dated the date of the  Closing  and  addressed  to the  Purchasers,  shall be
satisfactory  in form and substance to the Purchasers and shall be to the effect
that:

                    1. The Company is a  partnership,  validly  existing  and in
         good standing under the laws of the State of Delaware and has the power
         and the  authority to execute and deliver the Note  Purchase  Agreement
         and to issue the Notes.

                    2. The Note Purchase  Agreement has been duly  authorized by
         all necessary action on the part of the Company, has been duly executed
         and  delivered  by the Company  and  constitutes  the legal,  valid and
         binding  contract of the Company  enforceable  in  accordance  with its
         terms,  subject to bankruptcy,  insolvency,  fraudulent  conveyance and
         similar  laws  affecting  creditors'  rights  generally,   and  general
         principles of equity  (regardless  of whether the  application  of such
         principles is considered in a proceeding in equity or at law).

                    3. The  Notes  have been duly  authorized  by all  necessary
         action on the part of the Company, and the Notes being delivered on the
         date hereof have been duly  executed  and  delivered by the Company and
         constitute  the legal,  valid and  binding  obligations  of the Company
         enforceable  in  accordance  with their terms,  subject to  bankruptcy,
         insolvency, fraudulent conveyance and similar laws affecting creditors'
         rights  generally,  and general  principles  of equity  (regardless  of
         whether  the   application  of  such  principles  is  considered  in  a
         proceeding in equity or at law).

                    4. The  issuance,  sale and  delivery of the Notes under the
         circumstances contemplated by the Note Purchase Agreement do not, under
         existing  law,   require  the  registration  of  the  Notes  under  the
         Securities  Act  of  1933,  as  amended,  or  the  qualification  of an
         indenture under the Trust Indenture Act of 1939, as amended.

         The opinion of Chapman and Cutler  shall also state that the opinion of
Bryan Cave LLP,  special  counsel for the Company,  is satisfactory in scope and
form to Chapman  and Cutler  and that,  in their  opinion,  the  Purchasers  are
justified in relying thereon.

         In rendering  the opinion set forth in  paragraph 1 above,  Chapman and
Cutler may rely,  as to matters  referred  to in  paragraph  1,  solely  upon an
examination of the  Certificate of Formation  certified by, and a certificate of
good  standing  of the  Company  from,  the  Secretary  of State of the State of
Delaware, the Articles of Partnership of the Company and the general partnership
law of the State of Delaware. The opinion of Chapman and Cutler shall be limited
to the laws of the State of  Illinois,  the  Delaware  Revised  Uniform  Limited
Partnership Act and the Federal laws of the United States.

         With  respect to  matters  of fact upon  which  such  opinion is based,
Chapman and Cutler may rely on appropriate  certificates of public officials and
officers  of the  Company  and  upon  representations  of the  Company  and  the
Purchasers delivered in connection with the issuance and sale of the Notes.


<PAGE>
                                  EXHIBIT 10.1
                          (to Note Purchase Agreement)
                     SUBORDINATION PROVISIONS APPLICABLE TO
                                Subordinated Debt

           (a) The  indebtedness  evidenced  by the  subordinated  notes and any
renewals or extensions thereof,  premium, if any, interest  (including,  without
limitation any such interest accruing subsequent to the filing by or against the
Company of any proceeding  brought under Chapter 11 of the  Bankruptcy  Code (11
U.S.C.  Section  100 et seq.))  and any fees,  charges,  expenses  or other sums
payable  under  or  in  respect  of  the  agreements   pursuant  to  which  such
subordinated notes were issued, shall at all times be wholly and unconditionally
subordinate  and junior in right of payment to any and all  indebtedness  of the
Company  (including  principal,  premium,  if any,  accrued and unpaid interest,
including  any  interest  which  may  accrue   subsequent  to   commencement  of
proceedings  under bankruptcy laws (whether or not such interest is allowed as a
claim pursuant to the provisions of any such  bankruptcy  laws) evidenced by the
Company's  $109,000,000 aggregate principal amount 6.99% Senior Notes, Series A,
due August 1, 2005,  $37,000,000  aggregate principal amount 7.08% Senior Notes,
Series B, due August 1,  2006,  $52,000,000  aggregate  principal  amount  7.12%
Senior  Notes,  Series C, due August 1, 2008,  $82,000,000  aggregate  principal
amount  7.24%  Senior  Notes,  Series D, due  August 1,  2010,  and  $70,000,000
aggregate  principal  amount  7.42% Senior  Notes,  Series E, due August 1, 2013
issued pursuant to the Note Purchase Agreement, dated as of July 1, 1998, as the
same  shall  be  amended  from  time  to  time,  between  the  Company  and  the
institutional  investors  named in  Schedule  A attached  thereto  and all other
amounts  due under said Note  Purchase  Agreement  (together  with any  renewal,
replacement or refinancing thereof, herein called "Superior  Indebtedness"),  in
the manner and with the force and effect hereafter set forth:

                   (1) In the  event  of any  (i)  liquidation,  dissolution  or
         winding  up  of  the  Company,  voluntary  or  involuntary,   (ii)  any
         execution,  sale, receivership,  insolvency,  bankruptcy,  liquidation,
         readjustment,  reorganization or other similar  proceeding  relative to
         the  Company  or its  property,  (iii) any  general  assignment  by the
         Company  for  the  benefit  of  creditors,  or (iv)  any  distribution,
         division, marshalling or application of any of the properties or assets
         of the  Company or the  proceeds  thereof to  creditors,  voluntary  or
         involuntary,  and whether or not involving legal proceedings,  then and
         in any event:

                            (A) all principal, premium, if any, and interest and
                  all other sums owing on all Superior  Indebtedness shall first
                  be  indefeasibly  paid in full in cash  before any  payment or
                  distribution  of any  kind  or  character  is  made  upon  the
                  indebtedness  evidenced by the subordinated  notes; and in any
                  such  event  any  payment  or  distribution  of  any  kind  or
                  character, whether in cash, property or securities (other than
                  in securities, including equity securities, or other evidences
                  of  indebtedness,  the  payment  of which  is  unconditionally
                  subordinated (to the same extent as the subordinated notes) to
                  the payment of all Superior Indebtedness which may at the time
                  be outstanding)  which shall be made upon or in respect of the
                  subordinated  notes  shall  immediately  be  paid  over to the
                  holders  of  such  Superior   Indebtedness,   pro  rata,   for
                  application in payment thereof, unless and until such Superior
                  Indebtedness shall have been indefeasibly paid or satisfied in
                  full in cash;

                   (2) In the event that the  subordinated  notes are in default
         under  circumstances  when  the  foregoing  clause  (l)  shall  not  be
         applicable,  the holders of the subordinated notes shall be entitled to
         payments of  principal,  premium,  if any, or interest only after there
         shall first have been  indefeasibly  paid in full in cash all  Superior
         Indebtedness  outstanding at the time the subordinated  notes so become
         in default; and

                   (3) During the continuance of any default with respect to any
         Superior  Indebtedness,  no payment of principal,  premium,  if any, or
         interest or any other  fees,  charges,  expenses or other sums  payable
         under  or  in  respect  of  the  agreements   pursuant  to  which  such
         subordinated notes were issued shall be made on the subordinated notes.

           (b) The holder of each subordinated note agrees that: (1) it will not
initiate a proceeding for liquidation, dissolution or winding-up of the Company,
or for  execution,  sale,  receivership,  insolvency,  bankruptcy,  liquidation,
readjustment, reorganization or other similar proceeding relative to the Company
or its  property and (2) it will not  accelerate  the maturity of or enforce the
collection of the subordinated notes.

           (c) The holder of each  subordinated  note  undertakes and agrees for
the benefit of each holder of Superior Indebtedness to execute,  verify, deliver
and file any proofs of claim within 30 days before the expiration of the time to
file the same which any holder of Superior  Indebtedness may at any time require
in order to prove  and  realize  upon any  rights or  claims  pertaining  to the
subordinated  notes and to  effectuate  the full  benefit  of the  subordination
contained herein;  and upon failure of the holder of any subordinated note so to
do, any such holder of Superior  Indebtedness  shall be deemed to be irrevocably
appointed the agent and  attorney-in-fact of the holder of such note to execute,
verify, deliver and file any such proofs of claim.

           (d) No right of any holder of any  Superior  Indebtedness  to enforce
subordination  as herein provided shall at any time or in any way be affected or
impaired  by any  failure to act on the part of the  Company  or the  holders of
Superior  Indebtedness,  or by any  noncompliance by the Company with any of the
terms, provisions and covenants of the subordinated notes or the agreement under
which they are issued,  regardless of any knowledge thereof that any such holder
of Superior Indebtedness may have or be otherwise charged with.

           (e) The  subordination  effected by the foregoing  provisions and the
rights created thereby of the holders of the Superior  Indebtedness shall not be
affected  by: (1) any  amendment  of or addition or  supplement  to any Superior
Indebtedness or any instrument or agreement  relating thereto,  (2) any exercise
or  non-exercise  of any  right,  power or  remedy  under or in  respect  of any
Superior  Indebtedness or any instrument or agreement  relating thereto,  or (3)
the giving or denial of any waiver,  consent,  release,  indulgence,  extension,
renewal,  modification  or delay or the taking or nontaking of any other action,
inaction or omission,  in respect of any Superior Indebtedness or any instrument
or  agreement  relating  thereto or to any  securities  relating  thereto or any
guarantee  thereof,  whether or not any holder of any  subordinated  notes shall
have had notice or knowledge of any of the foregoing.

           (f) The  Company  agrees,  for the benefit of the holders of Superior
Indebtedness,  that in the event that any subordinated  note is declared due and
payable  before its expressed  maturity  because of the  occurrence of a default
hereunder:  (1) the Company will give prompt notice in writing of such happening
to the holders of Superior  Indebtedness and (2) all Superior Indebtedness shall
forthwith  become  immediately  due and payable upon demand,  regardless  of the
expressed  maturity thereof and (3) the holders of such subordinated notes shall
not  entitled  to receive  any  payment or  distribution  in respect  thereof or
applicable thereto until all Superior Indebtedness at the time outstanding shall
have been indefeasibly paid in full in cash.

           (g) No holder of any subordinated  notes will sell,  assign,  pledge,
encumber or otherwise dispose of any of its subordinated notes unless such sale,
assignment,  pledge, encumbrance or disposition is made expressly subject to the
foregoing provisions.

           (h) If any payment or distribution of any character, whether in cash,
securities or other property shall be received by any holder of any subordinated
notes in  contravention of this Section  ________,  such payment or distribution
shall be  received  and held in trust for the  benefit of, and shall be promptly
paid over or delivered and  transferred  in the form received to, the holders of
the  Superior  Indebtedness  pro  rata for  application  to the  payment  of all
Superior Indebtedness  remaining unpaid, to the extent necessary to indefeasibly
pay all such Superior  Indebtedness in full in cash. In the event of the failure
of any holder of the  subordinated  notes to endorse or assign any such payment,
distribution  or  security,  any  holder of the  Superior  Indebtedness  or such
holder's  representative is hereby  irrevocably  authorized to endorse or assign
the same.