Document:

Exhibit 4.2

 

FERRELLGAS PARTNERS, L.P.

 

FERRELLGAS PARTNERS FINANCE CORP.,

 

as Issuers

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

 

$280,000,000

85/8% Senior Notes due 2020

 

 

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated as of April 13, 2010

 

 

to Indenture dated as of April 13, 2010

 

 

FIRST SUPPLEMENTAL
INDENTURE, dated as of April 13, 2010 (the “First Supplemental
Indenture”), among Ferrellgas Partners, L.P., a Delaware limited partnership
(the “Partnership”), and Ferrellgas Partners Finance Corp., a Delaware
corporation (“Finance Corp.” and, together with the Partnership, the “Issuers”)
and U.S. BANK NATIONAL ASSOCIATION, as trustee under the Base Indenture
referred to below (hereinafter called the “Trustee”).

 

RECITALS
OF THE ISSUERS

 

WHEREAS, the Issuers entered
into an Indenture dated as of April 13, 2010 (the “Base Indenture” and, as
supplemented by this First Supplemental Indenture, the “Indenture”) with the
Trustee, for the purposes of providing for the issuance from time to time of
senior unsecured debentures, notes or other evidences of indebtedness of the
Issuers, unlimited as to principal amount, to bear such rates of interest, to
mature at such time or times, to be issued in one or more series and to have
such other provisions as authorized by or pursuant to the authority granted in
one or more resolutions of the Boards of Directors of the Issuers;

 

WHEREAS, the Issuers propose
to issue $280,000,000 aggregate principal amount of the Issuers’ 85/8% Senior Notes due 2020 (such Securities being referred
to herein as the “Initial Notes”);

 

WHEREAS, Section 901 of
the Base Indenture provides that without the consent of the Holders of the
Securities of any series issued under the Base Indenture, the Issuers, when
authorized by a Board Resolution, and the Trustee may enter into one or more
indentures supplemental to the Base Indenture to, among other things (a) add
covenants and Events of Default for the benefit of the Holders of all or any
series of Securities, (b) add to, change or eliminate any of the
provisions of the Indenture, provided that any such addition, change or
elimination shall become effective only after there are no such Securities of
any series entitled to the benefit of such provision outstanding, (c) establish
the forms or terms of Securities of any series issued under the Indenture, and (d) cure
any ambiguity or correct any defect or inconsistency in the Indenture;

 

WHEREAS, pursuant to Section 201
of the Base Indenture, the Issuers desire to execute this First Supplemental
Indenture to establish the form, and pursuant to Section 301 of the Base
Indenture, to provide for the issuance, of the Notes;

 

WHEREAS, this First
Supplemental Indenture shall be subject to and governed by the provisions of
the Trust Indenture Act;

 

WHEREAS, the entry into this
First Supplemental Indenture by the parties hereto is in all respects
authorized by the provisions of the Base Indenture; and

 

WHEREAS, all things
necessary have been done to make this First Supplemental Indenture, when
executed and delivered by the Issuers, the legal, valid and binding agreement
of the Issuers, in accordance with its terms;

 

2

 

NOW, THEREFORE, THIS FIRST
SUPPLEMENTAL INDENTURE WITNESSETH:

 

For and in consideration of
the premises and the purchase of the Notes by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Notes, as follows:

 

SECTION 1.           Application of
this First Supplemental Indenture

 

(A)          Notwithstanding any other
provision of this First Supplemental Indenture, the provisions of this First
Supplemental Indenture are expressly and solely for the benefit of the Holders
of the Notes and any such provisions shall not be deemed to apply to any other
Securities issued under the Indenture and shall not be deemed to amend, modify
or supplement the Base Indenture for any purpose other than with respect to the
Notes.

 

(B)           All Initial Notes and
Additional Notes, if any, will be treated as a single class for all purposes of
the Indenture, including waivers, amendments, redemptions and offers to
purchase.

 

(C)           To the extent that the
provisions of this First Supplemental Indenture conflict with any provision of
the Base Indenture, the provisions of this First Supplemental Indenture shall
govern and be controlling.

 

(D)          All capitalized terms used
in this First Supplemental Indenture not otherwise defined herein that are
defined in the Base Indenture shall have the meanings set forth therein.

 

SECTION 2.           Terms and Form of
the Notes

 

(A)          The following terms relating
to the Notes are hereby established:

 

(1)           The aggregate principal
amount of the Initial Notes that may be authenticated and delivered under the
Indenture on the Issue Date shall be $280,000,000.  The Issuers may from time to time, without
the consent of the Holders of Notes, issue Additional Notes having the same
ranking and the same interest rate, maturity and other terms as the Initial
Notes.  Any Additional Notes and the
existing Notes will constitute a single series under the Indenture and all
references to the Notes shall include the Additional Notes unless the context
otherwise requires.

 

(2)           The entire outstanding
principal of the Notes shall be payable on June 15, 2020.

 

(3)           The rate at which the Notes
shall bear interest shall be 8.625% per annum; the date from which interest
shall accrue on the Notes shall be April 13, 2010 or the most recent
Interest Payment Date to which interest has been paid or, if no interest has
been paid, from the date of issuance; the Interest Payment Dates for the Notes
shall be June 15 and December 15 of each year, beginning June 15,
2010, or if any such day is not a Business Day, on the next succeeding Business
Day; provided that if there is no existing
Default in the payment of interest, and if the Notes are authenticated between
a record date referred to on the face thereof and the next succeeding Interest
Payment Date, 

 

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interest shall accrue from
such next succeeding Interest Payment Date; the interest so payable will be
paid, in immediately available funds, to the Persons who are registered Holders
of the Notes (or one or more Predecessor Securities) at the close of business
on the Regular Record Date for such interest, which shall be June 1 and December 1,
as the case may be, next preceding such Interest Payment Date, even if such
Notes are canceled after such record date and on or before such Interest
Payment Date, except as provided in Section 307 with respect to defaulted
interest. The Issuers will pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess of
the rate then in effect; they will pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. 
Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Notes will be payable as to principal, premium, if any, and
interest at the office or agency of the Issuers maintained for such purpose
within the City and State of New York, or, at the option of the Issuers,
payment of interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium on, all Global Securities
the Holders of which will have provided wire transfer instructions to the
Issuers or the Paying Agent.  Such
payment will be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.

 

(4)           The Notes shall be issuable
in whole in the registered form of one or more Global Securities (without
coupons), and the Depository for such Global Securities shall be The Depository
Trust Company, New York, New York.

 

(5)           The Notes shall be in
denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

(B)           The Notes and the Trustee’s
certificate of authentication shall be substantially in the form of Exhibit A
to this First Supplemental Indenture.

 

(1)           Global Securities.  Notes issued in global form will be
substantially in the form of Exhibit A hereto (including the Global
Security Legend thereon and the “Schedule of Exchanges of Interests in the
Global Security” attached thereto).  Each
Global Security will represent such of the outstanding Notes as will be
specified therein and each shall provide that it represents the aggregate
principal amount of outstanding Notes from time to time endorsed thereon and
that the aggregate principal amount of outstanding Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions.  Any
endorsement of a Global Security to reflect the amount of any increase or decrease
in the aggregate principal amount of outstanding Notes represented thereby will
be made by the Trustee or the Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section 305
of the Indenture.

 

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(2)           Definitive Securities.  Notes issued in definitive form will be
substantially in the form of Exhibit A hereto (but without the
Global Security Legend thereon and without the “Schedule of Exchanges of
Interests in the Global Security” attached thereto).

 

(3)           Transfer and Exchange of
Beneficial Interests in the Global Securities.  The transfer and exchange of beneficial
interests in a Global Security will be effected through the Depositary, in accordance
with the provisions of the Indenture and the Applicable Procedures.

 

(4)           Transfer or Exchange of
Beneficial Interests for Definitive Securities.  If any one of the events listed in the eighth
paragraph of Section 305 of the Indenture has occurred regarding an
exchange for Definitive Securities or the Issuers have elected pursuant to Section 305
of the Indenture to cause the issuance of Definitive Securities, transfers or
exchanges of beneficial interests in a Global Security for a Definitive Security
shall be effected.  If any Holder of a
beneficial interest in a Global Security proposes to exchange such beneficial
interest for a Definitive Security or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Security, then
the Trustee will, upon written instruction, cause the aggregate principal
amount of the applicable Global Security to be reduced accordingly pursuant to Section 309
of the Indenture, and the Issuers will execute and, upon receipt of an Issuer
Order, the Trustee will authenticate and deliver to the Person designated in
the instruction to the Trustee a Definitive Security in the appropriate
principal amount. Any Definitive Securities issued in exchange for a beneficial
interest pursuant to this paragraph (4) will be registered in such name or
names and in such authorized denomination or denominations as the holder of
such beneficial interest requests through instructions to the Registrar from or
through the applicable Depositary and the Participant or Indirect Participant.
The Trustee will deliver such Definitive Securities to the Persons in whose
names such Securities are so registered.

 

(5)           Transfer and Exchange of
Definitive Securities for Beneficial Interests.  A Holder of a Definitive Security may
exchange such Definitive Security for a beneficial interest in a Global
Security or transfer such Definitive Security to a Person who takes delivery
thereof in the form of a beneficial interest in a Global Security at any time.
Upon receipt of a written request for such an exchange or transfer, the Trustee
will cancel the applicable Definitive Security and increase or cause to be
increased the aggregate principal amount of the relevant Global Security.

 

(6)           Transfer and Exchange of
Definitive Securities for Definitive Securities.  Upon request by a Holder of Definitive
Securities, the Registrar will register the transfer or exchange of Definitive
Securities. Prior to such registration of transfer or exchange, the requesting
Holder must present or surrender to the Registrar the Definitive Securities
duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar and duly executed by such Holder or by its
attorney, duly authorized in writing.

 

(C)           In accordance with Section 303
of the Indenture, upon delivery of an Issuer Order on the Issue Date, the
Trustee shall authenticate the Initial Notes for original issue up to 

 

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$280,000,000 in aggregate
principal amount and, upon delivery of any Issuer Order at any time and from
time to time thereafter, the Trustee shall authenticate Additional Notes for
original issue in an aggregate principal amount specified in such Issuer Order.

 

SECTION 3.           Definitions

 

The definitions contained in
Section 101 of Article I, as amended, shall apply to the Securities.

 

(A)          Section 101 of Article I
of the Base Indenture shall be amended to add new definitions thereto in
appropriate alphabetical sequences, as follows:

 

“Accounts
Receivable Securitization” means a financing arrangement involving
the transfer or sale of accounts receivable of the Partnership and its
Restricted Subsidiaries 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 Partnership and its Restricted Subsidiaries or
any Affiliate of the Partnership and its Restricted Subsidiaries (other than
any such SPE) except to the extent of the breach of a representation or warranty
by the Partnership and its Restricted Subsidiaries 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.

 

“Additional
Notes” means additional Notes
(other than the Initial Notes) issued from time to time under this Indenture in
accordance with Sections 303 and 1009 hereof, as part of the same series as the
Initial Notes.

 

“Agent” means any
Registrar, co-registrar, Paying Agent or additional paying agent.

 

“Applicable
Procedures” means, with respect to any transfer or exchange
of, or for beneficial interests in, any Global Security, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer or exchange.

 

“Asset
Acquisition” means the following (in all cases, including assets
acquired through a Flow-Through Acquisition):

 

(1)           an Investment by the
Partnership or any Restricted Subsidiary of the Partnership in any other Person
pursuant to which the Person shall become a Restricted Subsidiary of the
Partnership, or shall be merged with or into the Partnership or any Restricted
Subsidiary of the Partnership;

 

(2)           the acquisition by the
Partnership or any Restricted Subsidiary of the Partnership of the assets of any
Person, other than a Restricted Subsidiary of the Partnership, which constitute
all or substantially all of the assets of such Person; or

 

(3)           the acquisition by the
Partnership or any Restricted Subsidiary of the Partnership of any division or
line of business of any Person, other than a Restricted Subsidiary of the
Partnership.

 

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“Asset
Sale” means either of the following, whether in a single transaction or a
series of related transactions:

 

(1)           the sale, lease, conveyance
or other disposition of any assets other than (a) sales, leases or
transfers of assets in the ordinary course of business (including but not
limited to the sales of inventory in the ordinary course of business), and (b) sales
of accounts receivable under any Accounts Receivable Securitization; or

 

(2)           the issuance or sale of
Capital Stock of any direct Subsidiary.

 

Notwithstanding the
preceding, none of the following items will be deemed to be an Asset Sale:

 

(1)           any sale, lease or transfer
of assets or Capital Stock by the Partnership or any of its Restricted
Subsidiaries to the Issuers, the Operating Partnership, or a Restricted
Subsidiary;

 

(2)           any sale or transfer of
assets or Capital Stock by the Partnership or any of its Restricted
Subsidiaries to any entity in exchange for other assets used in a related
business and/or cash (provided, that
such cash portion is at least 75% of the difference between the value of the
assets being transferred and the value of the assets being received) and having
a fair market value, as determined in good faith by an authorized financial
officer of the General Partner, reasonably equivalent to the fair market value
of the assets so transferred;

 

(3)           any sale, lease or transfer
of assets in accordance with Permitted Investments;

 

(4)           the sale, lease, conveyance
or other disposition of all or substantially all of the assets of the
Partnership; provided, that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Partnership will be governed by Section 1015 hereof and/or Section 801
hereof and not Section 1010 hereof;

 

(5)           the transfer or disposition
of assets that are permitted Restricted Payments;

 

(6)           any sale, lease or transfer
of assets pursuant to a sale and leaseback transaction, provided
that the fair market value of all assets so sold, leased or transferred shall
not exceed $25 million from and after the Issue Date;

 

(7)           sales or transfers of assets
not otherwise covered which do not generate proceeds in excess of $2.5 million;
and

 

(8)           sales or transfers of
accounts receivable under an Accounts Receivable Securitization.

 

“Available
Cash” as to any quarter means:

 

(1)           the sum of:

 

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(a)           all cash receipts of the
Partnership during such quarter from all sources (including, without
limitation, distributions of cash received from the Operating Partnership, cash
proceeds from Interim Capital Transactions, but excluding cash proceeds from
Termination Capital Transactions, and borrowings made under the Credit
Facilities); and

 

(b)           any reduction with respect
to such quarter in a cash reserve previously established pursuant to clause (2)(b) below
(either by reversal or utilization) from the level of such reserve at the end
of the prior quarter;

 

(2)           less the sum of:

 

(a)           all cash disbursements of
the Partnership during such quarter, including, without limitation,
disbursements for operating expenses, taxes, if any, debt service (including,
without limitation, the payment of principal, premium and interest), redemption
of Capital Stock of the Partnership, capital expenditures, contributions, if
any, to the Operating Partnership and cash distributions to partners of the
Partnership (but only to the extent that such cash distributions to partners
exceed Available Cash for the immediately preceding quarter); and

 

(b)           any cash reserves
established with respect to such quarter, and any increase with respect to such
quarter in a cash reserve previously established pursuant to this clause (2)(b) from
the level of such reserve at the end of the prior quarter, in such amounts as
the General Partner determines in its reasonable discretion to be necessary or
appropriate (i) to provide for the proper conduct of the business of the
Partnership or the Operating Partnership (including, without limitation,
reserves for future capital expenditures), (ii) to provide funds for
distributions with respect to Capital Stock of the Partnership in respect of
any one or more of the next four quarters or (iii) because the
distribution of such amounts would be prohibited by applicable law or by any
loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which the Partnership or the Operating Partnership
is a party or by which any of them is bound or its assets are subject;

 

(3)           plus the lesser of (a) an
amount as calculated in accordance with clauses (1) and (2) above for
the Partnership or its Restricted Subsidiaries for the first 45 days of the
quarter during which such Restricted Payment is made (rather than the quarter
for which clauses (1) and (2) were calculated) and (b) an amount
of working capital Indebtedness that the Partnership or its Restricted
Subsidiaries could have incurred on or before the 45th day after the last day
of the quarter used to calculate clauses (1) and (2) above;

 

provided, however, that Available Cash
attributable to any Restricted Subsidiary of the Partnership will be excluded
to the extent dividends or distributions of Available Cash by the Restricted
Subsidiary are not at the date of determination permitted by the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
other regulation.

 

8

 

Notwithstanding the
foregoing, (x) disbursements (including, without limitation, contributions
to the Operating Partnership or disbursements on behalf of the Operating
Partnership) made or reserves established, increased or reduced after the end
of any quarter but on or before the date on which any Restricted Payment
requiring a determination of Available Cash for such quarter is made shall be
deemed to have been made, established, increased or reduced, for purposes of
determining Available Cash, with respect to such quarter if the General Partner
so determines, and (y) “Available Cash” shall not include any cash
receipts or reductions in reserves or take into account any disbursements made
or reserves established in each case after the date of liquidation of the Partnership.
Taxes paid by the Partnership on behalf of, or amounts withheld with respect
to, all or less than all of the partners shall not be considered cash
disbursements of the Partnership that reduce Available Cash, but the payment or
withholding thereof shall be deemed to be a distribution of Available Cash to
the partners. Alternatively, in the discretion of the General Partner, such
taxes (if pertaining to all partners) may be considered to be cash
disbursements of the Partnership which reduce Available Cash, but the payment
or withholding thereof shall not be deemed to be a distribution of Available
Cash to such partners.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular “Person” (as that term is used in Section 13(d)(3) of
the Exchange Act), such “Person” will be deemed to have beneficial ownership of
all securities that such “Person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.  The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning.

 

“Borrowing Base” means, as of any date, an
amount equal to:

 

(1)           80% of the face amount of
all accounts receivable owned by the Partnership and its Subsidiaries as of the
end of the most recent month preceding such date that were not more than 90
days past due; plus

 

(2)           70% of the value of all
inventory owned by the Partnership and its Subsidiaries as of the end of the
most recent month preceding such date,

 

in
each case, calculated on a consolidated basis and in accordance with GAAP.

 

“Business
Day” means any day other than a Legal Holiday.

 

“Capital Lease” means,
generally, any lease of any property which would be required to be classified
and accounted for as a capital lease on a balance sheet of the lessor.

 

“Capital
Stock” means of any Person any capital stock, partnership interest,
membership interest, or equity interest of any kind.

 

“Change of Control” means

 

(1)           the sale, lease, conveyance
or other disposition of all or substantially all of the assets of the
Partnership  or the Operating Partnership
to any entity other than to a Related Party;

 

9

 

(2)           the liquidation or
dissolution of the Partnership or the General Partner, or a successor to the
General Partner; or

 

(3)           any transaction or series of
transactions that results in a Person other than a Related Party beneficially
owning in the aggregate, directly or indirectly, more than 35% of the voting
stock of the General Partner or a successor to the General Partner and such
percentage is more than the percentage of voting stock that is owned by the
Related Party or a successor to the Related Party.

 

“Consolidated Cash Flow Available for Fixed Charges” means,
with respect to the Partnership and its Restricted Subsidiaries, for any
period, the sum of, without duplication, the amounts for the period, taken as
single accounting, of:

 

(1)           Consolidated Net Income;

 

(2)           Consolidated Non-cash
Charges;

 

(3)           Consolidated Interest
Expense; and

 

(4)           Consolidated Income Tax
Expense.

 

“Consolidated
Fixed Charge Coverage Ratio” means, with respect to the
Partnership and its Restricted Subsidiaries, the ratio of (y) the
aggregate amount of Consolidated Cash Flow Available for Fixed Charges of the
Person for the four full fiscal quarters immediately preceding the date of the
transaction (the “Transaction Date”) giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio (the “Four Quarter Period”), to (z) the
aggregate amount of Consolidated Fixed Charges of the Person for the Four
Quarter Period.  In addition to and
without limitation of the foregoing, for purposes of this definition,
“Consolidated Cash Flow Available for Fixed Charges” and “Consolidated Fixed
Charges” shall be calculated after giving effect on a pro forma basis for the
period of the calculation to, without duplication:

 

(1)           the incurrence or repayment
of any Indebtedness, excluding the incurrence of revolving credit borrowings
and repayments of revolving credit borrowings (other than the incurrence and
repayment of any revolving credit borrowings the proceeds of which are used for
Asset Acquisitions or Growth Related Capital Expenditures of the Partnership or
any of its Restricted Subsidiaries and, in the case of any incurrence or
revolving credit borrowings, the application of the net proceeds thereof) during
the period commencing on the first day of the Four Quarter Period to and
including the Transaction Date (the “Reference Period”), including, without
limitation, the incurrence of the Indebtedness giving rise to the need to make
the calculation (and the application of the net proceeds thereof), as if the
incurrence (and application) occurred on the first day of the Reference Period;
and

 

(2)           any Asset Sales or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make the calculation as a result of the Partnership or one of
its Restricted Subsidiaries, including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition, incurring, assuming or
otherwise being liable for Acquired Indebtedness) occurring during the
Reference Period, 

 

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as if the Asset Sale or
Asset Acquisition occurred on the first day of the Reference Period; provided, however, that:

 

(a)           Consolidated Fixed Charges
will be reduced by amounts attributable to businesses or assets that are so
disposed of only to the extent that the obligations giving rise to such
Consolidated Fixed Charges would no longer be obligations contributing to the
Consolidated Fixed Charges subsequent to the date of determination of the
Consolidated Fixed Charge Coverage Ratio;

 

(b)           Consolidated Cash Flow
Available for Fixed Charges generated by an acquired business or asset shall be
determined by the actual gross profit, which is equal to revenues minus cost of
goods sold, of the acquired business or asset during the immediately available
preceding four full fiscal quarters occurring in the Reference Period, minus
the pro forma expenses that would have been incurred by the Partnership and its
Restricted Subsidiaries in the operation of the acquired business or asset
during the period computed on the basis of personnel expenses for employees
retained or to be retained by the Partnership and its Restricted Subsidiaries
in the operation of the acquired business or asset and non-personnel costs and
expenses incurred by or to be incurred by the Partnership and its Restricted
Subsidiaries based upon the operation of the Partnership’s business, all as
determined in good faith by an authorized financial officer of the General
Partner; and

 

(c)           Consolidated Cash Flow
Available for Fixed Charges shall not include the impact of any nonrecurring
cash charges incurred in connection with a restructuring, reorganization or
other similar transaction, as determined in good faith by an authorized
financial officer of the General Partner.

 

Furthermore, subject to the
following paragraph, in calculating “Consolidated Fixed Charges” for purposes
of determining the “Consolidated Fixed Charge Coverage Ratio”:

 

(1)           interest on outstanding
Indebtedness, other than Indebtedness referred to in the point below,
determined on a fluctuating basis as of the last day of the Four Quarter Period
and which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on that date;

 

(2)           only actual interest
payments associated with Indebtedness incurred in accordance with clause (4) of
the definition of Permitted Indebtedness and all Permitted Refinancing
Indebtedness in respect thereof, during the Four Quarter Period shall be
included in the calculation; and

 

(3)           if interest on any
Indebtedness actually incurred on the date may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rates, then the interest rate in effect on the
last day of the Four Quarter Period will be deemed to have been in effect
during the period.

 

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“Consolidated Fixed Charges” means, with respect to the
Partnership and its Restricted Subsidiaries for any period, the sum of, without
duplication:

 

(1)           the amounts for such period
of Consolidated Interest Expense; and

 

(2)           the product of:

 

(a)           the aggregate amount of
dividends and other distributions paid or accrued during the period in respect
of Preferred Stock and Redeemable Capital Stock of the Partnership and its
Restricted Subsidiaries on a consolidated basis; and

 

(b)           a fraction, the numerator of
which is one and the denominator of which is one less the then applicable
current combined federal, state and local statutory tax rate, expressed as a
percentage.

 

“Consolidated Income Tax Expense” means, with respect to the
Partnership and its Restricted Subsidiaries for any period, the provision for
federal, state, local and foreign income taxes of the Partnership and its
Restricted Subsidiaries for the period as determined on a consolidated basis in
accordance with GAAP.

 

“Consolidated Interest Expense” means, with respect to the
Partnership and its Restricted Subsidiaries, for any period, without
duplication, the sum of:

 

(1)           the interest expense of the
Partnership and its Restricted Subsidiaries for the period as determined on a
consolidated basis in accordance with GAAP, including, without limitation:

 

(2)           any amortization of debt
discount;

 

(3)           the net cost under interest
rate agreements;

 

(4)           the interest portion of any
deferred payment obligation;

 

(5)           all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers’
acceptance financing;

 

(6)           all accrued interest for all
instruments evidencing Indebtedness; and

 

(7)           the interest component of
Capital Leases paid or accrued or scheduled to be paid or accrued by the
Partnership and its Restricted Subsidiaries during the period as determined on
a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means the net income of the
Partnership and its Restricted Subsidiaries, as determined on a consolidated
basis in accordance with GAAP and as adjusted to exclude:

 

(1)           net after-tax extraordinary
gains or losses;

 

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(2)           net after-tax gains or
losses attributable to Asset Sales or sales of receivables under any Accounts
Receivable Securitization;

 

(3)           the net income or loss of
any Person which is not a Restricted Subsidiary and which is accounted for by
the equity method of accounting; provided, that
Consolidated Net Income shall include the amount of dividends or distributions
actually paid to the Partnership or any Restricted Subsidiary;

 

(4)           the net income or loss prior
to the date of acquisition of any Person combined with the Partnership or any
Restricted Subsidiary in a pooling of interest;

 

(5)           the net income of any
Restricted Subsidiary to the extent that dividends or distributions of that net
income are not at the date of determination permitted by the terms of its
charter or any judgment, decree, order, statute, rule or other regulation;
and

 

(6)           the cumulative effect of any
changes in accounting principles.

 

“Consolidated Net Tangible Assets” means as of any date of
determination, the Total Assets of the Partnership and the Restricted
Subsidiaries as would be shown on a consolidated balance sheet of the
Partnership and the Restricted Subsidiaries prepared in accordance with GAAP as
of that date less applicable reserves reflected in such balance sheet, after
deducting the following amounts: (a) all current liabilities reflected in
such balance sheet, and (b) all goodwill, trademarks, patents, unamortized
debt discounts and expenses and other like intangibles reflected in such
balance sheet.

 

“Consolidated Non-Cash Charges” means, with
respect to the Partnership and its Restricted Subsidiaries for any period, the
aggregate (1) depreciation, (2) amortization,  (3) non-cash employee compensation
expenses of the Partnership or its Restricted Subsidiaries for such period, and
(4) any non-cash charges resulting from writedowns of non-current assets,
in each case which reduces the Consolidated Net Income of the Partnership and
its Restricted Subsidiaries for the period, as determined on a consolidated
basis in accordance with GAAP.

 

“Credit Agreement” means that Fifth Amended
and Restated Credit Agreement, dated as of April 22, 2005, among the
Operating Partnership, the General Partner, Bank of America, N.A., as agent,
and the other financial institutions party thereto as heretofore amended (as
amended, the “Existing Credit Agreement”),
as the Existing Credit Agreement may be amended, restated, modified, renewed,
refunded, replaced or refinanced from time to time.

 

“Credit
Facilities” means, one or more debt facilities (including,
without limitation, the facilities evidenced by the Credit Agreement) or
commercial paper facilities, or indentures, in each case with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.

 

“Custodian” means the
Trustee, as custodian with respect to the Notes in global form, or any
successor entity thereto.

 

13

 

“Definitive
Security” means a certificated
Security registered in the name of the Holder thereof and issued in accordance
with Section 305 hereof, substantially in the form of Exhibit A
to the First Supplemental Indenture except that such Security shall not bear
the Global Security Legend and shall not have the “Schedule of Exchanges of
Interests in the Global Security” attached thereto.

 

“Designation Amount” means, with respect to the designation
of a Restricted Subsidiary or a newly acquired or formed Subsidiary as an
Unrestricted Subsidiary, an amount equal to the sum of:

 

(1)           the net book value of all
assets of the Subsidiary at the time of the designation in the case of a
Restricted Subsidiary; and

 

(2)           the cost of acquisition or
formation in the case of a newly acquired or formed Subsidiary.

 

“Equity
Offering” means a public offering or private placement of
partnership interests (other than interests that are mandatorily redeemable)
of:

 

(1)           any entity that directly or
indirectly owns equity interests in the Partnership, to the extent the net
proceeds are contributed to the Partnership;

 

(2)           any Subsidiary of the
Partnership to the extent the net proceeds are distributed, paid, lent or
otherwise transferred to the Partnership that results in the net proceeds to
the Partnership of at least $20 million; or

 

(3)           the Partnership.

 

A private placement of
partnership interests will not be deemed an Equity Offering unless net proceeds
of at least $20 million are received.

 

“Existing
Notes” means the Operating Partnership’s (1) $450,000,000
principal amount of 6.75% Senior Notes due 2014 and (2) $300,000,000
principal amount of 9.125% Senior Notes due 2017.

 

“Euroclear” means
Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

 

“Flow-Through
Acquisition” means an acquisition by the General Partner or its
parent from a Person that is not an Affiliate of the General Partner, its parent
or the Partnership, of property (real or personal), assets or equipment
(whether through the direct purchase of assets or the Capital Stock of the
Person owning such assets) in a permitted line of business, which is promptly
sold, transferred or contributed by the General Partner or its parent to the
Partnership or one of its Subsidiaries.

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board 

 

14

 

or
in such other statements by such other entity as have been approved by a
significant segment of the accounting profession, in each case, which are in
effect on the Issue Date.

 

“Global Security
Legend” means the following legend, which is required to be placed on all
Global Securities issued under this Indenture:

 

“THIS GLOBAL SECURITY IS
HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR
ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS
NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE
INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT
TO THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 309 OF THE INDENTURE AND (IV) THIS GLOBAL
SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE ISSUERS.

 

UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) (“DTC”), TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.”

 

“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).

 

“Indirect
Participant” means a Person who holds a beneficial interest in a
Global Security through a Participant.

 

15

 

“Initial
Notes” means the first $280,000,000 aggregate principal amount of Notes
issued under this Indenture on the Issue Date.

 

“Interim
Capital Transactions” means (1) borrowings, refinancings or
refundings of Indebtedness and sales of debt securities (other than for working
capital purposes and other than for items purchased on open account in the
ordinary course of business) by the Partnership or the Operating Partnership, (2) sales
of Capital Stock of the Partnership by the Partnership or the Operating
Partnership and (3) sales or other voluntary or involuntary dispositions
of any assets of the Partnership or the Operating Partnership (other than (x) sales
or other dispositions of inventory in the ordinary course of business, (y) sales
or other dispositions of other current assets including, without limitation,
receivables and accounts and (z) sales or other dispositions of assets as
a part of normal retirements or replacements), in each case prior to the
commencement of the dissolution and liquidation of the Partnership.

 

“Investment” means as
applied to any Person:

 

(1)           any direct or indirect
purchase or other acquisition by the Person of stock or other securities of any
other Person; or

 

(2)           any direct or indirect loan,
advance or capital contribution by the Person to any other Person and any other
item which would be classified as an “investment” on a balance sheet of the
Person prepared in accordance with GAAP, including without limitation any
direct or indirect contribution by the Person of property or assets to a joint
venture, partnership or other business entity in which the Person retains an
interest, it being understood that a direct or indirect purchase or other
acquisition by the Person of assets of any other Person, other than stock or
other securities, shall not constitute an “Investment” for purposes of this
Indenture.

 

The
amount classified as Investments made during any period shall be the aggregate
cost to the Partnership and its Restricted Subsidiaries of all the Investments
made during the 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 the Investments and without regard to the existence of any
undistributed earnings or accrued interest with respect thereto accrued after
the respective dates on which the Investments were made, less any net return of
capital realized during the period upon the sale, repayment or other
liquidation of the Investments, determined in accordance with GAAP, but without
regard to any amounts received during the period as earnings (in the form of
dividends not constituting a return of capital, interest or otherwise) on the
Investments or as loans from any Person in whom the Investments have been made.

 

“Issue Date”
means April 13, 2010.

 

“Legal Holiday” means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a Place of Payment are
authorized by law, regulation or executive order to remain closed.  If a payment date is a Legal Holiday at a
Place of Payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.

 

16

 

“Lien” means, with
respect to any asset, any mortgage, lien (statutory or otherwise), pledge,
charge, security interest, hypothecation, assignment for security or other
encumbrance of any kind in respect of such asset.  A Person shall be deemed to own subject to a
Lien any asset which such Person has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement, capital lease or
other title retention agreement.

 

“Net
Amount of Unrestricted Investment” means, without duplication,
the sum of:

 

(1)           the aggregate amount of all
Investments made after the Issue Date pursuant to clause (3) of the
definition of Permitted Investment hereto, computed as provided in the last
sentence of the definition of Investment herein; and

 

(2)           the aggregate of all
Designation Amounts in connection with the designation of Unrestricted
Subsidiaries, less all Designation Amounts in respect of Unrestricted
Subsidiaries which have been designated as Restricted Subsidiaries and
otherwise reduced in a manner consistent with the provisions of the last
sentence of the definition of Investment herein.

 

“Net Proceeds” means, with respect to any Asset Sale, the
proceeds therefrom in the form of cash or cash equivalents including payments
in respect of deferred payment obligations when received in the form of cash or
cash equivalents, except to the extent that the deferred payment obligations
are financed or sold with recourse to the Partnership or any of its Restricted
Subsidiaries, net of:

 

(1)           brokerage commissions and
other fees and expenses related to the Asset Sale, including, without
limitation, fees and expenses of legal counsel and accountants and fees,
expenses, discounts or commissions of underwriters, placement agents and
investment bankers;

 

(2)           provisions for all taxes
payable as a result of the Asset Sale;

 

(3)           amounts required to be paid
to any Person, other than the Partnership or any Restricted Subsidiary of the
Partnership, owning a beneficial interest in the assets subject to the Asset
Sale;

 

(4)           appropriate amounts to be
provided by the Partnership or any Restricted Subsidiary of the Partnership, as
the case may be, as a reserve required in accordance with GAAP against any liabilities
associated with the Asset Sale and retained by the Partnership or any
Restricted Subsidiary of the Partnership, as the case may be, after the Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with the Asset Sale; and

 

(5)           amounts applied to the
repayment of Indebtedness in connection with the asset or assets acquired in
the Asset Sale, including any transaction costs and expenses associated
therewith and any make-whole or other premium owed in connection with such
repayment.

 

17

 

“Notes” means the
Issuers’ 85/8% Senior Notes due 2020,
which shall constitute a series of Securities under this Indenture.  The Initial Notes and the Additional Notes
shall be treated as a single class for all purposes under this Indenture, and
unless the context otherwise requires, all references to the Notes shall include
the Initial Notes and any Additional Notes.

 

“Participant” means, with
respect to the Depositary, a Person who has an account with the Depositary.

 

“Permitted
Investments” means any of the following:

 

(1)           Investments made or owned by
the Partnership or any Restricted Subsidiary in:

 

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

 

(b)           marketable direct
obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and having as at such date
the highest rating obtainable from either Standard & Poor’s Ratings
Group (“S&P”) and its successors or Moody’s Investors Service, Inc.
(“Moody’s”) and its successors;

 

(c)           commercial paper maturing no
more than 270 days from the date of creation thereof and having as at the date
of acquisition thereof one of the two highest ratings obtainable from either
S&P or Moody’s;

 

(d)           certificates of deposit
maturing one year or less from the date of acquisition thereof issued by
commercial banks incorporated under the laws of the United States or any state
thereof or the District of Columbia or Canada;

 

(e)           the commercial paper or
other short term unsecured debt obligations of which are as at such date rated
either “A-2” or better (or comparably if the rating system is changed) by
S&P or “Prime-2” or better (or comparably if the rating system is changed)
by Moody’s;

 

(f)            the long-term debt
obligations of which are, as at such date, rated either “A” or better (or
comparably if the rating system is changed) by either S&P or Moody’s
(“Permitted Banks”);

 

(g)           eurodollar time deposits
having a maturity of less than 270 days from the date of acquisition thereof
purchased directly from any Permitted Bank;

 

(h)           bankers’ acceptances
eligible for rediscount under requirements of the Board of Governors of the
Federal Reserve System and accepted by Permitted Banks; and

 

18

 

(i)            obligations of the type
described in clauses (a) through (e) above purchased from a
securities dealer designated as a “primary dealer” by the Federal Reserve Bank
of New York or from a Permitted Bank as counterparty to a written repurchase
agreement obligating such counterparty to repurchase such obligations not later
than 14 days after the purchase thereof and which provides that the obligations
which are the subject thereof are held for the benefit of the Partnership or a
Restricted Subsidiary by a custodian which is a Permitted Bank and which is not
a counterparty to the repurchase agreement in question;

 

(2)           the acquisition by the
Partnership or any Restricted Subsidiary of Capital Stock or other ownership
interests, whether in a single transaction or in a series of related
transactions, of a Person located in the United States, Mexico or Canada and
engaged in substantially the same business as the Partnership such that, upon
the completion of such transaction or series of transactions, the Person
becomes a Restricted Subsidiary;

 

(3)           any Investment by the
Partnership or any Restricted Subsidiary in a Person, if as a result of such
Investment:

 

(a)           such Person becomes a
Restricted Subsidiary; or

 

(b)           such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its properties or assets to, or is liquidated into, the Partnership or a
Restricted Subsidiary;

 

(4)           the making or ownership by
the Partnership or any Restricted Subsidiary of Investments (in addition to any
other Permitted Investments) in any Person incorporated or otherwise formed
pursuant to the laws of the United States, Mexico or Canada or any state
thereof which is engaged in the United States, Mexico or Canada; provided, that the aggregate amount of all such Investments
made by the Partnership and its Restricted Subsidiaries following the Issue
Date and outstanding pursuant to this third clause shall not at any date of
determination exceed 7.5% of Total Assets;

 

(5)           the making or ownership by
the Partnership or any Restricted Subsidiary of Investments:

 

(a)           arising out of loans and
advances to employees incurred in the ordinary course of business;

 

(b)           arising out of extensions of
trade credit or advances to third parties in the ordinary course of business;
or

 

(c)           acquired by reason of the
exercise of customary creditors’ rights upon default or pursuant to the
bankruptcy, insolvency or reorganization of a debtor;

 

(6)           the creation or incurrence
of liability by the Partnership or any Restricted Subsidiary, with respect to
any guarantee constituting an obligation, warranty or indemnity, not
guaranteeing Indebtedness of any Person, which is undertaken or made in the
ordinary course of business;

 

19

 

(7)           the creation or incurrence
of liability by the Partnership or any Restricted Subsidiary with respect to
any hedging agreements or arrangements, including of the types described in
clause (y) of the definition of “Indebtedness”;

 

(8)           the making by any Restricted
Subsidiary of Investments in the Partnership or another Restricted Subsidiary
and the making by the Partnership of Investments in any Restricted Subsidiary;

 

(9)           the making or ownership by
the Partnership or any Restricted Subsidiary of Investments in the Operating
Partnership;

 

(10)         the present value,
determined on the basis of the implicit interest rate, of all basic rental
obligations under all synthetic leases of the Partnership or any Restricted
Subsidiary; and

 

(11)         the creation or incurrence
of liability by the Partnership or any Restricted Subsidiary or the making or
ownership by the Partnership or any Restricted Subsidiary of Investments in any
Person with respect to any Accounts Receivable Securitization.

 

“Permitted
Liens” means any of the following:

 

(1)           Liens for taxes, assessments
or other governmental charges, the payment of which is not yet due or the
payment of which is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and as to which reserves or other
appropriate provision, if any, as shall be required by GAAP, shall have been
made therefor and be adequate in the good faith judgment of the obligor;

 

(2)           Liens of carriers, vendors,
warehousemen, mechanics, materialmen, repairmen and other like Liens incurred
in the ordinary course of business for sums not overdue for a period of more
than 30 days or the payment of which is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and as to
which reserves or other appropriate provisions, if any, as shall be required by
GAAP, shall have been made therefor and be adequate in the good faith judgment
of the obligor, in each case:

 

(a)           not incurred or made in
connection with the borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of property; or

 

(b)           incurred in the ordinary
course of business securing the unpaid purchase price of property or services
constituting current accounts payable;

 

(3)           Liens, other than any Lien
imposed by the Employee Retirement Income Security Act of 1974, as may be
amended from time to time, incurred or deposits made in the ordinary course of
business:

 

(a)           in connection with workers’
compensation, unemployment insurance and other types of social security; or

 

20

 

(b)           to secure or to obtain
letters of credit that secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds,
purchase, construction or sales contracts and other similar obligations, in
each case not incurred or made in connection with the borrowing of money;

 

(4)           other deposits made to
secure liability to insurance carriers under insurance or self-insurance
arrangements;

 

(5)           Liens securing reimbursement
obligations under letters of credit, provided in each case that such Liens
cover only the title documents and related goods and any proceeds thereof
covered by the related letter of credit;

 

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

 

(7)           leases or subleases granted
to others, easements, rights-of-way, restrictions and other similar charges or
encumbrances, which, in each case either are granted, entered into or created
in the ordinary course of the business of the Partnership or any Restricted
Subsidiary or do not materially impair the value or intended use of the property
covered thereby;

 

(8)           Liens on property or assets
of any Restricted Subsidiary securing Indebtedness of the Restricted Subsidiary
owing to the Partnership or a Restricted Subsidiary;

 

(9)           Liens on assets of the
Partnership or any Restricted Subsidiary existing on the Issue Date;

 

(10)         Liens on personal property
leased under leases entered into by the Partnership or its Restricted
Subsidiaries which are accounted for as operating leases in accordance with
GAAP;

 

(11)         Liens securing Indebtedness
arising under an Accounts Receivable Securitization (including the filing of
any related financing statements naming the Partnership or any Restricted
Subsidiary as the debtor thereunder in connection with the sale of accounts
receivable by the Partnership, the Operating Partnership or any Restricted
Subsidiary to an SPE in connection with any such permitted Accounts Receivable
Securitization);

 

(12)         Liens securing Indebtedness
incurred in accordance with:

 

(a)           clauses (3) and (6) of
the definition of Permitted Indebtedness; and

 

(b)           Indebtedness otherwise
permitted to be incurred under Section 1009 hereof to the extent incurred:

 

21

 

(i)            to finance the
making of expenditures for the improvement or repair (to the extent the
improvements and repairs may be capitalized on the books of the Partnership and
the Restricted Subsidiaries in accordance with GAAP) of, or additions including
additions by way of acquisitions of businesses and related assets to, the
assets and property of the Partnership and its Restricted Subsidiaries; or

 

(ii)           by assumption
in connection with additions including additions by way of acquisition or
capital contributions of businesses and related assets to the property and
assets of the Partnership and its Restricted Subsidiaries;

 

provided, that, in the case of
Indebtedness incurred in accordance with clauses (i) and (ii) above,
the principal amount of the Indebtedness does not exceed the lesser of the cost
to the Partnership and its Restricted Subsidiaries of the additional property
or assets and the fair market value of the additional property or assets at the
time of the acquisition thereof, as determined in good faith by an authorized
financial officer of the General Partner;

 

(13)         Liens existing
on any property of any Person at the time it becomes a Subsidiary of the
Partnership, or existing at the time of acquisition upon any property acquired
by the Partnership or any Subsidiary through purchase, merger or consolidation
or otherwise, whether or not assumed by the Partnership or the Subsidiary, or
created to secure Indebtedness incurred to pay all or any part of the purchase
price (a “Purchase Money Lien”) of property including, without limitation,
Capital Stock and other securities acquired by the Partnership or a Restricted
Subsidiary; provided, that:

 

(a)           the Lien shall
be confined solely to the item or items of property and, if required by the
terms of the instrument originally creating the Lien, other property which is
an improvement to or is acquired for use specifically in connection with the
acquired property;

 

(b)           in the case of
a Purchase Money Lien, the principal amount of the Indebtedness secured by the Purchase
Money Lien shall at no time exceed an amount equal to the lesser of:

 

(A)          the cost to the
Partnership and the Restricted Subsidiaries of the property; and

 

(B)          the fair market
value of the property at the time of the acquisition thereof as determined in
good faith by an authorized financial officer of the General Partner;

 

(c)           the Purchase
Money Lien shall be created not later than 360 days after the acquisition of
the property; and

 

(d)           the Lien, other
than a Purchase Money Lien, shall not have been created or assumed in
contemplation of the Person’s becoming a Subsidiary of the Partnership or the
acquisition of property by the Partnership or any Subsidiary;

 

22

 

(14)         easements,
exceptions or reservations in any property of the Partnership or any Restricted
Subsidiary granted or reserved for the purpose of pipelines, roads, the removal
of oil, gas, coal or other minerals, and other like purposes, or for the joint
or common use of real property, facilities and equipment, which are incidental
to, and do not materially interfere with, the ordinary conduct of the business
of the Partnership or any Restricted Subsidiary;

 

(15)         Liens arising
from or constituting permitted encumbrances under the agreements and
instruments securing obligations under the Operating Partnership’s Existing
Notes and the Credit Agreement;

 

(16)         Liens securing
an Indebtedness of the Operating Partnership;

 

(17)         Liens of
landlords or mortgages of landlords on fixtures and movable property located on
premises leased by the Partnership or any of its Subsidiaries in the ordinary
course of business;

 

(18)         Liens such as
banker’s liens, rights of set-off or similar rights and remedies and burdening
only deposit accounts or other funds maintained with a depository institution
in the ordinary course of business; and

 

any Lien renewing or
extending any Lien permitted by clauses (9) through (13) and (15) and (16)
above; provided, that, the
principal amount of the Indebtedness secured by any such Lien shall not exceed
the principal amount of the Indebtedness outstanding immediately prior to the
renewal or extension of the Lien, and no assets encumbered by the Lien other
than the assets encumbered immediately prior to the renewal or extension shall
be encumbered thereby.

 

“Permitted Refinancing Indebtedness” means Indebtedness
incurred by the Partnership or any Restricted Subsidiary to substantially and
concurrently (excluding any notice period on redemptions) repay, refund, renew,
replace, extend or refinance, in whole or in part, any Permitted Indebtedness
of the Partnership or any Restricted Subsidiary or any other Indebtedness
incurred by the Partnership or any Restricted Subsidiary pursuant to Section 1009,
to the extent:

 

(1)           the principal
amount of the Permitted Refinancing Indebtedness does not exceed the principal
or accreted amount plus the amount of accrued and unpaid interest of the
Indebtedness so repaid, refunded, renewed, replaced, extended or refinanced
(plus the amount of all expenses and premiums incurred in connection
therewith);

 

(2)           with respect to
the repayment, refunding, renewal, replacement, extension or refinancing of the
Issuers’ Indebtedness, the Permitted Refinancing Indebtedness ranks no more
favorably in right of payment with respect to the Notes than the Indebtedness
so repaid, refunded, renewed, replaced, extended or refinanced; and

 

(3)           with respect to
the repayment, refunding, renewal, replacement, extension or refinancing of the
Issuers’ Indebtedness, the Permitted Refinancing Indebtedness has a Weighted
Average Life to Stated Maturity and stated maturity equal to, or greater than,
and has no fixed mandatory redemption or sinking fund requirement in an amount
greater 

 

23

 

than or at a time prior to
the amounts set forth in, the Indebtedness so repaid, refunded, renewed,
replaced, extended or refinanced;

 

provided, however, that Permitted Refinancing
Indebtedness shall not include Indebtedness incurred by a Restricted Subsidiary
to repay, refund, renew, replace, extend or refinance Indebtedness of the
Partnership.

 

“Preferred Stock,” as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated), which
is preferred as to the payment of distributions, dividends, or upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
or units of Capital Stock of any other class of such Person; provided, that any limited partnership
interest of the Partnership will not be considered Preferred Stock.

 

“Principal” means James E.
Ferrell.

 

“Redeemable
Capital Stock” means any shares of any class or series of Capital
Stock, that, either by the terms thereof, by the terms of any security into
which it is convertible or exchangeable or by contract or otherwise, is or upon
the happening of an event or passage of time would be, required to be redeemed
prior to the stated maturity of the principal of the Notes or is redeemable at the
option of the holder thereof at any time prior to the stated maturity of the
principal of the Notes, or is convertible into or exchangeable for debt securities at any
time prior to the stated maturity of the principal of the Notes.

 

“Related
Party” means any of the following:

 

(1)           any immediate
family member or lineal descendant of the Principal;

 

(2)           any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of any one or more Principals and/or such other
Persons referred to in the immediately preceding clause (1);

 

(3)           the Ferrell
Companies, Inc. Employee Stock Ownership Trust (“FCI ESOT”);

 

(4)           any participant
in the FCI ESOT whose account has been allocated shares of Ferrell Companies, Inc.;

 

(5)           Ferrell
Companies, Inc.; or

 

(6)           any Subsidiary
of Ferrell Companies, Inc.

 

“Restricted
Subsidiary” means a Subsidiary of the Partnership, which, as of
the date of determination, is not an Unrestricted Subsidiary of the Partnership.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

24

 

“Significant
Subsidiary” means any Subsidiary that would be a “significant
subsidiary” as defined in Article 1, Rule 1—02 of Regulation S—X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issue Date.

 

“SPE” means any
special purpose Unrestricted Subsidiary established in connection with any
Accounts Receivable Securitization.

 

“Termination
Capital Transactions” means any sale, transfer or other
disposition of property of the Partnership or the Operating Partnership
occurring upon or incident to the liquidation and winding up of the Partnership
and the Operating Partnership.

 

“Total
Assets” means, as of any date of determination, the consolidated total assets
of the Partnership and the Restricted Subsidiaries as would be shown on a
consolidated balance sheet of the Partnership and the Restricted Subsidiaries
prepared in accordance with GAAP as of that date.

 

“Unrestricted Subsidiary” means (a) Ferrellgas
Receivables, LLC, (b) Uni-Asia, Ltd., (c) Ferrellgas Real Estate, Inc.,
(d) Blue Rhino Canada, Inc., and (e) any other Person (other
than Operating Partnership or Finance Corp.) that is designated as such by the
General Partner; provided, that
no portion of the Indebtedness of such Person:

 

(1)           is guaranteed
by the Partnership or any Restricted Subsidiary;

 

(2)           is recourse to
or obligates the Partnership or any Restricted Subsidiary in any way; or

 

(3)           subjects any
property or assets of the Partnership or any Restricted Subsidiary, directly or
indirectly, contingently or otherwise, to the satisfaction thereof.

 

Notwithstanding the
foregoing, the Partnership or a Restricted Subsidiary may guarantee or agree to
provide funds for the payment or maintenance of, or otherwise become liable
with respect to Indebtedness of an Unrestricted Subsidiary, but only to the
extent that the Partnership or a Restricted Subsidiary would be permitted to:

 

(4)           make an Investment
in the Unrestricted Subsidiary pursuant to the third clause of the definition
of Permitted Investments; and

 

(5)           incur the
Indebtedness represented by the guarantee or agreement pursuant to Section 1009(a) hereto.
The Board of Directors of the Partnership may designate an Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, that immediately after
giving effect to the designation there exists no Event of Default or event
which after notice or lapse or time or both would become an Event of Default,
and if the Unrestricted Subsidiary has, as of the date of the designation,
outstanding Indebtedness other than Permitted Indebtedness, the Partnership
could incur at least $1.00 of Indebtedness other than Permitted Indebtedness.

 

25

 

Notwithstanding the
foregoing, no Subsidiary may be designated an Unrestricted Subsidiary if the
Subsidiary, directly or indirectly, holds Capital Stock of a Restricted
Subsidiary.

 

“Voting
Stock” of any Person as of any date means the Capital Stock of such Person
that is at the time entitled to vote in the election of the Board of Directors
of such Person.

 

“Weighted
Average Life to Stated Maturity” means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

 

(1)           the sum of the
products obtained by multiplying:

 

(a)           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

 

(b)           the number of
years, calculated to the nearest one-twelfth, that will elapse between such
date and the making of such payment, by

 

(2)           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
Stated 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.

 

(B)          Section 101
of Article I shall be amended to replace in whole the following
definitions thereto with the corresponding existing definitions, so that in the
event of a conflict with the definition of terms in this Indenture, the
following definitions shall control:

 

“Depositary” means, with respect to the
Securities issuable or issued in whole or in part in global form, the Person
specified in Section 305 hereof as the Depositary with respect to the
Securities, and any and all successors thereto appointed as depositary
hereunder and having become such pursuant to the applicable provision of this
Indenture.

 

“Global
Security” means a global Security substantially in the form
of Exhibit A to the First Supplemental Indenture that bears the
Global Security Legend and that has the “Schedule of Exchanges of Interests in
the Global Security” attached thereto, and that is deposited with or on behalf
of and registered in the name of the Depositary.

 

“Indebtedness” means, as
applied to any Person, without duplication:

 

(1)           (a) any
indebtedness for borrowed money and (b) all obligations evidenced by any (i) bond,
note, debenture or other similar instrument or (ii) letter of credit, or
reimbursement agreements in respect thereof, but only for any drawings that are
not reimbursed within five Business Days after the date of such drawings, which
in each case the Person has, directly or indirectly, created, incurred or
assumed;

 

26

 

(2)           any indebtedness
for borrowed money and all obligations evidenced by any bond, note, debenture
or other similar instrument secured by any Lien in respect of property owned by
the Person, whether or not the Person has assumed or become liable for the
payment of the indebtedness; provided, that
the amount of the indebtedness, if the Person has not assumed the same or
become liable therefor, shall in no event be deemed to be greater than the fair
market value from time to time, as determined in good faith by the Person of
the property subject to the Lien;

 

(3)           any
indebtedness, whether or not for borrowed money (excluding trade payables and
accrued expenses arising in the ordinary course of business) with respect to
which the Person has become directly or indirectly liable and which represents
the deferred purchase price, or a portion thereof, or has been incurred to
finance the purchase price, or a portion thereof, of any property or business
acquired by, or service performed on behalf of, the Person, whether by purchase,
consolidation, merger or otherwise;

 

(4)           the principal
component of any obligations under Capital Leases to the extent the obligations
would, in accordance with GAAP, appear on the balance sheet of the Person;

 

(5)           any
indebtedness of any other Person of the character referred to in the foregoing
clauses (1)-(4) of this definition with respect to which the Person whose
indebtedness is being determined has become liable by way of a guarantee; and

 

(6)           all Redeemable
Capital Stock of the Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued dividends.

 

For purposes hereof, the
“maximum fixed repurchase price” of any Redeemable Capital Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of the Redeemable Capital Stock as if it were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture and
if the price is based upon, or measured by, the fair market value of the
Redeemable Capital Stock, the fair market value shall be determined in good
faith by the Board of Directors of the issuer of the Redeemable Capital
Stock.  For purposes hereof, the term
“Indebtedness” shall not include (x) accrual of interest, the accretion of
accreted value and the payment of interest or any other similar incurrence by
the Partnership or its Restricted Subsidiaries related to Indebtedness
otherwise permitted in this Indenture, (y) Indebtedness under any hedging
arrangement which provides for the right or obligation to purchase, sell or
deliver any currency, commodity or security at a future date for a specified
price entered into to protect such Person from fluctuations in prices or rates,
including currencies, interest rates, commodity prices, and securities prices,
including without limitation indebtedness under any interest rate or commodity
price swap agreement, interest rate cap agreement, interest rate collar
agreement or any forward sales arrangements, calls, options, swaps, or other
similar transactions or any combination thereof, or (z) any Accounts
Receivable Securitization.

 

“Person” means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, other entity, unincorporated organization or government, or any agency
or political subdivision thereof.

 

27

 

“Subsidiary” means, with
respect to any specified Person:

 

(1)           any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees of the corporation, association or other business entity is at the
time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person (or a combination thereof); and

 

(2)           any partnership
(a) the sole general partner or the managing general partner of which is
such Person or a Subsidiary of such Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person
(or any combination thereof).

 

SECTION 4.         General Provisions

 

(A)          Article I
of the Base Indenture shall be amended by adding the following Sections:

 

Section 117.
Rules of Construction.

 

Unless the context otherwise
requires:

 

(1)           a term has the
meaning assigned to it;

 

(2)           an accounting
term not otherwise defined has the meaning assigned to it in accordance with
GAAP;

 

(3)           “or” is not
exclusive;

 

(4)           words in the
singular include the plural, and in the plural include the singular;

 

(5)           “will” shall be
interpreted to express a command;

 

(6)           provisions
apply to successive events and transactions; and

 

(7)           references to
sections of or rules under the Securities Act will be deemed to include
substitute, replacement of successor sections or rules adopted by the
Commission from time to time.

 

Section 118.
Rules by Trustee and Agents.

 

The Trustee may make
reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its functions.

 

28

 

SECTION 5.         Satisfaction and Discharge

 

(A)          The provisions
of Article IV of the Base Indenture, as amended hereby, shall apply to the
Notes.

 

(B)          Article IV
of the Base Indenture shall be amended by amending Section 401 by adding
the following text at the end of the last paragraph of such Section:

 

“As a result of the
satisfaction and discharge of this Indenture with respect to Securities of any
series, the Issuers will, subject to this Article IV, cease to be primary
obligors with respect to the obligations under the Securities of such series
and such Securities shall cease to be “outstanding” for accounting purposes.”

 

(C)          Article IV
of the Base Indenture shall be amended by amending Section 402 by deleting
the last period in the Section and adding the following text:

 

“; but such money need not
be segregated from other funds except to the extent required by law.

 

If the Trustee or Paying
Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 401 by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuers’ obligations under this Indenture and the Securities
of such series shall be revived and reinstated as though no deposit had
occurred pursuant to Section 401; provided that
if the Issuers have made any payment of principal of, premium, if any, or
interest on any Securities of such series because of the reinstatement of their
obligations, the Issuers shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or U.S. Government Obligations held by
the Trustee or Paying Agent.”

 

SECTION 6.         Remedies

 

(A)          Article V
of the Base Indenture shall be amended by deleting the following Sections in
their entirety and replacing them as follows:

 

Section 501. Events of Default.

 

Each of the following is an
“Event of Default” with respect to the Notes:

 

(1)           default in the
payment of the principal of or premium, if any, on any Note when the same
becomes due and payable, upon stated maturity, acceleration, optional
redemption, required purchase, scheduled principal payment or otherwise;

 

(2)           default in the
payment of an installment of interest on any of the Notes, when the same
becomes due and payable, which default continues for a period of 30 days;

 

29

 

(3)           failure to
perform or observe any other term, covenant or agreement contained in the Notes
or this Indenture, other than a default specified in either Section 501(1) or
(2) above, and the default continues for a period of 45 days after written
notice of the default requiring the Issuers to remedy the same will have been
given to the Partnership by the Trustee or to the Issuers and the Trustee by
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding;

 

(4)           default or
defaults under one or more agreements, instruments, mortgages, bonds,
debentures or other evidences of Indebtedness under which the Partnership or
any Restricted Subsidiary of the Partnership then has outstanding Indebtedness
in excess of $25 million, if the default:

 

(a)           is caused by a
failure to pay principal of or premium, if any, or interest on to such
Indebtedness within the applicable grace period, if any, provided with respect
to such Indebtedness; or

 

(b)           results in the
acceleration of such Indebtedness prior to its stated maturity;

 

(5)           a final
judgment or judgments, which is or are non-appealable and non-reviewable or
which has or have not been stayed pending appeal or review or as to which all
rights to appeal or review have expired or been exhausted, shall be rendered
against the Partnership, any Restricted Subsidiary, or the General Partner
provided such judgment or judgments requires or require the payment of money in
excess of $25 million in the aggregate and is not covered by insurance or
discharged or stayed pending appeal or review within 60 days after entry of
such judgment; in the event of a stay, the judgment shall not be discharged
within 30 days after the stay expires;

 

(6)           either Issuer
or any of their Significant Subsidiaries pursuant to or within the meaning of
Bankruptcy Law:

 

(A)          commences a
voluntary case,

 

(B)          consents to the
entry of an order for relief against it in an involuntary case,

 

(C)          consents to the
appointment of a custodian of it or for all or substantially all of its
property,

 

(D)          makes a general
assignment for the benefit of its creditors, or

 

(E)           generally is
not paying its debts as they become due; or

 

(7)           a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(A)          is for relief
against the Issuers or any of their Significant Subsidiaries in an involuntary
case;

 

30

 

(B)          appoints a
custodian of the Issuers or any of their Significant Subsidiaries or for all or
substantially all of the property of the Issuers or any of their Significant
Subsidiaries; or

 

(C)          orders the
liquidation of the Issuers or any of their Significant Subsidiaries;

 

and the order or decree
remains unstayed and in effect for 60 consecutive days.

 

Section 502. Acceleration of Maturity; Rescission and Annulment.

 

In the case of an Event of
Default specified in clause (6) or (7) of Section 501 hereof,
with respect to the Partnership, Finance Corp. or any Significant Subsidiary,
all outstanding Notes will become due and payable immediately without further
action or notice.  If any other Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding may declare all the Notes to be
due and payable immediately.

 

Upon any such declaration,
the Notes shall become due and payable immediately.  The Holders of a majority in aggregate
principal amount of Notes issued under this Indenture and then outstanding by
notice to the Trustee may on behalf of all of the Holders of Notes rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.

 

If an Event of Default by
reason of any action (or inaction) taken (or not taken) by or on behalf of the
Issuers with the willful intention of avoiding payment of the premium that the
Issuers would have had to pay if the Issuers then had elected to redeem the
Notes pursuant to Section 1108 hereof, then, upon acceleration of the
Notes, an equivalent premium shall also become and be immediately due and
payable, to the extent permitted by law, anything in this Indenture or in the
Notes to the contrary notwithstanding.

 

SECTION 7.         Reports

 

(A)          Article VII
of the Base Indenture shall be amended by deleting Section 704 in its
entirety and replacing it as follows:

 

Section 704. Reports.

 

(a)           Whether or not
required by the rules and regulations of the Commission, so long as any
Notes are outstanding, the Issuers will furnish to the Holders of Notes, within
the time periods specified in the Commission’s rules and regulations:

 

(1)           all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Issuers were required
to file such forms, including a “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and, with respect to the annual
financial information only, a report thereon by the Issuers’ certified
independent accountants; and

 

31

 

(2)           all current
reports that would be required to be filed with the Commission on Form 8-K
if the Issuers were required to file such reports.

 

(b)           In addition,
whether or not required by the rules and regulations of the Commission,
the Issuers will file a copy of all of the information and reports referred to
in clauses (1) and (2) above with the Commission for public
availability within the time periods specified in the Commission’s rules and
regulations (unless the Commission will not accept such a filing) and make such
information available to investors who request it in writing.  The Issuers will promptly furnish to Holders
of Notes notices of (a) any payment default under any instrument
evidencing Indebtedness for borrowed money, and (b) any acceleration of
such Indebtedness prior to its express maturity. The Issuers will at all times
comply with Trust Indenture Act § 314(a).

 

(B)          Article VII
of the Base Indenture shall be amended by adding Section 705 as follows:

 

Section 705.
Communication by Holders of Securities  with Other Holders of Securities.

 

Holders may communicate
pursuant to Trust Indenture Act § 312(b) with other Holders with
respect to their rights under this Indenture or the Notes.  The Issuers, the Trustee, the Registrar and
anyone else shall have the protection of Trust Indenture Act § 312(c).

 

SECTION 8.         Merger, Consolidation, or
Sale of Assets

 

(A)          Article VIII
of the Base Indenture shall be amended by deleting the following Sections in
their entirety and replacing them as follows:

 

Section 801.
Merger, Consolidation, or Sale of Assets.

 

The Partnership shall not
consolidate or merge with or into, 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 entity unless:

 

(1)           the Partnership
is the surviving entity or the entity formed by or surviving the transaction,
if other than the Partnership, or the entity to which the sale was made is a
corporation or partnership organized or existing under the laws of the United
States, any state thereof or the District of Columbia;

 

(2)           the entity
formed by or surviving the transaction, if other than the Partnership, or the
entity to which the sale was made assumes all the obligations of the Partnership
in accordance with a supplemental indenture in a form reasonably satisfactory
to the Trustee, under the Notes and this Indenture;

 

(3)           immediately
after the transaction, no Default or Event of Default exists; and

 

(4)           at the time of
the transaction and after giving pro forma effect to it as if the transaction
had occurred at the beginning of the applicable four-quarter period, either (a) 

 

32

 

the Partnership or such
other entity or survivor is permitted to incur at least $1.00 of additional
Indebtedness in accordance with the Consolidated Fixed Charge Coverage Ratio
described in Section 1009(a) hereof, or (b) the Consolidated
Fixed Charge Coverage Ratio of the Partnership or such other entity or survivor
is equal to or greater than the Consolidated Fixed Charge Coverage Ratio of the
Partnership immediately before such transaction.

 

This Section 801 will
not apply to a sale, assignment, transfer, conveyance or other disposition of
assets between or among the Partnership and any of its Restricted
Subsidiaries.  Finance Corp. will not
consolidate or merge with or into, whether or not it is the surviving entity,
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 entity except under conditions similar to those
described in the paragraph above.

 

Section 802.
Successor Company Substituted.

 

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 Partnership or
Finance Corp. in a transaction that is subject to, and that complies with the
provisions of, Section 801 hereof, the successor entity formed by such
consolidation or into or with which the Partnership or Finance Corp., as
applicable, 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 Indenture
referring to the “Partnership” or “Finance Corp.,” as applicable, shall refer
instead to the successor entity and not to Partnership or Finance Corp., as
applicable), and may exercise every right and power of the Partnership or
Finance Corp., as applicable, under this Indenture with the same effect as if
such successor Person had been named as the Partnership or Finance Corp., as applicable,
herein; provided, however, that
Partnership or Finance Corp., as applicable, shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of assets of the Partnership or Finance Corp., as applicable,
in a transaction that is subject to, and that complies with the provisions of, Section 801
hereof.

 

SECTION 9.         Supplemental Indentures

 

(A)          Article IX
of the Base Indenture shall be amended by amending Section 902 as follows:

 

(i)            By deleting the
text “for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture,” and replacing with the
following text: “for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture, waiving any
existing Default or Event of Default (other than a continuing Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Securities, except a payment default resulting from an acceleration that
has been rescinded)”

 

(ii)           By deleting the
word “or” after clause (5); replacing the “.” after clause (6) with “;”;
and adding the following clause (7):

 

33

 

“(7) waive a Default in
the payment of principal or interest on the Securities.”

 

(iii)          By adding to
the end of Section 902, in a separate paragraph, as follows:

 

“After an amendment,
supplement or waiver under this Section 902 becomes effective, the Issuers
will mail to the Holders of Notes affected thereby a notice briefly describing
the amendment, supplement or waiver.  Any
failure of the Issuers to mail such notice, or any defect therein, will not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. 
Subject to Sections 508 and 513 hereof, with the consent of the Holders
of a majority in principal amount of the Notes (including, without limitation,
Additional Notes, if any) then outstanding (including consents obtained in
connection with a tender offer or exchange offer for the Notes) may waive any
existing default or compliance with any provision of this Indenture or the
Notes.”

 

(B)          Article IX
of the Base Indenture shall be amended by adding the following Sections:

 

Section 907.
Revocation and Effect of Consents.

 

Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note
is a continuing consent by the Holder of a Note and every subsequent Holder of
a Note or portion of a Note that evidences the same debt as the consenting
Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or
subsequent Holder of a Note may revoke the consent as to its Note if the
Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. 
An amendment, supplement or waiver becomes effective in accordance with
its terms and thereafter binds every Holder.

 

SECTION 10.       Covenants

 

(A)          Article X
of the Base Indenture shall be amended by deleting the following Sections in
their entirety and replacing them as follows:

 

Section 1001.
Payment of Notes.

 

The Issuers will pay or
cause to be paid the principal of, premium, if any, and interest on the Notes
on the dates and in the manner provided in the Notes.  Principal, premium, if any, and interest will
be considered paid on the date due if the Paying Agent, if other than the
Issuers or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on
the due date money deposited by the Issuers in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due.

 

The Issuers will pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in
excess of the then applicable interest rate on the Notes to the extent lawful;
they will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest (without regard
to any applicable grace period) at the same rate to the extent lawful.

 

34

 

Section 1004.
Compliance Certificate.

 

(a)           The Issuers shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers’ Certificate stating that a
review of the activities of the Issuers and their Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing Officers
with a view to determining whether the Issuers have kept, observed, performed
and fulfilled their obligations under this Indenture, and further stating, as
to each such Officer signing such certificate, that, to the best of his or her
knowledge, the Issuers have kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and are not in default in the
performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default has occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge
and what action the Issuers are taking or propose to take with respect thereto)
and that, to the best of his or her knowledge, no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Notes is prohibited or if such event has occurred,
a description of the event and what action the Issuers are taking or propose to
take with respect thereto.

 

(b)           So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 704(a) of
the Indenture shall be accompanied by a written statement of the Issuers’
independent public accountants (who shall be a firm of established national
reputation) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that the Issuers have violated any provisions of Article VIII
or Article X hereof or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.

 

(c)           So long as any of the Notes are outstanding, the
Issuers will deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers’ Certificate specifying such
Default or Event of Default and what action the Issuers are taking or propose
to take with respect thereto.

 

Section 1005.
Legal Existence.

 

Subject to Article VIII
hereof, the Partnership shall do or cause to be done all things necessary to
preserve and keep in full force and effect:

 

(1)           its partnership
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Partnership or any such
Restricted Subsidiary; and

 

(2)           the rights
(charter and statutory), licenses and franchises of the Partnership and its
Restricted Subsidiaries; provided, however,
that the Partnership shall not be 

 

35

 

required to preserve any
such right, license or franchise, or the corporate, partnership or other
existence of any of its Restricted Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Partnership and its Restricted Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Securities.

 

(B)          Article X
of the Base Indenture shall be amended by adding the following Sections:

 

Section 1009.
Incurrence of Indebtedness.

 

(a)           The Partnership
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, issue, assume, guarantee or in any manner become
directly or indirectly liable, contingently or otherwise, for the payment, in
each case, to “incur,” any
Indebtedness, unless at the time of the incurrence and after giving pro forma
effect to the receipt and application of the proceeds of the Indebtedness, the
Consolidated Fixed Charge Coverage Ratio of the Partnership is greater than
2.00 to 1.00.

 

(b)           The provisions
of Section 1009(a) will not prohibit the incurrence by the
Partnership and its Restricted Subsidiaries of any of the following items of
Indebtedness (collectively, “Permitted Indebtedness”):

 

(1)           Indebtedness
outstanding as of the Issue Date;

 

(2)           Indebtedness of
the Partnership or a Restricted Subsidiary incurred for the making of
expenditures for the improvement or repair, to the extent the improvements or
repairs may be capitalized in accordance with GAAP, or additions, including by
way of acquisitions of businesses and related assets, to the property and
assets of the Partnership and its Restricted Subsidiaries, including, without
limitation, the acquisition of assets subject to operating leases, Indebtedness
incurred under the Credit Facilities, or incurred by assumption in connection
with additions, including additions by way of acquisitions or capital
contributions of businesses and related assets, to the property and assets of
the Partnership and its Restricted Subsidiaries; provided,
that the aggregate principal amount of this Indebtedness outstanding at any
time may not exceed $75 million;

 

(3)           Indebtedness of
the Partnership or a Restricted Subsidiary (a) incurred for any purpose
permitted under the Credit Facilities, or (b) owing in respect of any
Accounts Receivable Securitization, operating lease, or other off-balance sheet
obligation existing on the Issue Date that arises because, after the Issue
Date, such off-balance sheet obligations are refinanced with Indebtedness, provided, that the aggregate principal amount of this
Indebtedness outstanding under this clause at any time may not exceed an amount
equal to the sum of (x) $500 million plus (y) the amount, if any, by
which the Borrowing Base as of the date of calculation exceeds the amount of
the Borrowing Base as of December 31, 2003;

 

36

 

(4)           Indebtedness of
the Partnership owed to the General Partner or an Affiliate of the General
Partner that is unsecured and that is subordinated in right of payment to the
Securities; provided, that the aggregate principal
amount of this Indebtedness outstanding at any time under this clause may not
exceed $50 million and this Indebtedness has a final maturity date later than
the final maturity date of the Securities;

 

(5)           Indebtedness (a) owed
by the Partnership or any Restricted Subsidiary to the Operating Partnership or
any Restricted Subsidiary or (b) owed by the Operating Partnership or any
Restricted Subsidiary to the Partnership or to any other Restricted Subsidiary;

 

(6)           Permitted
Refinancing Indebtedness (including, for the avoidance of doubt, Indebtedness
incurred as permitted under the Consolidated Fixed Charge Coverage Ratio set
forth in Section 1009(a) above);

 

(7)           the incurrence
by the Partnership or a Restricted Subsidiary of Indebtedness owing directly to
its insurance carriers, without duplication, in connection with the
Partnership’s, its Subsidiaries’ or its Affiliates’ self-insurance programs or
other similar forms of retained insurable risks for their respective
businesses, consisting of reinsurance agreements and indemnification
agreements, and guarantees of the foregoing, secured by letters of credit; provided, that any Consolidated Fixed Charges associated
with the Indebtedness evidenced by the reinsurance agreements, indemnification
agreements, guarantees and letters of credit will be included, without
duplication, in any determination of the Consolidated Fixed Charge Coverage
Ratio test set forth in Section 1009(a) above;

 

(8)           Indebtedness of
the Partnership and its Restricted Subsidiaries in respect of Capital Leases; provided, that the aggregate amount of this Indebtedness
outstanding at any time may not exceed $30 million;

 

(9)           Indebtedness of
the Partnership and its Restricted Subsidiaries represented by letters of
credit supporting (a) obligations under workmen’s compensation laws, (b) obligations
to suppliers of propane or energy commodity derivative providers in the
ordinary course of business consistent with past practices not to exceed $15
million at any one time outstanding and (c) the repayment of Indebtedness
permitted to be incurred under this Indenture;

 

(10)         surety bonds
and appeal bonds required in the ordinary course of business or in connection
with the enforcement of rights or claims of the Partnership or any of its
Subsidiaries or in connection with judgments that do not result in a Default or
Event of Default;

 

(11)         Indebtedness of
the Partnership or its Restricted Subsidiaries incurred in connection with
acquisitions of retail propane businesses in favor of the sellers of such
businesses in an aggregate principal amount not to exceed $20 

 

37

 

million in any fiscal year
and not to exceed $70 million at any one time outstanding; provided,
that the principal amount of such Indebtedness incurred in connection with any
such acquisition shall not exceed the fair market value of the assets so
acquired and, to the extent issued by the Partnership, such Indebtedness is
expressly subordinated to the Securities;

 

(12)         unsecured
Indebtedness of the Partnership or its Restricted Subsidiaries which is not
otherwise a Permitted Indebtedness in an aggregate outstanding amount not to
exceed the greater of (a) $50 million and (b) 5% of Consolidated Net
Tangible Assets; and

 

(13)         the Notes
(other than Additional Notes).

 

For purposes of determining
compliance with this Section 1009, in the event that an item of
Indebtedness meets the criteria of more than one of the categories of Permitted
Indebtedness described in clauses (1) through (13) above or is entitled to
be incurred in compliance with the Consolidated Fixed Charge Coverage Ratio
pursuant to Section 1009(a) above, the Partnership, may, in its sole
discretion, classify (or later reclassify) in whole or in part such items of
Indebtedness in any manner that complies with this Section 1009, and such
item of Indebtedness or a portion thereof may be classified (or later
reclassified) in whole or in part as having been incurred under more than one
of the applicable clauses of Permitted Indebtedness or in compliance with the Consolidated
Fixed Charge Coverage Ratio set forth in Section 1009(a) above.

 

Section 1010. Asset Sales.

 

The Partnership will not,
and will not permit any of its Restricted Subsidiaries to, complete an Asset
Sale unless:

 

(1)           the Partnership
or its Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value, as determined
in good faith by an authorized financial officer of the General Partner, of the
assets sold or otherwise disposed of; and

 

(2)           if such Asset
Sale involves assets with a fair market value in excess of $10 million, at
least 75% of the consideration therefor received by the Partnership or such
Restricted Subsidiary is in the form of cash.

 

For purposes of determining
the amount of cash received in an Asset Sale, each of the following shall be
deemed to be cash:

 

(1)           the amount of
any liabilities on the Partnership’s or any Restricted Subsidiary’s balance
sheet that are assumed by the transferee of the assets; and

 

(2)           the amount of
any notes or other obligations received by the Partnership or the Restricted
Subsidiary from the transferee that is converted within 180 days by the
Partnership or the Restricted Subsidiary into cash, to the extent of the cash
received.

 

38

 

Furthermore, the 75%
limitation will not apply to any Asset Sale in which the cash portion of the
consideration received is equal to or greater than the after-tax proceeds would
have been had the Asset Sale complied with the 75% limitation.

 

If the Partnership or any of
its Restricted Subsidiaries receives Net Proceeds exceeding $20 million from
one or more Asset Sales in any fiscal year, then within 410 days after the date
the aggregate amount of Net Proceeds exceeds $20 million, the Partnership or
any of its Restricted Subsidiaries must apply the amount of such Net Proceeds
either:

 

(1)           to reduce Indebtedness of
the Partnership or any of its Restricted Subsidiaries, with a permanent
reduction of availability in the case of revolving Indebtedness; or

 

(2)           to make an investment in
assets or capital expenditures useful to the Partnership’s or any of its
Subsidiaries’ business as in effect on the Issue Date or business related or
ancillary thereto.

 

Pending
the final application of any such Net Proceeds, the Partnership or any
Restricted Subsidiary may temporarily reduce borrowings under the Credit
Facilities or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture.

 

Any Net Proceeds from Asset
Sales that are not applied or invested as provided above will be considered “Excess Proceeds.”  When the aggregate amount of Excess Proceeds
exceeds $20 million, within 15 days thereof, the Issuers will make an Asset
Sale Offer to all Holders of Notes and all holders of other Indebtedness
outstanding that is pari passu
with the Notes containing provisions similar to those set forth in this
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets in accordance with Section 1110 hereof to purchase for
cash the maximum principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer
will be equal to 100% of principal amount plus accrued and unpaid interest to
the date of purchase.  To the extent that
the aggregate amount of Notes tendered in response to the Issuers’ purchase
offer is less than the Excess Proceeds, the Partnership or any Restricted
Subsidiary may use such deficiency for general business purposes.  If the aggregate principal amount of Notes
and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on
pro rata basis in proportion to the aggregate principal amount of Notes and
such other pari passu
Indebtedness tendered.  Upon completion
of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

 

The Issuers will comply with
the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with each repurchase of Notes pursuant
to an Asset Sale Offer.  To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of Section 1110 or this Section 1010 of this Indenture,
the Issuers will comply with the applicable securities laws and regulations and
will not be deemed to have breached their obligations under those provisions of
this Indenture by virtue of such conflict.

 

39

 

Section 1011. Restricted Payments.

 

(a)           The Partnership
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, (all such payments and other actions set forth in these clauses (1) through
(4) below being collectively referred to as a “Restricted Payment”):

 

(1)           declare or pay
any dividend or any other distribution or payment on or with respect to Capital
Stock of the Partnership or any of its Restricted Subsidiaries or any payment
made to the direct or indirect holders, in their capacities as such, of Capital
Stock of the Partnership or any of its Restricted Subsidiaries other than (a) dividends
or distributions payable solely in Capital Stock of the Partnership (excluding
Redeemable Capital Stock), or in options, warrants or other rights to purchase
Capital Stock of the Partnership (excluding Redeemable Capital Stock); (b) dividends
or other distributions to the extent declared or paid to the Partnership or any
Restricted Subsidiary of the Partnership; or (c) dividends or other
distributions by any Restricted Subsidiary of the Partnership to all holders of
Capital Stock of that Restricted Subsidiary on a pro rata basis, including, in
the case of the Operating Partnership, to the General Partner;

 

(2)           purchase,
redeem, defease or otherwise acquire or retire for value any Capital Stock of
the Partnership or any of its Restricted Subsidiaries, other than any Capital
Stock owned the Partnership or a Restricted Subsidiary of the Partnership;

 

(3)           make any
principal payment on, or purchase, defease, repurchase, redeem or otherwise
acquire or retire for value, prior to any scheduled maturity, scheduled
repayment, scheduled sinking fund payment or other stated maturity, any
subordinated Indebtedness, other than any such Indebtedness owned by the
Partnership or a Restricted Subsidiary of the Partnership; or

 

(4)           make any
Investment, other than a Permitted Investment, in any entity,

 

unless,
at the time of and after giving effect to such Restricted Payment:

 

(1)           no Default or
Event of Default has occurred and is continuing; and

 

(2)           the Restricted
Payment, together with the aggregate of all other Restricted Payments made by
the Partnership and its Restricted Subsidiaries during the fiscal quarter
during which the Restricted Payment is made will not exceed:

 

(A) if the Consolidated Fixed
Charge Coverage Ratio of the Partnership is greater than 1.75 to 1.00, an
amount equal to Available Cash for the immediately preceding fiscal quarter; or

 

(B) if the Consolidated Fixed
Charge Coverage Ratio of the Partnership is equal to or less than 1.75 to 1.00,
an amount equal to the sum of $50 million, less the aggregate amount of all
Restricted Payments made by the Partnership and its Restricted Subsidiaries in
accordance with this clause during the period ending on the last day of the
fiscal quarter of the Partnership immediately preceding the date of the
Restricted Payment and beginning on the first day of the sixteenth full 

 

40

 

fiscal quarter immediately
preceding the date of the Restricted Payment plus the aggregate net cash proceeds
of capital contributions to the Partnership from any Person other than a
Restricted Subsidiary of the Partnership, or issuance and sale of shares of
Capital Stock, other than Redeemable Capital Stock, of the Partnership to any
entity other than to a Restricted Subsidiary of the Partnership, in any case
made during the period ending on the last day of the fiscal quarter of the
Partnership immediately preceding the date of the Restricted Payment and
beginning on the first day of the sixteenth full fiscal quarter immediately
preceding the date of the Restricted Payment.

 

(b)           The provisions of Section 1011(a) will not
prohibit:

 

(1)           the payment of
any dividend or distribution within 60 days after the date of its declaration
if, at the date of declaration, the payment would be permitted as stated above;

 

(2)           the redemption,
repurchase or other acquisition or retirement of any shares of any class of
Capital Stock of the Partnership or any Restricted Subsidiary of the
Partnership in exchange for, or out of the net cash proceeds of, a
substantially concurrent capital contribution to the Partnership from any
entity other than a Restricted Subsidiary of the Partnership; or issuance and
sale of other Capital Stock, other than Redeemable Capital Stock, of the Partnership
to any entity other than to a Restricted Subsidiary of the Partnership; provided, however, that the amount of any
net cash proceeds that are utilized for any redemption, repurchase or other
acquisition or retirement will be excluded from the calculation of Available
Cash; or

 

(3)           any redemption,
repurchase or other acquisition or retirement of subordinated Indebtedness in
exchange for, or out of the net cash proceeds of, a substantially concurrent
capital contribution to the Partnership from any entity other than a Restricted
Subsidiary of the Partnership; or issuance and sale of Indebtedness of the
Partnership issued to any entity other than a Restricted Subsidiary or the
Partnership, so long as the Indebtedness is Permitted Refinancing Indebtedness;
provided, however, that the
amount of any net cash proceeds that are utilized for any redemption,
repurchase or other acquisition or retirement will be excluded from the
calculation of Available Cash.

 

In computing the amount of
Restricted Payments in Section 1011(a) above, the Restricted Payments
permitted by clause (1) of this paragraph (b) will be included and
the Restricted Payments permitted by clauses (2) and (3) of this
paragraph (b) will not be included.

 

The amount of all Restricted
Payments (other than cash) will be the fair market value on the date of the
Restricted Payment of the assets proposed to be transferred by the Partnership
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment.  The fair market value of any assets
that are required to be valued by this Section 1011 will be determined in
good faith by an authorized financial officer of the General Partner on the
date of the Restricted Payment of the assets proposed to be transferred.

 

41

 

 

Section 1012.
Liens.

 

The Partnership will not,
and will not permit any of its Restricted Subsidiaries to incur any Liens or
other encumbrance, unless the Lien is a Permitted Lien or the Notes are
directly secured equally and ratably with the obligation or liability secured
by such Lien.

 

Section 1013.
Transactions with Affiliates.

 

(a)           The Partnership will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or suffer to exist any transaction or series of related
transactions, including the sale, transfer, disposition, purchase, exchange or
lease of assets, property or services, other than as provided for in the
partnership agreement or other organizational documents of the Issuers or the
Operating Partnership, as applicable, and the other agreements entered into
between the Partnership or the Operating Partnership and any of their
Affiliates, with, or for the benefit of, any Affiliates of the Partnership
(each an “Affiliate Transaction”),
unless:

 

(1)           the transaction or series of
related transactions are between the Partnership and its Restricted
Subsidiaries or between two Restricted Subsidiaries; or

 

(2)           the transaction or series of
related transactions are on terms that are no less favorable to the Partnership
or the Restricted Subsidiary, as the case may be, than those which would have
been obtained in a comparable transaction at such time from an entity that is
not an Affiliate of the Partnership or Restricted Subsidiary, and, with respect
to transaction(s) involving aggregate payments or value equal to or
greater than $20 million, the Partnership delivers an Officers’ Certificate to
the Trustee certifying that the transaction(s) is on terms that are no
less favorable to the Partnership or the Restricted Subsidiary than those which
would have been obtained from an entity that is not an Affiliate of the
Partnership or Restricted Subsidiary and has been approved by a majority of the
Board of Directors of the General Partner, including a majority of the disinterested
directors.

 

(b)           The following items will not
be deemed to be Affiliate Transactions and, therefore, will not be subject to
the provisions of Section 1013(a) or otherwise be restricted by this
Indenture or the Notes:

 

(1)           any employment agreement,
stock option agreement, restricted stock agreement, employee stock ownership
plan related agreements, or similar agreement and arrangements, in the ordinary
course of business;

 

(2)           transactions permitted by Section 1011
hereof and the definition of “Permitted Investments”;

 

(3)           transactions 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 business
operated by the Partnership, its Subsidiaries and Affiliates;

 

(4)           any Accounts Receivable
Securitization;

 

42

 

(5)           any affiliate
trading transactions done in the ordinary course of business; and

 

(6)           any transaction
that is a Flow-Through Acquisition.

 

Section 1014.
Dividend and Other Payment Restrictions Affecting
Subsidiaries.

 

(a)           The Partnership will not,
and will not permit any of its Restricted Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to:

 

(1)           pay dividends,
in cash or otherwise, or make any other distributions on or with respect to its
Capital Stock or any other interest or participation in, or measured by, its
profits;

 

(2)           pay any
Indebtedness owed to the Partnership or any other Restricted Subsidiary;

 

(3)           make loans or
advances to, or any investment in, the Partnership or any other Restricted
Subsidiary;

 

(4)           transfer any of
its properties or assets to the Partnership or any other Restricted Subsidiary;
or

 

(5)           guarantee any
Indebtedness of the Partnership or any other Restricted Subsidiary.

 

All such restrictions and
other actions set forth in these clauses (1) through (5) above being
collectively referred to as “Payment
Restrictions.”

 

(b)           The provisions of Section 1014(a) will
not apply to (and therefore the following are permitted) encumbrances or
restrictions existing under or by reason of:

 

(1)           applicable law;

 

(2)           any agreement
in effect at or entered into on the Issue Date or any agreement relating to any
Indebtedness permitted to be incurred under this Indenture, or with respect to
any Credit Facility (including agreements or instruments evidencing
Indebtedness incurred after the Issue Date); provided, however, that the encumbrances
and restrictions contained in the agreements governing such permitted
Indebtedness are not materially more restrictive with respect to the Payment
Restrictions than those set forth in the agreements governing the Operating
Partnership’s Credit Facilities or existing Indebtedness as in effect on the
Issue Date;

 

(3)           customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of the Partnership or any Restricted Subsidiary;

 

43

 

(4)           specific
purchase money obligations or Capital Leases for property subject to such
obligations;

 

(5)           any agreement
of an entity (or any it its Restricted Subsidiaries) acquired by the
Partnership or any Restricted Subsidiary, in existence at the time of the
acquisition but not created in contemplation of the acquisition, which
encumbrance or restriction is not applicable to any third party other than the
entity; or

 

(6)           provisions
contained in instruments relating to Indebtedness which prohibit the transfer
of all or substantially all of the assets of the obligor of the Indebtedness
unless the transferee shall assume the obligations of the obligor under the
agreement or instrument.

 

Section 1015.
Offer to Repurchase Upon Change of Control.

 

(a)           Upon the occurrence of a
Change of Control, the Issuers will make an offer (a “Change of Control Offer”) to each Holder to repurchase, in
cash, all or any part (equal to $2,000 or an integral multiple of $1,000 in
excess thereof) of that Holder’s Notes at a purchase price equal to 101% of the
aggregate principal amount of the Notes or portion of Notes validly tendered
for payment thereof plus accrued and unpaid interest on the Notes repurchased,
if any, to the date of purchase (the “Change
of Control Payment”). Within 30 days following any Change of
Control, the Issuers will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and stating:

 

(1)           that the Change of Control
Offer is being made pursuant to this Section 1015 and that all Notes
tendered will be accepted for payment;

 

(2)           the purchase price and the
purchase date, which shall be no later than 30 Business Days from the date such
notice is mailed (the “Change of Control
Payment Date”);

 

(3)           that any Notes not tendered
will continue to accrue interest;

 

(4)           that, unless the Issuers
defaults in the payment of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer will cease to accrue
interest after the Change of Control Payment Date;

 

(5)           that Holders electing to
have any Notes purchased pursuant to a Change of Control Offer will be required
to surrender the Notes, with the form entitled “Option of Holder to Elect
Purchase” on the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;

 

(6)           that Holders will be
entitled to withdraw any election to have their Notes purchased if the Paying
Agent receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes delivered
for

 

44

 

purchase, and a statement
that such Holder is withdrawing his election to have the Notes purchased; and

 

(7)           that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $2,000 in principal amount or an integral multiple of $1,000
in excess thereof.

 

The Issuers will comply with
the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent those laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change in Control.  To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Section 1015, the Issuers will comply with the
applicable securities laws and regulations and will not be deemed to have
breached their obligations under this Section 1015 by virtue of such
conflict.

 

(b)           On the Change of Control
Payment Date, the Issuers will, to the extent lawful:

 

(1)           accept for
payment all Notes or portions thereof properly tendered in accordance with the
Change of Control Offer;

 

(2)           deposit an
amount equal to the Change of Control Payment for the Notes with the Paying
Agent in respect of all Notes or portions of Notes properly tendered; and

 

(3)           deliver or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers’ Certificate stating the aggregate principal amount of Notes or
portions of Notes being tendered to the Issuers.

 

The Paying Agent will
promptly mail to each Holder of Notes properly tendered the Change of Control
Payment for such Notes, and the Trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a
principal amount of $2,000 or an integral multiple of $1,000 in excess
thereof.  The Issuers will publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.

 

Notwithstanding anything to
the contrary in this Section 1015, the Issuers will not be required to
make a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 1015 and purchases
all Notes properly tendered and not withdrawn under the Change of Control
Offer.

 

Section 1016.
Taxes.

 

The Issuers will pay, and
will cause each of their Subsidiaries to pay, prior to delinquency, all
material taxes, assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to the Holders of
the Notes.

 

45

 

Section 1017.
Stay, Extension and Usury Laws.

 

The Issuers covenant (to the
extent that they may lawfully do so) that they will not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuers (to the extent that they may lawfully do so) hereby
expressly waive all benefit or advantage of any such law, and covenant that
they will not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.

 

SECTION 11.         Redemption

 

(A)          Article XI of the Base
Indenture shall be amended by adding the following Sections:

 

Section 1108.
Optional Redemption

 

(a)           On and after June 15,
2015, the Issuers may redeem the Notes, in whole or in part, upon not less than
30 nor more than 60 days’ notice (provided that more than 60 days’ notice may
be given if the redemption is being made in connection with a defeasance of the
Notes or a satisfaction and discharge of this Indenture), at the Redemption
Prices (expressed in percentages of principal amount) listed in the table
below, plus accrued and unpaid interest on the Notes to the applicable
Redemption Date, if redeemed during the twelve months beginning on June 15
of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2015

  	
   

  	
  104.313

  	
  %

  
	
  2016

  	
   

  	
  102.875

  	
  %

  
	
  2017

  	
   

  	
  101.438

  	
  %

  
	
  2018 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

(b)           In addition, at any time on
or prior to June 15, 2013, the Issuers, at their option, may use the net
proceeds of one or more Equity Offerings to redeem up to an aggregate of 35% of
the aggregate principal amount of the Notes originally issued under this
Indenture at a Redemption Price equal to 108.625% of the aggregate principal
amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the
Redemption Date; provided that at least 65% of the initial aggregate principal
amount of the Notes must remain outstanding immediately after the occurrence of
such redemption and the Issuers must complete such redemption within 90 days of
the closing of the Equity Offering.

 

(c)           Any redemption pursuant to
this Section 1108 shall be made pursuant to the provisions of Section 1101
through 1107 hereof.

 

46

 

Section 1109.
Mandatory Redemption.

 

The Issuers are not required
to make any mandatory redemption or sinking fund payments with respect to the
Notes.  The Issuers may at any time and
from time to time purchase Notes in the open market or otherwise.

 

Section 1110.
Offer to Purchase by Application of Excess
Proceeds.

 

In the event that, pursuant
to Section 1010 hereof, the Issuers are required to commence an offer to
all Holders to purchase Notes (an “Asset
Sale Offer”), they will follow the procedures specified below.

 

The Asset Sale Offer shall
be made to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets.  The Asset Sale Offer will remain open for a
period of at least 20 Business Days following its commencement and not more
than 30 Business Days, except to the extent that a longer period is required by
applicable law (the “Offer Period”).  No later than three Business Days after the
termination of the Offer Period (the “Purchase
Date”), the Issuers will apply all Excess Proceeds (the “Offer Amount”) to the purchase of Notes
and such other pari passu
Indebtedness (on a pro rata basis, if applicable) or, if less than the Offer
Amount has been tendered, all Notes and other Indebtedness tendered in response
to the Asset Sale Offer.  Payment for any
Notes so purchased will be made in the same manner as interest payments are
made.

 

If the Purchase Date is on
or after a Regular Record Date and on or before the related Interest Payment
Date, any accrued and unpaid interest will be paid to the Person in whose name
a Security is registered at the close of business on such Regular Record Date,
and no additional interest will be payable to Holders who tender Notes pursuant
to the Asset Sale Offer.

 

Upon the commencement of an
Asset Sale Offer, the Issuers will send, by first class mail, a notice to the
Trustee and each of the Holders, with a copy to the Trustee.  The notice will contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer.  The notice, which will
govern the terms of the Asset Sale Offer, will state:

 

(1)           that the Asset
Sale Offer is being made pursuant to this Section 1110 and Section 1010
hereof and the length of time the Asset Sale Offer will remain open;

 

(2)           the Offer
Amount, the purchase price and the Purchase Date;

 

(3)           that any Note
not tendered or accepted for payment will continue to accrue interest;

 

(4)           that, unless
the Issuers default in making such payment, any Note accepted for payment
pursuant to the Asset Sale Offer will cease to accrue interest after the
Purchase Date;

 

(5)           that Holders
electing to have a Note purchased pursuant to an Asset Sale Offer may elect to
have Notes purchased only in denominations of $2,000 and integral multiples of
$1,000 in excess thereof;

 

47

 

(6)           that Holders
electing to have a Note purchased pursuant to any Asset Sale Offer will be
required to surrender the Note, with the form entitled “Option of Holder to
Elect Purchase” on the reverse of the Note completed, or transfer by book-entry
transfer, to the Issuers, a Depositary, if appointed by the Issuers, or a
Paying Agent at the address specified in the notice at least three days before
the Purchase Date;

 

(7)           that Holders
will be entitled to withdraw their election if the Issuers, the Depositary or
the Paying Agent, as the case may be, receives, not later than the expiration
of the Offer Period, a facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to have
such Note purchased;

 

(8)           that, if the
aggregate principal amount of Notes and other pari
passu Indebtedness surrendered by Holders exceeds the Offer Amount,
the Issuers will select the Notes and other pari
passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and
such other pari passu Indebtedness
surrendered (with such adjustments as may be deemed appropriate by the Issuers
so that only Notes in denominations of $2,000, or integral multiples of $1,000
in excess thereof, will be purchased); and

 

(9)           that Holders
whose Notes were purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer).

 

On or before the Purchase
Date, the Issuers will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and will deliver to the Trustee an Officers’ Certificate stating that
such Notes or portions thereof were accepted for payment by the Issuers in
accordance with the terms of this Section 1110.  The Issuers, the Depositary or the Paying
Agent, as the case may be, will promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Issuers for purchase, and the Issuers will promptly issue a new
Note, and the Trustee, upon written request from the Issuers will authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal
to any unpurchased portion of the Note surrendered.  Any Note not so accepted shall be promptly
mailed or delivered by the Issuers to the Holder thereof.  The Issuers will publicly announce the
results of the Asset Sale Offer on the Purchase Date.

 

Other than as specifically
provided in this Section 1110, any purchase pursuant to this Section 1110
shall be made pursuant to the provisions of Sections 1101 through 1107 hereof.

 

(B)           Article XI of the Base
Indenture shall be amended by adding the following text to the end of Section 1102:

 

48

 

“Notwithstanding the
foregoing, more than 60 days’ notice of redemption may be given if the
redemption is being made in connection with a defeasance of the Notes or a
satisfaction and discharge of this Indenture.”

 

(C)           Article XI of the Base
Indenture shall be amended by adding the following text to the end of Section 1104:

 

“Notwithstanding the
foregoing, more than 60 days’ notice of redemption may be given if the
redemption is being made in connection with a defeasance of the Notes or a
satisfaction and discharge of this Indenture. 
Once notice of redemption is mailed in accordance with this Section 1104,
Securities called for redemption become irrevocably due and payable on the
Redemption Date at the Redemption Price. 
A notice of redemption may not be conditional.”

 

SECTION 12.         Application of
the Article of the Base Indenture Regarding Sinking Funds

 

The provisions of Article XII
of the Base Indenture shall not apply to the Notes.

 

SECTION 13.         Defeasance

 

(A)          Article XIII of the
Base Indenture shall be amended by deleting the following Sections in their
entirety and replacing them as follows:

 

Section 1301.
Option to Effect Legal Defeasance or Covenant
Defeasance.

 

The Issuers may, at the
option of the Board of Directors of the General Partner, on the Issuers’
behalf, and the Board of Directors of Finance Corp., and at any time, elect to
have Section 1302 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article XIII.  The Issuers may, at their option and at any
time, elect to have Section 1303 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article XIII.

 

Section 1302.
Legal Defeasance and Discharge.

 

Upon the Issuers’ exercise
under Section 1301 hereof of the option applicable to this Section 1302,
the Issuers will, subject to the satisfaction of the conditions set forth in Section 1307
hereof, be deemed to have been discharged from their obligations with respect
to all outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that
the Issuers will be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which will thereafter be deemed to be
“outstanding” only for the purposes of Section 1304 hereof and the other
Sections of this Indenture referred to in clauses (1) and (2) below,
and to have satisfied all their other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Issuers,
shall execute proper instruments acknowledging the same), except for the
following provisions which will survive until otherwise terminated or
discharged hereunder:

 

(1)           the rights of
Holders of outstanding Notes to receive payments in respect of the principal
of, or interest or premium, if any, on such Notes when such payments are due
from the trust referred to in Section 1307 hereof;

 

49

 

(2)           the Issuers’
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes or mutilated, destroyed, lost or stolen Notes under Article III;

 

(3)           the Issuers’
obligation to maintain an office or agency for payment under Section 1002
hereof and money for security payments held in trust;

 

(4)           the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Issuers’
obligations in connection therewith; and

 

(5)           the legal
defeasance and covenant defeasance provisions of this Article XIII.

 

Subject
to compliance with this Article XIII, the Issuers may exercise their
option under this 1302 notwithstanding the prior exercise of their option under
Section 1303 hereof.

 

Section 1303. Covenant Defeasance.

 

Upon the Issuers’ exercise
under Section 1301 hereof of the option applicable to this Section 1303,
the Issuers will, subject to the satisfaction of the conditions set forth in Section 1307
hereof, be released from each of their obligations under the covenants
contained in Sections 1009, 1010, 1011, 1012, 1013, 1014, 1015 and 1007 hereof
and clause (4) of Section 801 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 1307
hereof are satisfied (hereinafter, “Covenant
Defeasance”), and the Notes will thereafter be deemed not
“outstanding” for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but will continue to be deemed “outstanding” for all other purposes
hereunder (it being understood that such Notes will not be deemed outstanding
for accounting purposes).  For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Issuers may omit to comply with and will have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply will not
constitute a Default or an Event of Default under Section 501 hereof, but,
except as specified above, the remainder of this Indenture and such Notes will
be unaffected thereby.  In addition, upon
the Issuers’ exercise under Section 1301 hereof of the option applicable
to this Section 1303 hereof, subject to the satisfaction of the conditions
set forth in 1307 hereof, Section 501(3) hereof will not constitute
an Event of Default.

 

Section 1304.
Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.

 

Subject to Section 1305
hereof, all money and non-callable U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 1304, the “Trustee”) pursuant to
Section 1307 hereof in respect of the outstanding Notes will be held in
trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Issuers or any of their Restricted Subsidiaries acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to 

 

50

 

become
due thereon in respect of principal, premium, if any, and interest, but such
money need not be segregated from other funds except to the extent required by
law.

 

The Issuers will pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the cash or non-callable U.S. Government Obligations deposited
pursuant to Section 1307 hereof or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.

 

Notwithstanding anything in
this Article XIII to the contrary, the Trustee will deliver or pay to the
Issuers from time to time upon the written request of the Issuers any money or
non-callable U.S. Government Obligations held by it as provided in Section 1307
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee (which may be the opinion delivered under Section 1307(1) hereof),
are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

(B)           Article XIII shall be
amended by adding section 1307 as follows:

 

Section 1307. Conditions to Legal or Covenant Defeasance.

 

In order to exercise either
Legal Defeasance or Covenant Defeasance under either Section 1302 or 1303
hereof:

 

(1)           the Issuers
must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders, cash in United States dollars, non-callable U.S. Government Obligations, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium, if any, and interest on the outstanding Notes on the Stated Maturity
for payment thereof or on the applicable Redemption Date, as the case may be;

 

(2)           the Issuers
will deliver to the Trustee an Opinion of Counsel stating that:

 

(a) 
after the 91st day following the deposit the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, and all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with and confirming other matters;

 

(b) 
in the case of an election under Section 1302 hereof, that the
Issuers have received from, or there has been published by, the Internal
Revenue Service a ruling, or since the Issue Date, there shall have been a
change in the applicable federal income tax law, in either case to the effect
that, and based thereon, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred; and

 

51

 

(c) 
in the case of an election under Section 1303 hereof, that the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred;

 

(3)           the Issuers
must deliver to the Trustee an Officers’ Certificate stating that the deposit
was not made by the Issuers with the intent of preferring the Holders of Notes
over the other creditors of the Issuers or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Issuers;

 

(4)           no Event of
Default shall have occurred and be continuing on the date of such deposit or
insofar as Events of Default described in Section 501(6) or 501(7) hereof
are concerned, at any time in the period ending on the 91st day after the date of deposit; and

 

(5)           such Legal
Defeasance or Covenant Defeasance will not result in a breach, violation of, or
constitute a default under, any material agreement or instrument (other than
this Indenture) to which the Issuers or any of their Restricted Subsidiaries is
a party or by which the Issuers or any of their Restricted Subsidiaries is
bound.

 

SECTION 14.         U.S.A. Patriot
Act.

 

The parties hereto
acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act,
the Trustee, like all financial institutions and in order to help fight the
funding of terrorism and money laundering, is required to obtain, verify, and
record information that identifies each person or legal entity that establishes
a relationship or opens an account with the Trustee.  The parties to this First Supplemental
Indenture agree that they will provide the Trustee with such information as it
may request in order for the Trustee to satisfy the requirements of the U.S.A.
Patriot Act.

 

SECTION 15.         Miscellaneous.

 

(A)          The Base Indenture, as
supplemented and amended by this First Supplemental Indenture, is in all
respects ratified and confirmed, and the Base Indenture and this First
Supplemental Indenture shall be read, taken and construed as one and the same
instrument. All provisions included in this First Supplemental Indenture
supersede any similar provisions included in the Base Indenture unless not
permitted by law.  The Trustee accepts
the trusts created by the Indenture, as supplemented by this First Supplemental
Indenture, and agrees to perform the same upon the terms and conditions of the
Indenture, as supplemented by this First Supplemental Indenture.

 

(B)           If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in this First Supplemental Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.

 

(C)           All covenants and agreements
in this First Supplemental Indenture by the Company shall bind its successors
and assigns, whether so expressed or not.

 

52

 

(D)          In case any provision in
this First Supplemental Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions (or of the other series of Securities) shall not in any way be
affected or impaired thereby.

 

(E)           Nothing in this First
Supplemental Indenture, expressed or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the Holders of the
Notes any benefit or any legal or equitable right, remedy or claim under this
First Supplemental Indenture.

 

(F)           This First Supplemental
Indenture and each Note shall be deemed to be a contract made under the laws of
the State of New York and this First Supplemental Indenture and each such Note
shall be governed by and construed in accordance with the laws of the State of
New York without regard to conflicts of law principles thereof.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
FIRST SUPPLEMENTAL INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

(G)           This First Supplemental
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.  The exchange of copies
of this First Supplemental Indenture and of signature pages by facsimile
or PDF transmission shall constitute effective execution and delivery of this
First Supplemental Indenture for all purposes. 
Signatures of the parties hereto transmitted by facsimile or PDF shall
be deemed to be their original signatures for all purposes.

 

(H)          The provisions of this First
Supplemental Indenture shall become effective as of the date hereof.

 

[Remainder of page intentionally left blank.]

 

53

 

IN WITNESS WHEREOF, the
parties hereto have caused this First Supplemental Indenture to be duly
executed, all as of the day and year first above written.

 

	
   

  	
  FERRELLGAS
  PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By: Ferrellgas, Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  RYAN VAN WINKLE

  
	
   

  	
   

  	
  Name: J. Ryan Van Winkle

  
	
   

  	
   

  	
  Title: Senior Vice
  President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  FERRELLGAS
  PARTNERS FINANCE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  RYAN VAN WINKLE

  
	
   

  	
   

  	
  Name: J. Ryan Van Winkle

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer & Sole Director

  

 

54

 

	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  THOMAS E. TABOR

  
	
   

  	
   

  	
  Name: Thomas E. Tabor

  
	
   

  	
   

  	
  Title: Vice President

  

 

55

 

EXHIBIT A

 

[Face of Security]

CUSIP                    

 

85/8% Senior Notes due 2020

 

	
  No.

  	
   

  	
  $

  

 

FERRELLGAS PARTNERS, L.P.

FERRELLGAS PARTNERS FINANCE CORP.

 

promises to pay to CEDE & CO. or registered assigns,

 

the principal sum of

Dollars on June 15, 2020.

 

Interest Payment Dates:  June 15
and December 15

 

Record Dates:  June 1 and December 1

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FERRELLGAS
  PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  Ferrellgas, Inc., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  J. Ryan Van Winkle

  
	
   

  	
  Title:  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
  FERRELLGAS
  PARTNERS FINANCE CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  J. Ryan Van Winkle

  
	
   

  	
  Title:  Chief
  Financial Officer

  

 

	
  This
  is one of the Notes referred to in the within-mentioned Indenture:

  	
   

  
	
   

  	
   

  
	
  U.S.
  BANK NATIONAL ASSOCIATION

  	
   

  
	
  as Trustee

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Authorized Signatory

  	
   

  
			

 

56

 

[Back of Security]

 

85/8% Senior Notes
due 2020

 

[Insert
the Global Security Legend, if applicable pursuant to the provisions of the
Indenture]

 

Capitalized terms used
herein have the meanings assigned to them in the Indenture referred to below
unless otherwise indicated.

 

(1)           INTEREST.  Ferrellgas Partners, L.P., a Delaware limited
partnership, and Ferrellgas Partners Finance Corp., a Delaware corporation
(together, the “Issuers”), promise to pay interest on the principal amount of
this Note at 8.625% per annum from April 13, 2010 until maturity.  The Issuers will pay interest semi-annually
in arrears on June 15 and December 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each, an
“Interest Payment Date”).  Interest on
the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the
first Interest Payment Date shall be June 15, 2010.  The Issuers will pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; they will pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent
lawful.  Interest will be computed on the
basis of a 360-day year of twelve 30-day months.

 

(2)           METHOD
OF PAYMENT.  The Issuers
will pay interest on the Notes to the Persons who are registered Holders of
Notes at the close of business on the June 1 and December 1 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in Section 307
of the Indenture with respect to defaulted interest.  The Notes will be payable as to principal,
premium, if any, and interest at the office or agency of the Issuers maintained
for such purpose within the City and State of New York, or, at the option of
the Issuers, payment of interest may be made by check mailed to the Holders at
their addresses set forth in the register of Holders; provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium on, all Global Securities the Holders of which will have
provided wire transfer instructions to the Issuers or the Paying Agent.  Such payment will be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.

 

57

 

(3)           PAYING
AGENT AND REGISTRAR.  Initially,
U.S. Bank National Association, the Trustee under the Indenture, will act as
Paying Agent and Registrar.  The Issuers
may change any Paying Agent or Registrar without notice to any Holder.  The Issuers or any of their Subsidiaries may
act in any such capacity.

 

(4)           INDENTURE.  The Issuers issued the Notes under an
Indenture dated as of April 13, 2010, as supplemented by the First
Supplemental Indenture dated as of April 13, 2010 (as supplemented, the
“Indenture”), among the Issuers and the Trustee.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.  The Notes are unsecured obligations of the
Issuers.

 

(5)           Optional
Redemption.

 

(i)            On or after June 15,
2015, the Issuers will have the option to redeem the Notes, in whole or in
part, upon not less than 30 nor more than 60 days’ notice (provided that more
than 60 days’ notice may be given if the redemption is being made in connection
with a defeasance of the Notes or a satisfaction and discharge of the
Indenture), at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon to the
applicable redemption date, if redeemed during the twelve months beginning on June 15
of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2015

  	
   

  	
  104.313

  	
  %

  
	
  2016

  	
   

  	
  102.875

  	
  %

  
	
  2017

  	
   

  	
  101.438

  	
  %

  
	
  2018 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(ii)           In addition, at any time on
or prior to June 15, 2013, the Issuers, at their option, may use the net
proceeds of one or more Equity Offerings to redeem up to an aggregate of 35% of
the aggregate principal amount of the Notes originally issued under the
Indenture at a Redemption Price equal to 108.625% of the aggregate principal
amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the
Redemption Date; provided that at least 65% of the initial aggregate principal
amount of the Notes must remain outstanding immediately after the occurrence of
such redemption and the Issuers must complete such redemption within 90 days of
the closing of the Equity Offering.

 

(6)           Mandatory
Redemption.

 

The Issuers will not be
required to make mandatory redemption payments with respect to the Notes.

 

58

 

(7)           Repurchase
at Option of Holder.

 

(a) 
If there is a Change of Control, the Issuers will be required to make
an offer (a “Change of Control Offer”) to repurchase, in cash, all or any part
(equal to $2,000 or an integral multiple of $1,000 in excess thereof) of each
Holder’s Notes at a purchase price equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase (the “Change of Control Payment”). 
Within 30 days following any Change of Control, the Issuers will mail a
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.

 

(b) 
If the Partnership or any of its Restricted Subsidiary consummates any
Asset Sales, within 15 days of each date on which the aggregate amount of
Excess Proceeds exceeds $20 million, the Issuers will commence an offer to all
Holders of Notes and all holders of other Indebtedness that are pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets (an “Asset Sale
Offer”) pursuant to Sections 1010 and 1110 of the Indenture to purchase the
maximum principal amount of Notes and other pari
passu Indebtedness that may be purchased out of the Excess Proceeds
at an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date fixed for
the closing of such offer, in accordance with the procedures set forth in the
Indenture.  To the extent that the
aggregate amount of Notes and other pari
passu Indebtedness tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Partnership or any Restricted Subsidiary may use
such deficiency for general business purposes. 
If the aggregate principal amount of Notes and other pari passu Indebtedness surrendered by
holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and other pari passu
Indebtedness to be purchased on a pro rata
basis.  Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Issuers prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled “Option of Holder to Elect Purchase”
on the reverse of the Notes.

 

(8)           NOTICE
OF REDEMPTION.  Notice of
redemption will be mailed at least 10 days but not more than 60 days (provided
that more than 60 days’ notice may be given if the redemption is being made in
connection with a defeasance of the Notes or a satisfaction and discharge of
the Indenture) before the redemption date to each Holder whose Notes are to be
redeemed at its registered address. 
Notes in denominations larger than $2,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Notes held by a Holder are
to be redeemed.  On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.

 

(9)           DENOMINATIONS,
TRANSFER, EXCHANGE.  The Notes
are in registered form without coupons in denominations of $2,000 and integral
multiples of $1,000 in excess thereof. 
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture.  The Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Issuers may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuers need not exchange or register the
transfer of any Note or portion

 

59

 

of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part.  Also, the
Issuers need not exchange or register the transfer of any Notes for a period of
15 days before a selection of Notes to be redeemed or during the period between
a record date and the corresponding Interest Payment Date.

 

(10)         PERSONS
DEEMED OWNERS.  The
registered Holder of a Note may be treated as its owner for all purposes.

 

(11)         AMENDMENT,
SUPPLEMENT AND WAIVER. 
Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes (including, consents obtained in
connection with a tender offer or exchange offer for the Notes), and any
existing default or compliance with any provision of the Indenture or the Notes
may be waived with the consent of the Holders of a majority in aggregate
principal amount of the then outstanding Notes (including, consents obtained in
connection with a tender offer or exchange offer for the Notes).  Without the consent of any Holder of a Note,
the Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Issuers’ obligations to Holders of the Notes  in case of a merger or consolidation, to make
any change that could provide any additional rights or benefits to the Holders
of the Notes that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act, or to provide for security for or add guarantees with
respect to the Notes.

 

(12)         DEFAULTS
AND REMEDIES.  Events of
Default include:  Each of the following is
an “Event of Default”: (i) default in the payment of the principal of or
premium, if any, on any Note when the same becomes due and payable, upon stated
maturity, acceleration, optional redemption, required purchase, scheduled
principal payment or otherwise; (ii) default in the payment of an
installment of interest on any of the Notes, when the same becomes due and
payable, which default continues for a period of 30 days; (iii) failure of
the Issuers to perform or observe any other term, covenant or agreement
contained in the Notes or the Indenture, other than a default specified in
either (i) or (ii) above, and the default continues for a period of
45 days after written notice of the default requiring the Issuers to remedy the
same has been given to the Partnership by the Trustee or to the Issuers and the
Trustee by Holders of at least 25% in aggregate principal amount of the Notes
then outstanding; (iv) default or defaults under certain other agreements,
instruments, mortgages, bonds, debentures or other evidences of Indebtedness
under which the Partnership or any Restricted Subsidiary of the Partnership has
outstanding Indebtedness in excess of $25 million if the default (x) is
caused by a failure to pay principal of or premium, if any, or interest on to
such Indebtedness within the applicable grace period, if any, provided with
respect to such Indebtedness or (y) results in the acceleration of such
Indebtedness prior to its stated maturity; (v) certain final judgment or
judgments, which is or are non-appealable and non-reviewable or which has or
have not been stayed pending appeal or review or as to which all rights to
appeal or review have expired or been exhausted, shall have been rendered
against the

 

60

 

Partnership,
any Restricted Subsidiary or the General Partner provided such judgment or
judgments requires or require the payment of money in excess of $25 million in
the aggregate and is not covered by insurance or discharged or stayed pending
appeal or review within 60 days after entry of such judgment or in the event of
a stay, within 30 days after the stay expires; or (vi) specified events of
bankruptcy, insolvency, or reorganization with respect to the Issuers or any of
their Significant Subsidiaries as more fully set forth in the Indenture.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the applicable series of Notes then outstanding may declare all the Notes of
that series to be due and payable. 
Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Partnership, Finance Corp. or any Significant Subsidiary, all outstanding Notes
will become due and payable without further action or notice.  Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. 
Subject to certain limitations, Holders of a majority in principal
amount of a series of then outstanding Notes may direct the Trustee of that
series of Notes in its exercise of any trust or power. The Trustee may withhold
from Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines in good faith that withholding notice is in their
interest.  The Holders of a majority in
aggregate principal amount of a series of Notes then outstanding by notice to
the Trustee for those Notes may on behalf of all Holders of Notes of that
series waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.  The Issuers are required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Issuers are required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.

 

(13)         TRUSTEE
DEALINGS WITH ISSUERS.  The
Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Issuers or their Affiliates, and
may otherwise deal with the Issuers or their Affiliates, as if it were not the
Trustee.

 

(14)         NO
RECOURSE AGAINST OTHERS.  A
limited partner of the Partnership or director, officer, employee, incorporator
or stockholder of the General Partner or Finance Corp., as such, will not have
any liability for any obligations of the Issuers under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations.  Each Holder by accepting a
Note waives and releases all such liability. 
The waiver and release are part of the consideration for the issuance of
the Notes.

 

(15)         AUTHENTICATION.  This Note will not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

 

(16)         ABBREVIATIONS.  Customary abbreviations may be used in the
name of a Holder or an assignee, such as: 
TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT
TEN (= joint tenants with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

61

 

(17)         CUSIP
NUMBERS.  Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee
may use CUSIP numbers in notices of redemption as a convenience to
Holders.  No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

(18)         GOVERNING
LAW.  THE INTERNAL LAW OF THE STATE
OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THIS NOTE
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

 

The
Issuers will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Requests may be
made to:

 

Ferrellgas, L.P.

7500 College Boulevard

Suite 1000

Overland
Park, Kansas  66210

Attention:  Investor Relations

(913)
661-1537

 

62

 

ASSIGNMENT FORM

 

To
assign this Note, fill in the form below:

 

	
  (I) or (we) assign and transfer this Note to:

  	
   

  
	
  (Insert assignee’s legal name)

  

 

	
   

  
	
  (Insert assignee’s soc. sec. or tax I.D. no.)

  

 

	
   

  
	
   

  
	
   

  
	
   

  
	
  (Print or type assignee’s name, address and zip code)

  

 

 

and irrevocably appoint
                                                                                                                                                 to
transfer this Note on the books of the Issuers. 
The agent may substitute another to act for him.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name
  appears on the face of this Note)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
						

 

*              Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee).

 

63

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

If
you want to elect to have this Note purchased by the Issuers pursuant to Section 1010
or 1015 of the Indenture, check the appropriate box below:

 

	
   

  	
  oSection 1010

  	
  oSection 1015

  

 

If
you want to elect to have only part of the Note purchased by the Issuers
pursuant to Section 1010 or Section 1015 of the Indenture, state the
amount you elect to have purchased:

 

$                      

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name
  appears on the face of this Note)

  
	
   

  	
   

  
	
   

  	
  Tax Identification No.:

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
							

 

*              Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee).

 

64

 

SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL SECURITY*

 

The
following exchanges of a part of this Global Security for an interest in
another Global Security or for a Definitive Security, or exchanges of a part of
another Global Security or Definitive Security for an interest in this Global
Security, have been made:

 

	
  Date of
  Exchange

  	
   

  	
  Amount of decrease in

  Principal Amount  of 

  this Global Security

  	
   

  	
  Amount of increase in

  Principal Amount  of 

  this Global Security

  	
   

  	
  Principal Amount

  of this Global Security

  following such decrease

  (or increase)

  	
   

  	
  Signature of authorized

  signatory of Trustee or

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

* This schedule should be included only if the Note
is issued in global form.

 

65ex104.htm

    THIRD
AMENDMENT TO MINERAL RIGHT OPTION AGREEMENT

     

    This
Third Amendment to the Mineral Right Option Agreement (the “Third Amendment”) is
made and entered into as of the 8 day of April, 2010 (the “Amendment Effective
Date”), by and between Temasek Investments Inc., a company duly
incorporated and organized under the laws of Panama (hereinafter referred to as
“Optionor”),
and Constitution Mining Corp., a company duly incorporated and organized under
the laws of the State of Delaware, United States of America (hereinafter
referred to as “Optionee”).

     

    R E C I T A L
S

     

    A. Optionor
and Optionee have previously entered into the Mineral Right Option Agreement,
dated September 29, 2008, as amended May 12, 2009 and as further amended October
29, 2009, pursuant to which Optionor granted to Optionee four exclusive options
to acquire the mineral rights to certain properties located in Peru (the “Agreement”)

     

    B. The
parties desire to amend the Agreement as set forth herein with the same force
and effect as if such amendments were incorporated into the Agreement as
originally executed.

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

     

    1. Capitalized
Terms.  Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreement.

     

    2. Purchase and Sale of Shares;
Purchase Price.

     

    (a)   
Section
2.2(c) of the Agreement is hereby deleted in its entirety.

     

    (b)   
Section
2.2(d) of the Agreement is hereby deleted in its entirety and the following is
substituted in replacement:

     

    100%
Option

     

    Subject
to the prior and due and complete exercise by the Optionee of the 50% Option in
accordance with the paragraph before, the Optionee may exercise the third and
fourth, twenty-five percent (25%) options to acquire an additional fifty percent
(50%) interest in the Mineral Rights, in accordance with the terms set out below
(hereinafter, the “100%
Option”).

     

    In order
to exercise the 100% Option, the Optionee shall within five (5) business days of
the Amendment Effective Date:

     

    (i) 
pay to
the order and direction of the Optionor $1,000,000 (United States Dollars One
Million);

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (ii) 
issue a
total of six million (6,000,000) Optionee Shares to the order and the direction
of Optionor, or whoever persons the Optionor indicates, of which two million
(2,000,000) Optionee Shares are acknowledged by Optionor to have been previously
issued in November 2009; and

     

    (iii) 
issue a
convertible note for $7,000,000 (United States Dollars Seven Million) to the
order and the direction of Optionor in the form set forth on Exhibit A hereto (the
“Convertible
Note”).

     

    For the
purposes of this Agreement, the Optionee is deemed to have fully exercised the
100% Option only once all of the obligations described in points (i), (ii), and
(iii) above have been completed.

     

    Upon
exercise of the 100% Option by the Optionee, the Optionor will immediately
proceed to transfer to Optionee, or to the person the Optionee indicates, the
final and remaining 50% of all the outstanding shareholding in BACON
HILL.  Additionally, upon the exercise of the 100% Option, the
Optionor shall become holder of the one (1) share that it currently holds in
MINERA MARAÑON as nominee and on trust for the exclusive and sole benefit and
interest of the Optionee.  The Optionor hereby undertakes to the
Optionee at all times to exercise all rights in respect of the share that it
holds in MINERA MARAÑON strictly in accordance with the Optionee
instructions.

     

    Upon
completion of the 100% Option, the Optionee shall be the owner of one hundred
percent (100%) undivided interest in the Mineral Rights through the direct
ownership of 100% of the outstanding shareholding of BACON HILL and indirect
ownership of 100% of the outstanding shareholding of MINERA
MARAÑON.

     

    3.     
Waiver of Prior Breach
and/or Default.  Optionor hereby waives any prior breach or
default of this Agreement by Optionee.

     

    4.   
  No Other
Changes.  Except for the changes set forth in this Third
Amendment, there are no other changes made by this Third Amendment to the
Agreement.  In the event that any terms, provisions or conditions of
this Third Amendment shall conflict with the terms, provisions and conditions of
the Agreement, the terms, provisions and conditions of this Third Amendment
shall govern and control.

     

    5.    
 Incorporation of
Amendment.  The parties hereby agree that: (a) this Third
Amendment is incorporated into and made a part of the Agreement; (b) any and all
references to the Agreement shall include this Third Amendment; and (c) the
Agreement and all terms, conditions and provisions of the Agreement are in full
force and effect as of the date hereof, except as expressly modified and amended
hereinabove.

     

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    6.   
 Counterparts.  This
Third Amendment may be executed in any number of counterparts and by each of the
undersigned on separate counterparts, and each such counterpart shall be deemed
to be an original, but all such counterparts taken together shall constitute but
one and the same instrument.

     

    7.    
Governing
Law.  This Third Amendment shall, in all respect, be governed,
construed, and enforced in accordance with the laws of the State of
Nevada.

     

    [signature
page follows]

     

     

     

     

     

    
 

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have caused this Third Amendment to be effective as
of the date first set forth above.

     

    Temasek
Investments, Inc.

     

    /s/ Jose
Silva                                           

    By:           Jose
Silva

    Its:           President

     

    Constitution
Mining Corp.

     

    /s/ Michael
Stocker                              

    By:           Michael
Stocker

    Its:           Chief
Executive Officer

     

    

     

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    EXHIBIT A

     

    CONVERTIBLE NOTE

     

     

     

     

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

    NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH IT MAY BE CONVERTED HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE
STATE SECURITIES LAWS.  NEITHER THIS NOTE NOR THE SECURITIES IN TO
WHICH IT MAY BE CONVERTED MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE ACT, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT, OR (II) UNLESS
SOLD PURSUANT TO AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT
AND/OR ANY SUCH LAWS.

     

    CONSTITUTION
MINING CORP.

     

    CONVERTIBLE PROMISSORY
NOTE

     

    DUE APRIL
8, 2013

    
       

      
        	
                $7,000,000

              	
                April
      8, 2010

              

      

       

    

    FOR VALUE
RECEIVED, the undersigned, Constitution Mining Corp., a Delaware corporation
(the “Company”), promises
to pay to the order of Temasek Investments Inc. (the “Holder”), the
principal sum of Seven Million Dollars ($7,000,000.00) on April 8, 2013 (the
“Maturity
Date”), plus interest thereon as provided herein.

     

    8.    
Mineral Right
Agreement.  This Convertible Promissory Note (this “Note”) is issued
pursuant to that certain Mineral Right Agreement dated September 29, 2008, as
amended May 12, 2009 and as further amended October 29, 2009 and April 8, 2010
by and between the Company and the Holder (the “Agreement”), and the
Holder is entitled to the benefits of this Note and the Agreement and may
enforce the agreements of the Company contained herein and therein and exercise
the remedies provided for hereby and thereby or otherwise available in respect
hereto and thereto.  Capitalized terms used herein without definition
are used herein with the meanings ascribed to such terms in the
Agreement.

     

    9.    
Interest.  In
addition to the principal amount due, the Company promises to pay interest on
the principal amount outstanding under this Note, payable annually, at the rate
of twelve percent (12%) per annum.  Interest shall accrue until the
first to occur of payment in full of this Note or conversion of this Note into
Conversion Units as provided in Section 4, and such interest shall be paid,
together with the principal amount hereof, on the first to occur of the Maturity
Date or conversion.

     

    10.   
Events of
Default.  An “Event of Default” shall occur if:

     

    (a) the
Company fails to make payment of the principal or interest of this Note within
five (5) days of the date that the same shall become due and payable;
or

     

    (b) the
Company’s Board of Directors resolves by proper corporate procedure to, or an
order, judgment or decree is entered to, wind-up, dissolve or liquidate the
Company.

     

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

    

     

    11.   
Conversion.

     

    (a)    
Conversion
Option.  At any time on or after the date hereof and prior to
the Maturity Date, this Note and/or any interest due hereunder shall be
convertible, in whole or in part, at the option of the Holder (the “Conversion Option”)
into such number of Conversion Units as determined by dividing (x) the sum of
that portion of the outstanding principal balance under this Note and any
accrued but unpaid interest thereon as of such date that the Holder elects to
convert by (y) a unit conversion price of $0.80 (the “Unit Conversion
Price”), subject to adjustment as described in Section 4(c)
below.  “Conversion Units”
shall mean one (1) share of fully paid and non-assessable common stock of the
Company, par value $0.001, and one (1) common stock purchase warrant (the “Warrant”).  Each
Warrant is exercisable to purchase one share of common stock at a price of $1.10
per share.

     

    (b)     
Mechanics of
Conversion.  The Holder shall provide written notice of
conversion, duly executed, to the Company in the manner provided in the
Agreement (the “Conversion
Notice”).  No later than three (3) business days after receipt
of the Conversion Notice by Company (the “Delivery Date”), the
Company shall issue and deliver to the Holder (i) a certificate evidencing the
number of shares of common stock to which the Holder shall be entitled, and (ii)
Warrants to purchase such shares of common stock to which the Holder shall be
entitled.  The Warrant shall be substantially in the form attached
hereto as Exhibit
A.

     

    (c)      
Adjustment of Unit
Conversion Price.  The Unit Conversion Price shall be subject
to adjustment from time to time as follows:

     

    (i)   
Stock Dividends and Stock
Splits. If the Company, at any time while this Note is outstanding: (A)
subdivides outstanding shares of common stock into a larger number of shares;
(B) combines (including by way of a reverse stock split) outstanding shares of
common stock into a smaller number of shares; or (C) issues, in the event of a
reclassification of shares of the common stock, any shares of capital stock of
the Company, then the Unit Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of common stock (excluding any
treasury shares of the Company) outstanding immediately before such event and of
which the denominator shall be the number of shares of common stock outstanding
immediately after such event. Any adjustment made pursuant to this subsection
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.  Any adjustments under
this Section 4(c)(i) shall be effective at the close of business on the date the
stock split or combination occurs.

     

    (ii)   
Calculations. All
calculations under this Section 4(c) shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section
4(c), the number of shares of common stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of common stock
issued and outstanding.

     

    (iii)   
Notice to the
Holder.  Whenever the Unit Conversion Price is adjusted
pursuant to any provision of this Section 4(c), the Company shall promptly mail
to the Holder a notice setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such
adjustment.  Any notice or rescission shall be given in the manner
specified in the Agreement.

     

     

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

    

     

    12. 
  Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be given in accordance with
Section 9.1 of the Agreement.

     

    13.   
Governing
Law.  This Note shall be governed by and construed in
accordance with the internal laws of the State of Nevada, without giving effect
to any of the conflicts of law principles which would result in the application
of the substantive law of another jurisdiction.  This Note shall not
be interpreted or construed with any presumption against the party causing this
Note to be drafted.

     

    14.   
Headings.  Section
headings in this Note are included herein for purposes of convenience of
reference only and shall not constitute a part of this Note for any other
purpose.

     

    15.   
Interpretation. This
Note is intended by Company and Lender as a final expression of the credit to be
extended hereunder and as a complete and exclusive statement of its terms, there
being no conditions to the enforceability of this Note.  This Note may
not be supplemented or modified except in writing, executed by both parties
hereto.

     

    16.   
Binding
Effect.  The obligations of the Company and the Holder set
forth herein shall be binding upon the successors and assigns of each such
party, whether or not such successors or assigns are permitted by the terms
hereof.

     

    17.   
Compliance with Securities
Laws.  The Holder of this Note acknowledges that this Note is
being acquired solely for the Holder’s own account and not as a nominee for any
other party, and for investment, and that the Holder shall not offer, sell or
otherwise dispose of this Note.

     

    18.    
Transfer and
Assignment.  Neither party may transfer or assign this Note
without the prior written consent of the other party.

     

    

     

     [Signature
on following page]

     

    
      
         

      

      
        - 8
-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company caused this Note to be effective as of the date
first set forth above.

     

    Constitution
Mining Corp.

     

    /s/
Michael
Stocker                         

    By:           Michael
Stocker

    Its:           Chief
Executive Officer

     

    
      
         

      

      
        - 9
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    Exhibit
A

     

    WARRANT

    

    THESE
SECURITIES MAY NOT BE OFFERED OR SOLD UNLESS AT THE TIME OF SUCH OFFER OR SALE,
THE PERSON MAKING SUCH OFFER OR SALE DELIVERS A PROSPECTUS MEETING THE
REQUIREMENTS OF SECTION 10 OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), FORMING A PART OF A REGISTRATION STATEMENT, OR POST-EFFECTIVE AMENDMENT
THERETO, WHICH IS EFFECTIVE UNDER SAID ACT, UNLESS IN THE OPINION OF COUNSEL TO
THE COMPANY, SUCH OFFER AND SALE IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SAID ACT.

     

     

    CONSTITUTION
MINING CORP.

     

     

    COMMON
STOCK PURCHASE WARRANT

     

    CONSTITUTION
MINING CORP. (the
“Company”), a
Delaware corporation, hereby certifies that, for value received,
________________________________ (the “Holder”), whose
address is __________________________________________________, is entitled,
subject to the terms set forth below, at any time, or from time to time, after
the date hereof and before the Expiration Date (as defined below), to purchase
from the Company ________ shares (the “Shares”) of common
stock, $0.001 par value, of the Company (the “Common Stock”) at a
price of $1.10 per Share (the purchase price per Share, as adjusted from time to
time pursuant to the provisions hereunder set forth, is referred to in this
Warrant as the “Purchase
Price”).

     

    This
Warrant was issued to Holder as part of a unit (the “Unit”) composed of one
share of Common Stock and one Common Stock Purchase Warrant.

     

    1.    
Term of the
Warrant.

     

    1.1   
Time of
Exercise.  Subject to the
provisions of Sections 1.5, “Transfer and Assignment,” and 3.1, “Registration
and Legends,” this Warrant may be exercised at any time and from time to time
after 9:00 a.m., local time, on (commencing six months after the
date of issuance) (the “Exercise Commencement
Date”), but no later than 5:00 p.m., local time, (one year from the date of
issuance) (the “Expiration Date”), at
which point it shall become void and all rights under this Warrant shall
cease.

     

    1.2   
Manner of
Exercise.

     

    1.2.1  
The
Holder may exercise this Warrant, in whole or in part, upon surrender of this
Warrant, with the form of subscription attached hereto duly executed, to the
Company at its corporate office, together with the full Purchase Price for each
Share to be purchased in lawful money of the United States, or by certified
check, bank draft or postal or express money order payable in United States
dollars to the order of the Company, and upon compliance with and subject to the
conditions set forth in this Warrant.

     

    1.2.2   
Upon
receipt of this Warrant, with the form of subscription duly executed and
accompanied by payment of the aggregate Purchase Price for the Shares for which
this Warrant is then being exercised, the Company shall cause to be issued
certificates or other evidence of ownership, for the total number of whole
Shares for which this Warrant is being exercised in such denominations as are
required for delivery to the Holder, and the Company shall thereupon deliver
such documents to the Holder or its nominee.

     

     

    
      
         

      

      
        - 10
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    1.2.3  
If the
Holder exercises this Warrant with respect to fewer than all of the Shares that
may be purchased under this Warrant, the Company shall execute a new Warrant for
the balance of the Shares that may be purchased upon exercise of this Warrant
and deliver such new Warrant to the Holder.

     

    1.2.4  
The
Company covenants and agrees that it will pay when due and payable any and all
transfer taxes which may be payable in respect of the issue of this Warrant, or
the issue of any Shares upon the exercise of this Warrant.  The
Company shall not, however, be required to pay any transfer or other tax which
may be payable in respect of any transfer involved in the issuance or delivery
of this Warrant or of the Shares in a name other than that of the Holder at the
time of surrender, and until the payment of such tax, the Company shall not be
required to issue such Shares.

     

    1.2.5   
The
Company shall, at the time of any exercise of all or part of this Warrant, upon
the request of the Holder hereof, acknowledge in writing its continuing
obligation to afford to such Holder any rights to which such Holders shall
continue to be entitled after such exercise in accordance with the provisions of
this Warrant, provided that if the Holder of this Warrant shall fail to make any
such request, such failure shall not affect the continuing obligations of the
Company to afford to such Holder any such rights.

     

    1.3   
Exchange of
Warrant.  This Warrant may
be split-up, combined or exchanged for another Warrant or Warrants of like tenor
to purchase a like aggregate number of Shares.  If the Holder desires
to split-up, combine or exchange this Warrant, it shall make such request in
writing delivered to the Company at its corporate office and shall surrender
this Warrant and any other Warrants to be so split-up, combined or exchanged,
the Company shall execute and deliver to the person entitled thereto a Warrant
or Warrants, as the case may be, as so requested.  The Company shall
not be required to effect any split-up, combination or exchange which will
result in the issuance of a Warrant entitling the Holder to purchase upon
exercise a fraction of a Share.  The Company may require the Holder to
pay a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any split-up, combination or exchange of
Warrants.  The term “Warrant” as used herein includes any Warrants
issued in substitution for or replacement of this Warrant, or into which this
Warrant may be divided or exchanged.

     

    1.4    
Holder as
Owner.  Prior to due
presentment for registration of transfer of this Warrant, the Company may deem
and treat the Holder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for the purpose of any exercise
hereof and for all other purposes, and the Company shall not be affected by any
notice to the contrary.  Irrespective of the date of issue and
delivery of certificates for any Shares issuable upon the exercise of the
Warrant, each person in whose name any such certificate is issued shall be
deemed to have become the holder of record of the Shares represented thereby on
the date on which all or a portion of the Warrant surrendered in connection with
the subscription therefor was surrendered and payment of the purchase price was
tendered.  No surrender of all or a portion of the Warrant on any date
when the stock transfer books of the Company are closed, however, shall be
effective to constitute the person or persons entitled to receive Shares upon
such surrender as the record holder of such Shares on such date, but such person
or persons shall be constituted the record holder or holders of such Shares at
the close of business on the next succeeding date on which the stock transfer
books are opened.  Each person holding any Shares received upon
exercise of Warrant shall be entitled to receive only dividends or distributions
payable to holders of record on or after the date on which such person shall be
deemed to have become the holder of record of such Shares.

     

    
      
         

      

      
        - 11
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    1.5    
Transfer and
Assignment.  This Warrant may
not be sold, hypothecated, exercised, assigned or transferred except in
accordance with and subject to the provisions of the Securities Act of 1933, as
amended (“Act”).

     

    1.6    
Method for
Assignment.  Any assignment
permitted under this Warrant shall be made by surrender of this Warrant to the
Company at its principal office with the form of assignment attached hereto duly
executed and funds sufficient to pay any transfer tax.  In such event,
the Company shall, without charge, execute and deliver a new Warrant in the name
of the assignee designated in such instrument of assignment and this Warrant
shall promptly be canceled.  This Warrant may be divided or combined
with other Warrants which carry the same rights upon presentation thereof at the
corporate office of the Company together with a written notice signed by the
Holder, specifying the names and denominations in which such new Warrants are to
be issued.

     

    1.7    
Rights of
Holder.  Nothing
contained in this Warrant shall be construed as conferring upon the Holder the
right to vote or consent or receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company.  If,
however, at any time prior to the expiration of this Warrant and prior to its
exercise, any of the following shall occur:

     

    1.7.1   
The
Company shall take a record of the holders of its shares of Common Stock for the
purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company;
or

     

    1.7.2    
The
Company shall offer to the holders of its Common Stock any additional shares of
capital stock of the Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right or warrant to
subscribe therefor; or

     

    1.7.3    
There
shall be proposed any capital reorganization or reclassification of the Common
Stock, or a sale of all or substantially all of the assets of the Company, or a
consolidation or merger of the Company with another entity; or

     

    1.7.4     
There
shall be proposed a voluntary or involuntary dissolution, liquidation or winding
up of the Company; then, in any one or more of said cases, the Company shall
cause to be mailed to the Holder, at the earliest practicable time (and, in any
event, not less than thirty (30) days before any record date or other date set
for definitive action), written notice of the date on which the books of the
Company shall close or a record shall be taken to determine the stockholders
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, or entitled to vote on such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up, as the case may be.  Such notice shall also set forth such
facts as shall indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Purchase Price and the kind and
amount of the Common Stock and other securities and property deliverable upon
exercise of this Warrant.  Such notice shall also specify the date as
of which the holders of the Common Stock of record shall participate in said
distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be (on which date, in the event of
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the right to exercise this Warrant shall terminate).  Without limiting
the obligation of the Company to provide notice to the holder of actions
hereunder, it is agreed that failure of the Company to give notice shall not
invalidate such action of the Company.

     

     

    
      
         

      

      
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    1.8    
Lost Warrant
Certificate(s).  Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction of
reasonably satisfactory indemnification, including a surety bond if required by
the Company, and upon surrender and cancellation of this Warrant, if mutilated,
the Company will cause to be executed and delivered a new Warrant of like tenor
and date.  Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.

     

    1.9    
Covenants of the
Company.  The Company
covenants and agrees as follows:

     

    1.9.1     
At all
times it shall reserve and keep available for the exercise of this Warrant into
Common Stock such number of authorized shares of Common Stock as are sufficient
to permit the exercise in full of this Warrant into Common Stock;
and

     

    1.9.2     
All
Shares issued upon exercise of the Warrant shall be duly authorized, validly
issued and outstanding, fully-paid and non-assessable.

     

    
      2.    
Adjustment
of Purchase Price and Number of Shares Purchasable Upon
Exercise.

    

     

    2.1   
Recapitalization.  The number of
Shares purchasable on exercise of this Warrant and the Purchase Price therefor
shall be subject to adjustment from time to time in the event that the Company
shall:  (i) pay a dividend in, or make a distribution of, shares
of Common Stock, (ii) subdivide its outstanding shares of Common Stock into
a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) spin-off a subsidiary by
distributing, as a dividend or otherwise, shares of the subsidiary to its
stockholders.  In any such case, the total number of shares
purchasable on exercise of this Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive, at the same aggregate
purchase price, the number of shares of Common Stock that the Holder would have
owned or would have been entitled to receive immediately following the
occurrence of any of the events described above had this Warrant been exercised
in full immediately prior to the occurrence (or applicable record date) of such
event.  An adjustment made pursuant to this Paragraph 2 shall, in the
case of a stock dividend or distribution, be made as of the record date and, in
the case of a subdivision or combination, be made as of the effective date
thereof.  If, as a result of any adjustment pursuant to this Paragraph
2, the Holder shall become entitled to receive shares of two or more classes of
series of securities of the Company, the board of directors of the Company shall
equitably determine the allocation of the adjusted purchase price between or
among shares or other units of such classes or series and shall notify the
Holder of such allocation.

     

    2.2   
Merger or
Consolidation.  In the event of
any reorganization or recapitalization of the Company or in the event the
Company consolidates with or merges into another entity or transfers all or
substantially all of its assets to another entity, then and in each such event,
the Holder, on exercise of this Warrant as provided herein, at any time after
the consummation of such reorganization, recapitalization, consolidation, merger
or transfer,  shall be entitled, and the documents executed to
effectuate such event shall so provide, to receive the stock or other securities
or property to which the Holder would have been entitled upon such consummation
if the Holder had exercised this Warrant immediately prior
thereto.  In such case, the terms of this Warrant shall survive the
consummation of any such reorganization, recapitalization, consolidation, merger
or transfer and shall be applicable to the shares of stock or other securities
or property receivable on the exercise of this Warrant after such consummation
and as an exchange for a larger or smaller number of shares, as the case may
be.

     

     

    
      
         

      

      
        - 13
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    2.3   
Notice of
Dissolution or Liquidation.  Except as
otherwise provided in Section 2.2, “Merger or Consolidation,” in the case of any
sale or conveyance of all or substantially all of the assets of the Company in
connection with a plan of complete liquidation of the Company, or in the case of
the dissolution, liquidation or winding-up of the Company, all rights under this
Warrant shall terminate on a date fixed by the Company, such date so fixed to be
not earlier than the date of the commencement of the proceedings for such
dissolution, liquidation or winding-up and not later than thirty (30) days after
such commencement date.  Notice of such termination of purchase rights
shall be given to the Holder at least thirty (30) days prior to such termination
date.

     

    2.4    
Statement of
Adjustment.  Any adjustment
pursuant to the provisions of this Section 2 shall be made on the basis of the
number of Shares which the Holder would have been entitled to acquire by
exercise of this Warrant immediately prior to the event giving rise to such
adjustment and, as to the Purchase Price in effect immediately prior to the rise
to such adjustment.  Whenever any such adjustment is required to be
made, the Company shall forthwith determine the new number of Shares which the
Holder hereof shall be entitled to purchase hereunder and/or such new Purchase
Price and shall prepare, retain on file and transmit to the Holder within ten
(10) days after such preparation a statement describing in reasonable detail the
method used in calculating such adjustment.

     

    2.5    
No Fractional
Shares.  The Company
shall not issue any fraction of a Share in connection with the exercise of this
Warrant, and in any case where the Holder would, except for the provisions of
this Section 2.5, be entitled under the terms of this Warrant to receive a
fraction of a Share upon such exercise, the Company shall upon the exercise and
receipt of the Purchase Price, issue the largest number of whole Shares
purchasable upon exercise of this Warrant.  The Company shall not be
required to make any cash or other adjustment in respect of such fraction of a
Share to which the Holder would otherwise be entitled.  The Holder, by
the acceptance of this Warrant, expressly waives his right to receive a
certificate for any fraction of a Share upon exercise hereof.

     

    2.6    
No Change in Form
Required.  The form of
Warrant need not be changed because of any change pursuant to this Section 2 in
the Purchase Price or in the number of Shares purchasable upon the exercise of a
Warrant, may state the same Purchase Price and the same number of shares of
Common Stock as are stated in the Warrants initially issued pursuant to the
Agreement.

     

    3.    
Registration
Under the Securities Act of 1933.

     

    3.1    
Registration and
Legends.  The Holder
understands that (i) the Company has not registered the Warrant or the Shares
under the Act, or the applicable securities laws of any state in reliance on
exemptions from registration and (ii) such exemptions depend upon the Holder’s
investment intent at the time the Holder acquires the Warrant or the
Shares.  The Holder therefore represents and warrants that it is
acquiring the Warrant, and will acquire the Shares, for the Holder’s own account
for investment and not with a view to distribution, assignment, resale or other
transfer of the Warrant or the Shares.  Because the Warrant and the
Shares are not registered, the Holder is aware that the Holder must hold them
indefinitely unless they are registered under the Act and any applicable
securities laws or the Holder must obtain exemptions from such
registration.  Upon exercise, in part or in whole, of this Warrant,
the Shares shall bear the following legend:

     

     

    
      
         

      

      
        - 14
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    The
shares of Common Stock represented by this certificate have not been registered
under the Securities Act of 1933, as amended (“Act”) or any applicable state
securities laws, and they may not be offered for sale, sold, transferred,
pledged or hypothecated without an effective registration statement under the
Securities Act and under any applicable state securities laws, or an opinion of
counsel, satisfactory to the Company, that an exemption from such registration
is available.

     

    3.2     
No-Action
Letter.  The Company agrees that it will be satisfied that no
post-effective amendment or new registration is required for the public sale of
the Shares if it shall be presented with a letter from the Staff of the
Securities and Exchange Commission (the “Commission”), stating in effect that,
based upon stated facts which the Company shall have no reason to believe are
not true in any material respect, the Staff will not recommend any action to the
Commission if such Shares are offered and sold without delivery of a prospectus,
and that, therefore, no Registration Statement under which such shares are to be
registered is required to be filed.

     

    4.     
Reservation of
Shares.  The Company shall at all times reserve, for the
purpose of issuance on exercise of this Warrant such number of shares of Common
Stock or such class or classes of capital stock or other securities as shall
from time to time be sufficient to comply with this Warrant and the Company
shall take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized and unissued Common Stock or such other
class or classes of capital stock or other securities to such number as shall be
sufficient for that purpose.

     

    5.      
Survival.  All
agreements, covenants, representations and warranties herein shall survive the
execution and delivery of this Warrant and any investigation at any time made by
or on behalf of any parties hereto and the exercise, sale and purchase of this
Warrant (and any other securities or property) issuable on exercise
hereof.

     

    6.      
Remedies.  The
Company agrees that the remedies at law of the Holder, in the event of any
default or threatened default by the Company in the performance or compliance
with any of the terms of this Warrant, may not be adequate and such terms may,
in addition to and not in lieu of any other remedy, be specifically enforced by
a decree of specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or
otherwise.

     

    7. Other
Matters.

     

    7.1 Binding
Effect.  All the
covenants and provisions of this Warrant by or for the benefit of the Company
shall bind and inure to the benefit of its successors and assigns
hereunder.

     

    
      
         

      

      
        - 15
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    7.2    
Notices.  Notices or
demands pursuant to this Warrant to be given or made by the Holder to or on the
Company shall be sufficiently given or made if sent by certified or registered
mail, return receipt requested, postage prepaid, and addressed, until another
address is designated in writing by the Company, as follows:

     

    Constitution
Mining Corp.

     Pasaje
Mártir Olaya 129, Oficina 1203

    Centro
Empresarial José Pardo Torre A

    Miraflores,
Lima Perú

    Phone:
+51-1-446-6807

    Fax:
+54-11-5236-997

     

    Contact:
CEO: Michael Stocker

    

    Notices
to the Holder provided for in this Warrant shall be deemed given or made by the
Company if sent by certified or registered mail, return receipt requested,
postage prepaid, and addressed to the Holder at the Holder’s last known address
as it shall appear on the books of the Company.

     

    7.3    
Governing
Law.  The validity,
interpretation and performance of this Warrant shall be governed by the laws of
the State of Delaware.

     

    7.4    
Parties Bound and
Benefitted.  Nothing in this
Warrant expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company and the Holder any right, remedy or
claim under promise or agreement hereof, and all covenants, conditions,
stipulations, promises and agreements contained in this Warrant shall be for the
sole and exclusive benefit of the Company and its successors and of the Holder,
its successors and, if permitted, its assignees.

     

    7.5  
Headings.  The Article
headings herein are for convenience only and are not part of this Warrant and
shall not affect the interpretation thereof.

     

    IN
WITNESS WHEREOF, this Warrant has been duly executed by the Company under its
corporate seal as of the ____ day of _______________, 20__.

    

    CONSTITUTION
MINING CORP.

    

    

    Michael
Stocker

    Its:  Chief
Executive Officer

    

    
      
         

      

      
        - 16
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