Document:

<PAGE>

                                 COHERENT, INC.

                           PRODUCTIVITY INCENTIVE PLAN
                        (AS LAST AMENDED MARCH 24, 2000)

         1. PURPOSE. The purpose of this Productivity Incentive Plan is to
afford an incentive to employees of Coherent, Inc. and its subsidiaries and to
enable Coherent, Inc. and its subsidiaries to retain and attract personnel of
the highest caliber who by their position, ability and diligence are able to
make important contributions to the Company's success.

         2. DEFINITIONS.

            (a) "Company" means Coherent, Inc. and its majority-owned domestic
and foreign subsidiaries the employees of which are designated from time to time
by the Board of Directors as eligible to participate in the Plan.

            (b) "Common Stock" means the Common Stock, $.01 par value, of the
Company.

            (c) "Employee" means any person, including an officer or director of
the Company, who is customarily employed for at least twenty (20) hours per week
by, and receives a regular salary from, the Company.

            (d) "Participating Employee" means any Employee of the Company, who
has not elected to discontinue his or her participation in the Plan.

            (e) "Three Month Period of the Plan" means the three months
commencing on or about October 1, January 1, April 1 and July 1 of each fiscal
year.

            (f) "Quarterly Base Earnings" means the aggregate regular salary and
earnings paid to a Participating Employee during each Three Month Period of the
Plan, exclusive of: bonuses, certain commissions as determined by the Board of
Directors from time to time, overtime payments, lead or swing premiums, shift
premiums, location cost premiums, or any other form of extra compensation;
Company payments for social security, worker's compensation, unemployment
compensation, or other Company payments required by statute; or Company
contributions for insurance, annuity, or employee benefit plans.

            (g) "Quarterly Pre-tax Profit Percentage" means that percentage
calculated to the nearest tenth of a percent arrived at by dividing (i) the
consolidated pre-tax profit earned by the Company for the Three Month Period of
the Plan, after deduction of the total Amount of Incentive Compensation under
the Plan, by (ii) the Company's consolidated net sales for the Three Month
Period of the Plan.

                                      -1-

<PAGE>

                The Quarterly Pre-tax Profit Percentage shall be calculated by
the Company, and such calculation shall be final and conclusive on all
participants. In determining such amounts, the Company may be entitled to rely
upon a certificate or estimate prepared by the Company's independent public
accountants or by the Company's chief accounting or financial officer. After
such determination, no recalculation shall be made on account of any subsequent
adjustments or for any other reason.

            (h) "Amount of Incentive Compensation" means that amount arrived at
by multiplying (i) the Quarterly Base Earnings of a Participating Employee by
(ii) fifty percent of the Quarterly Pre-tax Profit Percentage.

            (i) "Fair Market Value of Common Stock" means the fair market value
of the Common Stock as determined by the Board of Directors of the Company based
on the closing price per share, as reported in the Wall Street Journal on the
last day of each Three Month Period of the Plan.

            (j) "Plan" means this Productivity Incentive Plan, as amended from
time to time.

         3. ADMINISTRATION. The Plan shall be administered by the management of
the Company under the direction of the Board of Directors. The administration,
interpretation or application of the Plan by the Board or management shall be
final, conclusive and binding upon all participants. Members of the Board of
Directors and management are permitted to participate in the Plan provided such
persons are eligible Employees.

         4. EFFECTIVE DATE. The effective date of the Plan was October 1, 1972.

         5. PARTICIPATION. All Employees automatically become participants in
the Plan. Once an Employee elects to become a participant in the Plan, such
participation shall continue until the Employee has filed with the Company a
written statement on a form prescribed by the Company stating his or her
intention to discontinue participation.

         6. DISTRIBUTION OF CASH OR COMMON STOCK. At the end of each Three Month
Period of the Plan, the Company shall distribute cash or shares of Common Stock,
at the election of the Participating Employee, to each Participating Employee;
provided, however, that only cash shall be distributed to a Participating
Employee when the Amount of Incentive Compensation is less than one day's base
earnings (i.e., eight hours) for such Participating Employee. The Company will
distribute cash to each Participating Employee unless the Participating Employee
notifies the Company in writing on or before the last day of the Three Month
Period that he or she elects to receive Common Stock. The amount of cash
distributed to a Participating Employee shall be the Amount of Incentive
Compensation. The number of shares of Common Stock distributed to a
Participating Employee shall be that number arrived at by dividing the Amount of
Incentive Compensation by the Fair Market Value of Common Stock. No fractional
shares shall be distributed, but the dollar amount of such fractional share
shall be carried forward and included in the Amount of Incentive Compensation
for the succeeding Three Month Period if the Employee is still an eligible and
Participating Employee at that time.

                                      -2-
<PAGE>

         7. DELIVERY OF CASH OR SHARE CERTIFICATES. As promptly as practicable
after each Three Month Period of the Plan, the Company shall arrange to deliver
to each Participating Employee who elected to receive shares of Common Stock,
the share certificates evidencing the shares of Common Stock distributed for the
Three Month Period of the Plan. As promptly as practicable after each Three
Month Period of the Plan, the Company shall arrange to deliver to each
Participating Employee who elected to receive cash, a check in the amount of the
cash distribution for the Three Month Period.

         8. TERMINATION OF EMPLOYMENT; DEATH. Upon termination of a
Participating Employee's employment for any reason, including retirement or
death, his participation in the Plan shall be automatically terminated. If such
termination occurs during a Three Month period of the Plan, such Participating
Employee shall not be entitled to any cash or stock distribution for that
period, unless the termination is caused by the Employee's death, in which case
his designated beneficiary shall receive a cash or Common Stock distribution at
the election of the designated beneficiary, such election to be made on or
before the last day of the relevant Three Month Period, for the portion of the
Three Month Period of the Plan in which the Participating Employee's
participation under the Plan was effective.

         9. TRANSFERABILITY. A Participating Employee's rights to receive cash
or shares of Common Stock under the Plan may not be assigned, transferred,
pledged or otherwise disposed of in any way by the Participating Employee,
except to the extent provided in Section 8.

        10. STOCK. The maximum number of shares of Common Stock which shall be
made available for distribution under the Plan shall be 2,125,000 shares,
subject to adjustment upon changes in capitalization of the Company. The shares
of Common Stock to be distributed to Participating Employees may, at the
election of the Company, be either treasury shares or shares authorized but
unissued.

            A Participating Employee shall have no interest in the shares of
Common Stock until such shares are distributed.

            Shares of Common Stock to be distributed to a Participating Employee
under the Plan will be registered in the name of the Participating Employee or
in the name of the Participating Employee and his or her spouse, or in the name
of the Participating Employee's designated beneficiary pursuant to Section 8.

        11. AMENDMENT OR TERMINATION. The Board of Directors of the Company may
at any time terminate, modify, or amend the Plan; provided, however, that
approval of the holders of a majority of the outstanding shares of the Company
entitled to vote shall be required for any modification or amendment which
materially increases the benefits accruing hereunder to Participating Employees,
materially increases the number of shares issuable pursuant to the Plan, or
materially changes the standards of eligibility for participation in the Plan.

                                      -3-THIRD AMENDED AND RESTATED CREDIT AGREEMENT

                           Dated as of April 18, 2000

                                      among

                                FERRELLGAS, L.P.,

                                FERRELLGAS, INC.,

                     THE FINANCIAL INSTITUTIONS PARTY HERETO

                                       and

                             BANK OF AMERICA, N.A.,

                 as Administrative Agent and Documentation Agent

                                   Arranged By

                         BANC OF AMERICA SECURITIES LLC

<PAGE>

                   THIRD AMENDED AND RESTATED CREDIT AGREEMENT

         This THIRD AMENDED AND RESTATED CREDIT  AGREEMENT is entered into as of
April 18, 2000,  among  FERRELLGAS,  L.P., a Delaware  limited  partnership (the
"Borrower"),  FERRELLGAS,  INC.,  a Delaware  corporation  and the sole  general
partner  of  the  Borrower  (the  "General  Partner"),   the  several  financial
institutions  from  time to time  party  to this  Agreement  (collectively,  the
"Banks";  individually,  a "Bank") and BANK OF AMERICA,  N.A. ("BofA"), as agent
for the Banks (in such capacity, the "Administrative Agent" and as documentation
agent (in such capacity, "Documentation Agent") under this Agreement.

                                 R E C I T A L S

         WHEREAS,  the  Borrower,   the  General  Partner,  the  Banks  and  the
Administrative  Agent are parties to the Existing  Credit  Agreement (as defined
below),  pursuant to which the Banks have (a) made revolving credit loans to the
Borrower  pursuant  to the  Facility A  Commitments  under the  Existing  Credit
Agreement  solely for working capital  purposes in an aggregate  amount of up to
$40,000,000,  (b) made revolving credit loans to the Borrower and have issued or
participated  in letters of credit for the account of the  Borrower  pursuant to
the Facility B Commitments  under the Existing  Credit  Agreement,  in each case
under this clause (b) for working capital and general partnership purposes in an
aggregate  amount of up to $50,000,000,  and (c) made revolving  credit loans to
the Borrower  pursuant to the Facility C Commitments  under the Existing  Credit
Agreement for working capital,  Acquisitions and general partnership purposes in
an aggregate amount of up to $55,000,000.

         WHEREAS, the Borrower has requested that (i) the Facility A Commitments
and Facility A Revolving Loans  outstanding  under the Existing Credit Agreement
be continued as Facility A Commitments and Facility A Revolving Loans under this
Agreement,  the  proceeds  of which are to be used by the  Borrower  solely  for
working capital purposes, (ii) the Facility B Commitments,  Facility B Revolving
Loans,  Facility C Commitments,  Facility C Revolving Loans and Existing Letters
of Credit (as defined below)  outstanding under the Existing Credit Agreement be
continued  as or  converted  into (as the case may be)  Facility B  Commitments,
Facility B  Revolving  Loans and  Letters of Credit  under this  Agreement,  the
proceeds  of which  are to be used by the  Borrower  for  Acquisitions,  capital
expenditures,  working  capital and general  partnership  purposes and (iii) the
Existing Credit  Agreement  otherwise be amended and restated in its entirety as
set forth below in this Agreement; and

         WHEREAS,  the  Banks  are  willing,  on and  subject  to the  terms and
conditions  set forth in this  Agreement,  to amend and restate the terms of the
Existing  Credit  Agreement  and to extend  credit under this  Agreement as more
particularly hereinafter set forth.

         ACCORDINGLY, the parties hereto agree to amend and restate the Existing
Credit Agreement as follows:

ARTICLE I

                                   DEFINITIONS

     1.01  Certain  Defined  Terms.  The  following  terms  have  the  following
meanings: ---------------------

                  "1994  Fixed Rate Senior  Notes"  means the 10% Series A Fixed
         Rate  Senior  Notes  due 2001  that were  issued  by the  Borrower  and
         Ferrellgas Finance Corp. pursuant to that certain Indenture dated as of
         July 5, 1994 among the Borrower,  Ferrellgas  Finance Corp. and Norwest
         Bank Minnesota, National Association. All of the 1994 Fixed Rate Senior
         Notes were redeemed prior to the Restatement Effective Date.

                  "1996  Indenture"  means the  Indenture  dated as of April 26,
         1996,  among the MLP,  Ferrellgas  Partners  Finance Corp. and American
         Bank National Association,  pursuant to which the MLP Senior Notes were
         issued,  as it may be amended,  modified or  supplemented  from time to
         time.

                  "1998 Fixed Rate Senior  Notes" means,  collectively,  (a) the
         $109,000,000 6.99% Senior Notes,  Series A, due August 1, 2005, (b) the
         $37,000,000  7.08% Senior Notes,  Series B, due August 1, 2006, (c) the
         $52,000,000 7.12% Senior Notes, Series C, due 2008, (d) the $82,000,000
         7.24%  Senior  Notes,  Series  D,  due  August  1,  2010  and  (e)  the
         $70,000,000  7.42% Senior Notes,  Series E, due August 1, 2013, in each
         case  issued  by the  Borrower  pursuant  to  the  1998  Note  Purchase
         Agreement.

                  "1998  Note  Purchase   Agreement"  means  the  Note  Purchase
         Agreement,  dated  as of July  1,  1998,  among  the  Borrower  and the
         Purchasers named therein,  pursuant to which the 1998 Fixed Rate Senior
         Notes were issued, as it may be amended,  modified or supplemented from
         time to time.

                  "2000  Note  Purchase   Agreement"  means  the  Note  Purchase
         Agreement,  dated as of February 1, 2000,  among the  Borrower  and the
         Purchasers named therein, pursuant to which the 2000 Notes were issued,
         as it may be amended, modified or supplemented from time to time.

                  "2000 Notes" means,  collectively,  (a) the $21,000,000  8.68%
         Senior Notes,  Series A, due August 1, 2006, (b) the $90,000,000  8.78%
         Senior  Notes,  Series B, due  August  1, 2007 and (c) the  $73,000,000
         8.87% Senior  Notes,  Series C, due August 1, 2009, in each case issued
         by the Borrower pursuant to the 2000 Note Purchase Agreement.

                  "Accounts  Receivable  Securitization"  shall mean a financing
         arrangement  involving  the transfer or sale of accounts  receivable of
         the  Borrower in the  ordinary  course of business  through one or more
         SPEs, the terms of which  arrangement do not impose (a) any recourse or
         repurchase  obligations  upon  the  Borrower  or any  Affiliate  of the
         Borrower  (other  than any such SPE) except to the extent of the breach
         of a representation or warranty by the Borrower in connection therewith
         or (b) any  negative  pledge  or Lien on any  accounts  receivable  not
         actually   transferred  to  any  such  SPE  in  connection   with  such
         arrangement.

                  "Acquired Debt" means,  with respect to any specified  Person,
         (a)  Indebtedness  of any other Person  existing at the time such other
         Person  merged with or into or became a  Subsidiary  of such  specified
         Person,  including  Indebtedness  incurred in  connection  with,  or in
         contemplation  of, such other Person merging with or into or becoming a
         Subsidiary of such specified  Person and (b)  Indebtedness  encumbering
         any asset acquired by such specified Person.

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

                  "Administrative  Agent"  has  the  meaning  specified  in  the
         introductory clause hereto.  References to the  "Administrative  Agent"
         shall  include  BofA in its  capacity as agent for the Banks under this
         Agreement, and any successor agent arising under Section 10.09.

                  "Administrative  Agent's Payment Office" means the address for
         payments  set  forth  on  Schedule  11.02  hereto  in  relation  to the
         Administrative Agent, or such other address as the Administrative Agent
         may from time to time specify.

                  "Affiliate"  means, as to any Person,  any other Person which,
         directly or indirectly, is in control of, is controlled by, or is under
         common control with,  such Person.  A Person shall be deemed to control
         another  Person  if  the  controlling  Person  possesses,  directly  or
         indirectly,  the  power  to  direct  or  cause  the  direction  of  the
         management  and  policies  of the other  Person,  whether  through  the
         ownership of voting  securities,  by contract,  or  otherwise.  No Bank
         shall  be  deemed  an  Affiliate  of  the  Borrower  by  reason  of the
         relationship established and governed by this Agreement.

                  "Agent-Related   Persons"   means   BofA  and  any   successor
         Administrative  Agent arising under Section 10.09,  together with their
         respective Affiliates  (including,  in the case of BofA, the Arranger),
         and the officers, directors, employees, agents and attorneys-in-fact of
         such Persons and Affiliates.

                  "Agreement" means this Credit Agreement.

                  "Applicable Margin" means, for each Type of Loan, effective as
         of the first day of each fiscal  quarter,  the percentage per annum set
         forth below opposite the Level of the Pricing Ratio  applicable to such
         fiscal quarter as set forth herein.
<TABLE>
<CAPTION>

              Pricing Ratio                     Base Rate Loans             Eurodollar Rate Loans
              -------------                     ---------------             ---------------------
<S>                    <C>                         <C>                             <C>
                 Level 1                           0.25%                           1.25%
                 Level 2                           0.50%                           1.50%
                 Level 3                           0.75%                           1.75%
                 Level 4                           1.00%                           2.00%
                 Level 5                           1.25%                           2.25%
</TABLE>

                  "Arranger"   means   Banc  of   America   Securities   LLC,  a
         wholly-owned subsidiary of BankAmerica  Corporation.  The Arranger is a
         registered  broker-dealer  and  permitted  to  underwrite  and  deal in
         certain Ineligible Securities.

                  "Asset Sale" has the meaning specified in Section 8.02.

                  "Assignee" has the meaning specified in Section 11.08(a).

                  "Attorney   Costs"  means  and  includes  all  reasonable  and
         itemized  fees and  disbursements  of any law  firm or  other  external
         counsel,  the  allocated  cost  of  internal  legal  services  and  all
         disbursements of internal counsel.

                  "Attributable  Debt" means, in respect of a sale and leaseback
         arrangement  of any  property,  as at the  time of  determination,  the
         present value  (calculated using a discount rate equal to 7.16%) of the
         total  obligations  of  the  lessee  for  rental  payments  during  the
         remaining term of the lease included in such arrangement (including any
         period for which such lease has been extended).

                  "Available  Cash"  has the  meaning  given to such term in the
         Partnership Agreement,  as amended to October 14, 1998; provided,  that
         (a)  Available  Cash shall not  include  any amount of Net  Proceeds of
         Asset Sales until the 270-day period  following the consummation of the
         applicable Asset Sale, (b) investments,  loans and other  contributions
         to a Non-Recourse Subsidiary,  Unrestricted Subsidiary or Joint Venture
         are to be treated as "cash  disbursements"  when made for  purposes  of
         determining  the amount of  Available  Cash and (c) cash  receipts of a
         Non-Recourse Subsidiary, Unrestricted Subsidiary or Joint Venture shall
         not   constitute   cash  receipts  of  the  Borrower  for  purposes  of
         determining  the  amount  of  Available  Cash  until  cash is  actually
         distributed by such Non-Recourse Subsidiary, Unrestricted Subsidiary or
         Joint Venture to the Borrower or a Restricted Subsidiary.

                  "Bank" has the meaning specified in the introductory clause to
         this  Agreement.  References  to the "Banks" shall include BofA and any
         other Bank  designated by the  Administrative  Agent as an Issuing Bank
         from time to time, including in their respective  capacities as Issuing
         Banks;  for  purposes  of  clarification  only,  to the extent  that an
         Issuing Bank may have any rights or obligations in addition to those of
         a Bank due to its status as an Issuing Bank, its status as such will be
         specifically referenced.

     "Bankruptcy  Code"  means the  Federal  Bankruptcy  Reform Act of 1978,  as
amended (11 U.S.C. ss.101, et seq.).

                  "Base Rate"  means,  for any day, the higher of: (a) 0.50% per
         annum above the Federal  Funds Rate in effect on such day;  and (b) the
         rate of interest in effect for such day as publicly announced from time
         to time by BofA in San Francisco,  California, as its "reference rate."
         (The "reference  rate" is a rate set by BofA based upon various factors
         including BofA's costs and desired return,  general economic conditions
         and other  factors,  and is used as a reference  point for pricing some
         loans,  which may be priced at, above,  or below such announced  rate.)
         Any change in the reference rate announced by BofA shall take effect at
         the opening of business on the day specified in the public announcement
         of  such  change  or if no  day  is so  specified,  on  the  day of the
         announcement.

                  "Base Rate Loan" means a Loan that bears interest based on the
Base Rate.

     "BofA" has the meaning specified in the introductory clause hereto.

     "Borrower"  has the meaning  specified in the  introductory  clause to this
Agreement.

                  "Borrowing" means a borrowing under this Agreement  consisting
         of Loans of the same Type made to the  Borrower  on the same day by the
         Banks (or, in the case of Swingline Loans, by BofA) and, for Eurodollar
         Rate  Loans,  having the same  Interest  Period,  in either  case under
         Article II.

                  "Borrowing Date" means any date on which a Borrowing occurs.

                  "Business Day" means any day other than a Saturday,  Sunday or
         other day on which  commercial  banks in New York or San  Francisco are
         authorized or required by law to close and, if the applicable  Business
         Day  relates to any  Eurodollar  Rate  Loan,  means such a day on which
         dealings are carried on in the London interbank dollar market.

                  "Capital Adequacy Regulation" means any guideline,  request or
         directive of any central bank or other Governmental  Authority,  or any
         other law, rule or regulation,  whether or not having the force of law,
         in  each  case,  regarding  capital  adequacy  of  any  bank  or of any
         corporation controlling a bank.

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

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

                  "Cash  Collateralize"  means to  pledge  and  deposit  with or
         deliver  to  the   Administrative   Agent,   for  the  benefit  of  the
         Administrative  Agent,  the Issuing Banks and the Banks,  as collateral
         for  the L/C  Obligations  or any  outstanding  Loan,  cash or  deposit
         account  balances  pursuant  to  documentation  in form  and  substance
         satisfactory to the  Administrative  Agent (which  documents are hereby
         consented  to by the  Banks).  Derivatives  of  such  term  shall  have
         corresponding meaning. The Borrower hereby grants to the Administrative
         Agent, for the benefit of the  Administrative  Agent, the Issuing Banks
         and the Banks, a security interest in all such cash and deposit account
         balances. Cash collateral shall be maintained in blocked,  non-interest
         bearing deposit  accounts at BofA. Such collateral may be invested from
         time  to  time  in  short-term  money  market   instruments  and  other
         investments  with  the  consent  of the  Administrative  Agent  and the
         Majority  Banks  (which  consent may be given or withheld in their sole
         and absolute  discretion)  provided that the Administrative  Agent, the
         Issuing  Banks and the Banks  shall at all times have a first  priority
         perfected  security  interest  in  such  collateral  and  the  proceeds
         thereof.

                  "Cash  Equivalents"  means  (a)  United  States  dollars,  (b)
         securities  issued or directly and fully  guaranteed  or insured by the
         United  States  government  or any  agency or  instrumentality  thereof
         having  maturities  of not more than  eighteen  months from the date of
         acquisition,  (c)  certificates of deposit and eurodollar time deposits
         with  maturities  of six  months or less from the date of  acquisition,
         bankers'  acceptances  with  maturities  not  exceeding  six months and
         overnight bank  deposits,  in each case with any Bank or with any other
         domestic  commercial  bank having capital and surplus in excess of $500
         million and a Keefe Bank Watch Rating of "B" or better,  (d) repurchase
         obligations  with a term of not more  than  seven  days for  underlying
         securities  of the types  described in clauses (b) and (c) entered into
         with any financial institution meeting the qualifications  specified in
         clause (c)  above,  (e)  commercial  paper or direct  obligations  of a
         Person,  provided such Person has publicly  outstanding debt having the
         highest  short-term rating  obtainable from Moody's Investors  Service,
         Inc. or Standard & Poor's  Ratings  Services and provided  further that
         such  commercial  paper or direct  obligation  matures  within 270 days
         after the date of  acquisition,  and (f)  investments  in money  market
         funds all of whose assets consist of securities of the types  described
         in the foregoing clauses (a) through (e).

                  "Change of Control" means (a) the sale,  lease,  conveyance or
         other  disposition of all or substantially all of the Borrower's assets
         to any Person or group (as such term is used in Section 13(d)(3) of the
         Exchange Act) other than James E. Ferrell,  the Related Parties and any
         Person of which James E. Ferrell and the Related  Parties  beneficially
         own in the aggregate 51% or more of the voting Capital Interests (or if
         such  Person  is a  partnership,  51% or  more of the  general  partner
         interests),  (b) the  liquidation or dissolution of the Borrower or the
         General Partner,  (c) the occurrence of any transaction,  the result of
         which is that James E. Ferrell and the Related Parties beneficially own
         in the aggregate,  directly or  indirectly,  less than 51% of the total
         voting  power  entitled to vote for the  election of  directors  of the
         General Partner and (d) the occurrence of any  transaction,  the result
         of which is that the  General  Partner  is no longer  the sole  general
         partner of the Borrower.

                  "Class" means, with respect to any Loan,  whether such Loan is
         a Facility A Revolving Loan, a Facility B Revolving Loan or a Swingline
         Loan.

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

                  "Commercial  Letters of Credit" means  commercial  documentary
         letters of credit issued by an Issuing Bank pursuant to Article III.

                  "Commercial  Letter of Credit Risk  Participation  Percentage"
         means,  as of any date and based upon the Level of the Pricing Ratio on
         such date,  the  percentage  per annum set forth  below  opposite  such
         Level:

                        Commercial Letter of Credit Risk
            Pricing Ratio                     Participation Percentage
               Level 1                                    0.425%
               Level 2                                    0.500%
               Level 3                                    0.575%
               Level 4                                    0.650%
               Level 5                                    0.725%

                  "Commitment Fee Rate" means, as of any date and based upon the
         Level of the Pricing Ratio on such date,  the  percentage per annum set
         forth below opposite such Level:

           Pricing Ratio                   Commitment Fee Rate
           -------------                   -------------------
              Level 1                              0.275%
              Level 2                              0.325%
              Level 3                              0.375%
              Level 4                              0.425%
              Level 5                              0.500%

         Notwithstanding  the  foregoing,  each  of  the  Commitment  Fee  Rates
         specified  above shall be increased by 0.125% per annum for each day on
         which the Effective  Amount of the Revolving Loans of the Banks and the
         L/C Obligations  shall be less than 33% of the aggregate  amount of the
         Revolving Loan Commitments of the Banks on such day.

                  "Compliance  Certificate"  means  a  certificate  signed  by a
         Responsible  Officer  of the  Borrower  substantially  in the  form  of
         Exhibit C,  demonstrating  compliance  with the covenants  contained in
         this Agreement,  including  Sections 7.12, 7.13 and 8.12 and the 30 day
         clean-up period contained in Section 2.01(a)(ii).

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

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

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

                  "Consolidated  Net Worth" means,  with respect to the Borrower
         and the  Restricted  Subsidiaries  as of any  date,  the sum of (a) the
         consolidated  equity of the  common  stockholders  or  partners  of the
         Borrower and the Restricted  Subsidiaries as of such date, plus (b) the
         respective  amounts  reported on the balance  sheet of the Borrower and
         the Restricted  Subsidiaries as of such date with respect to any series
         of preferred  stock  (other than  Disqualified  Interests)  that by its
         terms is not entitled to the payment of dividends unless such dividends
         may be  declared  and paid only out of net  earnings  in respect of the
         year of such  declaration  and  payment,  but only to the extent of any
         cash  received by the Borrower  and the  Restricted  Subsidiaries  upon
         issuance of such preferred  stock,  less (x) all write-ups  (other than
         write-ups resulting from foreign currency translations and write-ups of
         tangible assets of a going concern business made within 12 months after
         the  acquisition  of  such  business)  subsequent  to  the  Restatement
         Effective Date in the book value of any asset owned by the Borrower and
         the  Restricted  Subsidiaries,  (y) all  Investments as of such date in
         unconsolidated  Subsidiaries  and in  Persons  that are not  Restricted
         Subsidiaries (except, in each case, Permitted Investments), and (z) all
         unamortized debt discount and expense and unamortized  deferred charges
         as of such date,  all of the foregoing  determined  in accordance  with
         GAAP.

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

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

                  "Conversion/Continuation  Date" means any date on which, under
         Section  2.04,  the Borrower (a) converts  Loans of one Type to another
         Type,  or (b)  continues  as  Loans of the  same  Type,  but with a new
         Interest Period, Loans having Interest Periods expiring on such date.

                  "Default"  means any  event or  circumstance  which,  with the
         giving of notice,  the lapse of time,  or both,  would (if not cured or
         otherwise remedied during such time) constitute an Event of Default.

                  "Disqualified Interests" means any Capital Interests which, by
         their  terms  (or by the  terms of any  security  into  which  they are
         convertible or for which they are exchangeable),  or upon the happening
         of any  event,  mature or are  mandatorily  redeemable,  pursuant  to a
         sinking fund  obligation or  otherwise,  or redeemable at the option of
         the holder  thereof,  in whole or in part,  on or prior to December 31,
         2003.

                  "Documentation Agent" means BofA.

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

                  "Effective  Amount" means (a) with respect to any Loans on any
         date, the aggregate  outstanding  principal amount thereof after giving
         effect  to any  Borrowings  and  prepayments  or  repayments  of  Loans
         occurring  on such date;  and (b) with respect to any  outstanding  L/C
         Obligations  on any date,  the amount of such L/C  Obligations  on such
         date  after  giving  effect  to any  Issuances  of  Letters  of  Credit
         occurring on such date and any other changes in the aggregate amount of
         the L/C  Obligations  as of such  date,  including  as a result  of any
         reimbursements  of  outstanding  unpaid  drawings  under any Letters of
         Credit or any  reductions in the maximum  amount  available for drawing
         under  Letters of Credit  taking  effect on such date.  For purposes of
         Section 2.07, the Effective  Amount shall be determined  without giving
         effect to any mandatory prepayments to be made under such Section 2.07.

                  "Eligible  Assignee"  means (a) a  commercial  bank  organized
         under the laws of the United States, or any state thereof, and having a
         combined capital and surplus of at least $500,000,000; (b) a commercial
         bank organized under the laws of any other country which is a member of
         the Organization for Economic Cooperation and Development (the "OECD"),
         or a political  subdivision of any such country,  and having a combined
         capital and surplus of at least  $500,000,000,  provided that such bank
         is acting through a branch or agency located in the United States;  and
         (c) a Person that is primarily  engaged in the  business of  commercial
         banking and that is (i) a Subsidiary of a Bank,  (ii) a Subsidiary of a
         Person  of which a Bank is a  Subsidiary,  or (iii) a Person of which a
         Bank is a Subsidiary.

                  "Environmental  Claims" means all claims, however asserted, by
         any Governmental Authority or other Person alleging potential liability
         or  responsibility  for  violation  of any  Environmental  Law,  or for
         release or injury to the environment.

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

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

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

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

                  "Eurodollar  Rate" shall  mean,  for each  Interest  Period in
         respect of Eurodollar Rate Loans comprising part of the same Borrowing,
         an interest rate per annum  (rounded to the nearest 1/16th of 1% or, if
         there is no nearest 1/16th of 1%, rounded upward)  determined  pursuant
         to the following formula:

         Eurodollar Rate =                                               LIBOR
  1.00 - Eurodollar Reserve Percentage

         The Eurodollar Rate shall be adjusted automatically as of the effective
         date of any change in the Eurodollar Reserve Percentage.

                  "Eurodollar  Rate Loan" means a Loan that bears interest based
on the Eurodollar Rate.

                  "Eurodollar Reserve Percentage" shall mean the maximum reserve
         percentage  (expressed as a decimal,  rounded to the nearest 1/100th of
         1% or, if there is no nearest  1/100th of 1%, rounded upward) in effect
         on the date LIBOR for such Interest  Period is  determined  (whether or
         not applicable to any Bank) under regulations  issued from time to time
         by the  Federal  Reserve  Board for  determining  the  maximum  reserve
         requirement  (including any emergency,  supplemental  or other marginal
         reserve  requirement) with respect to Eurocurrency  funding  (currently
         referred to as "Eurocurrency  liabilities") having a term comparable to
         such Interest Period. Without limiting the effect of the foregoing, the
         Eurodollar  Reserve  shall  include any other  reserves  required to be
         maintained by any Bank with respect to (a) any category of  liabilities
         that includes  deposits by reference to which the Eurodollar Rate is to
         be determined as provided in the  definition  of  "Eurodollar  Rate" in
         this Section 1.01 or (b) any category of  extensions of credit or other
         assets that includes Eurodollar Rate Loans.

     "Event of Default"  means any of the events or  circumstances  specified in
Section 9.01.

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

                  "Existing  Credit  Agreement"  means the  Second  Amended  and
         Restated Credit  Agreement,  dated as of July 2, 1998, as amended prior
         to the  Restatement  Effective  Date,  among the Borrower,  the General
         Partner,  the several  financial  institutions  from time to time party
         thereto and Bank of America, N.A., as Administrative Agent.

                  "Existing Indebtedness" means Indebtedness and Synthetic Lease
         Obligations  of the  Borrower  and its  Subsidiaries  (other  than  the
         Obligations)  and  certain  Indebtedness  of the General  Partner  with
         respect  to which  the  Borrower  has  assumed  the  General  Partner's
         repayment  obligations,  in each case in existence  on the  Restatement
         Effective Date and as more fully set forth on Schedule 8.05.
                  "Existing  Letters  of  Credit"  means the  letters  of credit
         issued and  outstanding  on the  Restatement  Effective  Date which are
         described in Schedule 3.03.  Each of the Existing  Letters of Credit is
         designated  on  such  schedule  as a  standby  letter  of  credit  or a
         commercial documentary letter of credit.

                  "Facility A Commitment" means, as to each Bank, the amount set
         forth  opposite  such Bank's  name on  Schedule  2.01 under the caption
         "Facility A Commitment,"  as the same may be reduced under Section 2.05
         or 2.07 or reduced or increased as a result of one or more  assignments
         under Section 11.08;  provided,  that the maximum aggregate  Facility A
         Commitment of all Banks shall not exceed $40,000,000 at any time.

                  "Facility  A  Revolving  Loan" has the  meaning  specified  in
         Section 2.01(a), and may be a Base Rate Loan or a Eurodollar Rate Loan.

                  "Facility B Commitment" means, as to each Bank, the amount set
         forth  opposite  such Bank's  name on  Schedule  2.01 under the caption
         "Facility B Commitment,"  as the same may be reduced under Section 2.05
         or 2.07 or reduced or increased as a result of one or more  assignments
         under Section 11.08;  provided,  that the maximum aggregate  Facility B
         Commitment of all Banks shall not exceed $117,000,000 at any time.

                  "Facility  B  Revolving  Loan" has the  meaning  specified  in
         Section 2.01(b), and may be a Base Rate Loan or a Eurodollar Rate Loan.

                  "FDIC" means the Federal Deposit  Insurance  Corporation,  and
         any  Governmental   Authority   succeeding  to  any  of  its  principal
         functions.

                  "Federal Funds Rate" means, for any day, the rate set forth in
         the  weekly  statistical  release  designated  as  H.15(519),   or  any
         successor  publication,  published  by the Federal  Reserve Bank of New
         York  (including  any such  successor,  "H.15(519)")  on the  preceding
         Business Day opposite the caption "Federal Funds  (Effective)";  or, if
         for  any  relevant  day  such  rate  is not so  published  on any  such
         preceding  Business  Day, the rate for such day will be the  arithmetic
         mean as  determined  by the  Administrative  Agent of the rates for the
         last transaction in overnight Federal funds arranged prior to 9:00 a.m.
         (New York City  time) on that day by each of three  leading  brokers of
         Federal   funds   transactions   in  New  York  City  selected  by  the
         Administrative Agent.

                  "Fee Letter" has the meaning specified in Section 2.10(a).

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

                  "Ferrellgas  Partners Finance Corp." means Ferrellgas Partners
         Finance Corp., a Delaware corporation and a Wholly-Owned  Subsidiary of
         the MLP.

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

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

                  "FRB"  means the Board of  Governors  of the  Federal  Reserve
         System,  and  any  Governmental  Authority  succeeding  to  any  of its
         principal functions.

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

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

     "General Partner" has the meaning  specified in the introductory  clause to
this Agreement.

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

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

     "Guarantor"  means each Person that executes a Guaranty and its  successors
and assigns.

                  "Guaranty"  means a continuing  guaranty of the Obligations in
         favor  of  the  Administrative   Agent  on  behalf  of  the  Banks,  in
         substantially  the form of Exhibit G or otherwise in form and substance
         satisfactory to the Administrative Agent.

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

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

                  "Honor Date" has the meaning specified in Section 3.03(c).

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

     "Indemnified Liabilities" has the meaning specified in Section 11.05.

     "Indemnified Person" has the meaning specified in Section 11.05.

     "Independent Auditor" has the meaning specified in Section 7.01(a).

     "Ineligible  Securities"  means securities which may not be underwritten or
dealt in by member banks of the Federal  Reserve  System under Section 16 of the
Banking Act of 1933 (12 U.S.C. ss. 24, Seventh), as amended.

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

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

                  "Interest Payment Date" means, as to any Eurodollar Rate Loan,
         the last day of each Interest Period applicable to such Loan and, as to
         any Base Rate Loan,  the first  Business Day of each fiscal  quarter of
         the  Borrower;  provided,  however,  that if any Interest  Period for a
         Eurodollar  Rate  Loan  exceeds  three  months,  the date that is three
         months  after the  beginning  of such  Interest  Period  and after each
         Interest  Payment Date  thereafter  is also an Interest  Payment  Date,
         provided, further, that if there is no numerically corresponding day in
         the calendar  month during which an Interest  Payment Date is to occur,
         such Interest Payment Date shall occur on the last Business Day of such
         calendar month.

                  "Interest  Period" means,  as to any Eurodollar Rate Loan, the
         period  commencing  on  the  Borrowing  Date  of  such  Loan  or on the
         Conversion/Continuation  Date on which  the Loan is  converted  into or
         continued as a Eurodollar  Rate Loan,  and ending on the date one, two,
         three or six months  thereafter  as  selected  by the  Borrower  in its
         Notice of Borrowing or Notice of Conversion/Continuation;

provided that:

                  (a) if any Interest  Period would  otherwise end on a day that
is not a Business Day,  that Interest  Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another  calendar  month,  in which event such Interest Period shall
end on the preceding Business Day;

                  (b) any Interest  Period that begins on the last  Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar  month at the end of such Interest  Period) shall end on the
last Business Day of the calendar month at the end of such Interest Period; and

                  (c) no Interest  Period for any  Revolving  Loan shall  extend
beyond the Revolving Loan Termination Date.

                  "Investment"  means,  relative  to any  Person,  any direct or
indirect  purchase  or  other  acquisition  by such  Person  of  stock  or other
securities  of any other  Person,  or any direct or  indirect  loan,  advance or
capital  contribution  by such  Person to any other  Person,  and any other item
which would be classified as an  "investment"  on a balance sheet of such Person
prepared in accordance with GAAP, including,  without limitation,  any direct or
indirect  contribution  by such Person of property or assets to a joint venture,
partnership or other  business  entity in which such Person retains an interest.
For purposes of this Agreement,  the amount involved in Investments  made during
any period shall be the aggregate  cost to the Borrower of all such  Investments
made during such period,  determined in accordance with GAAP, but without regard
to  unrealized  increases or decreases in value,  or write-ups,  write-downs  or
write-offs,  of such  Investments  and without  regard to the  existence  of any
undistributed  earnings or accrued  interest with respect  thereto accrued after
the respective dates on which such Investments were made, less any net return of
capital  realized  during  such  period  upon  the  sale,   repayment  or  other
liquidation of such Investment  (determined in accordance with GAAP, but without
regard to any amounts  received  during such period as earnings  (in the form of
dividends not  constituting a return of capital,  interest or otherwise) on such
Investment or as loans from any Person in whom such Investment has been made).

                  "IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions.

                  "Issuance Date" has the meaning specified in Section 3.01(a).

                  "Issue" means,  with respect to any Letter of Credit, to issue
         or to extend the expiry date of, or to renew or increase the amount of,
         such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance"
         have corresponding meanings.

                  "Issuing  Banks"  means BofA and  Paribas in their  respective
         capacities  as  issuers  of one or more  Letters  of Credit  under this
         Agreement.

                  "Joint   Venture"   means   a   single-purpose    corporation,
         partnership,  joint venture or other similar legal arrangement (whether
         created by contract or conducted  through a separate  legal entity) now
         or  hereafter  formed by the Borrower or any of its  Subsidiaries  with
         another Person in order to conduct a common venture or enterprise  with
         such Person.

                  "L/C  Advance"  means  each  Bank's  participation  in any L/C
         Borrowing in accordance with its Pro Rata Share.

                  "L/C  Amendment  Application"  means an  application  form for
         amendment  of  outstanding  Standby  Letters  of Credit  or  Commercial
         Letters  of  Credit  as shall  at any time be in use at the  applicable
         Issuing Bank, as such Issuing Bank shall request.

                  "L/C  Application"  means an application form for issuances of
         Standby  Letters of Credit or Commercial  Letters of Credit as shall at
         any time be in use at the applicable Issuing Bank, as such Issuing Bank
         shall request.

                  "L/C Borrowing"  means an extension of credit resulting from a
         drawing under any Letter of Credit which shall not have been reimbursed
         on the date when made nor  converted  into a  Borrowing  of  Facility B
         Revolving Loans under Section 3.03(c).

                  "L/C Commitment"  means the commitment of the Issuing Banks to
         Issue,  and the commitment of the Banks  severally to  participate  in,
         Letters of Credit from time to time Issued or outstanding under Article
         III,  in an  aggregate  amount  not to exceed on any date the lesser of
         $60,000,000 and the aggregate Facility B Commitment, as such amount may
         be reduced as a result of a reduction in the L/C Commitment pursuant to
         Section  2.05;  provided  that  the  L/C  Commitment  is a part  of the
         aggregate  Facility B Commitment,  rather than a separate,  independent
         commitment.

                  "L/C  Obligations"  means  at any  time  the  sum  of (a)  the
         aggregate  undrawn  amount of all Letters of Credit  then  outstanding,
         plus (b) the amount of all  unreimbursed  drawings under all Letters of
         Credit,  including all outstanding  L/C Borrowings,  plus (c) all other
         Obligations of the Borrower under or in connection with the L/C-Related
         Documents,  to the  extent  not  included  within  clauses  (a) and (b)
         hereof.

                  "L/C-Related  Documents" means the Letters of Credit,  the L/C
         Applications,  the L/C Amendment  Applications  and any other  document
         relating to any Letter of Credit,  including any of the Issuing  Banks'
         standard form  reimbursement  agreements and other documents for letter
         of credit issuances.

                  "Lending  Office" means, as to any Bank, the office or offices
         of such Bank  specified  as its "Lending  Office" or "Domestic  Lending
         Office" or "Eurodollar Lending Office", as the case may be, on Schedule
         11.02,  or such  other  office or offices as such Bank may from time to
         time notify the Borrower and the Administrative Agent.

                  "Letters of Credit" means,  collectively,  Standby  Letters of
         Credit and Commercial Letters of Credit.

                  "Level" means, at any time, Level 1, Level 2, Level 3, Level 4
         or Level 5 based on the amount of the Pricing  Ratio at such time.  For
         purposes of this  Agreement,  the  following  "Levels" of Pricing Ratio
         (PR) shall apply:

          Level                     Pricing Ratio
         Level 1                            PR < 3.25
         Level 2                    3.25 <  PR < 3.75
         Level 3                    3.75 <  PR < 4.25
         Level 4                    4.25 <  PR < 4.75
         Level 5                           4.75 <  PR

         The  Level of the  Pricing  Ratio  for the  period  from and  after the
         Restatement  Effective  Date through the next date on which a change in
         the Pricing Level shall become  effective (as determined as forth below
         in this  paragraph)  shall be equal to Level 5. Any change in the Level
         of the Pricing Ratio shall be determined  by the  Administrative  Agent
         based upon the  financial  information  required to be contained in the
         Compliance  Certificate delivered by the Borrower to the Administrative
         Agent with  respect to each fiscal  quarter of the  Borrower  and shall
         become  effective as of the third  Business Day  following  the date on
         which the Compliance  Certificate for such quarter was delivered.  Upon
         any failure of the Borrower to deliver a Compliance Certificate for any
         fiscal quarter prior to 10 days after the date on which such Compliance
         Certificate  is required to be delivered to the  Administrative  Agent,
         and   without   limiting   the  other   rights  and   remedies  of  the
         Administrative  Agent and the Banks under this  Agreement,  the Pricing
         Ratio shall be deemed to be Level 5 during the period from the due date
         of such Compliance Certificate through the third Business Day following
         the date on which such Compliance Certificate is so delivered.

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

                  "LIBOR" means,  with respect to any  Eurodollar  Rate Loan for
         any  Interest  Period  for such Loan,  the per annum  rate of  interest
         appearing on page 3750 of the Telerate Service as of 11:00 London time,
         two Business Days prior to the beginning of such Interest Period, or if
         such rate does not  appear on page  3750 of the  Telerate  Service  (or
         otherwise  on such  service),  the rate of interest  determined  by the
         Administrative  Agent as the rate at which  deposits  in Dollars in the
         approximate  amount of BofA's  Eurodollar  Rate Loan for such  Interest
         Period would be offered by BofA's Grand Cayman  Branch,  Grand  Cayman,
         British West Indies (or such other office as may be designated for such
         purpose  by BofA),  to major  banks in the  offshore  Dollar  interbank
         market  upon  request  of such  banks at  approximately  8:00 a.m.  San
         Francisco  time  two  Business  Days  prior  to the  first  day of such
         Interest Period.

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

                  "Loan"  means an extension of credit by a Bank to the Borrower
         under  Article II or Article  III in the form of a Facility A Revolving
         Loan,  Facility B Revolving  Loan, L/C Advance or (in the case of BofA)
         Swingline Loan.

                  "Loan  Documents"  means this  Agreement,  any Notes,  the Fee
         Letter,  the  L/C-Related  Documents,  the  Guaranties  and  all  other
         documents  delivered  to  the  Administrative  Agent  or  any  Bank  in
         connection with this Agreement.

                  "Majority  Banks"  means at any time Banks then  holding  more
         than 50% of the then  aggregate  unpaid  principal  amount of the Loans
         (other than the Swingline  Loans),  or, if no such principal  amount is
         then  outstanding,  Banks then  having  more than 50% of the  aggregate
         Revolving  Loan  Commitments,  but in no  event  shall  Majority  Banks
         consist of less than three (3) Banks.

                  "Margin Stock" means "margin stock" as such term is defined in
Regulation U of the FRB.

                  "Material  Adverse Effect" means (a) a material adverse change
         in, or a  material  adverse  effect  upon,  the  operations,  business,
         properties,  condition  (financial  or  otherwise)  or prospects of the
         Borrower or the Borrower and its  Subsidiaries  taken as a whole; (b) a
         material impairment of the ability of the General Partner, the Borrower
         or any  Subsidiary  to perform  under any Loan Document or otherwise to
         avoid any Event of Default;  or (c) a material  adverse effect upon the
         legality,  validity,  binding  effect  or  enforceability  against  the
         Borrower or any Subsidiary of any Loan Document.

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

     "MLP Senior  Notes" means the  $160,000,000  9-3/8%  Senior  Secured  Notes
issued by the MLP and  Ferrellgas  Partners  Finance Corp.  pursuant to the 1996
Indenture.

                  "Net  Income"  means,  with  respect to the  Borrower  and the
         Restricted  Subsidiaries,  the  net  income  (loss)  of  such  Persons,
         determined in accordance  with GAAP and before any reduction in respect
         of preferred stock dividends, excluding, however, (a) any gain (but not
         loss),  together with any related provision for taxes on such gain (but
         not loss),  realized in connection with (i) any asset sale  (including,
         without  limitation,   dispositions  pursuant  to  sale  and  leaseback
         transactions),  or  (ii)  the  disposition  of  any  securities  or the
         extinguishment  of  any  Indebtedness  of  the  Borrower  or any of the
         Restricted Subsidiaries, and (b) any extraordinary gain (but not loss),
         together  with any related  provision  for taxes on such  extraordinary
         gain (but not loss);  provided,  however,  that all costs and  expenses
         with  respect to the  redemption  of the 1994 Fixed Rate Senior  Notes,
         including,  without limitation,  cash premiums,  tender offer premiums,
         consent  payments  and all fees and expenses in  connection  therewith,
         shall be added  back to the Net  Income of the  Borrower,  the  General
         Partner or the  Restricted  Subsidiaries  to the extent  that they were
         deducted from such Net Income in accordance with GAAP.

                  "Net Proceeds of Asset Sale" means the aggregate cash proceeds
         received  by the  Borrower  or any of the  Restricted  Subsidiaries  in
         respect of any Asset  Sale,  net of the direct  costs  relating to such
         Asset  Sale  (including,  without  limitation,  legal,  accounting  and
         investment  banking fees,  and sales  commissions)  and any  relocation
         expenses  incurred  as a result  thereof,  taxes  paid or  payable as a
         result  thereof (after taking into account any available tax credits or
         deductions and any tax sharing  arrangements),  and amounts required to
         be applied to the  repayment of  Indebtedness  secured by a Lien on the
         asset or assets the subject of such Asset Sale.

                  "Non-Recourse   Subsidiary"   means  any  Person   that  would
         otherwise  be a  Subsidiary  of the  Borrower  but is  designated  as a
         Non-Recourse  Subsidiary  in a resolution  of the Board of Directors of
         the General Partner, so long as each of the following remains true: (a)
         no portion of the Indebtedness or any other  obligation  (contingent or
         otherwise)  of  such  Person  (i)  is a  Contingent  Obligation  of the
         Borrower or any of its Subsidiaries,  (ii) is recourse or obligates the
         Borrower or any of its  Subsidiaries  in any way or (iii)  subjects any
         property or asset of the Borrower or any of its Subsidiaries,  directly
         or indirectly,  contingently or otherwise, to satisfaction thereof, (b)
         neither the  Borrower  nor any of its  Subsidiaries  has any  contract,
         agreement,  arrangement or understanding or is subject to an obligation
         of any kind,  written or oral,  with such Person other than on terms no
         less  favorable to the Borrower  and its  Subsidiaries  than those that
         might be obtained at the time from  persons who are not  Affiliates  of
         the Borrower,  (c) neither the Borrower nor any of its Subsidiaries has
         any  obligation  with  respect  to such  Person  (i) to  subscribe  for
         additional  shares of capital stock,  Capital Interests or other Equity
         Interests therein or (ii) maintain or preserve such Person's  financial
         condition  or to  cause  such  Person  to  achieve  certain  levels  of
         operating or other financial results,  (d) such Person has no more than
         $1,000 of assets at the time of such designation, (e) such Person is in
         compliance  with the  restrictions  applicable to Affiliates of the MLP
         under  Section 8.22 and (f) such Person takes steps  designed to assure
         that neither the Borrower  nor any of its  Subsidiaries  will be liable
         for any  portion  of the  Indebtedness  or  other  obligations  of such
         Person,  including  maintenance  of a corporate or limited  partnership
         structure  and  observance of  applicable  formalities  such as regular
         meetings and  maintenance  of minutes,  a  substantial  and  meaningful
         capitalization  and the use of a corporate or partnership  name,  trade
         name or trademark not misleadingly similar to those of the Borrower.

                  "Note"  means a  promissory  note  executed by the Borrower in
         favor of a Bank pursuant to Section 2.02(b),  in substantially the form
         of Exhibit F-1 or F-2.

     "Notice of Borrowing" means a notice in  substantially  the form of Exhibit
A.

     "Notice of  Conversion/Continuation"  means a notice in  substantially  the
form of Exhibit B.

                  "Obligations"   means  all   advances,   debts,   liabilities,
         obligations,  covenants  and duties  arising  under any Loan  Document,
         owing by the Borrower to any Bank,  the  Administrative  Agent,  or any
         Indemnified  Person,   whether  direct  or  indirect  (including  those
         acquired by assignment),  absolute or contingent, due or to become due,
         now existing or hereafter arising including,  without  limitation,  all
         Indebtedness  of the Borrower to the Banks for the payment of principal
         of and interest on all  outstanding  Loans and all  obligations  of the
         Borrower  to the Issuing  Banks for  reimbursement  of  drawings  under
         Letters of Credit from time to time.

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

                  "Other Taxes" means any present or future stamp or documentary
         taxes or any other excise or property taxes,  charges or similar levies
         which  arise from any  payment  made under this  Agreement  or from the
         execution,  delivery or registration  of, or otherwise with respect to,
         this Agreement or any other Loan Documents.

                  "Participant" has the meaning specified in Section 11.08(d).

                  "Partners'  Equity" means the  partners'  equity as shown on a
         balance sheet prepared in accordance with GAAP for any partnership.

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

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

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

                  "Permitted  Acquisitions"  means  Acquisitions by the Borrower
         and its Subsidiaries which comply with the provisions of Section 8.04.

                  "Permitted  Investments"  means  (a) any  Investments  in Cash
         Equivalents;  (b) any  Investments  in the Borrower  or(subject  to the
         provisions of Section 8.21) in a Restricted  Subsidiary of the Borrower
         that is a Guarantor;  (c) Investments by the Borrower or any Restricted
         Subsidiary  of the  Borrower in a Person in  compliance  with the other
         provisions of this  Agreement,  if as a result of such  Investment  (i)
         such Person  becomes a  Restricted  Subsidiary  of the  Borrower  and a
         Guarantor or (ii) such Person is merged,  consolidated  or  amalgamated
         with or into, or transfers or conveys  substantially  all of its assets
         to, or is liquidated  into, the Borrower or a Restricted  Subsidiary of
         the Borrower that is a Guarantor;  and (d)  Investments by the Borrower
         or any Restricted  Subsidiary in  Unrestricted  Subsidiaries  and Joint
         Ventures;  provided  that the amount of cash or  property  contributed,
         loaned  or  otherwise  advanced  by the  Borrower  or  such  Restricted
         Subsidiaries in respect of such  Investments may not exceed at any time
         an aggregate  amount equal to the greater of (i)  $15,000,000  and (ii)
         10% of  Consolidated  Cash Flow for the most recently ended four fiscal
         quarters of the Borrower.

                  "Permitted Liens" has the meaning specified in Section 8.01.

                  "Permitted Refinancing Indebtedness" means any Indebtedness of
         the Borrower or any Subsidiary of the Borrower  issued in exchange for,
         or the net  proceeds  of which are used to  extend,  refinance,  renew,
         replace, defease or refund other Indebtedness of the Borrower or any of
         its  Subsidiaries;  provided  that  (a) the  principal  amount  of such
         Indebtedness  does not exceed the principal  amount of the Indebtedness
         so extended,  refinanced,  renewed, replaced, defeased or refunded (the
         "Prior  Indebtedness") (plus the amount of reasonable expenses incurred
         in connection therewith),  and the effective interest rate per annum on
         such  Indebtedness  does not or is not likely to exceed  the  effective
         interest rate per annum of the Prior Indebtedness, as determined by the
         Administrative Agent in its sole discretion;  (b) such Indebtedness has
         a  Weighted  Average  Life to  Maturity  equal to or  greater  than the
         Weighted Average Life to Maturity of the Prior Indebtedness; (c) if the
         Prior   Indebtedness   is  subordinated   to  the   Obligations,   such
         Indebtedness  is  subordinated  to the  Obligations  on the  terms  and
         conditions  set  forth  on  part II of  Schedule  8.05;  and  (d)  such
         Indebtedness  is incurred by the Borrower or the  Subsidiary who is the
         obligor on the Prior Indebtedness.

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

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

                  "Pricing  Ratio"  means,  as of the  last  day of each  fiscal
         quarter of the  Borrower,  the  Leverage  Ratio for the  fiscal  period
         consisting  of such  fiscal  quarter  of the  Borrower  and  the  three
         immediately preceding fiscal quarters of the Borrower.

                  "Pro  Rata  Share"  means,  as to any  Bank at any  time,  the
         percentage  set forth on Schedule  2.01 hereto as its "Pro Rata Share,"
         as such amount may be adjusted by assignments under Section 11.08.

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

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

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

                  "Responsible Officer" means the chief executive officer or the
         president  of  the  General   Partner  or  any  other  officer   having
         substantially  the same  authority  and  responsibility  to act for the
         General Partner on behalf of the Borrower;  or, with respect to actions
         taken or to be taken  under  Articles  II and III and  compliance  with
         financial  covenants,  the chief financial  officer or the treasurer of
         the General Partner or any other officer having  substantially the same
         authority and  responsibility  to act for the General Partner on behalf
         of the Borrower or any other employee of the General Partner designated
         in a  certificate  of a Responsible  Officer to have  authority in such
         matters.

                  "Restatement Effective Date" means the first date on or before
         April 20, 2000 on which all conditions  precedent set forth in Sections
         5.01 and 5.02 are  satisfied or waived by each Bank (or, in the case of
         subsection  5.01(f),  waived by the Persons  entitled  to receive  such
         payments).

                  "Restricted  Subsidiary"  means any Subsidiary of the Borrower
         (a) of which  80% of the  voting  Capital  Interests  are  beneficially
         owned,  directly  or  indirectly,  by the  Borrower  and  none of which
         Capital  Interests are owned,  directly or indirectly,  by Unrestricted
         Subsidiaries,  (b) which is  engaged in the same or  substantially  the
         same line of business as the Borrower, (c) which is organized under the
         laws of the United  States or any State  thereof,  (d) which  maintains
         substantially  all of its assets and conducts  substantially all of its
         business  within the United  States  and (e) which is  designated  as a
         Restricted  Subsidiary in Schedule 6.16 as of the Restatement Effective
         Date or which shall be  designated  as a Restricted  Subsidiary  by the
         Borrower  at a  subsequent  date  pursuant to Section  7.16;  provided,
         however,  that (x) to the extent a newly formed or acquired  Subsidiary
         meeting  the  foregoing  requirements  is  not  declared  a  Restricted
         Subsidiary  or  an  Unrestricted  Subsidiary  within  90  days  of  its
         formation or acquisition,  such Subsidiary shall be deemed to have been
         designated by the Borrower as a Restricted  Subsidiary  (in which event
         the Borrower shall comply,  and shall cause such Restricted  Subsidiary
         to comply,  with Section 8.21) and (b) a Restricted  Subsidiary  may be
         designated  as  an  Unrestricted  Subsidiary  in  accordance  with  the
         provisions of Section 7.16.

                  "Revolving  Loan  Commitments"  means,  as to each  Bank,  the
         Facility A Commitment and the Facility B Commitment of such Bank.

                  "Revolving   Loans"  means,   collectively,   the  Facility  A
         Revolving Loans and the Facility B Revolving Loans.

                  "Revolving  Loan  Termination  Date"  means the earlier of (a)
         June  30,  2003  (or  such  later  date to  which  the  Revolving  Loan
         Termination  Date may be extended  pursuant to Section  2.08(c) of this
         Agreement)  and (b) the date on which the  Revolving  Loan  Commitments
         shall have been terminated pursuant to this Agreement.

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

                  "Significant  Subsidiary" means any Subsidiary of the Borrower
         that would be a "significant  subsidiary" as defined in Article 1, Rule
         1-02 of Regulation S-X,  promulgated  pursuant to the Securities Act of
         1933, as such Regulation is in effect on the date of this Agreement.

                  "Solvent"  shall mean, with respect to any Person on any date,
         that on such date (a) the fair value of the  property of such Person is
         greater  than the fair  value of the  liabilities  (including,  without
         limitation,  contingent  liabilities)  of such Person,  (b) such Person
         does not intend to, and does not believe that it will,  incur debts and
         liabilities  beyond  such  Person's  ability  to pay as such  debts and
         liabilities  mature and (c) such Person is not engaged in business or a
         transaction, and is not about to engage in a business or a transaction,
         for which such Person's property would constitute an unreasonably small
         capital.

                  "SPE" shall mean any special purpose  Non-Recourse  Subsidiary
         of the Borrower  established  in connection  with  Accounts  Receivable
         Securitizations permitted by Section 8.05.

                  "Standby  Letters of Credit" means  standby  letters of credit
         Issued by an Issuing Bank pursuant to Article III.

                  "Standby  Letter  of  Credit  Risk  Participation  Percentage"
         means,  as of any date and based upon the Level of the Pricing Ratio on
         such date, the percent per annum set forth below opposite such Level:

                          Standby Letter of Credit Risk
           Pricing Ratio                       Participation Percentage
           -------------                       ------------------------
              Level 1                                         1.25%
              Level 2                                         1.50%
              Level 3                                         1.75%
              Level 4                                         2.00%
              Level 5                                         2.25%

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

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

                  "Swingline Loan" has the meaning specified in Section 2.15.

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

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

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

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

                  "Taxes"  means any and all  present or future  taxes,  levies,
         imposts, deductions,  charges or withholdings, and all liabilities with
         respect  thereto,   excluding,  in  the  case  of  each  Bank  and  the
         Administrative  Agent,  such taxes (including income taxes or franchise
         taxes) as are  imposed on or  measured by each Bank's net income by the
         jurisdiction (or any political  subdivision  thereof) under the laws of
         which  such Bank or the  Administrative  Agent,  as the case may be, is
         organized or maintains a lending office.

                  "Type" means, with respect to any Loan, whether such Loan is a
         Base Rate Loan or a Eurodollar Rate Loan.

                  "UCP" has the meaning specified in Section 3.09.

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

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

     "United States" and "U.S." each means the United States of America.

                  "Weighted Average Life to Maturity" means, when applied to any
         Indebtedness  at any date, the number of years obtained by dividing (a)
         the sum of the products  obtained by multiplying (x) the amount of each
         then  remaining  installment,  sinking fund,  serial  maturity or other
         required payments of principal, including payment at final maturity, in
         respect thereof,  by (y) the number of years (calculated to the nearest
         one-twelfth)  that will elapse between such date and the making of such
         payment,  by  (b)  the  then  outstanding   principal  amount  of  such
         Indebtedness;  provided,  however,  that with respect to any  revolving
         Indebtedness,  the foregoing  calculation  of Weighted  Average Life to
         Maturity shall be determined based upon the total available commitments
         and the required  reductions of commitments in lieu of the  outstanding
         principal amount and the required payments of principal, respectively.

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

1.02              Other Interpretive Provisions.

(a) The  meanings of defined  terms are equally  applicable  to the singular and
plural forms of the defined terms.

(b) The words  "hereof",  "herein",  "hereunder" and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement;  and
subsection,  Section,  Schedule  and Exhibit  references  are to this  Agreement
unless otherwise specified.

(c)      (i) The term "documents"  includes any and all instruments,  documents,
         agreements,  certificates,  indentures,  notices  and  other  writings,
         however evidenced.

     (ii) The term  "including"  is not  limiting and means  "including  without
limitation."

                           (iii) In the  computation  of  periods of time from a
         specified date to a later  specified  date, the word "from" means "from
         and  including";   the  words  "to"  and  "until"  each  mean  "to  but
         excluding", and the word "through" means "to and including."

(d) Unless  otherwise  expressly  provided in this Agreement,  (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be  construed  as  including  all  statutory  and  regulatory  provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

(e) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.

(f)  This  Agreement  and  other  Loan  Documents  may  use  several   different
limitations,  tests or measurements to regulate the same or similar matters. All
such  limitations,  tests and  measurements  are  cumulative  and shall  each be
performed in accordance with their terms.

(g)  Unless   otherwise   expressly   provided  in  this  Agreement,   financial
calculations applicable to the Borrower shall be made on a consolidated basis.

(h) This Agreement and the other Loan  Documents are the result of  negotiations
among and have  been  reviewed  by  counsel  to the  Administrative  Agent,  the
Borrower  and  the  other  parties,   and  are  the  products  of  all  parties.
Accordingly, they shall not be construed against the Banks or the Administrative
Agent merely  because of the  Administrative  Agent's or Banks'  involvement  in
their preparation.

1.03              Accounting Principles.

(a) Unless the context  otherwise  clearly  requires,  all accounting  terms not
expressly  defined  in this  Agreement  shall be  construed,  and all  financial
computations  required  under this Agreement  shall be made, in accordance  with
GAAP,  consistently  applied.  In the event that GAAP changes during the term of
this Agreement  such that the covenants  contained in Section 7.12 would then be
calculated in a different manner or with different components,  (i) the Borrower
and the Banks agree to amend this Agreement in such respects as are necessary to
conform those  covenants as criteria for  evaluating  the  Borrower's  financial
condition to  substantially  the same criteria as were  effective  prior to such
change in GAAP and (ii) the Borrower  shall be deemed to be in  compliance  with
the covenants  contained in Section 7.12 during the 90-day period  following any
such  change in GAAP if and to the extent that the  Borrower  would have been in
compliance therewith under GAAP as in effect immediately prior to such change.

(b) Except as otherwise specified, references in this Agreement to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of the Borrower.

ARTICLE II

                                   THE CREDITS

2.01              Amounts and Terms of Revolving Loan Commitments.
                  -----------------------------------------------

(a)               Facility A Revolving Loans.

     (i) Each Bank severally  agrees, on the terms and subject to the conditions
set forth in this  Agreement,  to make loans to the Borrower  (each such loan, a
"Facility A Revolving Loan") from time to -------------------------  time on any
Business  Day during  the  period  from the  Restatement  Effective  Date to the
Revolving Loan Termination Date, in an aggregate  principal amount not to exceed
at any time outstanding such Bank's Facility A Commitment as in effect from time
to time;  provided,  however,  that, after giving effect to -------- ------- any
Borrowing of Facility A Revolving Loans, the Effective Amount of all outstanding
Facility A Revolving Loans shall not at any time exceed the combined  Facility A
Commitments,  and the Effective  Amount of the Facility A Revolving Loans of any
Bank shall not at any time exceed such Bank's Facility A Commitment.

(ii)     Within the limits of each Bank's Facility A Commitment and on the other
         terms  and  subject  to the other  conditions  of this  Agreement,  the
         Borrower may borrow under this Section  2.01(a),  prepay under  Section
         2.06 and  reborrow  under  this  Section  2.01(a);  provided,  that the
         Borrower  shall cause the  aggregate  outstanding  principal  amount of
         Facility  A  Revolving  Loans to be  reduced  to zero for at least  one
         period of 30 consecutive  days during each fiscal year of the Borrower,
         commencing with the fiscal year in which the Restatement Effective Date
         occurs.

     (b) Facility B Revolving Loans, Letters of Credit and Swingline Loans.

     (i) Each Bank severally  agrees, on the terms and subject to the conditions
set forth in this  Agreement,  to make loans to the Borrower  (each such loan, a
"Facility B Revolving Loan") from time to -------------------------  time on any
Business  Day during  the  period  from the  Restatement  Effective  Date to the
Revolving Loan Termination Date, in an aggregate  principal amount not to exceed
at any time outstanding such Bank's Facility B Commitment as in effect from time
to time;  provided,  however,  that, after giving effect to -------- ------- any
Borrowing of Facility B Revolving  Loans, the sum of the Effective Amount of all
outstanding  Facility B  Revolving  Loans plus the  Effective  Amount of all L/C
Obligations  plus the Effective  Amount of all Swingline  Loans shall not at any
time exceed the combined Facility B Commitments, and the Effective Amount of the
Facility B Revolving  Loans of any Bank plus the  participation  of such Bank in
the Effective  Amount of all L/C Obligations  plus such Bank's Pro Rata Share of
the Effective  Amount of all  outstanding  Swingline Loans shall not at any time
exceed such Bank's Facility B Commitment. On the Restatement Effective Date, the
aggregate  outstanding  principal  amount of the Facility B Revolving  Loans and
Swingline  Loans,  in each case under (and as defined  in) the  Existing  Credit
Agreement shall be  automatically  deemed to be Facility B Revolving Loans under
this  Agreement for all purposes of this  Agreement and the other Loan Documents
(including  for the purpose of  determining  usage of the  Facility B Commitment
under this Agreement as set forth above).

(ii)     Within the limits of each Bank's Facility B Commitment and on the other
         terms  and  subject  to the other  conditions  of this  Agreement,  the
         Borrower may borrow under this Section  2.01(b),  prepay under  Section
         2.06 and reborrow under this Section 2.01(b).

(iii)    As a subfacility of the Banks' Facility B Commitments, the Borrower may
         request the Issuing  Banks to Issue Letters of Credit from time to time
         pursuant  to  Article  III.  On the  Restatement  Effective  Date,  all
         Existing  Letters  of Credit  shall be  Letters  of Credit  under  this
         Agreement and shall constitute usage of the Facility B Commitment under
         this Agreement.

(iv)     In addition,  the Borrower may request BofA to make Swingline  Loans to
         the Borrower from time to time pursuant to Section 2.15.

2.02 Loan  Accounts.  (a) The Loans made by each Bank and the  Letters of Credit
Issued by the  Issuing  Banks  shall be  evidenced  by one or more  accounts  or
records  maintained  by such Bank or  Issuing  Bank,  as the case may be, in the
ordinary  course  of  business.  The  accounts  or  records  maintained  by  the
Administrative Agent, the Issuing Banks and each Bank shall be conclusive absent
manifest  error of the amount of the Loans made by the Banks to the Borrower and
the Letters of Credit Issued for the account of the  Borrower,  and the interest
and  payments  thereon.  Any failure so to record or any error in doing so shall
not,  however,  limit or otherwise  affect the  obligation of the Borrower under
this  Agreement  to pay any amount owing with respect to the Loans or any Letter
of Credit.

                  (b)  Upon  the   request   of  any  Bank  made   through   the
Administrative  Agent,  the Loans made by such Bank may be  evidenced  by one or
more  Notes,  instead  of loan  accounts.  Each such Bank  shall  endorse on the
schedules annexed to its Note(s) the date, amount and maturity of each Loan made
by it and the amount of each  payment of  principal  made by the  Borrower  with
respect  thereto.  Each such Bank is  irrevocably  authorized by the Borrower to
endorse its Note(s) and each Bank's record shall be conclusive  absent  manifest
error;  provided,  however,  that the failure of a Bank to make,  or an error in
making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the  obligations  of the Borrower  under this Agreement or under any such
Note to such Bank.

2.03 Procedure for Borrowing.  (a) Each Borrowing of Loans (other than Swingline
Loans) shall be made upon the Borrower's irrevocable written notice delivered to
the Administrative Agent in the form of a Notice of Borrowing (which notice must
be received by the  Administrative  Agent prior to 9:00 a.m. San Francisco  time
(i) three  Business Days prior to the requested  Borrowing  Date, in the case of
Eurodollar Rate Loans and (ii) one Business Day prior to the requested Borrowing
Date, in the case of Base Rate Loans, specifying:

(A)               the amount of the  Borrowing,  which shall be in an  aggregate
                  minimum  amount of $3,000,000 or any multiple of $1,000,000 in
                  excess thereof for Eurodollar  Rate Loans or $1,000,000 or any
                  multiple of $100,000 in excess thereof for Base Rate Loans;

(B) the requested Borrowing Date, which shall be a Business Day;

(C)               the Type and Class of Loans comprising the Borrowing; and

(D)               the  duration  of  the  Interest  Period   applicable  to  any
                  Eurodollar  Rate Loans included in such notice.  If the Notice
                  of  Borrowing  fails to specify the  duration of the  Interest
                  Period for any Borrowing  comprised of Eurodollar  Rate Loans,
                  such Interest Period shall be one month.

                  (b) The Administrative Agent will promptly notify each Bank of
the Administrative  Agent's receipt of any Notice of Borrowing and of the amount
of such Bank's Pro Rata Share of that Borrowing.

                  (c) Each Bank will  make the  amount of its Pro Rata  Share of
each  Borrowing  available  to the  Administrative  Agent for the account of the
Borrower  at the  Administrative  Agent's  Payment  Office  by  11:00  a.m.  San
Francisco  time  on the  Borrowing  Date  requested  by the  Borrower  in  funds
immediately  available  to the  Administrative  Agent.  The proceeds of all such
Loans will then be made available to the Borrower by the Administrative Agent at
such office by  crediting  the account of the Borrower on the books of BofA with
the aggregate of the amounts made available to the  Administrative  Agent by the
Banks and in like funds as received by the Administrative Agent.

                  (d) After  giving  effect to any  Borrowing,  there may not be
more than ten  different  Interest  Periods in effect with respect to Eurodollar
Rate Loans.

     2.04  Conversion  and  Continuation  Elections.  (a) The Borrower may, upon
irrevocable  written  notice  to the  Administrative  Agent in  accordance  with
Section 2.04(b):

(i)      elect, as of any Business Day, in the case of Base Rate Loans, or as of
         the  last  day of the  applicable  Interest  Period,  in  the  case  of
         Eurodollar  Rate Loans,  to convert any such Loans (or any part thereof
         in an  amount  not  less  than  $3,000,000,  or that is in an  integral
         multiple of $1,000,000 in excess thereof) into Loans of the other Type;
         or

(ii)     elect as of the last day of the applicable Interest Period, to continue
         as Eurodollar Rate Loans any Loans having Interest  Periods expiring on
         such day (or any part thereof in an amount not less than $3,000,000, or
         that is in an integral multiple of $1,000,000 in excess thereof);

provided,  that if at any time the aggregate  amount of Eurodollar Rate Loans in
respect of any Borrowing is reduced,  by payment,  prepayment,  or conversion of
part  thereof to be less than  $3,000,000,  such  Eurodollar  Rate  Loans  shall
automatically convert into Base Rate Loans, and on and after such date the right
of the  Borrower  to  continue  such Loans as,  and  convert  such  Loans  into,
Eurodollar Rate Loans shall terminate.

                  (b)   The    Borrower    shall    deliver    a    Notice    of
Conversion/Continuation  to be  received by the  Administrative  Agent not later
than 9:00 a.m. San Francisco time at least (i) three Business Days in advance of
the  Conversion/Continuation  Date,  if the  Loans are to be  converted  into or
continued as Eurodollar Rate Loans;  and (ii) one Business Day in advance of the
Conversion/Continuation  Date,  if the Loans are to be converted  into Base Rate
Loans, specifying:

(A)               the proposed Conversion/Continuation Date;

(B) the aggregate amount and Class of Loans to be converted or renewed;

(C) the Type of Loans  resulting from the proposed  conversion or  continuation;
and

     (D)  other  than in the case of  conversions  into  Base  Rate  Loans,  the
duration of the requested Interest Period.

                  (c) If upon the expiration of any Interest  Period  applicable
to  Eurodollar  Rate Loans,  the  Borrower  has failed to select a new  Interest
Period within the time period  specified in Section  2.04(b) to be applicable to
such  Eurodollar  Rate Loans, or if any Default or Event of Default then exists,
the Borrower  shall be deemed to have elected to convert  such  Eurodollar  Rate
Loans into Base Rate Loans  effective as of the expiration date of such Interest
Period.

                  (d) The Administrative Agent will promptly notify each Bank of
its receipt of a Notice of Conversion/Continuation, or, if no notice is provided
by the  Borrower  within  the time  period  specified  in Section  2.04(b),  the
Administrative  Agent  will  promptly  notify  each Bank of the  details  of any
automatic  conversion.  All conversions and continuations  shall be made ratably
according  to the  respective  outstanding  principal  amounts of the Loans with
respect to which the notice was given held by each Bank.

                  (e) Unless the  Majority  Banks  otherwise  agree,  during the
existence of a Default or Event of Default, the Borrower may not elect to have a
Loan converted into or continued as a Eurodollar Rate Loan.

                  (f) After giving effect to any conversion or  continuation  of
Loans, there may not be more than ten different Interest Periods in effect.

     2.05 Voluntary Termination or Reduction of Revolving Loan Commitments.
          ----------------------------------------------------------------

(a) The  Borrower  may, not later than 11:00 a.m.  San  Francisco  time at least
three Business Days prior to its effective date by notice to the  Administrative
Agent,  terminate  or  permanently  reduce  the  Facility  A  Commitments  by an
aggregate  minimum  amount of $5,000,000 or any multiple of $5,000,000 in excess
thereof;  unless,  after giving effect  thereto and to any  prepayments of Loans
made on the  effective  date  thereof,  the  Effective  Amount of all Facility A
Revolving  Loans would exceed the amount of the combined  Facility A Commitments
then in effect.

(b) The  Borrower  may, not later than 11:00 a.m.  San  Francisco  time at least
three Business Days prior to its effective date by notice to the  Administrative
Agent,  terminate  or  permanently  reduce  the  Facility  B  Commitments  by an
aggregate  minimum  amount of $5,000,000 or any multiple of $5,000,000 in excess
thereof;  unless,  after giving effect  thereto and to any  prepayments of Loans
made on the effective date thereof,  (i) the Effective  Amount of all Facility B
Revolving  Loans,  L/C Obligations and Swingline Loans together would exceed the
amount of the  combined  Facility  B  Commitments  then in  effect,  or (ii) the
Effective Amount of all L/C Obligations  then  outstanding  would exceed the L/C
Commitment.

(c) Once reduced in accordance  with this Section,  the  Commitments  may not be
increased.  Any reduction of the Revolving Loan Commitments  shall be applied to
each Bank according to its Pro Rata Share.

2.06 Optional Prepayments. (a) Subject to Section 4.04, the Borrower may, at any
time or from time to time,  not later than 9:00 a.m. San Francisco time at least
three (3) Business Days prior to its effective date by irrevocable notice to the
Administrative  Agent, in the case of Eurodollar Rate Loans,  and not later than
9:00  a.m.  San  Francisco  time at  least  one (1)  Business  Day  prior to its
effective date by irrevocable notice to the Administrative Agent, in the case of
Base Rate Loans, ratably prepay Loans in whole or in part, in minimum amounts of
$3,000,000 or any multiple of $1,000,000 in excess thereof,  for Eurodollar Rate
Loans,  and in minimum  amounts of  $1,000,000  or any  multiple  of $100,000 in
excess thereof, for Base Rate Loans.

                  (b) Any such notice of  prepayment  shall specify the date and
amount of such  prepayment  and the  Type(s)  and,  with  respect  to  voluntary
prepayments  occurring on or prior to the Revolving Loan  Termination  Date, the
Class(es)  of Loans to be prepaid.  Prepayments  of Base Rate Loans of any Class
may be made  pursuant to this  Agreement on any  Business  Day.  Prepayments  of
Eurodollar  Rate Loans of any Class may be made pursuant to this  Agreement only
on the last day of any applicable Interest Period; provided, that prepayments of
Eurodollar  Rate  Loans  may be made on a day  other  than  the  last day of the
applicable  Interest  Period only with payment by the Borrower of the  aggregate
amount of any  associated  funding  losses of any  affected  Banks  pursuant  to
Section 4.04.  The  Administrative  Agent will promptly  notify each Bank of its
receipt  of any  such  notice,  and of  such  Bank's  Pro  Rata  Share  of  such
prepayment.

                  (c) If any such notice is given by the Borrower,  the Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date  specified  therein,  together,  in the case of a
Eurodollar  Rate Loan,  with  accrued  interest  to each such date on the amount
prepaid and any amounts required pursuant to Section 4.04.

2.07  Mandatory  Prepayments  of Loans;  Mandatory  Commitment  Reductions.  (a)
Subject  to  Section  4.04,  if on any date on or prior  to the  Revolving  Loan
Termination  Date the  Effective  Amount of all Facility A Revolving  Loans then
outstanding  exceeds the combined  Facility A  Commitments,  the Borrower  shall
immediately,  and without  notice or demand,  prepay the  outstanding  principal
amount  of  Facility  A  Revolving  Loans by an  aggregate  amount  equal to the
applicable excess.

                  (b) If on any date the  Effective  Amount  of L/C  Obligations
exceeds the L/C Commitment,  the Borrower shall Cash  Collateralize on such date
the  outstanding  Letters  of  Credit in an  amount  equal to the  excess of the
aggregate  maximum amount then available to be drawn under the Letters of Credit
over the L/C  Commitment.  Subject to Section  4.04, if on any date after giving
effect to any Cash Collateralization made on such date pursuant to the preceding
sentence,   the  Effective  Amount  of  all  Facility  B  Revolving  Loans  then
outstanding  plus the Effective  Amount of all L/C Obligations  then outstanding
plus the Effective  Amount of all Swingline Loans then  outstanding  exceeds the
combined  Facility B Commitments,  the Borrower shall  immediately,  and without
notice or demand,  prepay the  outstanding  principal  amount of the  Facility B
Revolving Loans, the Swingline Loans and any L/C Advances by an aggregate amount
equal to the applicable excess.

                  (c) The  Borrower  shall  immediately,  and without  notice or
demand, prepay the Obligations (and if necessary,  Cash Collateralize Letters of
Credit) in full, including,  without limitation,  the aggregate principal amount
of all  outstanding  Loans,  all  accrued  and unpaid  interest  thereon and all
amounts  payable under Section 4.04, and all of the Revolving  Loan  Commitments
shall be  automatically  reduced to zero, in each case on the 30th day after any
Change of Control shall have occurred and be continuing.

                  (d) If and to the extent that the Revolving  Loan  Commitments
are not equal to zero on the Revolving  Loan  Termination  Date,  such Revolving
Loan Commitments  shall be  automatically  reduced to zero on the Revolving Loan
Termination Date.

2.08              Repayment.

(a)  Revolving  Loans.  The  Borrower  shall  repay to the  Banks in full on the
Revolving  Loan  Termination  Date the aggregate  principal  amount of Revolving
Loans  outstanding  on such date together  with all accrued and unpaid  interest
thereon.

                  (b) Swingline  Loans. The Borrower shall repay to BofA in full
on the  Revolving  Loan  Termination  Date the  aggregate  principal  amount  of
Swingline Loans  outstanding on such date,  together with all accrued and unpaid
interest thereon.

                  (c) Extension of Revolving Loan  Termination  Date. Each Bank,
at its sole  option  and in its sole  discretion,  upon the  written  request of
Borrower given to the  Administrative  Agent and each Bank not more than 90 days
nor less than 60 days prior to the Revolving Loan  Termination  Date at any time
in effect,  may elect to extend such Revolving Loan Termination Date by a period
of one year. Within 30 days following  receipt of such request,  each Bank shall
give notice to the  Borrower  and the  Administrative  Agent of its  decision to
extend or not to extend such Revolving Loan Termination  Date. If, in accordance
with the immediately preceding sentence,  all Banks shall have elected to extend
such Revolving Loan Termination  Date, the Revolving Loan Termination Date shall
be extended  by a period of one year.  In the event that any Bank  notifies  the
Borrower and the Administrative Agent that it will not extend the Revolving Loan
Termination Date then in effect, or if any Bank fails to notify the Borrower and
the  Administrative  Agent of its  decision  to  extend  or not to  extend  such
Revolving  Loan  Termination  Date, in either case within the  applicable 30 day
period  referred to above,  such  Revolving Loan  Termination  Date shall not be
extended and the  Revolving  Loan  Termination  Date then in effect shall be the
Revolving Loan Termination  Date for all purposes of this Agreement.  Nothing in
this Section  2.08(c) shall prevent the Borrower from replacing any Bank that is
unwilling to extend the Revolving Loan  Termination Date with another Bank or an
Eligible  Assignee that is willing to extend the Revolving Loan Termination Date
as provided in Section 4.07.

2.09 Interest.  (a) Each Loan shall bear interest on the  outstanding  principal
amount thereof from the  applicable  Borrowing Date at a rate per annum equal to
the  Eurodollar  Rate (other than with respect to  Swingline  Loans) or the Base
Rate,  as the case may be (and  subject  to the  Borrower's  right to convert to
other Types of Loans under Section 2.04), plus the Applicable Margin.

                  (b)  Interest  on each Loan  shall be paid in  arrears on each
applicable  Interest  Payment Date and on the Revolving Loan  Termination  Date.
Interest in all cases shall also be paid on the date of any  prepayment of Loans
under Section  2.07(d) and interest on Eurodollar  Rate Loans shall also be paid
on the date of prepayment of Loans in all other circumstances under Section 2.06
or 2.07,  in each case for the portion of the Loans so prepaid and upon  payment
(including prepayment) in full thereof and, during the existence of any Event of
Default,  interest  shall be paid on demand of the  Administrative  Agent at the
request or with the consent of the Majority Banks.

                  (c) Notwithstanding  subsection (a) of this Section, while any
Event of Default exists or after  acceleration,  the Borrower shall pay interest
(after as well as before  entry of judgment  thereon to the extent  permitted by
law) on the principal amount of all outstanding Obligations, at a rate per annum
which is  determined  by adding 2% per annum to the  Applicable  Margin  then in
effect  for  such  Loans  and,  in the case of  Obligations  not  subject  to an
Applicable  Margin,  including,  without  limitation,  all  letter of credit and
commitment  fees  provided in this  Agreement,  at a rate per annum equal to the
Base Rate plus the Applicable  Margin plus 2%; provided,  however,  that, on and
after the expiration of any Interest  Period  applicable to any Eurodollar  Rate
Loan  outstanding  on the  date  of  occurrence  of such  Event  of  Default  or
acceleration,  the principal amount of such Loan shall,  during the continuation
of such Event of  Default or after  acceleration,  bear  interest  at a rate per
annum equal to the Base Rate plus the Applicable Margin plus 2%.

                  (d)    Anything   in   this    Agreement   to   the   contrary
notwithstanding,  the  obligations  of the  Borrower  to  any  Bank  under  this
Agreement shall be subject to the limitation that payments of interest shall not
be required for any period for which interest is computed under this  Agreement,
to the extent (but only to the extent) that  contracting  for or receiving  such
payment by such Bank would be contrary to the  provisions of any law  applicable
to such  Bank  limiting  the  highest  rate of  interest  that  may be  lawfully
contracted for, charged or received by such Bank, and in such event the Borrower
shall pay such Bank interest at the highest rate permitted by applicable law.

2.10              Fees.  In addition to certain fees described in Section 3.08:
                  ----

(a) Agency  Fees.  The  Borrower  shall pay a  non-refundable  agency fee to the
Administrative Agent for the Administrative  Agent's own account, as required by
the  letter   agreement  (the  "Fee  Letter")   between  the  Borrower  and  the
Administrative Agent dated as of the Restatement Effective Date.

(b) Commitment Fees. The Borrower shall pay to the Administrative  Agent for the
account of each Bank (i) a commitment fee with respect to such Bank's Facility A
Commitment  equal to the  Commitment  Fee Rate per annum times the actual  daily
amount by which  such  Bank's  Facility  A  Commitment  exceeded  the sum of the
aggregate  Effective  Amount  of its  Facility  A  Revolving  Loans  and  (ii) a
commitment  fee with respect to such Bank's  Facility B Commitment  equal to the
Commitment Fee Rate per annum times the actual daily amount by which such Bank's
Facility B Commitment  exceeded the aggregate Effective Amount of its Facility B
Revolving  Loans  plus  its  Pro  Rata  Share  of the  Effective  Amount  of L/C
Obligations.  Such commitment  fees shall accrue from the Restatement  Effective
Date to the  Revolving  Loan  Termination  Date  and  shall  be due and  payable
quarterly in arrears on the first Business Day of each fiscal quarter  following
the  quarter  for which  payment is to be made,  commencing  on the  Restatement
Effective  Date through the  Revolving  Loan  Termination  Date,  with the final
payment to be made on the Revolving  Loan  Termination  Date;  provided that, in
connection with the full termination of Revolving Loan Commitments under Section
2.05 or Section 2.07,  the accrued  commitment  fees  calculated  for the period
ending  on such date  shall  also be paid on the date of such  termination.  The
commitment fees provided in this subsection  shall accrue at all times after the
above-mentioned  commencement  date,  including  at any time during which one or
more conditions in Article V are not met.

(c)  Participation  Fees. On the Restatement  Effective Date, the Borrower shall
pay to the  Administration  Agent for the account of each Bank a  non-refundable
participation  fee in an amount equal to (i) 3/8%  multiplied by (ii) the sum of
such Bank's Revolving Loan Commitments.

2.11 Computation of Fees and Interest. (a) All computations of interest for Base
Rate Loans when the Base Rate is determined by BofA's  "reference rate" shall be
made on the basis of a year of 365 or 366 days,  as the case may be,  and actual
days elapsed.  All other  computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed  (which results in more interest
being paid than if computed on the basis of a 365-day  year).  Interest and fees
shall accrue during each period during which  interest or such fees are computed
from the first day thereof to the last day thereof.

                  (b)   Each   determination   of  an   interest   rate  by  the
Administrative  Agent shall be  conclusive  and binding on the  Borrower and the
Banks in the absence of manifest error.

2.12 Payments by the Borrower. (a) All payments to be made by the Borrower under
any Loan Document shall be made without  set-off,  recoupment,  counterclaim  or
other defense.  Except as otherwise  expressly  provided in this Agreement,  all
payments  by the  Borrower  shall be made to the  Administrative  Agent  for the
account of the Banks at the Administrative  Agent's Payment Office, and shall be
made in dollars and in  immediately  available  funds,  no later than 10:00 a.m.
(San Francisco time) on the date specified in this Agreement. The Administrative
Agent  will  promptly  distribute  to each  Bank its Pro Rata  Share  (or  other
applicable  share as expressly  provided in this  Agreement)  of such payment in
like funds as received.  Any payment received by the Administrative  Agent later
than 10:00 a.m.  (San  Francisco  time) shall be deemed to have been received on
the following Business Day and any applicable  interest or fee shall continue to
accrue.

                  (b) Subject to the  provisions  set forth in the definition of
"Interest Period" in this Agreement,  whenever any payment is due on a day other
than a Business Day,  such payment shall be made on the following  Business Day,
and such extension of time shall in such case be included in the  computation of
interest or fees, as the case may be.

                  (c) Unless the  Administrative  Agent receives notice from the
Borrower  prior to the date on which any  payment  is due to the Banks  that the
Borrower  will  not  make  such  payment  in  full  as and  when  required,  the
Administrative  Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date in immediately  available funds and the
Administrative  Agent may (but shall not be so required),  in reliance upon such
assumption,  distribute  to each  Bank on such due date an  amount  equal to the
amount then due such Bank.  If and to the extent the  Borrower has not made such
payment  in full to the  Administrative  Agent,  each  Bank  shall  repay to the
Administrative  Agent on demand such amount  distributed to such Bank,  together
with interest  thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.

                  (d)  Unless  a  due  date  is  otherwise   specified  in  this
Agreement,  the due  date  for any  Obligation  shall  be 30 days  after  demand
therefor by the Person to whom the Obligation is owed.

2.13  Payments  by the  Banks  to  the  Administrative  Agent.  (a)  Unless  the
Administrative  Agent receives notice from a Bank on or prior to the Restatement
Effective Date or, with respect to any Borrowing after the Restatement Effective
Date, by 2:00 p.m. (San Francisco time) on the Business Day prior to the date of
such  Borrowing,  that such Bank will not make  available  as and when  required
under this Agreement to the Administrative Agent for the account of the Borrower
the amount of that Bank's Pro Rata Share of the  Borrowing,  the  Administrative
Agent  may  assume  that  each  Bank  has  made  such  amount  available  to the
Administrative  Agent in immediately  available  funds on the Borrowing Date and
the  Administrative  Agent may (but shall not be so required),  in reliance upon
such  assumption,  make  available to the Borrower on such date a  corresponding
amount.  If and to the  extent  any Bank  shall  not have  made its full  amount
available to the  Administrative  Agent in immediately  available  funds and the
Administrative  Agent in such  circumstances  has made available to the Borrower
such amount,  that Bank shall on the Business Day following  such Borrowing Date
make such amount available to the Administrative  Agent,  together with interest
at the  Federal  Funds Rate for each day  during  such  period.  A notice of the
Administrative  Agent  submitted to any Bank with respect to amounts owing under
this  subsection (a) shall be conclusive,  absent manifest error. If such amount
is so made available,  such payment to the Administrative Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made  available to the  Administrative  Agent on the Business
Day following  the  Borrowing  Date,  the  Administrative  Agent will notify the
Borrower of such failure to fund and, upon demand by the  Administrative  Agent,
the  Borrower  shall  pay  such  amount  to the  Administrative  Agent  for  the
Administrative  Agent's  account,  together with  interest  thereon for each day
elapsed  since  the date of such  Borrowing,  at a rate per  annum  equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.

                  (b) The failure of any Bank to make any Loan on any  Borrowing
Date shall not relieve any other Bank of any obligation  under this Agreement to
make a Loan on such Borrowing  Date,  but no Bank shall be  responsible  for the
failure  of any other Bank to make the Loan to be made by such other Bank on any
Borrowing Date.

2.14 Sharing of Payments, Etc. If, other than as expressly provided elsewhere in
this  Agreement,  any Bank  shall  obtain on account of the Loans made by it any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or  otherwise)  in  excess  of its Pro Rata  Share,  such  Bank  shall
immediately (a) notify the  Administrative  Agent of such fact, and (b) purchase
from the other Banks such  participations  in the Loans made by them as shall be
necessary  to cause such  purchasing  Bank to share the excess  payment pro rata
with each of them; provided,  however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing  Bank
the purchase price paid  therefor,  together with an amount equal to such paying
Bank's  ratable  share  (according  to the  proportion of (i) the amount of such
paying Bank's required  repayment to (ii) the total amount so recovered from the
purchasing  Bank)  of any  interest  or  other  amount  paid or  payable  by the
purchasing Bank in respect of the total amount so recovered. The Borrower agrees
that any Bank so  purchasing  a  participation  from  another  Bank may,  to the
fullest extent permitted by law,  exercise all its rights of payment  (including
the right of set-off)  with  respect to such  participation  as fully as if such
Bank  were  the  direct   creditor  of  the  Borrower  in  the  amount  of  such
participation.  The  Administrative  Agent  will keep  records  (which  shall be
conclusive  and  binding in the  absence of  manifest  error) of  participations
purchased  under this  Section and will in each case notify the Banks  following
any such purchases or repayments.

2.15              Discretionary Swingline Loans.

(a) From time to time, subject to the conditions set forth below, at the request
of the Borrower,  made through the Administrative Agent as set forth below, BofA
in its sole and absolute  discretion may make  short-term  loans to the Borrower
not to exceed in the aggregate at any one time  outstanding the principal sum of
$25,000,000, to be used by the Borrower to cover overdrafts, for cash management
purposes,  or for other general  working  capital needs of the Borrower (each, a
"Swingline  Loan").  The  availability  of Swingline Loans is conditioned on the
satisfaction  of each of the following  conditions:  (i) it shall be in the sole
and absolute  discretion  of BofA,  on each  occasion  that a Swingline  Loan is
requested,  whether to make such Swingline  Loan; (ii) each Swingline Loan shall
bear  interest  from the time made until the time repaid,  or until the time, if
any,  that such  Swingline  Loan is converted  into a Base Rate Loan as provided
below, at the rate(s) from time to time applicable to Base Rate Loans under this
Agreement;  (iii) at the time of making of any  Swingline  Loan,  the sum of the
Effective Amount of all outstanding Swingline Loans plus the Effective Amount of
all outstanding  Facility B Revolving Loans plus the Effective Amount of all L/C
Obligations  then  outstanding,   without  duplication,  shall  not  exceed  the
aggregate  Facility B  Commitment;  (iv) each  Swingline  Loan,  when made,  all
interest accrued thereon,  and all reimbursable  costs and expenses  incurred or
payable in  connection  therewith,  shall  constitute  an Obligation of Borrower
under  this  Agreement;  and (v) each  request  for a  Swingline  Loan from BofA
pursuant  to  this   Section   2.15  shall  be  made  by  the  Borrower  to  the
Administrative  Agent, shall be funded by BofA through the Administrative Agent,
and shall be repaid by the Borrower through the  Administrative  Agent (in order
that the  Administrative  Agent may keep an accurate  record of the  outstanding
balance  at any time of  Swingline  Loans so as to monitor  compliance  with the
terms and provisions  hereof),  and each such request shall be in writing unless
the  Administrative  Agent in its sole discretion  accepts an oral or telephonic
request.  Each  Swingline  Loan  shall be made upon the  Borrower's  irrevocable
written notice delivered to the Administrative  Agent  substantially in the form
of a Notice of Borrowing  (which  notice must be received by the  Administrative
Agent prior to 1:00 p.m.  (San  Francisco  time) on the  requested  date of such
Swingline Loan), specifying:

     (i) the amount of the Swingline Loan, which shall be in a minimum amount of
$200,000 or any multiple of $100,000 in excess thereof; and

(ii) the requested date of such Swingline Loan, which shall be a Business Day;

(b) If any Swingline  Loan made pursuant to this Section 2.15, and in compliance
with the conditions  set forth in the  immediately  preceding  paragraph of this
Section  2.15,  is not repaid by the Borrower on or before the seventh  calendar
day following  the day that it was funded by BofA,  BofA shall have the right in
BofA's sole and absolute  discretion,  by giving  notice to the Borrower and the
Banks, to cause such Swingline Loan automatically upon the giving of such notice
to be converted  into a Facility B Revolving Loan which is a Base Rate Loan, and
upon  receipt of such notice each Bank shall fund to the  Administrative  Agent,
for the account of BofA,  such Bank's ratable share of such Facility B Revolving
Loan,  based on such Bank's Pro Rata  Share;  provided,  that if any  Insolvency
Proceeding  has been  commenced  with respect to the Borrower on or prior to the
date on which such  Swingline  Loan is due,  and in lieu of funding its Pro Rata
Share of a Facility B Revolving  Loan,  each Bank shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from BofA a participation in
such Swingline Loan equal to the product of such Bank's Pro Rata Share times the
amount of such Swingline Loan.

(c) Each Bank's  obligation in accordance with this Agreement to make Facility B
Revolving  Loans upon the failure of a Swingline  Loan to be repaid in full when
due, or to purchase participations in such Swingline Loans, shall, in each case,
be absolute  and  unconditional  and  without  recourse to BofA and shall not be
affected  by  any  circumstance,   including  (i)  any  set-off,   counterclaim,
recoupment,  defense or other right which such Bank may have against  BofA,  the
Borrower or any other Person for any reason  whatsoever;  (ii) the occurrence or
continuance of a Default,  an Event of Default or a Material Adverse Effect;  or
(iii) any other  circumstance,  happening  or event  whatsoever,  whether or not
similar to any of the foregoing.

ARTICLE III

                              THE LETTERS OF CREDIT

3.01 The  Letter of Credit  Subfacility.  (a) On the  terms and  subject  to the
conditions  set forth in this  Agreement and as a subfacility  of the Facility B
Commitment,  (i) the Issuing Banks agree,  from time to time on any Business Day
during the period  from the  Restatement  Effective  Date to the date that is 30
days prior to the Revolving Loan Termination Date to issue Letters of Credit for
the account of the Borrower and to amend or renew  Letters of Credit  previously
issued by them,  in each case in accordance  with Sections  3.02(c) and 3.02(d);
and (ii) the Banks  severally  agree to  participate in Letters of Credit Issued
for the account of the Borrower;  provided,  that the Issuing Banks shall not be
obligated to Issue, and no Bank shall be obligated to participate in, any Letter
of Credit if, as of the date of Issuance of such Letter of Credit (the "Issuance
Date"),  (1) the  Effective  Amount of all L/C  Obligations  plus the  Effective
Amount of all  Facility  B  Revolving  Loans  plus the  Effective  Amount of all
Swingline  Loans  exceeds  the  combined  Facility  B  Commitments,  or (2)  the
Effective  Amount of L/C  Obligations  exceeds  the L/C  Commitment.  Within the
foregoing  limits,  and subject to the other terms and  conditions  hereof,  the
ability of the Borrower to obtain  Letters of Credit  shall be fully  revolving,
and, accordingly,  the Borrower may, during the foregoing period, obtain Letters
of Credit to  replace  Letters of Credit  which have  expired or which have been
drawn upon and reimbursed.

     (b) No Issuing Bank is under any  obligation  to Issue any Letter of Credit
if:

     (i)  any  order,  judgment  or  decree  of any  Governmental  Authority  or
arbitrator  shall by its terms  purport to enjoin or restrain  such Issuing Bank
from Issuing such Letter of Credit, or any Requirement of Law applicable to such
Issuing  Bank or any  request or  directive  (whether or not having the force of
law) from any Governmental  Authority with  jurisdiction  over such Issuing Bank
shall prohibit,  or request that such Issuing Bank refrain from, the Issuance of
letters of credit  generally  or such  Letter of Credit in  particular  or shall
impose  upon  such  Issuing  Bank with  respect  to such  Letter  of Credit  any
restriction,  reserve or capital requirement (for which such Issuing Bank is not
otherwise  compensated  under this  Agreement) not in effect on the  Restatement
Effective  Date, or shall impose upon such Issuing Bank any  unreimbursed  loss,
cost or expense which was not applicable on the  Restatement  Effective Date and
which such Issuing Bank in good faith deems material to it;

(ii)     such  Issuing  Bank has  received  written  notice  from any Bank,  the
         Administrative  Agent or the Borrower,  on or prior to the Business Day
         prior to the requested date of Issuance of such Letter of Credit,  that
         one or more of the applicable  conditions contained in Article V is not
         then satisfied;

     (iii) the expiry date of any requested Letter of Credit is (A) with respect
to  Commercial  Letters of Credit  supporting  the  purchase of inventory by the
Borrower, more than (1) 180 days after the date of Issuance or (2) 30 days prior
to the Revolving Loan Termination  Date, unless the Majority Banks have approved
such expiry date in writing, (B) with respect to Standby Letters of Credit, more
than  (1) 364  days  after  the  date of  Issuance  or (2) 30 days  prior to the
Revolving Loan  Termination  Date,  unless the Majority Banks have approved such
expiry date in writing;  or (C) with respect to any other  Letter of Credit,  30
days prior to the Revolving Loan Termination  Date, unless all of the Banks have
approved such expiry date in writing;

(iv)     the  expiry  date of any  requested  Letter  of  Credit is prior to the
         maturity  date  of any  financial  obligation  to be  supported  by the
         requested Letter of Credit;

(v)      any  requested  Letter of Credit does not  provide  for drafts  (unless
         there is a demand  for  payment  in the  documentation  required  to be
         delivered in connection with any drawing),  or is not otherwise in form
         and  substance  acceptable  to such Issuing  Bank, or the Issuance of a
         Letter of Credit shall violate any applicable  policies of such Issuing
         Bank;

(vi)     any  Standby  Letter of Credit is for the  purpose  of  supporting  the
         issuance  of any letter of credit by any other  Person  other than with
         respect to any  Existing  Letter of Credit so  designated  in  Schedule
         3.03; or

(vii)    such  Letter  of  Credit  is to be used for a  purpose  other  than any
         permitted  use of the  proceeds of  Facility B  Revolving  Loans as set
         forth in Section 7.11.

3.02  Issuance,  Amendment and Renewal of Letters of Credit.  (a) Each Letter of
Credit  shall be issued upon the  irrevocable  written  request of the  Borrower
received  by  the  Issuing  Bank  (with  a copy  sent  by  the  Borrower  to the
Administrative  Agent) prior to 10:00 a.m. (San Francisco  time) on the proposed
date of  Issuance  for Letters of Credit in the form of Exhibit H, I or J hereto
and at least four days prior to the proposed date of Issuance for other forms of
Letters of Credit. Each such request for issuance of a Letter of Credit shall be
by facsimile,  confirmed by telephone,  in the form of an L/C  Application,  and
shall specify in form and detail  satisfactory  to the applicable  Issuing Bank:
(i) the  proposed  date of  issuance of the Letter of Credit  (which  shall be a
Business  Day);  (ii) the face amount of the Letter of Credit;  (iii) the expiry
date of the  Letter of  Credit;  (iv) the name and  address  of the  beneficiary
thereof;  (v) the documents to be presented by the  beneficiary of the Letter of
Credit in case of any drawing thereunder;  (vi) the full text of any certificate
to be presented by the beneficiary in case of any drawing thereunder;  and (vii)
such other matters as the Issuing Bank may require.

                  (b)  Prior  to the  Issuance  of any  Letter  of  Credit,  the
applicable Issuing Bank will confirm with the Administrative Agent (by telephone
or in  writing)  that the  Administrative  Agent has  received a copy of the L/C
Application  or L/C  Amendment  Application  from the Borrower and, if not, such
Issuing Bank will provide the Administrative  Agent with a copy thereof.  Unless
such  Issuing Bank has received  notice on or before 11:00 a.m.  (San  Francisco
time) on the date such  Issuing  Bank is to issue a  requested  Letter of Credit
from the Administrative  Agent (A) directing such Issuing Bank not to issue such
Letter of Credit  because  such  issuance is not then  permitted  under  Section
3.01(a) as a result of the  limitations  set forth in clauses (1) or (2) thereof
or Section 3.01(b)(ii);  or (B) that one or more conditions specified in Article
V are not then satisfied; then, subject to the terms and conditions hereof, such
Issuing  Bank  shall,  on the  requested  date,  issue a  Letter  of  Credit  in
accordance with such Issuing Bank's usual and customary business practices.

                  (c) From time to time while a Letter of Credit is  outstanding
and prior to the Revolving Loan  Termination  Date, any Issuing Bank will,  upon
the written  request of the Borrower  received by such Issuing Bank (with a copy
sent by the  Borrower to the  Administrative  Agent) at least four days (or such
shorter time as such Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of amendment,  amend any Letter of Credit
issued by it. Each such  request for  amendment  of a Letter of Credit  shall be
made by facsimile,  confirmed by telephone, made in the form of an L/C Amendment
Application  and shall specify in form and detail  satisfactory  to such Issuing
Bank:  (i) the  Letter  of  Credit  to be  amended;  (ii) the  proposed  date of
amendment  of the Letter of Credit  (which shall be a Business  Day);  (iii) the
nature of the proposed  amendment;  and (iv) such other  matters as such Issuing
Bank may require.  The  applicable  Issuing Bank shall be under no obligation to
amend any Letter of Credit if: (A) such Issuing Bank would have no obligation at
such time to issue such Letter of Credit in its amended  form under the terms of
this  Agreement;  or (B) the  beneficiary  of any such Letter of Credit does not
accept the proposed amendment to the Letter of Credit. The Administrative  Agent
will promptly  notify the Banks of the receipt by it of any L/C  Application  or
L/C Amendment Application.

                  (d) The Issuing Banks and the Banks agree that, while a Letter
of Credit is outstanding  and prior to the Revolving Loan  Termination  Date, at
the option of the Borrower and upon the written request of the Borrower received
by the  applicable  Issuing  Bank  (with  a copy  sent  by the  Borrower  to the
Administrative  Agent) at least four days (or such  shorter time as such Issuing
Bank may agree in a  particular  instance in its sole  discretion)  prior to the
proposed date of notification of renewal, such Issuing Bank shall be entitled to
authorize the automatic  renewal of any Letter of Credit issued by it. Each such
request for renewal of a Letter of Credit shall be made by facsimile,  confirmed
by telephone, in the form of an L/C Amendment Application,  and shall specify in
form and detail  satisfactory  to such Issuing Bank: (i) the Letter of Credit to
be renewed;  (ii) the proposed date of  notification of renewal of the Letter of
Credit  (which shall be a Business  Day);  (iii) the revised  expiry date of the
Letter of Credit;  and (iv) such other matters as such Issuing Bank may require.
The applicable  Issuing Bank shall be under no obligation to so renew any Letter
of Credit if: (A) such  Issuing  Bank would have no  obligation  at such time to
issue or amend such Letter of Credit in its renewed form under the terms of this
Agreement;  or (B) the  beneficiary of any such Letter of Credit does not accept
the  proposed  renewal  of the Letter of Credit.  If any  outstanding  Letter of
Credit  shall  provide  that  it  shall  be  automatically  renewed  unless  the
beneficiary  thereof receives notice from the applicable  Issuing Bank that such
Letter  of Credit  shall  not be  renewed,  and if at the time of  renewal  such
Issuing Bank would be entitled to authorize the automatic renewal of such Letter
of Credit in  accordance  with this  Section  3.02(d)  upon the  request  of the
Borrower,  but such  Issuing  Bank  shall not have  received  any L/C  Amendment
Application  with  respect to such  renewal or other  written  direction  by the
Borrower with respect thereto,  such Issuing Bank shall nonetheless be permitted
to allow such Letter of Credit to renew,  and the  Borrower and the Banks hereby
authorize such renewal, and,  accordingly,  such Issuing Bank shall be deemed to
have received an L/C Amendment  Application  from the Borrower  requesting  such
renewal.

                  (e) The Issuing  Banks may, at their  election (or as required
by the Administrative Agent at the direction of the Majority Banks), deliver any
notices  of  termination  or  other  communications  to  any  Letter  of  Credit
beneficiary  or   transferee,   and  take  any  other  action  as  necessary  or
appropriate,  at any time and from time to time,  in order to cause  the  expiry
date of such  Letter of Credit to be a date not later  than the  Revolving  Loan
Termination Date.

                  (f) This Agreement  shall control in the event of any conflict
with any L/C-Related Document (other than any Letter of Credit).

                  (g) The Issuing Banks will also deliver to the  Administrative
Agent,  concurrently or promptly  following  delivery of a Letter of Credit,  or
amendment  to or  renewal  of a  Letter  of  Credit,  to an  advising  bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.

3.03   Existing   Letters  of  Credit;   Risk   Participations,   Drawings   and
Reimbursements.  (a) On and after the  Restatement  Effective Date, the Existing
Letters of Credit shall be deemed for all  purposes,  including  for purposes of
the  fees  to be  collected  pursuant  to  Sections  3.08(a)  and  3.08(c),  and
reimbursement  costs and  expenses  to the extent  provided  in this  Agreement,
Letters of Credit  outstanding under this Agreement and entitled to the benefits
of this  Agreement  and the other Loan  Documents,  and shall be governed by the
applications  and  agreements  pertaining  thereto and by this  Agreement.  Each
Existing Letter of Credit designated as a "standby letter of credit" on Schedule
3.03 shall be deemed to be a Standby Letter of Credit,  and each Existing Letter
of Credit designated as a "commercial  documentary letter of credit" on Schedule
3.03 shall be deemed to be a  Commercial  Letter of  Credit.  Each Bank shall be
deemed to, and hereby irrevocably and  unconditionally  agrees to, purchase from
the Issuing Banks on the Restatement Effective Date a participation in each such
Letter of Credit and each drawing  thereunder  in an amount equal to the product
of (i) such Bank's Pro Rata Share times (ii) the maximum amount  available to be
drawn under such Letter of Credit and the amount of such drawing,  respectively.
For  purposes of Sections  2.01(a) and 2.10(b),  the Existing  Letters of Credit
shall be deemed to utilize the Pro Rata Share of each Bank.

                  (b) Immediately  upon the Issuance of each Letter of Credit in
addition to those  described in Section  3.03(a),  each Bank shall be deemed to,
and  hereby  irrevocably  and  unconditionally  agrees  to,  purchase  from  the
applicable  Issuing  Bank a  participation  in such  Letter of  Credit  and each
drawing  thereunder  in an amount equal to the product of (i) the Pro Rata Share
of such Bank,  times (ii) the maximum  amount  available  to be drawn under such
Letter of Credit and the amount of such drawing,  respectively.  For purposes of
Sections  2.01(a) and  2.10(b),  each  Issuance  of a Letter of Credit  shall be
deemed to utilize the Facility B  Commitment  of each Bank by an amount equal to
the amount of such participation.

                  (c) In the event of any request  for a drawing  under a Letter
of Credit by the beneficiary or transferee thereof,  the applicable Issuing Bank
will promptly  notify the Borrower.  The Borrower  shall  reimburse such Issuing
Bank prior to 10:00 a.m. (San Francisco  time),  on each date that any amount is
paid by such Issuing Bank under any Letter of Credit (each such date,  an "Honor
Date"),  in an amount equal to the amount so paid by such Issuing  Bank.  In the
event the Borrower  fails to reimburse such Issuing Bank of any Letter of Credit
for the full  amount of any  drawing  under such  Letter of Credit by 10:00 a.m.
(San Francisco  time) on the Honor Date,  such Issuing Bank will promptly notify
the Administrative  Agent and the Administrative Agent will promptly notify each
Bank thereof,  and the Borrower shall be deemed to have requested that Base Rate
Loans be made by the Banks to be  disbursed  on the Honor Date under such Letter
of Credit,  subject to the  conditions  set forth in  Section  5.02  (including,
without limitation,  the condition that no Insolvency Proceeding shall have been
commenced by or against the Borrower on the Honor Date).  Any notice given by an
Issuing Bank or the Administrative Agent pursuant to this Section 3.03(c) may be
oral if immediately confirmed in writing (including by facsimile); provided that
the lack of such an immediate  confirmation  shall not affect the conclusiveness
or binding effect of such notice.

                  (d) Each  Bank  shall  upon any  notice  pursuant  to  Section
3.03(c)  make  available  to the  Administrative  Agent for the  account  of the
applicable Issuing Bank an amount in Dollars and in immediately  available funds
equal  to its Pro  Rata  Share  of the  amount  of the  drawing,  whereupon  the
participating  Banks shall  (subject to Section  3.03(e)) each be deemed to have
made a Facility B Revolving Loan  consisting of a Base Rate Loan to the Borrower
in that  amount.  If any  Bank  so  notified  fails  to  make  available  to the
Administrative  Agent for the account of the applicable  Issuing Bank the amount
of such  Bank's  Pro Rata  Share of the  amount of the  drawing by no later than
11:00 a.m. (San Francisco time) on the Honor Date, then interest shall accrue on
such Bank's  obligation  to make such  payment,  from the Honor Date to the date
such Bank makes such  payment,  at a rate per annum equal to the  Federal  Funds
Rate in effect from time to time during such period.  The  Administrative  Agent
will  promptly give notice of the  occurrence of the Honor Date,  but failure of
the  Administrative  Agent to give  any  such  notice  on the  Honor  Date or in
sufficient time to enable any Bank to effect such payment on such date shall not
relieve such Bank from its obligations under this Section 3.03.

                  (e)  With  respect  to any  unreimbursed  drawing  that is not
converted into Facility B Revolving  Loans  consisting of Base Rate Loans to the
Borrower in whole or in part,  because of the Borrower's  failure to satisfy the
conditions set forth in Section 5.02 or for any other reason, the Borrower shall
be deemed to have  incurred  from an Issuing Bank an L/C Borrowing in the amount
of such  drawing,  which  L/C  Borrowing  shall  be due and  payable  on  demand
(together  with  interest)  and shall bear interest at a rate per annum equal to
the Base Rate plus the  Applicable  Margin  plus 2% per annum,  and each  Bank's
payment to such Issuing Bank pursuant to Section 3.03(d) shall be deemed payment
in respect of its  participation  in such L/C Borrowing and shall  constitute an
L/C Advance from such Bank in satisfaction of its participation obligation under
this Section 3.03.

                  (f) Each Bank's  obligation in accordance  with this Agreement
to make the Facility B Revolving Loans or L/C Advances,  as contemplated by this
Section  3.03,  as a result of a  drawing  under a Letter  of  Credit,  shall be
absolute and  unconditional and without recourse to the Issuing Banks (except in
circumstances  arising  solely  as a  result  of  willful  misconduct  or  gross
negligence by the Issuing Banks) and shall not be affected by any  circumstance,
including  (i) any  set-off,  counterclaim,  recoupment,  defense or other right
which such Bank may have  against any Issuing  Bank,  the  Borrower or any other
Person  for any reason  whatsoever;  (ii) the  occurrence  or  continuance  of a
Default,  an Event of Default or a Material  Adverse Effect;  or (iii) any other
circumstance,  happening or event  whatsoever,  whether or not similar to any of
the foregoing.

3.04  Repayment  of  Participations.  (a) Upon (and only  upon)  receipt  by the
Administrative Agent for the account of an Issuing Bank of immediately available
funds from the Borrower (i) in reimbursement of any payment made by such Issuing
Bank  under the  Letter of Credit  with  respect  to which any Bank has paid the
Administrative  Agent  for the  account  of such  Issuing  Bank for such  Bank's
participation  in the  Letter  of Credit  pursuant  to  Section  3.03 or (ii) in
payment of interest thereon,  the Administrative Agent will pay to each Bank, in
the same funds as those received by the Administrative  Agent for the account of
such Issuing Bank,  the amount of such Bank's Pro Rata Share of such funds,  and
such Issuing  Bank shall  receive the amount of the Pro Rata Share of such funds
of any Bank that did not so pay the Administrative Agent for the account of such
Issuing Bank.

                  (b)  If  the  Administrative  Agent  or any  Issuing  Bank  is
required  at any time to  return to the  Borrower,  or to a  trustee,  receiver,
liquidator, custodian, or any official in any Insolvency Proceeding, any portion
of the payments made by the Borrower to the Administrative Agent for the account
of such Issuing Bank pursuant to Section 3.04(a) in  reimbursement  of a payment
made under the Letter of Credit or interest or fee thereon,  each Bank shall, on
demand of the Administrative Agent, forthwith return to the Administrative Agent
or such Issuing Bank the amount of its Pro Rata Share of any amounts so returned
by the Administrative  Agent or such Issuing Bank plus interest thereon from the
date such demand is made to the date such  amounts are  returned by such Bank to
the Administrative  Agent or such Issuing Bank, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.

3.05 Role of the Issuing  Banks.  (a) Each Bank and the Borrower  agree that, in
paying any drawing under a Letter of Credit,  the applicable  Issuing Bank shall
not have any  responsibility  to obtain any document (other than any sight draft
and certificates  expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such  document or the authority of
the Person executing or delivering any such document.

                  (b)  No  Agent-Related   Person  nor  any  of  the  respective
correspondents,  participants or assignees of an Issuing Bank shall be liable to
any Bank for:  (i) any action  taken or omitted in  connection  herewith  at the
request or with the  approval of the Banks  (including  the Majority  Banks,  as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct;  or (iii) the due execution,  effectiveness,  validity or
enforceability of any L/C-Related Document.

                  (c) The  Borrower  hereby  assumes  all  risks  of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not intended to, and shall
not,  preclude the  Borrower's  pursuing such rights and remedies as it may have
against the  beneficiary or transferee at law or under any other  agreement.  No
Agent-Related Person, nor any of the respective correspondents,  participants or
assignees of any Issuing  Bank,  shall be liable or  responsible  for any of the
matters  described  in clauses  (i)  through  (vii) of Section  3.06;  provided,
however,  anything in such  clauses to the  contrary  notwithstanding,  that the
Borrower may have a claim  against an Issuing  Bank,  and an Issuing Bank may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to  consequential  or exemplary,  damages suffered by the Borrower which
the Borrower proves were caused by an Issuing Bank's willful misconduct or gross
negligence  or an  Issuing  Bank's  willful  failure  to pay under any Letter of
Credit  after the  presentation  to it by the  beneficiary  of a sight draft and
certificate(s)  strictly  complying with the terms and conditions of a Letter of
Credit.  In furtherance  and not in limitation of the foregoing:  (i) an Issuing
Bank may accept  documents  that  appear on their  face to be in order,  without
responsibility   for  further   investigation,   regardless  of  any  notice  or
information  to the contrary;  and (ii) an Issuing Bank shall not be responsible
for the validity or sufficiency of any instrument  transferring  or assigning or
purporting  to  transfer  or assign a Letter of Credit or the rights or benefits
thereunder  or  proceeds  thereof,  in whole or in part,  which  may prove to be
invalid or ineffective for any reason.

3.06 Obligations Absolute.  The obligations of the Borrower under this Agreement
and any  L/C-Related  Document to reimburse the Issuing Banks for drawings under
Letters of Credit, and to repay any L/C Borrowing and any drawings under Letters
of Credit converted into Facility B Revolving Loans,  shall be unconditional and
irrevocable,  and shall be paid  strictly in  accordance  with the terms of this
Agreement  and each such other  L/C-Related  Document  under all  circumstances,
including the following:

     (i) any  lack of  validity  or  enforceability  of  this  Agreement  or any
L/C-Related Document;

(ii)     any change in the time,  manner or place of payment of, or in any other
         term of, all or any of the  obligations  of the  Borrower in respect of
         any Letter of Credit or any other amendment or waiver of or any consent
         to departure from all or any of the L/C-Related Documents;

(iii)    the  existence of any claim,  set-off,  defense or other right that the
         Borrower may have at any time against any beneficiary or any transferee
         of any Letter of Credit (or any Person for whom any such beneficiary or
         any such  transferee  may be  acting),  an  Issuing  Bank or any  other
         Person,  whether in connection  with this Agreement,  the  transactions
         contemplated  hereby or by the  L/C-Related  Documents or any unrelated
         transaction;

(iv)     any draft,  demand,  certificate or other document  presented under any
         Letter  of  Credit  proving  to  be  forged,  fraudulent,   invalid  or
         insufficient  in any respect or any  statement  therein being untrue or
         inaccurate in any respect;  or any loss or delay in the transmission or
         otherwise of any document required in order to make a drawing under any
         Letter of Credit;

(v)      any  payment  by an Issuing  Bank  under any  Letter of Credit  against
         presentation  of a draft or certificate  that does not strictly  comply
         with the  terms of any  Letter of  Credit;  or any  payment  made by an
         Issuing Bank under any Letter of Credit to any Person  purporting to be
         a trustee in bankruptcy, debtor-in-possession, assignee for the benefit
         of  creditors,  liquidator,  receiver  or  other  representative  of or
         successor to any beneficiary or any transferee of any Letter of Credit,
         including any arising in connection with any Insolvency Proceeding;

(vi)     any  exchange,  release or  non-perfection  of any  collateral,  or any
         release or  amendment  or waiver of or consent  to  departure  from any
         other  guarantee,  for all or any of the obligations of the Borrower in
         respect of any Letter of Credit; or

(vii)    any other circumstance or happening whatsoever,  whether or not similar
         to any of the foregoing,  including any other  circumstance  that might
         otherwise  constitute a defense  available  to, or a discharge  of, the
         Borrower or a guarantor.

3.07 Cash Collateral Pledge.  Upon (i) the request of the Administrative  Agent,
(A) if an Issuing  Bank has honored any full or partial  drawing  request on any
Letter of Credit and such  drawing has resulted in an L/C  Borrowing  under this
Agreement,  or (B) if, as of the Revolving Loan Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or wholly undrawn, or
(ii) the occurrence of the circumstances  described in Section 2.07(b) requiring
the Borrower to Cash Collateralize  Letters of Credit,  then, the Borrower shall
immediately Cash Collateralize the L/C Obligations in an amount equal to the L/C
Obligations.

3.08 Letter of Credit Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the  account of each of the Banks based on their  respective  Pro Rata
Shares a letter of credit fee (i) with respect to the Standby  Letters of Credit
equal to the  Standby  Letter of Credit  Risk  Participation  Percentage  of the
average daily maximum amount  available to be drawn of the  outstanding  Standby
Letters of Credit  and (ii) with  respect  to the  Commercial  Letters of Credit
equal to the Commercial  Letter of Credit Risk  Participation  Percentage of the
average daily maximum amount available to be drawn of the outstanding Commercial
Letters of Credit,  in each case computed on a quarterly basis in arrears on the
last  Business  Day  of  each  fiscal  quarter  based  upon  Letters  of  Credit
outstanding  for that quarter as calculated by the  Administrative  Agent.  Such
letter of credit fees shall be due and payable quarterly in arrears on the first
Business Day  following  each fiscal  quarter  during which  Standby  Letters of
Credit or  Commercial  Letters of Credit,  as the case may be, are  outstanding,
commencing  on the first  such  quarterly  date to occur  after the  Restatement
Effective  Date,  through the Revolving Loan  Termination  Date,  with the final
payment to be made on the Revolving Loan Termination Date.

                  (b) The Borrower agrees to pay to the applicable  Issuing Bank
for its sole account a letter of credit fronting fee (i) for each Standby Letter
of Credit  Issued by such  Issuing  Bank,  equal to 0.125% per annum of the face
amount (or increased face amount,  as the case may be) of such Standby Letter of
Credit  and (ii) for each  Commercial  Letter of Credit  Issued by such  Issuing
Bank, equal to 0.10% per annum of the face amount (or increased face amount,  as
the case may be) of such  Commercial  Letter of  Credit.  Such  Letter of Credit
fronting fee shall be due and payable quarterly in arrears on the first Business
Day  following  each  fiscal  quarter  during  which  such  Letter  of Credit is
outstanding,  commencing  on the first such  quarterly  date to occur  after the
Restatement  Effective  Date, with the final payment to be made on the Revolving
Loan Termination Date.

                  (c) The Borrower  agrees to pay to the Issuing Banks from time
to time on  demand  the  normal  issuance,  presentation,  amendment  and  other
processing  fees,  and other  standard  costs and charges,  of the Issuing Banks
relating to Standby  Letters of Credit and Commercial  Letters of Credit as from
time to time in effect.

3.09  Uniform  Customs and  Practice.  The  Uniform  Customs  and  Practice  for
Documentary  Credits as  published  by the  International  Chamber  of  Commerce
("UCP")  most  recently at the time of  issuance  of any Letter of Credit  shall
(unless  otherwise  expressly  provided in the Letters of Credit)  apply to such
Letter of Credit.

ARTICLE IV

                     TAXES, YIELD PROTECTION AND ILLEGALITY

4.01  Taxes.  (a) Any and  all  payments  by the  Borrower  to each  Bank or the
Administrative  Agent under this  Agreement and any other Loan Document shall be
made free and clear of, and without  deduction or withholding  for any Taxes. In
addition, the Borrower shall pay all Other Taxes.

                  (b) The Borrower  agrees to indemnify  and hold  harmless each
Bank and the  Administrative  Agent for the full  amount of Taxes or Other Taxes
(including  any Taxes or Other  Taxes  imposed  by any  jurisdiction  on amounts
payable under this Section) paid by the Bank or the Administrative Agent and any
liability (including interest,  additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted.  Payment under this indemnification shall be made within 30
days after the date the Bank or the  Administrative  Agent makes written  demand
therefor; provided, however, that if a Bank or the Administrative Agent fails to
make such demand within 90 days after such Bank or the Administrative  Agent, as
the case may be,  obtains actual  knowledge of the event  entitling such Bank or
the Administrative  Agent to indemnification  under this Section 4.01, such Bank
or the  Administrative  Agent  shall,  with respect to  indemnification  payable
pursuant to this Section 4.01 in respect of any costs resulting from such event,
only be entitled to payment under this Section 4.01 for costs  incurred from and
after the date 90 days prior to the date that such Bank makes such demand.

                  (c) If the  Borrower  shall be  required  by law to  deduct or
withhold  any Taxes or Other Taxes from or in respect of any sum  payable  under
this Agreement to any Bank or the Administrative Agent, then:

                           (i) the sum payable  shall be  increased as necessary
         so  that  after  making  all  required   deductions  and   withholdings
         (including  deductions and  withholdings  applicable to additional sums
         payable under this Section) such Bank or the  Administrative  Agent, as
         the case may be,  receives  an  amount  equal to the sum it would  have
         received had no such deductions or withholdings been made;

     (ii) the Borrower shall make such deductions and withholdings;

                           (iii) the Borrower shall pay the full amount deducted
         or withheld to the  relevant  taxing  authority  or other  authority in
         accordance with applicable law; and

                           (iv) the Borrower  shall also pay to each Bank or the
         Administrative Agent for the account of such Bank, at the time interest
         is paid, all additional  amounts which the respective Bank specifies as
         necessary to preserve the after-tax  yield the Bank would have received
         if such Taxes or Other Taxes had not been imposed.

                  (d)  Within  30 days  after  the  date of any  payment  by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the  Administrative
Agent the original or a certified copy of a receipt  evidencing payment thereof,
or other evidence of payment satisfactory to the Administrative Agent.

                  (e) If the Borrower is required to pay  additional  amounts to
any Bank or the Administrative Agent pursuant to subsection (c) of this Section,
then  such  Bank  shall  use  reasonable  efforts  (consistent  with  legal  and
regulatory  restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such  additional  payment by the Borrower  which may thereafter
accrue,  if  such  change  in  the  judgment  of  such  Bank  is  not  otherwise
disadvantageous to such Bank.

4.02  Illegality.  (a) If any  Bank  determines  that  the  introduction  of any
Requirement  of  Law,  or  any  change  in any  Requirement  of  Law,  or in the
interpretation  or  administration  of any  Requirement  of  Law,  has  made  it
unlawful, or that any central bank or other Governmental  Authority has asserted
that it is  unlawful,  for any Bank or its  applicable  Lending  Office  to make
Eurodollar  Rate  Loans,  then,  on notice  thereof by the Bank to the  Borrower
through the Administrative Agent, any obligation of that Bank to make Eurodollar
Rate Loans shall be suspended until the Bank notifies the  Administrative  Agent
and the Borrower that the  circumstances  giving rise to such  determination  no
longer exist.

                  (b) If a Bank  determines  that it is unlawful to maintain any
Eurodollar  Rate Loan,  the Borrower  shall,  upon its receipt of notice of such
fact and demand from such Bank (with a copy to the Administrative Agent), prepay
in full such Eurodollar Rate Loans of that Bank then outstanding,  together with
interest accrued thereon and amounts required under Section 4.04,  either on the
last day of the Interest  Period thereof,  if the Bank may lawfully  continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if the Bank may
not lawfully  continue to maintain such Eurodollar Rate Loan. If the Borrower is
required to so prepay any  Eurodollar  Rate Loan,  then  concurrently  with such
prepayment,  the Borrower  shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.

                  (c)  If the  obligation  of  any  Bank  to  make  or  maintain
Eurodollar  Rate Loans has been so  terminated  or  suspended,  the Borrower may
elect,  by giving notice to the Bank through the  Administrative  Agent that all
Loans which would  otherwise be made by the Bank as Eurodollar  Rate Loans shall
be instead Base Rate Loans.

                  (d) Before giving any notice to the Administrative Agent under
this Section,  the affected Bank shall designate a different Lending Office with
respect to its Eurodollar Rate Loans if such designation will avoid the need for
giving such  notice or making  such demand and will not, in the  judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.

4.03 Increased Costs and Reduction of Return.  (a) If any Bank determines  that,
due to either (i) the  introduction  of or any change  (other than any change by
way of  imposition  of or  increase  in  reserve  requirements  included  in the
calculation of the Eurodollar  Rate or in respect of the assessment rate payable
by any Bank to the FDIC for insuring U.S.  deposits) in or in the interpretation
of any law or regulation or (ii) the  compliance by that Bank with any guideline
or request from any central bank or other Governmental Authority (whether or not
having the force of law),  there shall be any  increase in the cost to such Bank
of agreeing to make or making,  funding or maintaining any Eurodollar Rate Loans
or participating in Letters of Credit,  or, in the case of any Issuing Bank, any
increase  in the cost to such  Issuing  Bank of  agreeing  to issue,  issuing or
maintaining  any Letter of Credit or of agreeing  to make or making,  funding or
maintaining  any unpaid  drawing  under any Letter of Credit,  then the Borrower
shall be liable for,  and shall from time to time,  upon demand  (with a copy of
such demand to be sent to the  Administrative  Agent), pay to the Administrative
Agent for the  account of such Bank,  additional  amounts as are  sufficient  to
compensate such Bank for such increased costs; provided, however, that if a Bank
fails to make  such  demand  within  90 days  after  such  Bank  obtains  actual
knowledge of the event  entitling such Bank to  compensation  under this Section
4.03(a),  such Bank shall, with respect to compensation payable pursuant to this
Section  4.03(a) in  respect of any costs  resulting  from such  event,  only be
entitled to payment under this Section 4.03(a) for costs incurred from and after
the date 90 days prior to the date that such Bank makes such demand.

                  (b)  If  any  Bank   shall  have   determined   that  (i)  the
introduction of any Capital Adequacy Regulation,  (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any  Capital  Adequacy  Regulation  by any  central  bank or other  Governmental
Authority charged with the  interpretation or  administration  thereof,  or (iv)
compliance by the Bank (or its Lending  Office) or any  corporation  controlling
the Bank with any  Capital  Adequacy  Regulation,  affects  or would  affect the
amount of capital  required  or  expected  to be  maintained  by the Bank or any
corporation  controlling the Bank and (taking into  consideration such Bank's or
such  corporation's  policies  with respect to capital  adequacy and such Bank's
desired  return  on  capital)  determines  that the  amount of such  capital  is
increased as a consequence of its Revolving Loan Commitments,  Loans, credits or
obligations under this Agreement, then, upon demand of such Bank to the Borrower
through the Administrative  Agent, the Borrower shall pay to the Bank, from time
to time as specified by the Bank,  additional  amounts  sufficient to compensate
the Bank for such increase; provided, however, that if a Bank fails to make such
demand  within 90 days after such Bank  obtains  actual  knowledge  of the event
entitling such Bank to compensation under this Section 4.03(a), such Bank shall,
with respect to compensation payable pursuant to this Section 4.03(a) in respect
of any costs  resulting from such event,  only be entitled to payment under this
Section  4.03(a) for costs incurred from and after the date 90 days prior to the
date that such Bank makes such demand.

4.04 Funding  Losses.  The Borrower shall reimburse each Bank and hold each Bank
harmless  from any loss or  expense  which  the Bank may  sustain  or incur as a
consequence of:

     (a) the failure of the  Borrower  to make on a timely  basis any payment of
principal of any Eurodollar Rate Loan;

(b) the failure of the Borrower to borrow,  continue or convert a Loan after the
Borrower  has  given (or is deemed  to have  given) a Notice of  Borrowing  or a
Notice of Conversion/ Continuation;

(c) the failure of the Borrower to make any prepayment of Eurodollar  Rate Loans
in accordance with any notice delivered under Section 2.06;

(d) the  prepayment  (including  pursuant  to  Section  2.07) or  other  payment
(including after  acceleration  thereof) of a Eurodollar Rate Loan on a day that
is not the last day of the relevant Interest Period; or

(e) the automatic conversion under Section 2.04 of any Eurodollar Rate Loan to a
Base  Rate  Loan on a day  that is not the  last  day of the  relevant  Interest
Period;

including any such loss or expense  arising from the liquidation or reemployment
of funds  obtained  by it to  maintain  its  Eurodollar  Rate Loans or from fees
payable to terminate  the  deposits  from which such funds were  obtained.  Such
reimbursement of funding losses or expenses shall be paid by the Borrower to the
Administrative  Agent  within 15 days after  demand  therefor.  For  purposes of
calculating  amounts payable by the Borrower to the Banks under this Section and
under  Section  4.03(a),  each  Eurodollar  Rate  Loan  made by a Bank (and each
related reserve,  special deposit or similar  requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining  the Eurodollar Rate
for such  Eurodollar  Rate Loan by a matching  deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Eurodollar Rate Loan is in fact so funded.

4.05 Inability to Determine Rates . If the Administrative  Agent determines that
for any reason  adequate and reasonable  means do not exist for  determining the
Eurodollar  Rate for any  requested  Interest  Period with respect to a proposed
Eurodollar Rate Loan or that the Eurodollar Rate applicable  pursuant to Section
2.09(a) for any requested Interest Period with respect to a proposed  Eurodollar
Rate Loan does not  adequately  and  fairly  reflect  the cost to such  Banks of
funding such Loan, the Administrative Agent will promptly so notify the Borrower
and each  Bank.  Thereafter,  the  obligation  of the Banks to make or  maintain
Eurodollar  Rate  Loans  under  this  Agreement  shall be  suspended  until  the
Administrative  Agent upon the  instruction  of the Majority  Banks revokes such
notice in writing.  Upon  receipt of such  notice,  the  Borrower may revoke any
Notice of Borrowing or Notice of  Conversion/Continuation  then submitted by it.
If the Borrower  does not revoke such Notice,  the Banks shall make,  convert or
continue the Loans, as proposed by the Borrower,  in the amount specified in the
applicable  notice  submitted  by the  Borrower,  but such Loans  shall be made,
converted or continued as Base Rate Loans instead of Eurodollar Rate Loans.

4.06 Survival. The agreements and obligations of the Borrower in this Article IV
shall survive the payment of all other Obligations.

4.07  Replacement  of  Banks.  In the  event  that  (a) any Bank  shall  request
compensation  from the Borrower pursuant to Section 4.01 or 4.03 or (b) any Bank
shall elect not to extend the  Revolving  Loan  Termination  Date as provided in
Section  2.08(c),  the Borrower may, so long as no Event of Default has occurred
and is  continuing,  give not less than ten Business  Days' prior notice to such
Bank (with a copy to the  Administrative  Agent)  that the  Borrower  intends to
replace such Bank with respect to its rights and  obligations  as a "Bank" under
this  Agreement   (including   with  respect  to  such  Bank's   Revolving  Loan
Commitments,  Loans and interest in L/C  Obligations)  with one or more Eligible
Assignees  (which may be one or more of the Banks)  selected by the Borrower and
acceptable to the  Administrative  Agent and the Issuing  Bank(s) (none of which
shall unreasonably withhold its consent).  The Borrower and each such Bank to be
so replaced agrees that such Bank's Revolving Loan Commitments,  Loans, interest
in L/C  Obligations  and other  rights and  obligations  of such Bank under this
Agreement  shall be  transferred  pursuant and subject to an assignment  made in
compliance with Section 11.08.

ARTICLE V

                              CONDITIONS PRECEDENT

5.01  Conditions  to  Effectiveness.  The  effectiveness  of the  amendment  and
restatement  of the Existing  Credit  Agreement is subject to the condition that
the  Administrative  Agent have  received on or before April 30, 2000 all of the
following,  in form and substance  satisfactory to the Administrative Agent and,
where provided below, each Bank, and in sufficient copies for each Bank:

(a) Credit  Agreement and any Notes.  This Agreement and any Notes  requested by
the Banks, executed by each party thereto.

(b)               Resolutions; Incumbency.

(i)      Copies of partnership  authorizations  for the Borrower and resolutions
         of the  board of  directors  of the  General  Partner  authorizing  the
         transactions  contemplated  hereby,  certified  as of  the  Restatement
         Effective  Date  by the  Secretary  or an  Assistant  Secretary  of the
         General Partner; and

(ii)     A certificate  of the  Secretary or Assistant  Secretary of the General
         Partner certifying the names and true signatures of the officers of the
         General  Partner  authorized  to  execute,   deliver  and  perform,  as
         applicable,  on behalf of the  Borrower and the General  Partner,  this
         Agreement and all other Loan  Documents to be delivered by the Borrower
         and the General Partner under this Agreement.

     (c) Organization Documents; Good Standing. Each of the following documents:

(i)      the  articles or  certificate  of  incorporation  and the bylaws of the
         General  Partner and the  Certificate  of Limited  Partnership  and the
         Partnership Agreement of the Borrower, in each case as in effect on the
         Restatement  Effective  Date,  certified by the  Secretary or Assistant
         Secretary of the General Partner as of the Restatement Effective Date;

(ii)     a good  standing  and tax good  standing  certificate  for the  General
         Partner  and the  Borrower  from the  Secretary  of State (or  similar,
         applicable  Governmental  Authority) of its state of  incorporation  or
         organization,  as  applicable,  and  each  other  state  designated  by
         Administrative Agent where the General Partner or the Borrower conducts
         significant business, in each case as of a recent date.

(d)               Legal Opinions.  The following legal opinions:

(i)      the opinion of Bracewell & Patterson,  L.L.P., counsel to the Borrower,
         the General Partner and the Guarantors, or of such other counsel as are
         acceptable to the Administrative Agent and the Banks,  addressed to the
         Administrative  Agent  and  the  Banks,  substantially  in the  form of
         Exhibit D; and

(ii)     a favorable  opinion of Orrick,  Herrington  & Sutcliffe  LLP,  special
         counsel to the Administrative Agent.

(e)  Payment of Fees.  Evidence  of payment by the  Borrower  of all accrued and
unpaid  fees,  costs and  expenses  to the  extent  then due and  payable on the
Restatement  Effective Date,  together with Attorney Costs of the Administrative
Agent to the extent invoiced prior to or on the Restatement Effective Date, plus
such additional amounts of Attorney Costs as shall constitute the Administrative
Agent's  reasonable  estimate of Attorney Costs incurred or to be incurred by it
through  the  closing  proceedings   (provided  that  such  estimate  shall  not
thereafter  preclude  final  settling of accounts  between the  Borrower and the
Administrative Agent); including any such costs, fees and expenses arising under
or referenced in the Fee Letter or otherwise in Sections 2.10 and 11.04.

(f) Certificate.  A certificate signed by a Responsible Officer, dated as of the
Restatement Effective Date, stating that:

(i)      the representations and warranties contained in Article VI are true and
         correct on and as of such date, as though made on and as of such date;

     (ii) no Default or Event of Default shall have occurred and is continuing;

(iii)    there has not occurred  since April 30, 1999 any event or  circumstance
         that has  resulted  or could  reasonably  be  expected  to  result in a
         Material Adverse Effect; and

(iv)     on February  28,  2000,  the  Borrower  (A) issued the 2000 Notes in an
         aggregate principal amount equal to $184,000,000 and (B) repaid in full
         all of its  outstanding  obligations  and  irrevocably  terminated  the
         commitments  under its Credit  Agreement  dated as of December 17, 1999
         with BofA (in its  capacity  as the  Administrative  Agent and the sole
         Bank thereunder).

(g) No Material Change. There shall have been no Material Adverse Effect between
April 30, 1999 and the Restatement Effective Date.

(h) Trading  Policies.  The  trading  position  policy and the supply  inventory
position policy as in effect on the Restatement  Effective Date, as evidenced by
the  written  policies   delivered  to  the   Administrative   Agent,  shall  be
satisfactory to the Administrative Agent and the Majority Banks.

(i) Payments under  Existing  Credit  Agreement.  Evidence that all interest and
fees accrued  under the Existing  Credit  Agreement  through and  including  the
Restatement Effective Date shall have been paid by the Borrower.

(j)  Assignments.  The Banks which are a party to the Existing Credit  Agreement
shall have effected any  assignments of their rights and  obligations  under the
Existing Credit  Agreement as may be necessary in order to reflect any change to
the Pro Rata  Shares of the Banks  under this  Agreement  as of the  Restatement
Effective Date.

(k) Other Documents. Such other approvals,  opinions,  documents or materials as
the Administrative Agent or any Bank may request.

5.02 Conditions to All Extensions of Credit. The obligation of each Bank to make
any Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under Section 2.04 and the obligation of the Issuing Banks to Issue any
Letters of Credit  (including  any initial  Letters of Credit) is subject to the
satisfaction  of the following  conditions  precedent on the relevant  Borrowing
Date, Conversion/Continuation Date or Issuance Date:

(a) Notice, Application.  The Administrative Agent shall have received (with, in
the case of the initial  Loans only, a copy for each Bank) a Notice of Borrowing
or a Notice of  Conversion/Continuation,  as  applicable,  or in the case of any
Issuance  of  any  Letter  of  Credit,  the  applicable  Issuing  Bank  and  the
Administrative  Agent shall have  received an L/C  Application  or L/C Amendment
Application, as required under Section 3.02;

(b) Continuation of  Representations  and Warranties.  The  representations  and
warranties  in Article VI shall be true and correct in all material  respects on
and as of such  Borrowing  Date,  Conversion/Continuation  Date or Issuance Date
with  the  same  effect  as  if  made  on  and  as  of  such   Borrowing   Date,
Conversion/Continuation  Date  or  Issuance  Date  (except  to the  extent  such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct in all material  respects as of such earlier date
and other than  Section  6.22,  which shall be true and correct in all  material
respects on the Restatement Effective Date); and

(c) No  Existing  Default.  No Default or Event of Default  shall exist or shall
result from such Borrowing, continuation or conversion or Issuance.

                  (d) Note Purchase  Agreements.  The incurrence and maintenance
of such Loan or Letter of Credit,  as the case may be, shall be permitted  under
Section 10.1 or Section 10.3, as applicable, of the 1998 Note Purchase Agreement
and the 2000 Note Purchase  Agreement,  and the Borrower shall have delivered to
the Administrative Agent an officer's certificate  demonstrating compliance with
such sections.

                  Each Notice of  Borrowing,  Notice of  Conversion/Continuation
and L/C Application or L/C Amendment Application submitted by the Borrower under
this Agreement shall  constitute a  representation  and warranty by the Borrower
under  this  Agreement,  as of the  date  of  each  such  notice  and as of each
Borrowing  Date,  Conversion/Continuation  Date or Issuance Date, as applicable,
that the conditions in Section 5.02 are satisfied.

ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

                  Each of the Borrower and the General  Partner  represents  and
warrants to the Administrative Agent and each Bank that:

6.01 Corporate or Partnership Existence and Power. The General Partner, the MLP,
the Borrower and each of the Restricted Subsidiaries:

     (a) is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation;

(b) has the power and authority and all governmental  licenses,  authorizations,
consents and approvals to own its assets,  carry on its business as now being or
as proposed to be conducted and to execute, deliver, and perform its obligations
under the Loan Documents;

(c) is duly qualified as a foreign  corporation  or partnership  and is licensed
and in good standing  under the laws of each  jurisdiction  where its ownership,
lease or  operation  of property or the conduct of its  business  requires  such
qualification  or license or where the failure so to qualify could reasonably be
expected to have a Material Adverse Effect; and

(d) is in compliance  with all  Requirements of Law, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.

6.02 Corporate or Partnership  Authorization;  No Contravention.  The execution,
delivery  and  performance  by the  Borrower  and the  General  Partner  of this
Agreement  and each  other  Loan  Document  to which the  General  Partner,  the
Borrower or any Restricted Subsidiary is party, have been duly authorized by all
necessary  partnership  action  on  behalf  of the  Borrower  and all  necessary
corporate action on behalf of the General Partner and any Restricted Subsidiary,
and do not and will not:

     (a) contravene the terms of any of the General  Partner's,  the MLP's,  the
Borrower's or any Restricted Subsidiary's Organization Documents;

(b) conflict with or result in any breach or  contravention  of, or the creation
of any Lien under, any document  evidencing any Contractual  Obligation to which
the General  Partner,  the MLP, the Borrower or any  Restricted  Subsidiary is a
party or any order, injunction,  writ or decree of any Governmental Authority to
which such  Person or its  property  is subject  where  such  conflict,  breach,
contravention  or Lien could  reasonably be expected to have a Material  Adverse
Effect; or

(c)               violate any material Requirement of Law.

6.03 Governmental Authorization. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental  Authority is
necessary  or  required  in  connection  with  (a) the  execution,  delivery  or
performance by, or enforcement against, the General Partner, the Borrower or any
Restricted  Subsidiary of this Agreement or any other Loan Document,  or (b) the
continued operation of Borrower's business as contemplated to be conducted after
the date  hereof by the Loan  Documents,  except  in each  case such  approvals,
consents, exemptions, authorizations or other actions, notices or filings (i) as
have been obtained,  (ii) as may be required under state  securities or Blue Sky
laws, (iii) as are of a routine or administrative  nature and are either (A) not
customarily  obtained or made prior to the consummation of transactions  such as
the transactions described in clauses (a) or (b) or (B) expected in the judgment
of the Borrower to be obtained in the ordinary course of business  subsequent to
the  consummation of the  transactions  described in clauses (a) or (b), or (iv)
that,  if not  obtained,  could not  reasonably  be  expected to have a Material
Adverse Effect.

6.04 Binding  Effect.  This  Agreement and each other Loan Document to which the
General Partner, the Borrower or any Restricted Subsidiary is a party constitute
the legal,  valid and binding  obligations of such Person,  enforceable  against
such Person in accordance with their respective terms,  except as enforceability
may be limited by applicable bankruptcy,  insolvency,  or similar laws affecting
the  enforcement  of  creditors'  rights  generally or by  equitable  principles
relating to enforceability.

6.05 Litigation.  There are no actions, suits,  proceedings,  claims or disputes
pending,  or to the best knowledge of the Borrower,  threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority,  against
the General Partner,  the MLP, the Borrower or any of its Subsidiaries or any of
their respective properties which:

     (a)  purport  to affect or  pertain  to this  Agreement  or any other  Loan
Document or any of the transactions contemplated hereby or thereby; or

(b)  if  determined  adversely  to  the  Borrower  or  its  Subsidiaries,  would
reasonably be expected to have a Material Adverse Effect.  No injunction,  writ,
temporary  restraining  order or any order of any nature has been  issued by any
court or other  Governmental  Authority  purporting  to enjoin or  restrain  the
execution, delivery or performance of this Agreement or any other Loan Document,
or  directing  that the  transactions  provided  for  herein or  therein  not be
consummated as herein or therein provided.

6.06 No Default.  No Default or Event of Default exists or would result from the
incurring,  continuing or converting of any  Obligations by the Borrower.  As of
the Restatement  Effective  Date,  neither the Borrower nor any Affiliate of the
Borrower is in default  under or with respect to any  Contractual  Obligation in
any respect  which,  individually  or  together  with all such  defaults,  could
reasonably be expected to have a Material Adverse Effect, or that would, if such
default had occurred after the Restatement  Effective  Date,  create an Event of
Default under Section 9.01(e).

6.07 ERISA  Compliance.  (a) Each Plan is in compliance in all material respects
with the  applicable  provisions  of ERISA,  the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Borrower and the General Partner,  nothing has occurred which would cause
the loss of such qualification.

                  (b) There are no pending, or to the best knowledge of Borrower
and the General Partner,  threatened claims,  actions or lawsuits,  or action by
any Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited  transaction or other violation of the fiduciary  responsibility rule
with  respect to any Plan which could  reasonably  result in a Material  Adverse
Effect.

                  (c) No ERISA Event has occurred or is  reasonably  expected to
occur with respect to any Pension Plan.

                  (d) No Pension Plan has any Unfunded  Pension  Liability  that
could reasonably be expected to have a Material Adverse Effect.

                  (e) The  Borrower  has not  incurred,  nor does it  reasonably
expect to incur,  any  liability  under  Title IV of ERISA  with  respect to any
Pension Plan (other than premiums due and not  delinquent  under Section 4007 of
ERISA).

                  (f) The Borrower  has not  transferred  any  Unfunded  Pension
Liability  to any Person or  otherwise  engaged in a  transaction  that could be
subject to Section 4069 of ERISA.

                  (g) Except as  specifically  disclosed  in Schedule  6.07,  no
trade or business  (whether or not  incorporated  under common  control with the
Borrower  within the  meaning of Section  414(b),  (c),  (m) or (o) of the Code)
maintains  or  contributes  to any Pension Plan or other Plan subject to Section
412 of the Code. Except as specifically  disclosed in Schedule 6.07, neither the
Borrower nor any Person  under  common  control with the Borrower (as defined in
the preceding  sentence) has ever contributed to any  multiemployer  plan within
the meaning of Section 4001(a)(3) of ERISA.

6.08 Use of Proceeds;  Margin  Regulations.  The proceeds of the Loans are to be
used solely for the  purposes  set forth in and  permitted  by Section  7.11 and
Section  8.07.  Neither  the  Borrower  nor any  Affiliate  of the  Borrower  is
generally  engaged in the  business of  purchasing  or selling  Margin  Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.

6.09 Title to Properties.  The Borrower and each Restricted Subsidiary have good
record and marketable  title in fee simple to, or valid leasehold  interests in,
all real property  necessary or used in the ordinary conduct of their respective
businesses,  except for such defects in title as could not,  individually  or in
the aggregate,  have a Material Adverse Effect. As of the Restatement  Effective
Date and subject to the preceding sentence, the property of the Borrower and its
Restricted Subsidiaries is subject to no Liens other than Permitted Liens.

6.10 Taxes.  The General  Partner has filed all Federal and other  material  tax
returns and reports required to be filed,  for itself and for the Borrower,  and
has paid all  Federal  and other  material  taxes,  assessments,  fees and other
governmental  charges  levied or imposed  upon it or its  properties,  income or
assets otherwise due and payable, except those which are being contested in good
faith by  appropriate  proceedings  and for which  adequate  reserves  have been
provided in accordance  with GAAP.  There is no proposed tax assessment  against
the Borrower that would, if made, have a Material Adverse Effect.

6.11 Financial Condition.  (a) The audited consolidated  financial statements of
the General Partner,  the Borrower,  the MLP and their  respective  Subsidiaries
dated July 31, 1999 and the unaudited  consolidated  financial statements of the
General Partner, the Borrower,  the MLP and their respective  Subsidiaries dated
January 31, 2000, in each case together with the related consolidated statements
of income or  operations,  shareholders'  equity  and cash  flows for the fiscal
periods ended on those respective dates:

(i)      were prepared in accordance with GAAP consistently  applied  throughout
         the  period  covered  thereby,  except  as  otherwise  expressly  noted
         therein, subject to ordinary, good faith year end audit adjustments;

(ii)     fairly  present  the  financial  condition  of  the  Borrower  and  its
         Subsidiaries  as of the date thereof and results of operations  for the
         period covered thereby; and

(iii)    show  all  material  indebtedness  and  other  liabilities,  direct  or
         contingent, of the Borrower and its consolidated Subsidiaries as of the
         date thereof, including liabilities for taxes, material commitments and
         Contingent  Obligations  (except  that since such date the Borrower (x)
         issued  $184,000,000  aggregate  principal amount of the 2000 Notes and
         (y) repaid in full and irrevocably terminated the commitments under its
         $183,000,000 credit facility with BofA).

     (b) Since January 31, 2000, there has been no Material Adverse Effect.

                  (c) The General Partner, the MLP, the Borrower and each of the
Restricted Subsidiaries are each Solvent, both before and after giving effect to
the consummation of each of the transactions contemplated by the Loan Documents.

6.12  Environmental  Matters.  The Borrower  conducts in the ordinary  course of
business  a review of the effect of  existing  Environmental  Laws and  existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Borrower has reasonably  concluded that such  Environmental Laws and
Environmental Claims could not, individually or in the aggregate,  reasonably be
expected to have a Material Adverse Effect.

6.13 Regulated Entities.  None of the Borrower or any Affiliate of the Borrower,
is an "Investment  Company" within the meaning of the Investment  Company Act of
1940. The Borrower is not subject to regulation under the Public Utility Holding
Company Act of 1935,  the Federal  Power Act, the  Interstate  Commerce Act, any
state public utilities code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.

6.14 No  Burdensome  Restrictions.  Neither  the  Borrower  nor  any  Restricted
Subsidiary is a party to or bound by any Contractual  Obligation,  or subject to
any restriction in any Organization  Document,  or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.

6.15  Copyrights,  Patents,  Trademarks and Licenses,  etc. The Borrower and the
Restricted  Subsidiaries  own or are licensed or otherwise have the right to use
all  of  the  patents,  trademarks,  service  marks,  trade  names,  copyrights,
contractual  franchises,  authorizations  and other  rights that are  reasonably
necessary for the operation of their  respective  businesses,  without  conflict
with the  rights of any other  Person,  except  for those  patents,  trademarks,
service marks, trade names, copyrights,  contractual franchises,  authorizations
and other rights the failure of which to obtain could not reasonably be expected
to have a Material  Adverse  Effect.  To the best knowledge of the Borrower,  no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Borrower
or any Restricted Subsidiary infringes upon any rights held by any other Person.
No claim or litigation regarding any of the foregoing is pending or, to the best
knowledge  of the  Borrower,  threatened,  and  no  patent,  invention,  device,
application,  principle or any statute, law, rule, regulation,  standard or code
is pending or, to the  knowledge of the  Borrower,  proposed,  which,  in either
case, could reasonably be expected to have a Material Adverse Effect.

6.16 Subsidiaries and Affiliates.  The Borrower (a) has no Subsidiaries or other
Affiliates  except (i) those  specifically  disclosed in Schedule 6.16 as of the
Restatement  Effective Date,  (ii) SPEs  established in connection with Accounts
Receivable  Securitizations  permitted by Section  8.05,  (iii)  Restricted  and
Unrestricted Subsidiaries established in compliance with Section 8.21 subsequent
to the  Restatement  Effective  Date  and (iv)  Joint  Ventures  established  in
compliance with Section 8.10  subsequent to the Restatement  Effective Date, and
(b)  has  no  equity  investments  in  any  corporation  or  entity  other  than
Subsidiaries  and  Affiliates  disclosed  in  subsection  (a)  above  and  other
Permitted Investments.

6.17 Insurance.  The properties of the Borrower and the Restricted  Subsidiaries
are  insured  with  financially  sound and  reputable  insurance  companies  not
Affiliates of the Borrower,  in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning  similar  properties  in  localities  where the Borrower or each such
Subsidiary  operates  and  consistent  with the practice of the Borrower and the
Restricted Subsidiaries as of the Restatement Effective Date.

     6.18 Tax Status. The Borrower is subject to taxation under the Code only as
a partnership and not as a corporation.

6.19 Full  Disclosure.  None of the  representations  or warranties  made by the
Borrower or any  Affiliate of the Borrower in the Loan  Documents as of the date
such  representations  and  warranties  are made or deemed made, and none of the
statements contained in any exhibit,  report, statement or certificate furnished
by or on behalf of the Borrower or any  Affiliate of the Borrower in  connection
with the Loan  Documents  contains any untrue  statement  of a material  fact or
omits any material fact  required to be stated  therein or necessary to make the
statements  made  therein,  in light of the  circumstances  under which they are
made, not misleading as of the time when made or delivered.

6.20 Fixed Price Supply  Contracts.  None of the  Borrower and its  Subsidiaries
(other than Non-Recourse Subsidiaries) is a party to any contract for the supply
of propane or other  product  except  where (a) the  purchase  price is set with
reference to a spot index or indices  substantially  contemporaneously  with the
delivery of such product or (b) delivery of such propane or other  product is to
be made no more than two years after the purchase price is agreed to.

6.21 Trading Policies.  The Borrower has provided to the Administrative Agent an
accurate  and  complete  summary  of its  trading  position  policy  and  supply
inventory position policy and the Borrower has complied in all material respects
with such policies.

6.22 Year 2000. The Borrower and its Subsidiaries have reviewed the areas within
their  business  and  operations  which could have been or could  continue to be
adversely  affected by the "Year 2000 Problem"  (that is, the risk that computer
applications  used  by the  Borrower  and  its  Subsidiaries  may be  unable  to
recognize and perform properly date-sensitive  functions involving certain dates
prior to and any date on or after December 31, 1999). Accordingly,  the Borrower
and its Subsidiaries  have developed a program to address such related problems,
and have made related  appropriate inquiry of material suppliers and vendors. To
date, no problems  connected with the Year 2000 Problem have occurred which have
had a Material Adverse Effect on the Borrower or its Subsidiaries. Although some
problems  related to the Year 2000  Problem  may remain as yet  undetected,  the
Borrower  believes  that,  based on such  review  and  program,  the "Year  2000
Problem" will not have a Material Adverse Effect.

ARTICLE VII

                              AFFIRMATIVE COVENANTS

                  So long as any Bank shall have any Revolving  Loan  Commitment
under this  Agreement,  or any Loan or other  Obligation  shall remain unpaid or
unsatisfied,  or any  Letter of Credit  shall  remain  outstanding,  unless  the
Majority Banks waive compliance in writing:

7.01  Financial  Statements.  The Borrower  shall deliver to the  Administrative
Agent,  in form and  detail  satisfactory  to the  Administrative  Agent and the
Majority Banks and consistent  with the form and detail of financial  statements
and  projections  provided to the  Administrative  Agent by the Borrower and its
Affiliates prior to the Restatement  Effective Date, with sufficient  copies for
each Bank:

(a) as soon as  available,  but not  later  than 100 days  after the end of each
fiscal year (commencing with the fiscal year ended July 31, 2000), a copy of the
audited  consolidated  balance sheet of the Borrower and its  Subsidiaries as at
the end of such  year and the  related  consolidated  statements  of  income  or
operations,  partners'  or  shareholders'  equity  and cash flows for such year,
setting  forth in each case in  comparative  form the figures  for the  previous
fiscal  year,  and  accompanied  by  the  opinion  of  a   nationally-recognized
independent  public accounting firm  ("Independent  Auditor") which report shall
state that such consolidated  financial  statements present fairly the financial
position for the periods  indicated in  conformity  with GAAP applied on a basis
consistent  with prior years.  Such opinion shall not be qualified or limited in
any manner, including on account of any limitation on it because of a restricted
or limited examination by the Independent Auditor of any material portion of the
Borrower's or any Subsidiary's records;

(b) as soon as  available,  but not later  than 45 days after the end of each of
the first three fiscal quarters of each fiscal year  (commencing with the fiscal
quarter ended April 30,  2000),  a copy of the  unaudited  consolidated  balance
sheet of the Borrower and its Subsidiaries as of the end of such quarter and the
related consolidated statements of income, partners' or shareholders' equity and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance   with  GAAP  (subject  to  ordinary,   good  faith   year-end  audit
adjustments),  the  financial  position  and the  results of  operations  of the
Borrower and the Subsidiaries;

(c) as soon as  available,  but not  later  than 100 days  after the end of each
fiscal  year  (commencing  with the first  fiscal year during all or any part of
which  the  Borrower  had one or more  Significant  Subsidiaries),  a copy of an
unaudited consolidating balance sheet of the Borrower and its Subsidiaries as at
the  end of such  year  and  the  related  consolidating  statement  of  income,
partners' or shareholders'  equity and cash flows for such year,  certified by a
Responsible  Officer as having been  developed and used in  connection  with the
preparation of the financial statements referred to in Section 7.01(a);

(d) as soon as  available,  but not later  than 45 days after the end of each of
the first three fiscal quarters of each fiscal year  (commencing  with the first
fiscal  quarter  during  all or any part of which the  Borrower  had one or more
Significant Subsidiaries),  a copy of the unaudited consolidating balance sheets
of the Borrower and its Subsidiaries,  and the related consolidating  statements
of income,  partners' or  shareholders'  equity and cash flows for such quarter,
all  certified by a  Responsible  Officer as having been  developed  and used in
connection  with the  preparation  of the  financial  statements  referred to in
Section 7.01(b);

(e) as soon as  available,  but not  later  than 60 days  after  the end of each
fiscal year  (commencing  with the fiscal year ended July 31,  2000),  projected
consolidated  balance sheets of the Borrower and its  Subsidiaries as at the end
of each of the  current and  following  two fiscal  years and related  projected
consolidated  statements of income,  partners' or shareholders'  equity and cash
flows for each such  fiscal  year,  including  therein a budget for the  current
fiscal year,  certified by a  Responsible  Officer as having been  developed and
prepared  by the  Borrower  in good  faith and based  upon the  Borrower's  best
estimates and best available information;

(f) as soon as  available,  but not  later  than 100 days  after the end of each
fiscal year of the General Partner  (commencing  with the fiscal year ended July
31,  2000),  a copy of the unaudited  (or audited,  if  available)  consolidated
balance sheets of the General  Partner as of the end of such fiscal year and the
related consolidated  statements of income,  shareholders' equity and cash flows
for such fiscal year,  certified by a Responsible  Officer as fairly presenting,
in accordance with GAAP, the financial position and the results of operations of
the General Partner and its  Subsidiaries  (or, if available,  accompanied by an
opinion of an Independent Auditor as described in Section 7.01(a)); and

(g) as soon as  available,  but not later  than 45 days after the end of each of
the first three  fiscal  quarters of each fiscal year and,  with  respect to the
final fiscal quarter,  concurrently with the financial statements referred to in
Section  7.01(a),  a trading  position  report as of the last day of each fiscal
quarter, certified by a Responsible Officer.

     7.02  Certificates;  Other  Information.  The Borrower shall furnish to the
Administrative Agent, with sufficient copies for each Bank:

(a) concurrently  with the delivery of the financial  statements  referred to in
Section 7.01(a), a certificate of the Independent Auditor stating that in making
the examination  necessary  therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;

(b) concurrently  with the delivery of the financial  statements  referred to in
Sections  7.01(a) and (b), a Compliance  Certificate  executed by a  Responsible
Officer  with  respect  to the  periods  covered  by such  financial  statements
together with supporting  calculations and such other  supporting  detail as the
Administrative Agent and Majority Banks shall require;

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

(d) promptly,  such additional information regarding the business,  financial or
corporate  affairs  of  the  Borrower,  the  General  Partner,  the  MLP  or any
Subsidiary as the  Administrative  Agent,  at the request of any Bank,  may from
time to time request.

     7.03 Notices.  The Borrower shall promptly notify the Administrative  Agent
and each Bank: -------

(a)               of the occurrence of any Default or Event of Default;

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

(c) of any of the following events affecting the Borrower,  the General Partner,
the MLP or any  Subsidiary,  together  with a copy of any notice with respect to
such event that may be required to be filed with a  Governmental  Authority  and
any notice delivered by a Governmental  Authority to such Person with respect to
such event:

(i)               an ERISA Event;

     (ii) if any of the representations and warranties in Section 6.07 ceases to
be true and correct;

     (iii) the adoption of any new Pension Plan or other Plan subject to Section
412 of the Code;

(iv)     the  adoption of any  amendment to a Pension Plan or other Plan subject
         to Section  412 of the Code,  if such  amendment  results in a material
         increase in contributions or Unfunded Pension Liability; or

     (v) the  commencement  of  contributions  to any Pension Plan or other Plan
subject to Section 412 of the Code;

(d) of any  material  change  in  accounting  policies  or  financial  reporting
practices by the Borrower or any of its consolidated Subsidiaries; and

(e) not later than five Business  Days after the  effective  date of a change in
the Borrower's  trading position policy or inventory supply position policy,  of
any change in either policy.

                  Each  notice  under this  Section  shall be  accompanied  by a
written  statement  by a  Responsible  Officer  setting  forth  details  of  the
occurrence  referred to therein,  and  stating  what action the  Borrower or any
affected  Affiliate proposes to take with respect thereto and at what time. Each
notice under Section  7.03(a)  shall  describe  with  particularity  any and all
clauses or  provisions  of this  Agreement or other Loan Document that have been
breached or violated.

7.04  Preservation  of  Corporate  or  Partnership  Existence,  Etc. The General
Partner and the Borrower  shall,  and the Borrower  shall cause each  Restricted
Subsidiary to:

(a) preserve and maintain in full force and effect its  partnership or corporate
existence  and good  standing  under  the laws of its state or  jurisdiction  of
organization or incorporation  except in connection with transactions  permitted
by Section 8.03;

(b)  preserve  and  maintain in full force and effect all  governmental  rights,
privileges,  qualifications,  permits,  licenses  and  franchises  necessary  or
desirable  in the  normal  conduct of its  business  except in  connection  with
transactions  permitted by Section 8.03 and sales of assets permitted by Section
8.02,  except  where the failure to so preserve  or maintain  such  governmental
rights, privileges,  qualifications,  permits, licenses and franchises could not
reasonably be expected to have a Material Adverse Effect;

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

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

7.05 Maintenance of Property.  The Borrower shall maintain, and shall cause each
Restricted  Subsidiary to maintain,  and preserve all its property which is used
or useful in its business in good working order and condition, ordinary wear and
tear  excepted.  The  Borrower  and each  Restricted  Subsidiary  shall  use the
standard of care typical in the industry in the operation and maintenance of its
facilities.

7.06  Insurance.  The Borrower shall  maintain,  and shall cause each Restricted
Subsidiary  to  maintain,  with  financially  sound  and  reputable  independent
insurers,  insurance with respect to its properties and business against loss or
damage of the kinds  customarily  insured against by Persons engaged in the same
or  similar  business,  of such  types and in such  amounts  as are  customarily
carried under similar circumstances by such other Persons.

7.07 Payment of  Obligations.  The Borrower and the General  Partner shall,  and
shall cause each  Restricted  Subsidiary to, pay and discharge as the same shall
become due and payable (except to the extent the failure to so pay and discharge
could not reasonably be expected to have a Material Adverse  Effect),  all their
respective obligations and liabilities, including:

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

(b) all lawful  claims  which,  if  unpaid,  would by law become a Lien upon its
property,  unless such claims are being  contested in good faith by  appropriate
proceedings and adequate  reserves in accordance with GAAP are being  maintained
by the Borrower, the General Partner or such Subsidiary; and

(c)  all  Indebtedness,  as  and  when  due  and  payable,  but  subject  to any
subordination  provisions  contained in any  instrument or agreement  evidencing
such Indebtedness.

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

7.09  Inspection of Property and Books and Records.  The Borrower shall maintain
and shall cause each  Subsidiary to maintain proper books of record and account,
in which full,  true and correct  entries in conformity  with GAAP  consistently
applied shall be made of all financial  transactions  and matters  involving the
assets and  business of the  Borrower and such  Subsidiary.  The Borrower  shall
permit,  and  shall  cause  each  Subsidiary  to  permit,   representatives  and
independent  contractors  of the  Administrative  Agent or any Bank to visit and
inspect  any  of  their  respective  properties,  to  examine  their  respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom,  and to discuss their respective affairs,  finances and accounts with
their respective directors, officers, and independent public accountants, all at
the expense of the Borrower and at such reasonable  times during normal business
hours and as often as may be reasonably desired,  upon reasonable advance notice
to the  Borrower;  provided,  however,  when an  Event  of  Default  exists  the
Administrative  Agent or any Bank may do any of the  foregoing at the expense of
the  Borrower  at any time during  normal  business  hours and  without  advance
notice.

7.10  Environmental  Laws. The Borrower  shall,  and shall cause each Restricted
Subsidiary  to,  conduct its  operations  and keep and  maintain its property in
material  compliance with all Environmental Laws, except where failure to comply
with such Environmental Laws could not reasonably be expected to have a Material
Adverse Effect.

7.11 Use of Proceeds.  The Borrower shall use the proceeds of (a) the Facility A
Revolving  Loans  for  working  capital  purposes  only and (b) the  Facility  B
Revolving Loans for working capital purposes, Acquisitions, capital expenditures
and other general partnership purposes, in each case not in contravention of any
Requirement of Law or of any Loan Document.

7.12              Financial Covenants.

(a)  Leverage  Ratio.  The  Borrower  shall  maintain as of the last day of each
fiscal quarter a Leverage Ratio equal to or less than (i) 5.10 to 1.00 as of the
last day of each fiscal quarter  ending on or prior to July 31, 2000,  (ii) 5.25
to 1.00 as of the last day of each fiscal quarter ending after July 31, 2000 and
on or prior to January  31,  2001,  and (iii) 4.75 to 1.00 as of the last day of
each fiscal  quarter ending after January 31, 2001. For purposes of this Section
7.12(a),  (x) Funded Debt and Synthetic Lease Obligations shall be calculated as
of the last day of such fiscal quarter and (y)  Consolidated  Cash Flow shall be
calculated  for the  most  recently  ended  four  consecutive  fiscal  quarters,
provided,  however,  that  prior to or  concurrently  with  each  delivery  of a
Compliance  Certificate  pursuant to Section 7.02(b),  the Borrower may elect to
calculate  Consolidated  Cash Flow for the most recently ended eight consecutive
fiscal quarters (in which case Consolidated Cash Flow shall be divided by two).

(b) Interest Coverage Ratio. The Borrower shall maintain,  as of the last day of
each fiscal quarter of the Borrower,  an Interest  Coverage Ratio for the fiscal
period  consisting of such fiscal  quarter and the three  immediately  preceding
fiscal quarters of at least (i) 2.25 to 1.00 for each such period of four fiscal
quarters  ending on or prior to January 31, 2001 and (ii) 2.50 to 1.00 each such
period of four fiscal quarters ending after January 31, 2001.

7.13 Trading and Supply  Policies.  The Borrower and its Affiliates shall comply
with the Borrower's trading position policy and supply inventory position policy
as in effect as of the Restatement  Effective Date; provided,  however, that the
Borrower and its Affiliates  may, during any period of four  consecutive  fiscal
quarters,  (a) increase the loss limits specified in either the trading position
or supply inventory position policy by up to 100% of the amount of such limit as
in effect as of the  Restatement  Effective  Date and (b)  increase  the  volume
limits specified in either of such policies on the number of barrels of a single
product or of all products in the aggregate by up to 100% of each such number as
in effect as of the Restatement Effective Date.

7.14              Other General Partner Obligations.

(a) The General  Partner shall cause the Borrower to pay and perform each of its
Obligations  when due. The General  Partner  acknowledges  and agrees that it is
executing this Agreement as a principal as well as the general partner on behalf
of the  Borrower,  and that its  obligations  under  this  Agreement  as general
partner  are  full  recourse  obligations  to the  same  extent  as those of the
Borrower.

(b) The General Partner  represents,  warrants and covenants that it is Solvent,
both before and after  giving  effect to the  consummation  of the  transactions
contemplated  by the Loan  Documents,  and that it will remain Solvent until all
Obligations  under  this  Agreement  shall  have  been  repaid  in full  and all
commitments shall have terminated.

(c)  The  General  Partner,  for so  long as it is the  general  partner  of the
Borrower,  (i)  agrees  that its  sole  business  will be to act as the  general
partner of the Borrower,  the MLP and any further  limited  partnership of which
the Borrower or the MLP is,  directly or  indirectly,  a limited  partner and to
undertake  activities that are ancillary or related thereto  (including  being a
limited  partner in the  Borrower),  (ii)  shall not enter  into or conduct  any
business  or incur  any  debts  or  liabilities  except  in  connection  with or
incidental to (A) its  performance of the  activities  required or authorized by
the partnership  agreement of the MLP or the Partnership  Agreement or described
in or contemplated by the MLP Registration  Statement,  and (B) the acquisition,
ownership or disposition of partnership  interests in the Borrower or the MLP or
any further limited partnership of which the Borrower or the MLP is, directly or
indirectly,  a limited  partner,  except that,  notwithstanding  the  foregoing,
employees of the General  Partner may perform  services  for Ferrell  Companies,
Inc. and its Affiliates.

(d) The General Partner agrees that, until all Obligations  under this Agreement
shall have been repaid in full and all  commitments  shall have  terminated,  it
will not  exercise  any rights it may have (at law,  in equity,  by  contract or
otherwise) to terminate, limit or otherwise restrict (whether through repurchase
or  otherwise  and whether or not the  General  Partner  shall  remain a general
partner  in  the  Borrower)  the  ability  of  the  Borrower  to  use  the  name
"Ferrellgas".

(e) The  General  Partner  shall  not  take any  action  or  refuse  to take any
reasonable  action the effect of which,  if taken or not taken,  as the case may
be, would be to cause the Borrower to be treated as an association  taxable as a
corporation  or otherwise to be taxed as an entity other than a partnership  for
federal income tax purposes.

7.15  Monetary  Judgments.  If  one  or  more  judgments,   orders,  decrees  or
arbitration awards is entered against the Borrower or any Restricted  Subsidiary
involving in the  aggregate a material  liability  (to the extent not covered by
independent  third-party  insurance  as to which the  insurer  does not  dispute
coverage  other than through a standard  reservation of rights letter) as to any
single or related  series of  transactions,  incidents or  conditions,  then the
Borrower shall  maintain  adequate  reserves for such amount in accordance  with
GAAP. Such amount so reserved shall be treated as establishment of a reserve for
purposes of calculating Available Cash under this Agreement.

7.16              Designations With Respect to Subsidiaries.

(a) The Borrower may designate any  Restricted  Subsidiary or newly  acquired or
formed Subsidiary as an Unrestricted  Subsidiary or any Unrestricted  Subsidiary
or newly acquired or formed Subsidiary as a Restricted Subsidiary,  in each case
subject to satisfaction of each of the following conditions:

                           (i)  immediately  before and after  giving  effect to
         such  designation,  no Default or Event of Default  shall  exist and be
         continuing;

                           (ii) after  giving  effect to such  designation,  the
         Borrower  would  be  permitted  to  incur  at  least  $1 of  additional
         Indebtedness in accordance with the provisions of Section 8.05;

                           (iii) in the case of a  designation  of a  Restricted
         Subsidiary,   such  Restricted   Subsidiary  shall  have  executed  and
         delivered to the Administrative Agent a Guaranty and the Borrower shall
         otherwise be in compliance with Section 8.21;

                           (iv) in the case of a designation as an  Unrestricted
         Subsidiary  (including the designation of a Restricted Subsidiary as an
         Unrestricted  Subsidiary),  (x) if  such  designation  were  deemed  to
         constitute a sale by the Borrower or any  Restricted  Subsidiary of all
         the  assets of the  Subsidiary  so  designated,  such sale  would be in
         compliance  with of Section 8.02 and (y) if such  designation  (and all
         other prior  designations of Restricted  Subsidiaries or newly acquired
         or formed  Subsidiaries  as Unrestricted  Subsidiaries)  were deemed to
         constitute an Investment by the Borrower or any  Restricted  Subsidiary
         in respect  of all the assets of the  Subsidiary  so  designated,  such
         investment would be a Permitted  Investment,  in each case with the net
         proceeds of such sale or the amount of such Investment  being deemed to
         equal the net book  value of such  assets  in the case of a  Restricted
         Subsidiary  or the cost of  acquisition  or  formation in the case of a
         newly acquired or formed Subsidiary; and

                           (v) in the  case  of a  designation  of a  Restricted
         Subsidiary as an Unrestricted  Subsidiary,  such Restricted  Subsidiary
         shall  not  have  been  an  Unrestricted   Subsidiary  prior  to  being
         designated a Restricted Subsidiary.

                  (b) The Borrower shall deliver to the Administrative Agent and
each Bank, within 20 Business Days after any such designation,  a certificate of
a Responsible Officer stating the effective date of such designation and stating
that the foregoing  conditions have been satisfied.  Such  certificate  shall be
accompanied by a schedule  setting forth in reasonable  detail the  calculations
demonstrating compliance with such conditions, where appropriate.

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

ARTICLE VIII

                               NEGATIVE COVENANTS

                  So long as any Bank shall have any Revolving  Loan  Commitment
under this  Agreement,  or any Loan or other  Obligation  shall remain unpaid or
unsatisfied,  or any  Letter of Credit  shall  remain  outstanding,  unless  the
Majority Banks waive compliance in writing:

8.01 Limitation on Liens. The Borrower shall not, and shall not suffer or permit
any Restricted  Subsidiary  to,  directly or indirectly,  make,  create,  incur,
assume  or suffer  to exist  any Lien  upon or with  respect  to any part of its
property or sell any of its accounts receivable,  whether now owned or hereafter
acquired, other than the following ("Permitted Liens"):

     (a) Liens existing on the Restatement  Effective Date set forth in Schedule
8.01;

(b)  Liens in favor  of the  Borrower  or  Liens  to  secure  Indebtedness  of a
Restricted Subsidiary to the Borrower or a Wholly-Owned Subsidiary;

(c) Liens on  property  of a Person  existing  at the time such Person is merged
into or consolidated  with the Borrower or any Restricted  Subsidiary,  provided
that such Liens were in existence prior to the  contemplation  of such merger or
consolidation  and do not  extend to any  assets  other than those of the Person
merged into or consolidated with the Borrower;

(d) Liens on  property  existing  at the time  acquired  by the  Borrower or any
Restricted  Subsidiary,  provided that such Liens were in existence prior to the
contemplation  of such  acquisition  and do not extend to any assets  other than
those of the Person acquired;

(e) Liens on any property or asset  acquired by the  Borrower or any  Restricted
Subsidiary  in favor of the seller of such  property  or asset and  construction
mortgages on property, in each case, created within six months after the date of
acquisition,  construction  or  improvement  of such  property  or  asset by the
Borrower or such Subsidiary to secure the purchase price or other  obligation of
the Borrower or such  Subsidiary  to the seller of such property or asset or the
construction or improvement  cost of such property in an amount up to 80% of the
total cost of the  acquisition,  construction or improvement of such property or
asset;  provided  that in each  case  such  Lien  does not  extend  to any other
property or asset of the Borrower and its Subsidiaries;

(f) Liens  incurred or pledges and deposits  made in  connection  with  worker's
compensation,  unemployment  insurance  and other social  security  benefits and
Liens to secure  the  performance  of  statutory  obligations,  surety or appeal
bonds,  performance  bonds or other  obligations of a like nature, in each case,
incurred in the ordinary course of business;

(g) Liens for taxes,  assessments or governmental charges or claims that are not
yet  delinquent  or that  are  being  contested  in good  faith  by  appropriate
proceedings  promptly  instituted  and diligently  concluded,  provided that any
reserve or other  appropriate  provision as shall be required in conformity with
GAAP shall have been made therefor;

(h)  Liens  imposed  by law,  such  as  mechanics',  carriers',  warehousemen's,
materialmen's, and vendors' Liens, incurred in good faith in the ordinary course
of business  with respect to amounts not yet  delinquent  or being  contested in
good  faith  by  appropriate  proceedings  if a  reserve  or  other  appropriate
provisions, if any, as shall be required by GAAP shall have been made therefor;

(i)  zoning  restrictions,   easements,   licenses,   covenants,   reservations,
restrictions  on the use of real  property  or  minor  irregularities  of  title
incident  thereto  that do not, in the  aggregate,  materially  detract from the
value of the property or the assets of the  Borrower or any of its  Subsidiaries
or impair the use of such  property  in the  operation  of the  business  of the
Borrower or any of its Subsidiaries;

(j) Liens of landlords or mortgages of landlords, arising solely by operation of
law, on fixtures and movable property located on premises leased by the Borrower
or any of its  Subsidiaries  in the  ordinary  course  of  business;  (k)  Liens
incurred and financing  statements filed or recorded,  in each case with respect
to personal property leased by the Borrower and its Subsidiaries in the ordinary
course of business to the owners of such personal  property which are either (i)
operating  leases  (including,  without  limitation,  Synthetic  Leases) or (ii)
Capital Leases to the extent (but only to the extent) permitted by Section 8.05;
provided,  that in each case such Lien does not extend to any other  property or
asset of the Borrower and its Subsidiaries;

     (l)  judgment  Liens to the  extent  that  such  judgments  do not cause or
constitute a Default or an Event of Default;

(m) Liens  incurred in the  ordinary  course of business of the  Borrower or any
Restricted  Subsidiary with respect to obligations that do not exceed $5,000,000
in the  aggregate at any one time  outstanding  and that (i) are not incurred in
connection  with the  borrowing of money or the  obtaining of advances or credit
(other than trade credit in the ordinary  course of business) and (ii) do not in
the  aggregate  materially  detract from the value of the property or materially
impair the use thereof in the  operation  of  business  by the  Borrower or such
Subsidiary;

(n) Liens securing Indebtedness incurred to refinance Indebtedness that has been
secured by a Lien otherwise  permitted under this  Agreement,  provided that (i)
any such Lien shall not extend to or cover any assets or property  not  securing
the Indebtedness so refinanced and (ii) the refinancing  Indebtedness secured by
such Lien shall have been  permitted to be incurred under Section 8.05 and shall
not have a principal amount in excess of the Indebtedness so refinanced;

(o) any extension or renewal, or successive  extensions or renewals, in whole or
in part, of Liens permitted  pursuant to the foregoing  clauses (a) through (n);
provided  that no such  extension or renewal Lien shall (i) secure more than the
amount  of  Indebtedness  or other  obligations  secured  by the  Lien  being so
extended or renewed or (ii) extend to any  property or assets not subject to the
Lien being so extended or renewed;

(p) Liens in favor of the  Administrative  Agent, any Issuing Bank and the Banks
relating to the Cash Collateralization of the Borrower's Obligations; and

(q)  Liens  securing  Indebtedness  of an SPE in  connection  with  an  Accounts
Receivable Securitization permitted by Section 8.05 (including the filing of any
related  financing  statements  naming the Borrower as the debtor  thereunder in
connection  with the sale of accounts  receivable by the Borrower to such SPE in
connection with any such permitted Accounts Receivable Securitization); provided
that the aggregate amount of accounts receivable subject to all such Liens shall
at no time  exceed  133% of the amount of  Accounts  Receivable  Securitizations
permitted to be outstanding under such Section 8.05.

8.02  Asset  Sales.  The  Borrower  shall  not,  and shall not permit any of the
Restricted  Subsidiaries to, (i) sell, lease, convey or otherwise dispose of any
assets (including by way of a sale-and-leaseback)  other than sales of inventory
in the ordinary course of business  consistent with past practice (provided that
the sale, lease,  conveyance or other disposition of all or substantially all of
the assets of the Borrower  shall be governed by the  provisions of Section 8.03
and not by the  provisions of this Section  8.02),  or (ii) issue or sell Equity
Interests of any of its  Subsidiaries,  in the case of either clause (i) or (ii)
above, whether in a single transaction or a series of related transactions,  (A)
that have a fair  market  value in excess of the  lesser of  $10,000,000  or the
amount  (which amount is equal to  $5,000,000  as of the  Restatement  Effective
Date)  specified in Section 4.10 the 1996 Indenture as amended from time to time
(such lesser amount, the "Applicable Amount"), or (B) for net proceeds in excess
of the Applicable  Amount (each of the foregoing,  an "Asset Sale"),  unless (X)
the  Borrower  (or the  Restricted  Subsidiary,  as the  case  may be)  receives
consideration  at the time of such Asset Sale at least  equal to the fair market
value  (evidenced  by a  resolution  of the board of  directors  of the  General
Partner (and, if applicable, the audit committee of such board of directors) set
forth in a  certificate  signed by a  Responsible  Officer and  delivered to the
Administrative  Agent) of the assets  sold or  otherwise  disposed of and (Y) at
least  80% of the  consideration  therefor  received  by the  Borrower  or  such
Subsidiary is in the form of cash; provided, however, that the amount of (1) any
liabilities (as shown on the Borrower's or such Subsidiary's most recent balance
sheet or in the notes  thereto),  of the Borrower or any Subsidiary  (other than
liabilities  that are by their  terms  subordinated  in right of  payment to the
Obligations)  that are assumed by the  transferee of any such assets and (2) any
notes or other obligations  received by the Borrower or any such Subsidiary from
such  transferee  that  are  immediately  converted  by  the  Borrower  or  such
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash  for  purposes  of this  provision;  and  provided,  further,  that the 80%
limitation  referred  to in this clause (Y) shall not apply to any Asset Sale in
which the cash portion of the consideration  received  therefrom,  determined in
accordance  with the  foregoing  proviso,  is equal to or greater  than what the
after-tax  proceeds  would  have  been had such  Asset  Sale  complied  with the
aforementioned 80% limitation.  Notwithstanding the foregoing, Asset Sales shall
not be deemed to include (w) sales or  transfers of accounts  receivable  by the
Borrower  to an SPE and by an SPE to any  other  Person in  connection  with any
Accounts Receivable  Securitization permitted by Section 8.05 (provided that the
aggregate amount of such accounts receivable that shall have been transferred to
and held by all SPEs at any time shall not exceed 133% of the amount of Accounts
Receivable  Securitizations permitted to be outstanding under Section 8.05), (x)
any  transfer  of  assets  by the  Borrower  or any of its  Subsidiaries  to the
Borrower or a Restricted Subsidiary,  (y) any transfer of assets by the Borrower
or any of its  Subsidiaries to any Person in exchange for other assets used in a
line of business permitted under Section 8.15 and having a fair market value not
less  than that of the  assets so  transferred  and (z) any  transfer  of assets
pursuant   to  a  Permitted   Investment   or  any   sale-leaseback   (including
sale-leasebacks involving Synthetic Leases) permitted by Section 8.17.

8.03              Consolidations and Mergers.

(a) The Borrower shall not consolidate or merge with or into (whether or not the
Borrower is the surviving Person), or sell, assign,  transfer,  lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related  transactions,  to another Person unless (i) the Borrower is the
surviving Person, or the Person formed by or surviving any such consolidation or
merger (if other than the Borrower) or to which such sale, assignment, transfer,
lease,  conveyance or other disposition shall have been made is a corporation or
partnership organized or existing under the laws of the United States, any state
thereof or the District of Columbia;  and (ii) the Person formed by or surviving
any such consolidation or merger (if other than the Borrower) or Person to which
such sale, assignment,  transfer,  lease,  conveyance or other disposition shall
have been made  assumes  all the  Obligations  of the  Borrower  pursuant  to an
assumption  agreement in a form reasonably  satisfactory  to the  Administrative
Agent, under this Agreement; (iii) immediately after such transaction no Default
or Event of Default  exists;  and (iv) the  Borrower or any Person  formed by or
surviving any such  consolidation or merger, or to which such sale,  assignment,
transfer,  lease, conveyance or other disposition shall have been made (A) shall
have Consolidated Net Worth  (immediately after the transaction but prior to any
purchase  accounting  adjustments  resulting from the  transaction)  equal to or
greater than the  Consolidated Net Worth of the Borrower  immediately  preceding
the transaction and (B) shall, at the time of such  transaction and after giving
effect thereto, be permitted to incur at least $1.00 of additional  Indebtedness
pursuant to the Leverage Ratio test set forth in Section 7.12(a).

(b)  The  Borrower  shall  deliver  to the  Administrative  Agent  prior  to the
consummation of the proposed transaction pursuant to the foregoing paragraph (a)
an officers' certificate to the foregoing effect signed by a Responsible Officer
and an opinion of counsel  satisfactory to the Administrative Agent stating that
the proposed transaction complies with this Agreement.  The Administrative Agent
and the Banks  shall be  entitled  to  conclusively  rely  upon  such  officer's
certificate and opinion of counsel.

(c) Upon any consolidation or merger, or any sale, assignment,  transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Borrower in accordance  with this Section 8.03,  the successor  Person formed by
such consolidation or into or with which the Borrower is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed  to,  and be  substituted  for (so that  from and after the date of such
consolidation,  merger,  sale,  lease,  conveyance  or  other  disposition,  the
provisions  of this  Agreement  referring  to the  "Borrower"  shall refer to or
include  instead the successor  Person and not the  Borrower),  and may exercise
every right and power of the Borrower  under this Agreement with the same effect
as if such  successor  Person had been named as the Borrower in this  Agreement;
provided,  however, that the predecessor Borrower shall not be relieved from the
obligation  to pay the  principal  of,  premium,  if any,  and  interest  on the
Obligations  except in the case of a sale of all of such Borrower's  assets that
meets the requirements of Section 8.03.

8.04  Acquisitions.  Without  limiting the generality of any other  provision of
this  Agreement,  neither  the  Borrower  nor any  Restricted  Subsidiary  shall
consummate any Acquisition unless (i) the acquiree is primarily a retail propane
distribution  business;  (ii) such  Acquisition is undertaken in accordance with
all applicable  Requirements of Law; (iii) the prior,  effective written consent
or  approval  to such  Acquisition  of the  board  of  directors  or  equivalent
governing body of the acquiree is obtained;  and (iv)  immediately  after giving
effect  thereto,  no Default or Event of Default will occur or be continuing and
each of the  representations and warranties of the Borrower in this Agreement is
true on and as of the date of such  Acquisition,  both  before and after  giving
effect  thereto.  Nothing in Section  8.22 shall  prohibit (x) the making by the
Borrower of a Permitted Acquisition  indirectly through the General Partner, the
MLP  or  any  of  its  or  their   Affiliates  in  a  series  of   substantially
contemporaneous  transactions  in which the Borrower  shall  ultimately  own the
assets that are the subject of such Permitted  Acquisition or (y) the assumption
of Acquired Debt in connection therewith to the extent such Acquired Debt is (if
not  otherwise  permitted  to be  incurred  by the  Borrower  pursuant  to  this
Agreement)  upon  such  assumption  immediately  repaid  (with the  proceeds  of
Revolving Loans or otherwise).

8.05  Limitation on  Indebtedness.  The Borrower shall not, and shall not permit
any of the Restricted  Subsidiaries to, directly or indirectly,  create,  incur,
issue,  assume,  suffer to exist,  guarantee  or  otherwise  become  directly or
indirectly liable with respect to any Indebtedness  (including Acquired Debt) or
any Synthetic Leases and the Borrower shall not issue any Disqualified Interests
and shall not permit any of the Restricted  Subsidiaries  to issue any shares of
preferred  stock;  provided,  however,  that  the  Borrower  and any  Restricted
Subsidiary of the Borrower may create,  incur, issue,  assume,  suffer to exist,
guarantee or otherwise become directly or indirectly  liable with respect to any
Indebtedness (including Acquired Debt) or any Synthetic Lease to the extent that
the Leverage Ratio is maintained in accordance with Section 7.12(a), both before
and after giving effect to the incurrence of such Indebtedness or such Synthetic
Lease,  as the case  may be,  and,  provided,  further,  that (x) the  aggregate
principal  amount of (1) all  Capitalized  Lease  Obligations  and all Synthetic
Lease Obligations  (other than Capitalized Lease Obligations and Synthetic Lease
Obligations in respect of Growth-Related  Capital  Expenditures) of the Borrower
and the Restricted  Subsidiaries and (2) all Indebtedness for which the Borrower
and any Restricted  Subsidiary of the Borrower  become liable in connection with
Acquisitions  of  retail  propane  businesses  in favor of the  sellers  of such
businesses and secured by any Lien on any property of the Borrower or any of the
Restricted   Subsidiaries,   shall  not  exceed  $65,000,000  at  any  one  time
outstanding,  and (y) the  principal  amount of any  Indebtedness  for which the
Borrower  or  any  Restricted  Subsidiary  of the  Borrower  becomes  liable  in
connection  with  Acquisitions  of  retail  propane  businesses  in favor of the
sellers of such businesses  shall not exceed the fair market value of the assets
so acquired,  and (z) the aggregate  amount of  Indebtedness of the Borrower and
its Subsidiaries through one or more SPEs in connection with Accounts Receivable
Securitizations shall not exceed $60,000,000 at any one time outstanding.

8.06 Transactions with Affiliates.  The Borrower shall not, and shall not permit
any of the  Restricted  Subsidiaries  to,  sell,  lease,  transfer or  otherwise
dispose of any of its  properties  or assets to, or  purchase  any  property  or
assets from, or enter into any contract, agreement, understanding, loan, advance
or  guarantee  with,  or for  the  benefit  of,  any  Affiliate,  including  any
Non-Recourse  Subsidiary  (each of the foregoing,  an "Affiliate  Transaction"),
unless (a) such Affiliate  Transaction is on terms that are no less favorable to
the Borrower or the relevant  Restricted  Subsidiary  than those that would have
been  obtained in a comparable  transaction  by the Borrower or such  Restricted
Subsidiary  with an unrelated  Person and (b) with respect to (i) any  Affiliate
Transaction  with an aggregate  value in excess of  $500,000,  a majority of the
directors of the General Partner having no direct or indirect  economic interest
in such  Affiliate  Transaction  determines  by resolution  that such  Affiliate
Transaction   complies  with  clause  (a)  above  and  approves  such  Affiliate
Transaction and (ii) any Affiliate  Transaction  involving the purchase or other
acquisition  or sale,  lease,  transfer or other  disposition  of  properties or
assets other than in the ordinary  course of  business,  in each case,  having a
fair market  value or for net  proceeds in excess of  $15,000,000,  the Borrower
delivers  to the  Administrative  Agent an  opinion  as to the  fairness  to the
Borrower or such Restricted  Subsidiary from a financial point of view issued by
an investment banking firm of national standing; provided, however, that (i) any
employment  agreement or stock option agreement  entered into by the Borrower or
any of the  Restricted  Subsidiaries  in the  ordinary  course of  business  and
consistent  with the past  practice of the Borrower (or the General  Partner) or
such Restricted  Subsidiary,  Restricted Payments permitted by the provisions of
Section  8.12,  and  transactions  entered  into by the Borrower in the ordinary
course of business in connection with reinsuring the self-insurance  programs or
other similar forms of retained insurable risks of the retail propane businesses
operated by the Borrower,  the Restricted  Subsidiaries  and its Affiliates,  in
each case, shall not be deemed Affiliate Transactions,  and (ii) nothing in this
Agreement shall authorize the payments by the Borrower to the General Partner or
any other Affiliate of the Borrower for administrative expenses incurred by such
Person  other than such  out-of-pocket  administrative  expenses  as such Person
shall incur and the Borrower shall pay in the ordinary  course of business;  and
provided,  further, that the foregoing provisions of this Section 8.06 shall not
apply  to  transfers  of  accounts  receivable  of  the  Borrower  to an  SPE in
connection  with any  Accounts  Receivable  Securitization  permitted by Section
8.05.

8.07 Use of Proceeds. The Borrower shall not, and shall not suffer or permit any
Restricted  Subsidiary to, use any portion of the Loan proceeds or any Letter of
Credit,  directly or indirectly,  (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance  indebtedness of the Borrower or others incurred to
purchase  or carry  Margin  Stock,  (iii) to extend  credit  for the  purpose of
purchasing or carrying any Margin Stock,  or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.

8.08 Use of Proceeds - Ineligible  Securities.  The Borrower shall not, directly
or indirectly,  use any portion of the Loan proceeds or any Letter of Credit (i)
knowingly to purchase Ineligible  Securities from the Arranger during any period
in  which  the  Arranger  makes a market  in such  Ineligible  Securities,  (ii)
knowingly to purchase  during the  underwriting or placement  period  Ineligible
Securities being  underwritten or privately placed by the Arranger,  or (iii) to
make payments of principal or interest on Ineligible Securities  underwritten or
privately  placed  by the  Arranger  and  issued  by or for the  benefit  of the
Borrower or any Affiliate of the Borrower.

8.09  Contingent  Obligations.  The Borrower  shall not, and shall not suffer or
permit any Restricted  Subsidiary to, create,  incur,  assume or suffer to exist
any Contingent Obligations except:

     (a)  endorsements  for  collection  or  deposit in the  ordinary  course of
business;

(b) subject to compliance with the trading  policies in effect from time to time
as submitted to the Administrative  Agent,  Hedging  Obligations entered into in
the ordinary course of business as bona fide hedging transactions;

(c)               the Guaranties under this Agreement;

(d) Guaranty  Obligations  to the extent not prohibited by Section 8.05; and (e)
indemnities not guaranteeing  Indebtedness or Synthetic Lease Obligations of any
Person.

8.10 Joint Ventures.  The Borrower shall not, and shall not suffer or permit any
Restricted Subsidiary,  to enter into any Joint Venture unless the same shall be
a Permitted Investment.

8.11 Lease  Obligations.  The  aggregate  obligations  of the  Borrower  and the
Restricted  Subsidiaries for the payment of rent for any property under lease or
agreement to lease  (excluding  obligations of the Borrower and its Subsidiaries
under or with respect to Synthetic  Leases) for any fiscal year shall not exceed
the greater of (a) $40,000,000 or (b) 20% of (i)  Consolidated  Cash Flow of the
Borrower for the most recently ended eight  consecutive  fiscal quarters divided
by (ii) two; provided,  however, that any payment of rent for any property under
lease or  agreement  to lease  for a term of less  than one year  (after  giving
effect to all automatic renewals) shall not be subject to this Section 8.11. For
purposes of this Section 8.11, the calculation of  Consolidated  Cash Flow shall
give  pro  forma   effect   to   Acquisitions   (including   all   mergers   and
consolidations),  Asset  Sales and other  dispositions  and  discontinuances  of
businesses  or  assets  that  have  been  made  by  the  Borrower  or any of the
Restricted  Subsidiaries  during  the  reference  period or  subsequent  to such
reference period and on or prior to the date of calculation of Consolidated Cash
Flow assuming that all such Acquisitions, Asset Sales and other dispositions and
discontinuances  of  businesses  or assets had  occurred on the first day of the
reference period.

8.12 Restricted Payments. The Borrower shall not and shall not permit any of the
Restricted  Subsidiaries  to,  directly  or  indirectly  (i)  declare or pay any
dividend or make any distribution on account of the Borrower's or any Restricted
Subsidiary's Equity Interests (other than (x) dividends or distributions payable
in Equity Interests  (other than  Disqualified  Interests) of the Borrower,  (y)
dividends or distributions payable to the Borrower or a Wholly-Owned  Subsidiary
that  is a  Restricted  Subsidiary  and a  Guarantor  or  (z)  distributions  or
dividends  payable  pro rata to all  holders  of Capital  Interests  of any such
Subsidiary);  (ii)  purchase,  redeem,  call or otherwise  acquire or retire for
value any Equity Interests of the Borrower or any Restricted Subsidiary or other
Affiliate of the Borrower (other than,  subject to compliance with Section 8.21,
any  such  Equity  Interests  owned  by  a  Wholly-Owned  Subsidiary  that  is a
Restricted  Subsidiary and a Guarantor);  (iii) make any Investment other than a
Permitted  Investment;  or (iv) prepay,  purchase,  redeem,  retire,  defease or
refinance  the 1998 Fixed Rate Senior Notes or the 2000 Notes (all  payments and
other  actions set forth in clauses (i)  through  (iv) above being  collectively
referred to as "Restricted Payments"), except to the extent that, at the time of
such Restricted Payment:

(a) no Default or Event of Default  shall have  occurred  and be  continuing  or
would  occur  as a  consequence  thereof  and  each of the  representations  and
warranties of the Borrower set forth in this  Agreement is true on and as of the
date of such Restricted Payment both before and after giving effect thereto; and

(b) the Fixed Charge  Coverage Ratio for the Borrower's most recently ended four
full fiscal  quarters for which  internal  financial  statements  are  available
immediately  preceding  the  date on  which  such  Restricted  Payment  is made,
calculated on a pro forma basis as if such  Restricted  Payment had been made at
the beginning of such four-quarter period, would have been more than (i) 2.15 to
1.00 for each such period of four fiscal  quarters ending on or prior to January
31,  2001 and (ii) 2.25 to 1.00 for each such  period  of four  fiscal  quarters
ending after January 31, 2001; and

(c) such Restricted Payment (the amount of any such payment, if other than cash,
to be  determined  by the  Board  of  Directors,  whose  determination  shall be
conclusive and evidenced by a resolution in an officer's certificate signed by a
Responsible  Officer and delivered to the Administrative  Agent),  together with
the  aggregate  of all other  Restricted  Payments  (other  than any  Restricted
Payments permitted by the provisions of clause (ii) of the penultimate paragraph
of this Section  8.12) made by the Borrower and its  Subsidiaries  in the fiscal
quarter during which such Restricted  Payment is made shall not exceed an amount
equal to (x) Available Cash of the Borrower for the immediately preceding fiscal
quarter  plus (y) the  lesser  of (i) the  amount of any  Available  Cash of the
Borrower  during the first 45 days of such fiscal quarter and (ii) the excess of
the  aggregate  amount of Loans that the Borrower  could have  borrowed over the
actual  amount  of  Loans  outstanding,  in each  case as of the last day of the
immediately preceding fiscal quarter; and

(d) such  Restricted  Payment (other than (x) Restricted  Payments  described in
clause (i) of the first  paragraph  of this  Section 8.12 made during the fiscal
quarter ending January 31, 1997 that do not exceed  $26,000,000 in the aggregate
or (y) any Restricted  Payments  described in clauses (iii) or (iv) of the first
paragraph  of this  Section  8.12)  the  amount of which  (to be  determined  in
accordance  with clause (c) of this  Section  8.12 if made other than with cash)
shall not exceed an amount equal to (1)  Consolidated  Cash Flow of the Borrower
and the Restricted  Subsidiaries  for the period from and after October 31, 1996
through and  including  the last day of the fiscal  quarter  ending  immediately
preceding  the  date of the  proposed  Restricted  Payment  (the  "Determination
Period"), minus (2) the sum of Consolidated Interest Expense of the Borrower and
the  Restricted  Subsidiaries  for the  Determination  Period  plus all  capital
expenditures (other than Growth-Related  Capital Expenditures and net of capital
asset sales in the  ordinary  course of  business)  made by the Borrower and the
Restricted  Subsidiaries  during the Determination  Period plus the aggregate of
all other Restricted  Payments (other than (x) Restricted  Payments described in
clause (i) of the first  paragraph  of this  Section 8.12 made during the fiscal
quarter ending January 31, 1997 that do not exceed  $26,000,000 in the aggregate
or (y) any Restricted  Payments  described in clauses (iii) or (iv) of the first
paragraph  of this  Section  8.12)  made  by the  Borrower  and  the  Restricted
Subsidiaries  during the period  from and after  October  31,  1996  through and
including the date of the proposed  Restricted  Payment,  plus (3)  $30,000,000,
plus (4) the excess, if any, of consolidated working capital of the Borrower and
the Restricted  Subsidiaries at July 31, 1996 over consolidated  working capital
of the Borrower and the  Restricted  Subsidiaries  at the end of the fiscal year
immediately preceding the date of the proposed Restricted Payment, minus (5) the
excess,  if  any,  of  consolidated  working  capital  of the  Borrower  and the
Restricted  Subsidiaries at the end of the fiscal year immediately preceding the
date of the proposed Restricted Payment over consolidated working capital of the
Borrower and the Restricted  Subsidiaries at July 31, 1996. For purposes of this
Section 8.12(d),  the calculation of Consolidated Cash Flow shall give pro forma
effect to Acquisitions  (including all mergers and consolidations),  Asset Sales
and other  dispositions  and  discontinuances  of businesses or assets that have
been  made by such  Person  or any of the  Restricted  Subsidiaries  during  the
reference  period or subsequent to such reference  period and on or prior to the
date  of  calculation  of   Consolidated   Cash  Flow  assuming  that  all  such
Acquisitions,   Asset  Sales  and  other  dispositions  and  discontinuances  of
businesses or assets had occurred on the first day of the reference period.

                  The foregoing  provisions will not prohibit (i) the payment of
any  distribution  within 60 days after the date on which the  Borrower  becomes
committed to make such distribution,  if at said date of commitment such payment
would  have  complied  with  the  provisions  of this  Agreement;  and  (ii) the
redemption,  repurchase, retirement or other acquisition of any Equity Interests
of the Borrower in exchange  for, or out of the  proceeds of, the  substantially
concurrent  sale (other than to a  Subsidiary  of the  Borrower) of other Equity
Interests of the Borrower (other than any Disqualified Interests).

                  Not later than the date of making any Restricted Payment,  the
General  Partner  shall  deliver  to  the  Administrative   Agent  an  officer's
certificate signed by a Responsible Officer stating that such Restricted Payment
is permitted and setting forth the basis upon which the calculations required by
this  Section  7.12 were  computed,  which  calculations  may be based  upon the
Borrower's latest available financial statements.

8.13 Prepayments of Subordinated Indebtedness. The Borrower shall not, and shall
not permit any of the Restricted  Subsidiaries to, (a) purchase,  redeem, retire
or otherwise acquire for value, or set apart any money for a sinking, defeasance
or other  analogous  fund for, the  purchase,  redemption,  retirement  or other
acquisition  of,  or make any  payment  or  prepayment  of the  principal  of or
interest on, or any other amount owing in respect of, any  Indebtedness  that is
subordinated  to the  Obligations,  except for regularly  scheduled  payments of
interest in respect of such  Indebtedness  required  pursuant to the instruments
evidencing such Indebtedness that are not made in contravention of the terms and
conditions  of  subordination  set  forth  on  part II of  Schedule  8.05 or (b)
directly or  indirectly,  make any payment in respect of, or set apart any money
for a  sinking,  defeasance  or other  analogous  fund on account  of,  Guaranty
Obligations  subordinated to the Obligations.  The foregoing provisions will not
prohibit the defeasance,  redemption or repurchase of subordinated  Indebtedness
with the proceeds of Permitted Refinancing Indebtedness.

8.14  Dividend  and  Other  Payment  Restrictions  Affecting  Subsidiaries.  The
Borrower shall not, and shall not permit any of the Restricted  Subsidiaries to,
directly or indirectly,  create or otherwise  cause or suffer to exist or become
effective  any  encumbrance  or  restriction  on the  ability of any  Restricted
Subsidiary to (a) pay dividends or make any other  distributions to the Borrower
or any of the Restricted  Subsidiaries (1) on its Capital  Interests or (2) with
respect to any other interest or participation  in, or interest measured by, its
profits,  (b) pay any indebtedness owed to the Borrower or any of the Restricted
Subsidiaries,  (c)  make  loans  or  advances  to  the  Borrower  or  any of the
Restricted  Subsidiaries  or (d) transfer any of its properties or assets to the
Borrower or any of the Restricted Subsidiaries,  except for such encumbrances or
restrictions existing under or by reason of (i) Existing Indebtedness, (ii) this
Agreement,  the 1998 Note Purchase Agreement,  the 1998 Fixed Rate Senior Notes,
the 2000 Note Purchase  Agreement and the 2000 Notes, (iii) applicable law, (iv)
any instrument governing  Indebtedness or Capital Interests of a Person acquired
by the Borrower or any of the Restricted  Subsidiaries  as in effect at the time
of such  Acquisition  (except to the extent such  Indebtedness  was  incurred in
connection with or in contemplation of such  Acquisition),  which encumbrance or
restriction is not applicable to any Person,  or the properties or assets of any
Person,  other than the Person,  or the  property  or assets of the  Person,  so
acquired,  provided that the Consolidated Cash Flow of such Person to the extent
that dividends,  distributions,  loans, advances or transfers thereof is limited
by such  encumbrance or restriction on the date of acquisition is not taken into
account in determining  whether such  acquisition  was permitted by the terms of
this Agreement, (v) customary  non-assignment  provisions in leases entered into
in the ordinary  course of business and  consistent  with past  practices,  (vi)
purchase  money  obligations  for property  acquired in the  ordinary  course of
business that impose restrictions of the nature described in clause (d) above on
the  property so  acquired,  (vii)  Permitted  Refinancing  Indebtedness  of any
Existing   Indebtedness,   provided  that  the  restrictions  contained  in  the
agreements  governing  such  Permitted  Refinancing  Indebtedness  are  no  more
restrictive  than those contained in the agreements  governing the  Indebtedness
being  refinanced  or  (viii)  other  Indebtedness   permitted  to  be  incurred
subsequent  to the  Restatement  Effective  Date  pursuant to the  provisions of
Section 8.05, provided that such restrictions are no more restrictive than those
contained in this Agreement.

8.15 Change in Business.  The Borrower shall not, and shall not suffer or permit
any  Restricted   Subsidiary  to,  engage  in  any  material  line  of  business
substantially  different from those lines of business carried on by the Borrower
and the Restricted Subsidiaries on the date of this Agreement.

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

8.17 Limitation on Sale and Leaseback  Transactions.  The Borrower will not, and
will  not  permit  any  of  the  Restricted  Subsidiaries  to,  enter  into  any
arrangement  with any Person  providing  for the leasing by the Borrower or such
Restricted  Subsidiary  of any  property  that  has  been  or is to be  sold  or
transferred  by the  Borrower or such  Restricted  Subsidiary  to such Person in
contemplation  of such  leasing;  provided,  however,  that the Borrower or such
Restricted Subsidiary may enter into such sale and leaseback transaction if: (i)
the  Borrower  could have (A)  incurred  Indebtedness  in an amount equal to the
Attributable  Debt relating to such sale and leaseback  transaction  pursuant to
the Leverage  Ratio test set forth in Section  7.12(a) and (B) secured a Lien on
such  Indebtedness  pursuant  to Section  8.01;  (ii) the lease in such sale and
leaseback  transaction  is for a term not in excess  of the  lesser of (A) three
years and (B) 60% of the remaining  useful life of such property;  or (iii) such
sale and leaseback  transaction  is otherwise  permitted by the last sentence of
Section  4.17  of the  1996  Indenture  as in  effect  as of the  date  of  this
Agreement.

8.18              [Intentionally Omitted]

8.19  Amendments  of  Organization  Documents  or Certain Debt  Agreements.  The
Borrower  shall not  modify,  amend,  supplement  or  replace,  nor  permit  any
modification, amendment, supplement or replacement of the Organization Documents
of the General Partner, the Borrower or any Subsidiary of the Borrower,  the MLP
Senior Notes,  the 1996  Indenture,  the 1998 Fixed Rate Senior Notes,  the 1998
Note Purchase  Agreement,  the 2000 Notes or the 2000 Note Purchase Agreement or
any document executed and delivered in connection with any of the foregoing,  in
any respect that would  adversely  affect the Banks,  the Borrower's  ability to
perform the Obligations,  or the Guarantor's  ability to perform its obligations
under the Guaranty,  in each such case without the prior written  consent of the
Administrative Agent and the Majority Banks. Furthermore, the Borrower shall not
permit  any   modification,   amendment,   supplement  or   replacement  of  the
Organization  Documents  of the MLP that  would  have a  material  effect on the
Borrower without the prior written consent of the  Administrative  Agent and the
Majority Banks.

8.20 Fixed Price  Supply  Contracts.  None of the  Borrower  and the  Restricted
Subsidiaries  shall at any time be a party or  subject to any  contract  for the
supply of propane or other  product  except where (a) the purchase  price is set
with reference to a spot index or indices substantially  contemporaneously  with
the delivery of such product or (b) delivery of such propane or other product is
to be made no more than two years after the purchase price is agreed to.

8.21 Operations through Subsidiaries.  The Borrower shall not conduct any of its
operations   through  Restricted   Subsidiaries   unless:  (a)  such  Restricted
Subsidiary  executes  a  Guaranty   guaranteeing   payment  of  the  Obligations
accompanied by an opinion of counsel to the Restricted  Subsidiary  addressed to
the Administrative  Agent and the Banks as to the due authorization,  execution,
delivery and  enforceability  of the Guaranty;  (b) such  Restricted  Subsidiary
agrees not to incur any  Indebtedness  other than (i) trade debt, (ii) debt owed
to the  Borrower or any other  Restricted  Subsidiary  and (iii)  Acquired  Debt
otherwise  permitted by this Agreement;  (c) the Consolidated  Cash Flow of such
Restricted  Subsidiary,  when  added  to  Consolidated  Cash  Flow of all  other
Restricted  Subsidiaries  for any  fiscal  year,  shall  not  exceed  10% of the
Consolidated Cash Flow of the Borrower and the Restricted  Subsidiaries for such
fiscal year; and (d) the value of the assets of such Restricted Subsidiary, when
added to the value of the assets of all other  Restricted  Subsidiaries  for any
fiscal year, shall not exceed 10% of the consolidated value of the assets of the
Borrower and the Restricted  Subsidiaries for such fiscal year, as determined in
accordance with GAAP;  provided that the requirements of subsections (c) and (d)
above  shall  not  apply  as to  any  Restricted  Subsidiary  if  the  aggregate
Indebtedness of such Restricted  Subsidiary,  when added to the  Indebtedness of
all other Restricted Subsidiaries at such time (excluding, in each case, debt of
any such  Restricted  Subsidiary  owed to the  Borrower  or  another  Restricted
Subsidiary),  shall not exceed $5 million. The Borrower shall not conduct any of
its operations through, and shall not establish,  create or otherwise invest in,
any Unrestricted Subsidiary unless the same shall be a Permitted Investment.

8.22  Operations  of MLP.  Except in  connection  with an  indirect  Acquisition
permitted by Section 8.04, the General Partner and the Borrower shall not permit
the MLP or any of its Affiliates  (including any Non-Recourse  Subsidiary or any
Unrestricted  Subsidiary)  to  operate  or conduct  any  business  substantially
similar to that conducted by the Borrower and the Restricted Subsidiaries within
a 25 mile radius of any business  conducted  by the Borrower and the  Restricted
Subsidiaries.  In order to comply with this Section 8.22, the Borrower may enter
into one or more  transactions  by which its assets and properties are "swapped"
or  "exchanged"  for  assets  and  properties  of  another  Person  prior  to or
concurrently with another transaction which, but for such swap or exchange would
violate  this  Section;  provided,  that (i) if the value of the MLP's assets or
units to be so swapped or exchanged  exceeds $15 million,  as  determined by the
audit committee of the Board of Directors of the General  Partner,  the Borrower
shall have first obtained at its expense an opinion from a nationally recognized
investment banking firm, addressed to it, the Administrative Agent and the Banks
and opining without  material  qualification  and based on assumptions  that are
realistic at the time,  that the exchange or swap  transactions  are fair to the
Borrower  and the  Restricted  Subsidiaries,  and (ii) if the value of the MLP's
assets or units to be so swapped or exchanged exceeds $50 million, as determined
by the audit committee of the Board of Directors of the General Partner,  at the
option  of the  Majority  Banks,  the  Administrative  Agent  shall  have  first
retained, at the Borrower's expense, an investment banking firm on behalf of the
Banks who shall also have  rendered an opinion  containing  the  statements  and
content referred to in clause (i).

ARTICLE IX

                                EVENTS OF DEFAULT

     9.01 Event of Default.  Any of the following shall  constitute an "Event of
Default": ----------------

(a) Non-Payment.  The Borrower or the General Partner fails to pay, (i) when and
as required to be paid under this Agreement, any amount of principal of any Loan
or of any L/C Obligation,  or (ii) within 5 days after the same becomes due, any
interest,  fee or any other  amount  payable  under this  Agreement or under any
other Loan Document; or

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

(c)  Specific  Defaults.  The  Borrower  fails to perform  or observe  any term,
covenant or agreement contained in any of Sections 2.01(a)(ii), 7.03 (other than
subsection (d) thereof), 7.12, 7.13 or in any Section in Article VIII; or

(d) Other Defaults. The Borrower, the General Partner or any Subsidiary fails to
perform or observe any other term or covenant contained in this Agreement or any
other Loan Document,  and such default shall continue unremedied for a period of
30 days after the earlier of (i) the date upon which a Responsible  Officer knew
or  reasonably  should  have  known of such  failure or (ii) the date upon which
written notice thereof is given to the Borrower by the  Administrative  Agent or
any Bank; or

(e)  Cross-Default.   The  Borrower,  the  General  Partner  or  any  Restricted
Subsidiary  (i)  fails to make  any  payment  in  respect  of any  Indebtedness,
Synthetic  Lease  Obligation  or  Contingent   Obligation  having  an  aggregate
principal amount (including undrawn committed or available amounts and including
amounts  owing  to  all  creditors  under  any  combined  or  syndicated  credit
arrangement) of more than $10,000,000  when due (whether by scheduled  maturity,
required  prepayment,  acceleration,  demand,  or  otherwise)  and such  failure
continues after the applicable grace or notice period, if any,  specified in the
relevant  document  on the date of such  failure;  or (ii)  fails to  perform or
observe any other  condition  or  covenant,  or any other event  (including  any
termination   or  similar   event  in  respect   of  any   Accounts   Receivable
Securitization)   shall  occur  or  condition  exist,  under  any  agreement  or
instrument  relating to any such  Indebtedness,  Synthetic  Lease  Obligation or
Contingent Obligation,  and such failure continues after the applicable grace or
notice period,  if any,  specified in the relevant  document on the date of such
failure if the effect of such  failure,  event or condition  is to cause,  or to
permit  the  holder  or  holders  of  such   Indebtedness   or   beneficiary  or
beneficiaries  of such  Indebtedness or Synthetic Lease Obligation (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such  Indebtedness or Synthetic Lease  Obligation to be declared to be due
and  payable  prior  to its  stated  maturity  or to  cause  such  Indebtedness,
Synthetic Lease Obligation or Contingent Obligation to be prepaid,  purchased or
redeemed  by the  Borrower,  the MLP,  the  General  Partner  or any  Restricted
Subsidiary,  or such Contingent  Obligation to become payable or cash collateral
in respect thereof to be demanded; or

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

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

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

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

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

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

(l) Certain Indenture Defaults,  Etc. (i) To the extent not otherwise within the
scope of Section  9.01(e)  above,  any  "Event of  Default"  shall  occur and be
continuing under and as defined in the 1998 Note Purchase Agreement or 2000 Note
Purchase  Agreement  or (ii)  any of the  following  shall  occur  under or with
respect  to the 1996  Indenture  or any  other  Indebtedness  guaranteed  by the
Borrower or its Subsidiaries (collectively, the "Guaranteed Indebtedness"):  (A)
any demand for payment  shall be made under any such  Guaranty  Obligation  with
respect  to the  Guaranteed  Indebtedness  or (B) so long as any  such  Guaranty
Obligation shall be in effect (x) the Borrower or any such Subsidiary shall fail
to pay  principal  of or  premium,  if  any,  or  interest  on  such  Guaranteed
Indebtedness  after the expiration of any  applicable  notice or cure periods or
(y) any "Event of Default" (however defined) shall occur and be continuing under
such  Guaranteed   Indebtedness  which  results  in  the  acceleration  of  such
Guaranteed Indebtedness; or

(m) Guarantor  Defaults.  Any Guarantor fails in any material respect to perform
or observe any term,  covenant or agreement in its Guaranty;  or any Guaranty is
for any reason  partially  (including with respect to future advances) or wholly
revoked or invalidated,  or otherwise ceases to be in full force and effect,  or
any  Guarantor  or any other  Person  contests  in any  manner the  validity  or
enforceability thereof or denies that it has any further liability or obligation
thereunder;  or any event  described at  subsections  (f) or (g) of this Section
occurs with respect to the Guarantor.

     9.02 Remedies.  If any Event of Default occurs,  the  Administrative  Agent
shall, at the request of, or may, with the consent of, the Majority Banks,

(a) declare the  commitment of each Bank to make Loans and any  obligation of an
Issuing  Bank to Issue  Letters  of  Credit  to be  terminated,  whereupon  such
commitments and obligation shall be terminated;

(b) declare an amount  equal to the maximum  aggregate  amount that is or at any
time thereafter may become  available for drawing under any outstanding  Letters
of Credit  (whether or not any  beneficiary  shall have  presented,  or shall be
entitled at such time to present, the drafts or other documents required to draw
under such Letters of Credit) to be immediately due and payable;

(c) declare the unpaid principal  amount of all outstanding  Loans, all interest
accrued and unpaid  thereon,  and all other  amounts owing or payable under this
Agreement  or under any other Loan  Document to be  immediately  due and payable
(including,  without  limitation,  amounts  due  under  Section  4.04),  without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby expressly waived by the Borrower; and

(d) exercise on behalf of itself and the Banks all rights and remedies available
to it and the Banks under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein),  the obligation of each Bank
to make Loans and any obligation of the Issuing Banks to Issue Letters of Credit
shall automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable without  further act of the  Administrative  Agent,  any Issuing
Bank or any Bank.

9.03 Rights Not  Exclusive.  The rights  provided for in this  Agreement and the
other Loan  Documents are  cumulative and are not exclusive of any other rights,
powers,  privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.

9.04 Certain Financial Covenant  Defaults.  In the event that, after taking into
account any extraordinary  charge to earnings taken or to be taken as of the end
of any fiscal  period of the Borrower (a  "Charge"),  and if solely by virtue of
such  Charge,  there would exist an Event of Default due to the breach of any of
Sections  7.12(a) or 7.12(b) as of such  fiscal  period end date,  such Event of
Default  shall be deemed to arise  upon the  earlier  of (a) the date after such
fiscal period end date on which the Borrower announces publicly it will take, is
taking or has taken such  Charge  (including  an  announcement  in the form of a
statement in a report filed with the SEC) or, if such announcement is made prior
to such fiscal  period end date,  the date that is such fiscal  period end date,
and (b) the date the Borrower delivers to the  Administrative  Agent its audited
annual or unaudited  quarterly  financial  statements  in respect of such fiscal
period reflecting such Charge as taken.

ARTICLE X

                            THE ADMINISTRATIVE AGENT

10.01 Appointment and Authorization. (a) Each of the Banks and each Issuing Bank
hereby irrevocably appoints,  designates and authorizes the Administrative Agent
to take such action on its behalf under the  provisions  of this  Agreement  and
each other Loan  Document and to exercise such powers and perform such duties as
are expressly  delegated to it by the terms of this  Agreement or any other Loan
Document,  together  with such  powers  as are  reasonably  incidental  thereto.
Notwithstanding  any  provision  to the  contrary  contained  elsewhere  in this
Agreement or in any other Loan Document, the Administrative Agent shall not have
any  duties  or  responsibilities,  except  those  expressly  set  forth in this
Agreement,  nor shall  the  Administrative  Agent  have or be deemed to have any
fiduciary  relationship  with  any  Bank or any  Issuing  Bank,  and no  implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this  Agreement  or any other  Loan  Document  or  otherwise  exist
against the Administrative  Agent. The Documentation  Agent shall have no duties
or responsibilities in such capacity under this Agreement.

                  (b) Each  Issuing  Bank  shall act on behalf of the Banks with
respect  to any  Letters  of Credit  Issued by it and the  documents  associated
therewith until such time and except for so long as the Administrative Agent may
agree at the request of the  Majority  Lenders to act for such Issuing Bank with
respect thereto; provided, however, that such Issuing Bank shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this Article
X with respect to any acts taken or  omissions  suffered by such Issuing Bank in
connection  with  Letters of Credit  Issued by it or proposed to be Issued by it
and the  application  and  agreements  for letters of credit  pertaining  to the
Letters  of Credit as fully as if the term  "Administrative  Agent",  as used in
this  Article  X,  included  such  Issuing  Bank  with  respect  to such acts or
omissions,  and (ii) as additionally  provided in this Agreement with respect to
such Issuing Bank.

10.02  Delegation  of Duties.  The  Administrative  Agent may execute any of its
duties  under this  Agreement or any other Loan  Document by or through  agents,
employees  or  attorneys-in-fact  and shall be  entitled  to  advice of  counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not  be   responsible   for  the  negligence  or  misconduct  of  any  agent  or
attorney-in-fact that it selects with reasonable care.

10.03  Liability  of  Administrative  Agent  and  Issuing  Banks.  None  of  the
Agent-Related Persons and Issuing Banks shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions  contemplated  hereby (except for
its own gross negligence or willful  misconduct),  or (ii) be responsible in any
manner  to any of the  Banks  for  any  recital,  statement,  representation  or
warranty made by the Borrower or any Subsidiary or Affiliate of the Borrower, or
any officer thereof,  contained in this Agreement or in any other Loan Document,
or in any  certificate,  report,  statement  or other  document  referred  to or
provided for in, or received by the Administrative  Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness,  enforceability  or sufficiency of this Agreement or any other Loan
Document,  or for any  failure of the  Borrower  or any other  party to any Loan
Document to perform its obligations  hereunder or thereunder.  No  Agent-Related
Person shall be under any  obligation  to any Bank to ascertain or to inquire as
to the  observance  or  performance  of any of the  agreements  contained in, or
conditions  of, this  Agreement  or any other Loan  Document,  or to inspect the
properties,  books  or  records  of  the  Borrower  or  any  of  the  Borrower's
Subsidiaries or Affiliates.

10.04 Reliance by Administrative Agent and Issuing Banks. (a) The Administrative
Agent  and each  Issuing  Bank  shall be  entitled  to rely,  and shall be fully
protected  in  relying,   upon  any  writing,   resolution,   notice,   consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement  or other  document or  conversation  believed by it to be genuine and
correct and to have been signed,  sent or made by the proper  Person or Persons,
and upon  advice  and  statements  of legal  counsel  (including  counsel to the
Borrower),   independent   accountants   and  other  experts   selected  by  the
Administrative  Agent or applicable Issuing Bank. The  Administrative  Agent and
each  Issuing  Bank shall be fully  justified in failing or refusing to take any
action  under this  Agreement or any other Loan  Document  unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks  against any and all  liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
and each  Issuing Bank shall in all cases be fully  protected  in acting,  or in
refraining  from  acting,  under this  Agreement  or any other Loan  Document in
accordance  with a request or consent of the Majority Banks and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of
the Banks.

                  (b) For purposes of determining compliance with the conditions
specified in Section 5.01,  each Bank that has executed this Agreement  shall be
deemed to have consented to,  approved or accepted or to be satisfied with, each
document or other matter either sent by the  Administrative  Agent or an Issuing
Bank to such Bank for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable  or  satisfactory  to
the Bank.

10.05 Notice of Default.  The  Administrative  Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Administrative  Agent for the account of the Banks, unless the
Administrative  Agent  shall have  received  written  notice  from a Bank or the
Borrower  referring  to this  Agreement,  describing  such  Default  or Event of
Default  and  stating   that  such  notice  is  a  "notice  of   default".   The
Administrative  Agent will notify the Banks of its  receipt of any such  notice.
The Administrative  Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority  Banks in  accordance  with
Article IX; provided,  however,  that unless and until the Administrative  Agent
has received any such request,  the  Administrative  Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such  Default or Event of Default as it shall deem  advisable  or in the best
interest of the Banks.

10.06 Credit Decision.  Each Bank  acknowledges  that none of the  Agent-Related
Persons or any Issuing Bank has made any  representation  or warranty to it, and
that no act by the  Administrative  Agent or any Issuing Bank hereinafter taken,
including any review of the affairs of the Borrower and its Subsidiaries,  shall
be deemed to  constitute  any  representation  or warranty by any  Agent-Related
Person  or  any  Issuing  Bank  to  any  Bank.   Each  Bank  represents  to  the
Administrative  Agent  and the  Issuing  Banks  that it has,  independently  and
without reliance upon any Agent-Related  Person or any Issuing Bank and based on
such  documents  and  information  as it has  deemed  appropriate,  made its own
appraisal  of  and  investigation  into  the  business,  prospects,  operations,
property, financial and other condition and creditworthiness of the Borrower and
its  Subsidiaries,  and all  applicable  bank  regulatory  laws  relating to the
transactions  contemplated  hereby, and made its own decision to enter into this
Agreement  and to  extend  credit  to the  Borrower  hereunder.  Each  Bank also
represents  that  it  will,   independently   and  without   reliance  upon  any
Agent-Related  Person  or any  Issuing  Bank  and  based on such  documents  and
information as it shall deem  appropriate at the time,  continue to make its own
credit  analysis,  appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents,  and to make such investigations as
it deems necessary to inform itself as to the business,  prospects,  operations,
property,  financial and other condition and  creditworthiness  of the Borrower.
Except for notices,  reports and other documents to be furnished to the Banks by
the  Administrative  Agent or any Issuing Bank as  specified on Schedule  10.06,
neither the  Administrative  Agent nor any  Issuing  Bank shall have any duty or
responsibility  to  provide  any Bank  with  any  credit  or  other  information
concerning the business,  prospects,  operations,  property, financial and other
condition or creditworthiness of the Borrower which may come into the possession
of any of the  Agent-Related  Persons or any Issuing  Bank.  The  Administrative
Agent shall promptly  deliver to the Banks the items specified on Schedule 10.06
that are required to be provided by the  Borrower  only to the extent such items
are actually provided by the Borrower.

10.07 Indemnification.  Whether or not the transactions  contemplated hereby are
consummated, the Banks shall indemnify upon demand the Agent-Related Persons and
the Issuing Banks (to the extent not  reimbursed by or on behalf of the Borrower
and without  limiting  the  obligation  of the  Borrower to do so),  pro rata in
accordance  with its Pro Rata  Share  on the date the  Borrower's  reimbursement
obligation  arises,  from  and  against  any  and all  Indemnified  Liabilities;
provided,  however,  that  no Bank  shall  be  liable  for  the  payment  to the
Agent-Related  Persons or the Issuing  Banks of any portion of such  Indemnified
Liabilities  resulting  solely from such  Person's  gross  negligence or willful
misconduct.  Without limitation of the foregoing,  each Bank shall reimburse the
Administrative  Agent and the Issuing  Banks upon demand for their ratable share
of any costs or out-of-pocket  expenses  (including  Attorney Costs) incurred by
them in connection with the preparation,  execution,  delivery,  administration,
modification,  amendment or enforcement  (whether  through  negotiations,  legal
proceedings  or  otherwise)  of,  or  legal  advice  in  respect  of  rights  or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated  by or  referred  to in this  Agreement,  to the  extent  that  the
Administrative  Agent or the applicable  Issuing Bank is not reimbursed for such
expenses by or on behalf of the Borrower.  The undertaking in this Section shall
survive the payment of all Obligations and the resignation or replacement of the
Administrative Agent or any Issuing Bank.

10.08 Administrative  Agent in Individual Capacity.  BofA and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,  trust,
financial  advisory,  underwriting  or other  business with the Borrower and its
Subsidiaries and Affiliates as though BofA were not the Administrative  Agent or
an Issuing Bank  hereunder  and without  notice to or consent of the Banks.  The
Banks acknowledge that, pursuant to such activities,  BofA or its Affiliates may
receive  information   regarding  the  Borrower  or  its  Affiliates  (including
information that may be subject to  confidentiality  obligations in favor of the
Borrower or such Subsidiary) and acknowledge that the Administrative Agent shall
be under no obligation to provide such  information to them. With respect to its
Loans and  participations in Letters of Credit,  BofA shall have the same rights
and powers  under this  Agreement as any other Bank and may exercise the same as
though it were not the Administrative Agent or an Issuing Bank.

10.09 Successor  Administrative  Agent. The Administrative Agent may, and at the
request of the Majority  Banks  shall,  resign as  Administrative  Agent upon 30
days'  notice to the  Banks.  If the  Administrative  Agent  resigns  under this
Agreement,  the  Majority  Banks shall  appoint from among the Banks a successor
agent for the Banks.  If no successor  agent is appointed prior to the effective
date of the resignation of the Administrative  Agent, the  Administrative  Agent
may appoint, after consulting with the Banks and the Borrower, a successor agent
from among the Banks.  Upon the acceptance of its appointment as successor agent
under this  Agreement,  such  successor  agent shall  succeed to all the rights,
powers  and  duties  of  the   retiring   Administrative   Agent  and  the  term
"Administrative  Agent"  shall  mean  such  successor  agent  and  the  retiring
Administrative  Agent's  appointment,  powers and duties as Administrative Agent
shall be  terminated.  After any  retiring  Administrative  Agent's  resignation
hereunder as Administrative Agent, the provisions of this Article X and Sections
11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was  Administrative  Agent under this  Agreement.  If no
successor  agent has accepted  appointment as  Administrative  Agent by the date
which  is  30  days  following  a  retiring  Administrative  Agent's  notice  of
resignation,  the retiring Administrative Agent's resignation shall nevertheless
thereupon  become effective and the Banks shall perform all of the duties of the
Administrative  Agent  under this  Agreement  until such  time,  if any,  as the
Majority Banks appoint a successor agent as provided for above.  Notwithstanding
the foregoing,  however,  BofA may not be removed as the Administrative Agent at
the  request of the  Majority  Banks  unless BofA shall also  simultaneously  be
replaced as an "Issuing Bank" hereunder  pursuant to  documentation  in form and
substance reasonably satisfactory to BofA.

10.10 Withholding Tax. (a) If any Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Bank claims  exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees  with and in favor of the  Administrative  Agent,  to deliver to the
Administrative Agent:

(i)      if such Bank claims an exemption  from, or a reduction of,  withholding
         tax under a United States tax treaty, properly completed IRS Forms 1001
         and W-8 (or any successor  forms) before the payment of any interest in
         the first  calendar year and before the payment of any interest in each
         third succeeding  calendar year during which interest may be paid under
         this Agreement;

(ii)     if such Bank claims that interest  paid under this  Agreement is exempt
         from United States withholding tax because it is effectively  connected
         with a United  States  trade or  business  of such Bank,  two  properly
         completed and executed  copies of IRS Form 4224 (or any successor form)
         before the payment of any interest is due in the first  taxable year of
         such Bank and in each succeeding taxable year of such Bank during which
         interest  may be paid  under this  Agreement,  and IRS Form W-9 (or any
         successor form); and

(iii)    such  other  form or forms as may be  required  under the Code or other
         laws  of the  United  States  as a  condition  to  exemption  from,  or
         reduction of, United States withholding tax.

Such Bank agrees to promptly  notify the  Administrative  Agent of any change in
circumstances  which would  modify or render  invalid any claimed  exemption  or
reduction.

                  (b) If any  Bank  claims  exemption  from,  or  reduction  of,
withholding  tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns,  grants a participation in, or otherwise transfers all
or part of the  Obligations  of the  Borrower to such Bank,  such Bank agrees to
notify  the  Administrative  Agent of the  percentage  amount  in which it is no
longer the beneficial  owner of Obligations of the Borrower to such Bank. To the
extent of such  percentage  amount,  the  Administrative  Agent  will treat such
Bank's IRS Form 1001 as no longer valid.

                  (c)  If  any  Bank  claiming   exemption  from  United  States
withholding  tax by filing IRS Form 4224 with the  Administrative  Agent  sells,
assigns,  grants a participation  in, or otherwise  transfers all or part of the
Obligations  of the Borrower to such Bank,  such Bank agrees to  undertake  sole
responsibility  for complying with the withholding tax  requirements  imposed by
Sections 1441 and 1442 of the Code.

                  (d) If any Bank is entitled to a reduction  in the  applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such  reduction.  If the forms or other  documentation  required by
subsection  (a) of this Section are not delivered to the  Administrative  Agent,
then the  Administrative  Agent may withhold  from any interest  payment to such
Bank not providing such forms or other documentation an amount equivalent to the
applicable withholding tax.

                  (e) If the  IRS or any  other  Governmental  Authority  of the
United  States or other  jurisdiction  asserts a claim  that the  Administrative
Agent did not  properly  withhold tax from amounts paid to or for the account of
any Bank  (because  the  appropriate  form was not  delivered,  was not properly
executed,  or because such Bank failed to notify the  Administrative  Agent of a
change in  circumstances  which  rendered the  exemption  from, or reduction of,
withholding tax ineffective,  or for any other reason) such Bank shall indemnify
the Administrative Agent fully for all amounts paid, directly or indirectly,  by
the Administrative Agent as tax or otherwise,  including penalties and interest,
and including any taxes imposed by any  jurisdiction  on the amounts  payable to
the  Administrative  Agent  under  this  Section,  together  with all  costs and
expenses  (including  Attorney  Costs).  The  obligation of the Banks under this
subsection  shall survive the payment of all  Obligations and the resignation or
replacement of the Administrative Agent.

ARTICLE XI

                                  MISCELLANEOUS

11.01  Amendments  and Waivers.  No amendment or waiver of any provision of this
Agreement  or any other  Loan  Document,  and no  consent  with  respect  to any
departure by the Borrower or the General Partner  therefrom,  shall be effective
unless the same shall be in writing and signed by the Majority  Banks (or by the
Administrative  Agent at the  written  request  of the  Majority  Banks) and the
Borrower and acknowledged by the Administrative  Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided,  however, that no such waiver,  amendment, or
consent shall,  unless in writing and signed by all the Banks,  the Borrower and
the General Partner and acknowledged by the Administrative  Agent, do any of the
following:

(a) increase or extend the Revolving  Loan  Commitment of any Bank (or reinstate
any Revolving Loan Commitment terminated pursuant to Section 9.02);

(b)  postpone  or delay  any date  fixed by this  Agreement  or any  other  Loan
Document for any payment of  principal,  interest,  fees or other amounts due to
the  Banks  (or any of them)  under  this  Agreement  or under  any  other  Loan
Document;

(c) reduce the principal of, or the rate of interest specified in this Agreement
on any Loan, or (subject to clause (ii) below) any fees or other amounts payable
under this Agreement or under any other Loan Document;

(d) change the percentage of the Revolving Loan  Commitments or of the aggregate
unpaid  principal  amount of the Loans which is required for the Banks or any of
them to take any action under this Agreement;

(e) amend this Section,  or Section  2.14,  or any  provision of this  Agreement
providing for consent or other action by all Banks; or

     (f) release any of the Guaranties or any liability of any Guarantor under a
Guaranty;

and, provided,  further, that (i) no amendment,  waiver or consent shall, unless
in writing and signed by the Issuing Banks in addition to the Majority  Banks or
all the Banks,  as the case may be,  affect the rights or duties of the  Issuing
Banks under this Agreement or any L/C-Related Document relating to any Letter of
Credit  Issued or to be  Issued by any such  Issuing  Bank,  (ii) no  amendment,
waiver or  consent  shall,  unless in writing  and signed by the  Administrative
Agent in addition to the  Majority  Banks or all the Banks,  as the case may be,
affect the rights or duties of the Administrative  Agent under this Agreement or
any other Loan Document,  and (iii) the Fee Letter may be amended,  or rights or
privileges  thereunder  waived,  in a writing  executed  solely  by the  parties
thereto.

11.02 Notices.  (a) Except as otherwise  specifically  provided in Section 3.02,
all notices,  requests and other  communications shall be in writing (including,
unless the context  expressly  otherwise  provides,  by facsimile  transmission;
provided,  that any matter transmitted by the Borrower by facsimile (i) shall be
immediately  confirmed  by a  telephone  call  to the  recipient  at the  number
specified on Schedule 11.02, and (ii) shall be followed  promptly by delivery of
a hard copy original thereof) and mailed, faxed or delivered,  to the address or
facsimile number specified for notices on Schedule 11.02; or, as directed to the
Borrower  or the  Administrative  Agent,  to such  other  address  as  shall  be
designated  by such  party in a  written  notice to the  other  parties,  and as
directed to any other party,  at such other  address as shall be  designated  by
such party in a written notice to the Borrower and the Administrative Agent.

                  (b) All such notices,  requests and communications shall, when
transmitted  by overnight  delivery,  or faxed,  be effective when delivered for
overnight  (next-day)  delivery,  or  transmitted  in legible  form by facsimile
machine,  respectively, or if mailed, upon the third Business Day after the date
deposited  into the U.S.  mail,  or if  delivered,  upon  delivery;  except that
notices  pursuant to Article II, III or X shall not be effective  until actually
received by the Administrative Agent, and notices pursuant to Article III to any
Issuing Bank shall not be effective until actually received by such Issuing Bank
at the address  specified for the "Issuing  Banks" on the  applicable  signature
page of this Agreement.

                  (c) Any agreement of the Administrative Agent and the Banks in
this  Agreement to receive  certain  notices by telephone or facsimile is solely
for the convenience and at the request of the Borrower. The Administrative Agent
and  the  Banks  shall  be  entitled  to  rely on the  authority  of any  Person
purporting to be a Person authorized by the Borrower to give such notice and the
Administrative  Agent and the Banks shall not have any liability to the Borrower
or  other   Person  on  account  of  any  action  taken  or  not  taken  by  the
Administrative  Agent or the Banks in reliance upon such telephonic or facsimile
notice.  The  obligation of the Borrower to repay the Loans and L/C  Obligations
shall  not be  affected  in  any  way or to any  extent  by any  failure  by the
Administrative  Agent  and the  Banks to  receive  written  confirmation  of any
telephonic or facsimile  notice or the receipt by the  Administrative  Agent and
the Banks of a  confirmation  which is at variance with the terms  understood by
the  Administrative  Agent and the Banks to be  contained in the  telephonic  or
facsimile notice.

11.03 No Waiver;  Cumulative  Remedies.  No failure to exercise  and no delay in
exercising,  on the part of the  Administrative  Agent or any Bank,  any  right,
remedy,  power or  privilege  under this  Agreement,  shall  operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

11.04             Costs and Expenses.  The Borrower shall:
                  ------------------

(a) whether or not the transactions contemplated hereby are consummated,  pay or
reimburse BofA (including in its capacity as Administrative Agent and an Issuing
Bank) and the  Arranger  within  five  Business  Days after  demand  (subject to
Section  5.01(e)) for all costs and expenses  incurred by BofA (including in its
capacity  as  Administrative  Agent and an  Issuing  Bank) and the  Arranger  in
connection  with  the  development,   preparation,   delivery,   administration,
syndication  and  execution  of,  and  any  amendment,   supplement,  waiver  or
modification to (in each case, whether or not consummated),  this Agreement, any
Loan Document, the Existing Credit Agreement and any other documents prepared in
connection  herewith or  therewith,  and the  consummation  of the  transactions
contemplated hereby and thereby,  including reasonable (giving due regard to the
prevailing  circumstances)  Attorney  Costs  incurred by BofA  (including in its
capacity as  Administrative  Agent and an Issuing  Bank) and the  Arranger  with
respect thereto; and

(b) pay or reimburse the Administrative  Agent, the Arranger,  each Issuing Bank
and each Bank within five  Business Days after demand for all costs and expenses
(including  Attorney Costs) incurred by them in connection with the enforcement,
attempted  enforcement,  or  preservation  of any rights or remedies  under this
Agreement or any other Loan Document during the existence of an Event of Default
or after  acceleration of the Loans  (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding).

11.05  Indemnity.  Whether  or not  the  transactions  contemplated  hereby  are
consummated,  the Borrower shall indemnify and hold the  Agent-Related  Persons,
the  Issuing  Banks,  the  Arranger  and each Bank and each of their  respective
officers, directors,  employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified  Person")  harmless  from  and  against  any and  all  liabilities,
obligations,   losses,  damages,   penalties,   actions,  judgments,  suits  and
reasonable (giving due regard to the prevailing  circumstances)  costs, charges,
expenses  and  disbursements  (including  Attorney  Costs) of any kind or nature
whatsoever  which may at any time (including at any time following  repayment of
the  Loans,  the  termination  of the  Letters  of Credit  and the  termination,
resignation  or replacement  of the  Administrative  Agent or replacement of any
Bank or Issuing  Bank) be imposed on,  incurred by or asserted  against any such
Person in any way  relating to or arising out of this  Agreement or any document
contemplated by or referred to herein, or the transactions  contemplated hereby,
or any action  taken or omitted by any such Person under or in  connection  with
any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or  arising  out of this  Agreement  or the Loans or Letters of Credit or the
actual or proposed use of the proceeds  thereof,  whether or not any Indemnified
Person is a party thereto (all the  foregoing,  collectively,  the  "Indemnified
Liabilities"); provided, that the Borrower shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified  Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified  Person. The
agreements in this Section shall survive payment of all other Obligations.

11.06 Payments Set Aside. To the extent that the Borrower makes a payment to the
Administrative  Agent or the  Banks,  or the  Administrative  Agent or the Banks
exercise  their  right of  set-off,  and such  payment or the  proceeds  of such
set-off  or any  part  thereof  are  subsequently  invalidated,  declared  to be
fraudulent or  preferential,  set aside or required  (including  pursuant to any
settlement  entered  into  by the  Administrative  Agent  or  such  Bank  in its
discretion)  to be  repaid  to a  trustee,  receiver  or  any  other  party,  in
connection with any Insolvency  Proceeding or otherwise,  then (a) to the extent
of such  recovery  the  obligation  or part  thereof  originally  intended to be
satisfied  shall be revived  and  continued  in full force and effect as if such
payment had not been made or such  set-off had not  occurred,  and (b) each Bank
severally  agrees to pay to the  Administrative  Agent upon  demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.

11.07 Successors and Assigns.  The provisions of this Agreement shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors and assigns,  except that the Borrower may not assign or transfer any
of its rights or  obligations  under this  Agreement  without the prior  written
consent of the  Administrative  Agent and each Bank.  Any attempted or purported
assignment in contravention of the preceding sentence shall be null and void.

11.08  Assignments,  Participations,  Etc.  (a) Any Bank may,  with the  written
consent of the  Borrower  (at all times  other than during the  existence  of an
Event of Default),  the Administrative Agent and the applicable Issuing Bank(s),
which  consents  shall not be  unreasonably  withheld,  at any time  assign  and
delegate to one or more Eligible Assignees  (provided that no written consent of
the Borrower,  the Administrative  Agent or an Issuing Bank shall be required in
connection with any assignment and delegation by a Bank to an Eligible  Assignee
that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part
of all, of the Loans,  the Revolving Loan  Commitments,  the L/C Obligations and
the other  rights  and  obligations  of such Bank  under  this  Agreement  in an
aggregate  minimum amount of $10,000,000 or a lesser amount as is agreed upon by
the  Administrative  Agent and the Borrower (except that no minimum amount shall
apply  to an  assignment  from a Bank  to an  Assignee  that  is  then a  Bank),
pro-rated in accordance with the respective amounts of the Facility A Commitment
and the Facility B Commitment of such Bank; provided that such Bank shall retain
an aggregate amount of not less than $10,000,000 in respect thereof, unless such
Bank assigns and  delegates all of its rights and  obligations  pursuant to this
Agreement  to one or more  Eligible  Assignees  at the time and  subject  to the
conditions set forth in this Agreement; and provided, further, however, that the
Borrower and the  Administrative  Agent may continue to deal solely and directly
with such Bank in connection  with the interest so assigned to an Assignee until
(i) written  notice of such  assignment,  together  with  payment  instructions,
addresses and related information with respect to the Assignee,  shall have been
given  to the  Borrower  and  the  Administrative  Agent  by such  Bank  and the
Assignee;  (ii) such Bank and its Assignee  shall have delivered to the Borrower
and the Administrative Agent an Assignment and Acceptance in the form of Exhibit
E ("Assignment and Acceptance"), together with any Note or Notes subject to such
assignment;  and (iii) the assignor Bank has paid to the Administrative  Agent a
processing fee in the amount of $3,500.

                  (b) From and  after  the date  that the  Administrative  Agent
notifies the assignor  Bank that it has received  (and provided its consent with
respect  to)  an  executed   Assignment   and  Acceptance  and  payment  of  the
above-referenced  processing fee, (i) the Assignee  thereunder  shall be a party
hereto and, to the extent that rights and obligations  under this Agreement have
been assigned to it pursuant to such Assignment and  Acceptance,  shall have the
rights and obligations of a Bank under the Loan Documents, and (ii) the assignor
Bank shall, to the extent that rights and  obligations  under this Agreement and
under  the other  Loan  Documents  have been  assigned  by it  pursuant  to such
Assignment  and  Acceptance,  relinquish  its  rights and be  released  from its
obligations under the Loan Documents.

                  (c) Within five  Business  Days after its receipt of notice by
the  Administrative  Agent  that it has  received  an  executed  Assignment  and
Acceptance  and payment of the  processing fee (and provided that it consents to
such  assignment  in  accordance  with  Section  11.08(a)),  if the  Assignee so
requests,  the Borrower shall execute and deliver to the  Administrative  Agent,
new  Notes  evidencing  such  Assignee's   assigned  Loans  and  Revolving  Loan
Commitments  and, if the  assignor  Bank has retained a portion of its Loans and
its  Revolving  Loan  Commitments  and so  requests,  replacement  Notes  in the
principal  amount or amounts of the Loans  retained by the  assignor  Bank (such
Notes to be in  exchange  for,  but not in  payment  of,  the Notes held by such
Bank).  Immediately upon each Assignee's making its processing fee payment under
the Assignment and  Acceptance,  this Agreement shall be deemed to be amended to
the extent,  but only to the extent,  necessary  to reflect the  addition of the
Assignee and the resulting  adjustment of the Revolving Loan Commitments arising
therefrom.  The Revolving  Loan  Commitments  allocated to each  Assignee  shall
reduce such Revolving  Loan  Commitments of the assigning Bank pro tanto and the
Administrative  Agent shall promptly  prepare and distribute a new Schedule 2.01
reflecting the new commitments.

                  (d) Any Bank may at any  time  sell to one or more  commercial
banks  or  other  Persons  not  Affiliates  of the  Borrower  (a  "Participant")
participating  interests in any Loans,  the Revolving  Loan  Commitments of that
Bank and the other  interests of that Bank (the  "originating  Bank") under this
Agreement and under the other Loan Documents;  provided,  however,  that (i) the
originating Bank's obligations under this Agreement shall remain unchanged, (ii)
the originating Bank shall remain solely responsible for the performance of such
obligations,  (iii) the Borrower, the Issuing Banks and the Administrative Agent
shall  continue  to deal  solely  and  directly  with  the  originating  Bank in
connection  with the  originating  Bank's  rights  and  obligations  under  this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to approve any
amendment  to, or any consent or waiver with  respect to, this  Agreement or any
other Loan  Document,  except to the extent  such  amendment,  consent or waiver
would require  unanimous  consent of the Banks as described in the first proviso
to Section 11.01. In the case of any such  participation,  the Participant shall
be entitled to the  benefit of Sections  4.01,  4.03 and 11.05 as though it were
also a  Bank  under  this  Agreement,  and if  amounts  outstanding  under  this
Agreement  are due and unpaid,  or shall have been declared or shall have become
due and payable upon the  occurrence  of an Event of Default,  each  Participant
shall be deemed to have the right of set-off  in  respect  of its  participating
interest  in amounts  owing  under this  Agreement  to the same extent as if the
amount of its  participating  interest were owing directly to it as a Bank under
this Agreement.

                  (e) Each Bank agrees to take normal and reasonable precautions
and  exercise  due  care to  maintain  the  confidentiality  of all  information
identified as  "confidential"  or "secret" by the Borrower and provided to it by
the  Borrower  or  any  Subsidiary,  or by  the  Administrative  Agent  on  such
Borrower's  or  Subsidiary's  behalf,  under  this  Agreement  or any other Loan
Document,  and  neither  it  nor  any of  its  Affiliates  shall  use  any  such
information  other than in connection  with or in  enforcement of this Agreement
and the other Loan Documents;  except to the extent such  information (i) was or
becomes  generally  available to the public other than as a result of disclosure
by the Bank, or (ii) was or becomes available on a non-confidential basis from a
source  other than the  Borrower,  provided  that such  source is not bound by a
confidentiality  agreement  with  the  Borrower  known  to the  Bank;  provided,
however,  that any Bank may  disclose  such  information  (A) at the  request or
pursuant to any requirement of any  Governmental  Authority to which the Bank is
subject or in connection with an examination of such Bank by any such authority;
(B) pursuant to subpoena or other court  process;  (C) when required to do so in
accordance with the provisions of any applicable  Requirement of Law; (D) to the
extent  reasonably  required in connection  with any litigation or proceeding to
which the Administrative  Agent, any Bank or their respective  Affiliates may be
party; (E) to the extent reasonably  required in connection with the exercise of
any remedy under this  Agreement or under any other Loan  Document;  (F) to such
Bank's  independent  auditors  and  other  professional  advisors;  (G)  to  any
Affiliate of such Bank, or to any Participant or Assignee,  actual or potential,
provided  that  such  Affiliate,  Participant  or  Assignee  agrees to keep such
information  confidential  to the same  extent  required of the Banks under this
Agreement, and (H) as to any Bank, as expressly permitted under the terms of any
other document or agreement  regarding  confidentiality to which the Borrower is
party or is deemed party with such Bank.

                  (f) Notwithstanding any other provision in this Agreement, any
Bank may at any time  create a  security  interest  in,  or  pledge,  all or any
portion of its rights under and interest in this  Agreement and any Note held by
it in favor of any Federal  Reserve Bank in accordance  with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR ss.203.14,  and such Federal Reserve Bank
may  enforce  such pledge or security  interest  in any manner  permitted  under
applicable law.

11.09  Set-off.  In addition to any rights and remedies of the Banks provided by
law, if an Event of Default exists or the Loans have been accelerated, each Bank
is  authorized  at any time and from time to time,  without  prior notice to the
Borrower,  any such notice being  waived by the  Borrower to the fullest  extent
permitted by law, to set off and apply any and all deposits (general or special,
time  or  demand,  provisional  or  final)  at  any  time  held  by,  and  other
indebtedness at any time owing by, such Bank to or for the credit or the account
of the  Borrower  against  any and all  Obligations  owing to such Bank,  now or
hereafter existing,  irrespective of whether or not the Administrative  Agent or
such Bank shall have made demand under this  Agreement or any Loan  Document and
although such  Obligations  may be  contingent  or  unmatured.  Each Bank agrees
promptly  to notify the  Borrower  and the  Administrative  Agent after any such
set-off and application made by such Bank; provided,  however,  that the failure
to  give  such  notice  shall  not  affect  the  validity  of such  set-off  and
application.

11.10  Notification of Addresses,  Lending Offices,  Etc. Each Bank shall notify
the  Administrative  Agent in  writing of any  changes  in the  address to which
notices to the Bank should be directed,  of addresses of any Lending Office,  of
payment  instructions  in  respect of all  payments  to be made to it under this
Agreement and of such other  administrative  information  as the  Administrative
Agent shall reasonably request.

11.11  Assignment  of  Revolving  Loans.  (a) On or  prior  to  the  Restatement
Effective  Date, the  Administrative  Agent shall notify each Bank of the amount
required to be paid by or to such Bank so that the  Revolving  Loans held by the
Banks  on the  Restatement  Effective  Date  (before  giving  effect  to any new
Revolving  Loans  made on such  date)  shall  be held by each  Bank  pro rata in
accordance  with the  Revolving  Loan  Commitments  of the  Banks  set  forth on
Schedule  2.01.  Each Bank which is required  to reduce the amount of  Revolving
Loans held by it (each such Bank, a "Decreasing Bank") shall irrevocably assign,
without recourse or warranty of any kind whatsoever (except that each Decreasing
Bank warrants that it is the legal and beneficial owner of the Loans assigned by
it under this Section 11.11 and that such Loans are held by such Decreasing Bank
free and clear of adverse  claims),  to each Bank which is  required to increase
the amount of Revolving Loans held by it (each such Bank, an "Increasing Bank"),
and each Increasing Bank shall irrevocably  acquire from the Decreasing Banks, a
portion of the principal  amount of the Revolving  Loans of each Decreasing Bank
(collectively,  the "Acquired Portion") outstanding on the Restatement Effective
Date (before  giving effect to any new Revolving  Loans made on such date) in an
amount  such that the  principal  amount  of the  Revolving  Loans  held by each
Increasing Bank and each  Decreasing  Bank as of the Restatement  Effective Date
shall be held in accordance  with each such Bank's Pro Rata Share (if any) as of
such date. Such assignment and acquisition shall be effective on the Restatement
Effective Date  automatically and without any action required on the part of any
party other than the payment by the Increasing Banks to the Administrative Agent
for the account of the  Decreasing  Banks of an  aggregate  amount  equal to the
Acquired Portion, which amount shall be allocated and paid by the Administrative
Agent at or before 12:00 p.m. San Francisco  time on the  Restatement  Effective
Date to the Decreasing  Banks pro rata based upon the  respective  reductions in
the  principal  amount  of  the  Revolving  Loans  held  by  such  Banks  on the
Restatement Effective Date (before giving effect to any new Revolving Loans made
on such date). Each of the  Administrative  Agent and the Banks shall adjust its
records accordingly to reflect the payment of the Acquired Portion.  The payment
to be made in respect of the Acquired  Portion  shall be made by the  Increasing
Banks to the Administrative  Agent in Dollars in immediately  available funds at
or before 11:00 a.m. San Francisco time on the Restatement  Effective Date, such
payment to be made by the  Increasing  Banks pro rata based upon the  respective
increases in the principal  amount of the Revolving  Loans held by such Banks on
the Restatement  Effective Date (before giving effect to any new Revolving Loans
made on such date).

(b) To the extent any of the Revolving  Loans acquired by the  Increasing  Banks
from the Decreasing Banks pursuant to Section 11.11(a) above are Eurodollar Rate
Loans  and the  Restatement  Effective  Date is not the last day of an  Interest
Period for such Loans,  the Decreasing  Banks shall be entitled to  compensation
from the Borrower as provided in Section 4.04 of the Existing  Credit  Agreement
(as if the  Borrower  had prepaid  such Loans in an amount equal to the Acquired
Portion on the Restatement  Effective  Date). The payment made by the Increasing
Banks in respect of the  Acquired  Portion  shall  constitute a Loan made by the
Increasing  Banks on the Restatement  Effective Date, and to the extent any Loan
acquired  by  the  Increasing  Banks  on the  Restatement  Effective  Date  is a
Eurodollar Rate Loan and such date is not the last day of an Interest Period for
such Loan,  such Loan shall accrue  interest at the rate then applicable to such
Loan until such last day; provided,  however, that the Borrower shall compensate
the  Increasing  Banks for an amount  equal to the amount,  if any, by which the
cost to the  Increasing  Banks of  funding  the  amount of each such Loan in the
respective  market  for the  period  from  such date to the last day of the then
Interest Period for such Loan exceeds such applicable rate.

11.12  Counterparts.  This  Agreement  may be executed in any number of separate
counterparts,  each of which, when so executed, shall be deemed an original, and
all of said  counterparts  taken  together shall be deemed to constitute but one
and the same instrument.  Transmission by telecopier of an executed  counterpart
of this Agreement  shall be deemed to constitute due and sufficient  delivery of
such  counterpart.  The parties  hereto shall  deliver to each other an original
counterpart  of this  Agreement  promptly  after  the  delivery  by  telecopier;
provided,  however,  that the  failure by any party to so  deliver  an  original
counterpart  shall not affect the sufficiency of a telecopy of such  counterpart
(and the fact that such telecopy  constitutes the due and sufficient delivery of
such counterpart), as provided above.

11.13 Severability.  The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required under this Agreement shall not
in any way affect or impair the  legality  or  enforceability  of the  remaining
provisions of this Agreement or any instrument or agreement  required under this
Agreement.

11.14 No Third Parties  Benefited.  This  Agreement is made and entered into for
the  sole  protection  and  legal  benefit  of  the  Borrower,  the  Banks,  the
Administrative  Agent and the  Agent-Related  Persons,  the  Arranger  and their
permitted  successors  and  assigns,  and no other  Person  shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.

11.15  Governing Law and  Jurisdiction.  (a) THIS AGREEMENT AND ALL NOTES ISSUED
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK;  PROVIDED  THAT THE  ADMINISTRATIVE  AGENT AND THE
BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

                  (b) ANY  LEGAL  ACTION  OR  PROCEEDING  WITH  RESPECT  TO THIS
AGREEMENT  OR ANY OTHER LOAN  DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN  DISTRICT OF NEW YORK,  AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT,  EACH OF THE BORROWER,  THE GENERAL
PARTNER,  THE  ADMINISTRATIVE  AGENT AND THE BANKS  CONSENTS,  FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
OF THE BORROWER,  THE GENERAL PARTNER,  THE  ADMINISTRATIVE  AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON  CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS  AGREEMENT OR ANY DOCUMENT  RELATED  HERETO.  THE BORROWER,  THE GENERAL
PARTNER,  THE ADMINISTRATIVE  AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF
ANY SUMMONS,  COMPLAINT OR OTHER  PROCESS,  WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.

11.16 Waiver of Jury Trial. THE BORROWER, THE GENERAL PARTNER, THE BANKS AND THE
ADMINISTRATIVE  AGENT EACH WAIVE THEIR  RESPECTIVE  RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION  BASED  UPON OR  ARISING  OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS  CONTEMPLATED HEREBY OR
THEREBY,  IN ANY ACTION,  PROCEEDING OR OTHER  LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE  PARTIES  AGAINST  ANY  OTHER  PARTY  OR  ANY  AGENT-RELATED  PERSON,
PARTICIPANT OR ASSIGNEE,  WHETHER WITH RESPECT TO CONTRACT CLAIMS,  TORT CLAIMS,
OR  OTHERWISE.   THE  BORROWER,   THE  GENERAL   PARTNER,   THE  BANKS  AND  THE
ADMINISTRATIVE  AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL  WITHOUT A JURY.  WITHOUT  LIMITING  THE  FOREGOING,  THE
PARTIES FURTHER AGREE THAT THEIR  RESPECTIVE  RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION,  COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN  DOCUMENTS OR ANY PROVISION  HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,  RENEWALS,  SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

11.17 Entire  Agreement.  From and after the  Restatement  Effective Date (if it
shall occur), this Agreement,  together with the other Loan Documents,  embodies
the entire  agreement  and  understanding  between and among the  Borrower,  the
General  Partner,  the Banks and the  Administrative  Agent,  and supersedes the
Existing Credit Agreement and all other  understandings of such Persons,  verbal
or written, relating to the subject matter hereof and thereof.

<PAGE>

DOCSLA1:344952.1

DOCSLA1:344952.1
                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be duly executed and delivered by their proper and duly  authorized
officers as of the day and year first above written.

FERRELLGAS, L.P.

By: Ferrellgas, Inc.
Its: General Partner

By: /s/ Kevin T. Kelly
Name: Kevin T. Kelly
Title: Vice President and Chief Financial Officer

FERRELLGAS, INC.

By: /s/ Kevin T. Kelly
Name: Kevin T. Kelly
Title: Vice President and Chief Financial Officer

Address for Notices for
each of the Borrower and
the General Partner:

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

BANK OF AMERICA, N.A., as Administrative Agent

By: /s/ Daryl G.Patterson
Name: Daryl G. Patterson
Title: Managing Director

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

BANK OF AMERICA, N.A., as a Bank

By: /s/ Daryl G. Patterson
Name: Daryl G. Patterson
Title: Managing Director

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

WELLS FARGO BANK (TEXAS), N.A.

By: /s/ Charles D. Kirkham
Name: Charles D. Kirkham
Title: Vice President

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

BANK ONE, NA (Chicago Office)

By: /s/ Jeanie C. Harman
Name: Jeanie C. Harman
Title: Officer

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

FIRSTAR BANK N.A.

By: /s/ Barry P. Sullivan
Name: Barry P. Sullivan
Title: Vice President

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

LASALLE BANK NATIONAL ASSOCIATION

By: /s/ Brian Peterson
Name: Brian Peterson
Title: Vice President

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

                                     PARIBAS

By: /s/ Rosine K. Matthews
Name: Rosine K. Matthews
Title: Vice President

By: /s/ Larry Robinson
Name: Larry Robinson
Title: Vice President

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

BANK OF OKLAHOMA, N.A.

By: /s/ Chris Amburgy
Name: Chris Amburgy
Title: Assistant Vice President

                       [SIGNATURES CONTINUED ON NEXT PAGE]

<PAGE>

THE FUJI BANK, LIMITED

By: /s/ Nate Ellis
Name: Nate Ellis
Title: Senior Vice President and Manager

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
<TABLE>
<CAPTION>
                                                                                                                 Page

                                TABLE OF CONTENTS

<S>                                                                                                             <C>
ARTICLE I             DEFINITIONS................................................................................2

         1.01     Certain Defined Terms..........................................................................2

         1.02     Other Interpretive Provisions.................................................................29

         1.03     Accounting Principles.........................................................................29

ARTICLE II            THE CREDITS...............................................................................30

         2.01     Amounts and Terms of Revolving Loan Commitments...............................................30

         2.02     Loan Accounts.................................................................................31

         2.03     Procedure for Borrowing.......................................................................32

         2.04     Conversion and Continuation Elections.........................................................32

         2.05     Voluntary Termination or Reduction of Revolving Loan Commitments..............................34

         2.06     Optional Prepayments..........................................................................34

         2.07     Mandatory Prepayments of Loans; Mandatory Commitment Reductions...............................35

         2.08     Repayment.....................................................................................35

         2.09     Interest......................................................................................36

         2.10     Fees..........................................................................................37

         2.11     Computation of Fees and Interest..............................................................37

         2.12     Payments by the Borrower......................................................................38

         2.13     Payments by the Banks to the Administrative Agent.............................................38

         2.14     Sharing of Payments, Etc......................................................................39

         2.15     Discretionary Swingline Loans.................................................................39

ARTICLE III           THE LETTERS OF CREDIT.....................................................................41

         3.01     The Letter of Credit Subfacility..............................................................41

         3.02     Issuance, Amendment and Renewal of Letters of Credit..........................................42

         3.03     Existing Letters of Credit; Risk Participations, Drawings and Reimbursements..................44

         3.04     Repayment of Participations...................................................................46

         3.05     Role of the Issuing Banks.....................................................................46

         3.06     Obligations Absolute..........................................................................47

         3.07     Cash Collateral Pledge........................................................................48

         3.08     Letter of Credit Fees.........................................................................48

         3.09     Uniform Customs and Practice..................................................................48

ARTICLE IV            TAXES, YIELD PROTECTION AND ILLEGALITY....................................................49

         4.01     Taxes.........................................................................................49

         4.02     Illegality....................................................................................50

         4.03     Increased Costs and Reduction of Return.......................................................50

         4.04     Funding Losses................................................................................51

         4.05     Inability to Determine Rates..................................................................52

         4.06     Survival......................................................................................52

         4.07     Replacement of Banks..........................................................................52

ARTICLE V             CONDITIONS PRECEDENT......................................................................53

         5.01     Conditions to Effectiveness...................................................................53

         5.02     Conditions to All Extensions of Credit........................................................55

ARTICLE VI            REPRESENTATIONS AND WARRANTIES............................................................56

         6.01     Corporate or Partnership Existence and Power..................................................56

         6.02     Corporate or Partnership Authorization; No Contravention......................................56

         6.03     Governmental Authorization....................................................................56

         6.04     Binding Effect................................................................................57

         6.05     Litigation....................................................................................57

         6.06     No Default....................................................................................57

         6.07     ERISA Compliance..............................................................................57

         6.08     Use of Proceeds; Margin Regulations...........................................................58

         6.09     Title to Properties...........................................................................58

         6.10     Taxes.........................................................................................58

         6.11     Financial Condition...........................................................................59

         6.12     Environmental Matters.........................................................................59

         6.13     Regulated Entities............................................................................59

         6.14     No Burdensome Restrictions....................................................................59

         6.15     Copyrights, Patents, Trademarks and Licenses, etc.............................................59

         6.16     Subsidiaries and Affiliates...................................................................60

         6.17     Insurance.....................................................................................60

         6.18     Tax Status....................................................................................60

         6.19     Full Disclosure...............................................................................60

         6.20     Fixed Price Supply Contracts..................................................................60

         6.21     Trading Policies..............................................................................61

         6.22     Year 2000.....................................................................................61

ARTICLE VII           AFFIRMATIVE COVENANTS.....................................................................61

         7.01     Financial Statements..........................................................................61

         7.02     Certificates; Other Information...............................................................62

         7.03     Notices.......................................................................................63

         7.04     Preservation of Corporate or Partnership Existence, Etc.......................................64

         7.05     Maintenance of Property.......................................................................64

         7.06     Insurance.....................................................................................65

         7.07     Payment of Obligations........................................................................65

         7.08     Compliance with Laws..........................................................................65

         7.09     Inspection of Property and Books and Records..................................................65

         7.10     Environmental Laws............................................................................66

         7.11     Use of Proceeds...............................................................................66

         7.12     Financial Covenants...........................................................................66

         7.13     Trading and Supply Policies...................................................................66

         7.14     Other General Partner Obligations.............................................................66

         7.15     Monetary Judgments............................................................................67

         7.16     Designations With Respect to Subsidiaries.....................................................67

ARTICLE VIII          NEGATIVE COVENANTS........................................................................68

         8.01     Limitation on Liens...........................................................................69

         8.02     Asset Sales...................................................................................71

         8.03     Consolidations and Mergers....................................................................72

         8.04     Acquisitions..................................................................................72

         8.05     Limitation on Indebtedness....................................................................73

         8.06     Transactions with Affiliates..................................................................73

         8.07     Use of Proceeds...............................................................................74

         8.08     Use of Proceeds - Ineligible Securities.......................................................74

         8.09     Contingent Obligations........................................................................74

         8.10     Joint Ventures................................................................................75

         8.11     Lease Obligations.............................................................................75

         8.12     Restricted Payments...........................................................................75

         8.13     Prepayments of Subordinated Indebtedness......................................................77

         8.14     Dividend and Other Payment Restrictions Affecting Subsidiaries................................77

         8.15     Change in Business............................................................................78

         8.16     Accounting Changes............................................................................78

         8.17     Limitation on Sale and Leaseback Transactions.................................................78

         8.19     Amendments of Organization Documents or Certain Debt Agreements...............................78
         8.20     Fixed Price Supply Contracts..................................................................79

         8.21     Operations through Subsidiaries...............................................................79

         8.22     Operations of MLP.............................................................................79

ARTICLE IX            EVENTS OF DEFAULT.........................................................................80

         9.01     Event of Default..............................................................................80

         9.02     Remedies......................................................................................82

         9.03     Rights Not Exclusive..........................................................................83

         9.04     Certain Financial Covenant Defaults...........................................................83

ARTICLE X             THE ADMINISTRATIVE AGENT..................................................................83

         10.01    Appointment and Authorization.................................................................83

         10.02    Delegation of Duties..........................................................................84

         10.03    Liability of Administrative Agent and Issuing Banks...........................................84

         10.04    Reliance by Administrative Agent and Issuing Banks............................................84

         10.05    Notice of Default.............................................................................85

         10.06    Credit Decision...............................................................................85

         10.07    Indemnification...............................................................................86

         10.08    Administrative Agent in Individual Capacity...................................................86

         10.09    Successor Administrative Agent................................................................86

         10.10    Withholding Tax...............................................................................87

ARTICLE XI            MISCELLANEOUS.............................................................................88

         11.01    Amendments and Waivers........................................................................88

         11.02    Notices.......................................................................................89

         11.03    No Waiver; Cumulative Remedies................................................................90

         11.04    Costs and Expenses............................................................................90

         11.05    Indemnity.....................................................................................90

         11.06    Payments Set Aside............................................................................91

         11.07    Successors and Assigns........................................................................91

         11.08    Assignments, Participations, Etc..............................................................91

         11.09    Set-off.......................................................................................93

         11.10    Notification of Addresses, Lending Offices, Etc...............................................94

         11.11    Assignment of Revolving Loans.................................................................94

         11.12    Counterparts..................................................................................95

         11.13    Severability..................................................................................95

         11.14    No Third Parties Benefited....................................................................95

         11.15    Governing Law and Jurisdiction................................................................95

         11.16    Waiver of Jury Trial..........................................................................96

         11.17    Entire Agreement..............................................................................96

</TABLE>

<PAGE>
An extra  Section break has been inserted  above this  paragraph.  Do not delete
this   Section   break   if  you   plan  to  add  text   after   the   Table  of
Contents/Authorities.    Deleting    this   break    will    cause    Table   of
Contents/Authorities  headers and footers to appear on any pages  following  the
Table of Contents/Authorities.

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