HERITAGE HOLDINGS, INC. HERITAGE OPERATING, L.P. 8.55% SENIOR SECURED NOTES DUE JUNE 30, 2011 NOTE PURCHASE AGREEMENT Dated as of June 25, 1996 2 TABLE OF CONTENTS

================================================================================

HERITAGE HOLDINGS, INC.
HERITAGE OPERATING, L.P.

$120,000,000

8.55% SENIOR SECURED NOTES DUE JUNE 30, 2011

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

NOTE PURCHASE AGREEMENT

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

Dated as of June 25, 1996

================================================================================

2
TABLE OF CONTENTS

Page
----

1. AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3A. Opinion of Purchasers' Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3B. Other Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3C. Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3D. Representations and Warranties; No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3E. Purchase Permitted By Applicable Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3F. Performance; Transfer of Assets; Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3G. Sale of Notes to Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3H. Operative Agreements; Security Documents; Intercreditor Agreement; Other Agreements. . . . . . . . . 5
3I. Sale of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3J. Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3K. Payment of Closing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3L. Private Placement Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3M. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4A. Required Prepayments; Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4B. Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4C. Contingent Prepayments on Disposition, Loss of Assets or Merger or Change of Control. . . . . . . . 8
4D. Prepayment Procedure for Contingent Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4E. Notice of Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4F. Allocation of Partial Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4G. Retirement of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5A. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5B. Information Required by Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5C. Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5D. Covenant to Secure Notes Equally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Page
----

5E. Partnership or Corporate Existence, etc.; Compliance with Laws. . . . . . . . . . . . . . . . . . . 19
5F. Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5G. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5H. Maintenance and Sufficiency of Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5I. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5J. Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5K. Operative Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5L. After-Acquired Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
5M. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5N. No Action Requiring Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5O. Books and Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5P. Available Cash Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5Q. Parity Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

6A. Financial Ratios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6B. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6C. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6D. Priority Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6E. Loans, Advances, Investments and Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . 30
6F. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6G. Consolidation, Merger, Sale of Assets, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6H. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6I. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6J. Subsidiary Stock and Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6K. Payment of Dividends by Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6L. Sales of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6M. Material Agreements; Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

7A. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7B. Rescission of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7C. Notice of Acceleration or Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7D. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

8. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

8A. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8B. Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8C. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8D. Business; Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

ii
4

Page
----

8E. Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8F. Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8G. Outstanding Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8H. Transfer of Assets and Business; Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . 48
8I. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8J. Compliance with Other Instruments, etc.; Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . 49
8K. Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8L. Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8M. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8N. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8O. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8P. Pre-emptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8Q. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8R. Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8S. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8T. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8U. Matters Relating to the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

9. REPRESENTATIONS OF EACH PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

9A. Nature of Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9B. Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9C. Status of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9D. Representations of Each Purchaser to Each Other Purchaser . . . . . . . . . . . . . . . . . . . . . 56

10. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

10A. Yield-Maintenance Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10B. Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10C. Accounting Principles, Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . 79

11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

11A. Note Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11B. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11C. Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes . . . . . . . . . . . . . . . . . . 81
11E. Persons Deemed Owners; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11F. Survival of Representations and Warranties; Entire Agreement . . . . . . . . . . . . . . . . . . . 82
11G. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11H. Disclosure to Other Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11I. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11J. Substitution of Wholly-Owned Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11K. Payments Due on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11L. Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11M. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11N. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11O. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11P. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11Q. Severalty of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11R. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

iii
5

EXHIBIT A-1 Form of Note

EXHIBIT A-2 Form of Note

EXHIBIT B-1 Form of Opinion of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇

EXHIBIT B-2 Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.

EXHIBIT B-3 Form of Opinion of Doerner, Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇

EXHIBIT C Form of Intercreditor Agreement

EXHIBIT D Form of Security Agreement

Purchaser Schedule

Schedule 6C Existing Liens

Schedule 6E Investments

Schedule 8B Subsidiaries

Schedule 8C Foreign Qualification

Schedule 8D Documents and Other Materials

Schedule 8G Other Indebtedness

Schedule 8H Title to Properties

Schedule 9B Employee Benefit Plans

HERITAGE HOLDINGS, INC.
HERITAGE OPERATING, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

As of June 25, 1996
To Each of the Purchasers Named in the
Purchaser Schedule Attached Hereto
Ladies and Gentlemen:

On the date hereof, Heritage Holdings, Inc. ("HERITAGE"), a
Delaware corporation, is engaged in the business of wholesale and retail sales,
storage and distribution of propane gas, providing repair, installation and
maintenance services for propane heating systems and the sale and distribution
of propane-related supplies and equipment, including appliances (the
"BUSINESS").

Heritage Operating, L.P., a Delaware limited partnership (the
"OPERATING PARTNERSHIP"), has been recently formed to acquire, own and operate
the Business. In a series of related transactions: (a) Heritage will issue
Notes (as defined below) in an aggregate principal amount not to exceed
$120,000,000 to the purchasers named in the Purchaser Schedule attached hereto
(the "PURCHASERS"), (b) Heritage will contribute substantially all of the
assets (including the assets of any entity consolidating with or merging into
Heritage) of Heritage (other than approximately $79,300,000 in proceeds from
the sale of the Notes) (the "ASSETS") to the Operating Partnership pursuant to
the Conveyance Agreements (as defined below), (c) Heritage will receive a
1.0101% general partner interest and a 98.9899% limited partner interest
(representing all of the limited partner interest) in the Operating
Partnership, (d) Heritage Propane Partners, L.P. (the "MASTER PARTNERSHIP"), a
Delaware limited partnership, will sell 4,025,000 common units representing a
limited partnership interest in the Master Partnership and the Operating
Partnership on a combined basis of not more than 51.6% (the "OFFERING"), and is
granting to the underwriters an option to purchase an additional 603,750 common
units (collectively, the "COMMON UNITS") to cover over-allotments, (e) the
Operating Partnership will assume substantially all of the liabilities
(including the Notes) of Heritage (the "LIABILITIES") pursuant to the
Conveyance Agreements, (f) Heritage will convey all of its limited partner
interests in the Operating Partnership to the Master Partnership in exchange
for 3,702,943 subordinated units (the "SUBORDINATED UNITS") representing all of
the limited partner interest in the Master Partnership not represented by
7
the Common Units and representing a limited partner interest of not less than
47.0% (43.6% if the underwriters' overallotment option is exercised in full) in
the Master Partnership and a 1.0% general partner interest in the Master
Partnership, (g) the Master Partnership will contribute the net proceeds of the
sale of the Common Units to the Operating Partnership, (h) the Operating
Partnership will apply the net proceeds from the sale of the Common Units and
the approximately $40,700,000 in cash contributed by Heritage from the issuance
of the Notes, $2,400,000 borrowed under the Acquisition Facility (as defined
below) and $4,300,000 borrowed under the Revolving Working Capital Facility (as
defined below) as contemplated by the Registration Statement (as defined
below), including the final form of Prospectus filed under Rule 424(b) of the
Securities Act, (i) Heritage will use the remaining $80,100,000 of net proceeds
from the issuance of the Notes to fund the Equity Repurchase (as defined
below), to capitalize the General Partner (as defined below) and to pay
expenses associated with the sale of the Notes, and (j) the Operating
Partnership will enter into the Credit Agreement (as defined below) which will
provide credit facilities in an aggregate amount of up to $50,000,000.

The foregoing transactions and others to occur in connection
with the issuance of the Notes and the Offering as specified in the
Contribution Agreement are collectively referred to herein as the
"TRANSACTIONS." Immediately after giving effect to the Transactions (a)
Heritage (in its capacity as general partner of the Operating Partnership, the
"GENERAL PARTNER") will be the sole general partner of the Operating
Partnership, owning a 1.0101% general partner interest therein, and the sole
general partner of the Master Partnership, owning a 1.0% interest therein, (b)
the Master Partnership will be the sole limited partner of the Operating
Partnership, owning a 98.9899% limited partner interest therein, and Heritage
will hold a 47.4% limited partner interest in the Master Partnership. As used
herein, the term the "COMPANY" shall mean Heritage prior to contribution of the
Assets to, and the assumption of the Liabilities (including, without
limitation, the Notes) by, the Operating Partnership pursuant to the Conveyance
Agreements and shall mean the Operating Partnership on and after the time of
such contribution and assumption. The Operating Partnership acknowledges and
agrees that on and after the time of such contribution and assumption it will
become and remain liable on the Notes theretofore issued by Heritage to the
same extent as if the Operating Partnership were the original maker thereof.

Accordingly, the Operating Partnership and Heritage agree
with the Purchasers as follows:

1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize
the issue of its senior secured promissory notes in the aggregate principal
amount of $120,000,000, to be dated the date of issue thereof, to mature June
30, 2011, to bear interest on the unpaid balance thereof from the date thereof
until the principal thereof shall have become due and payable at the rate of
8.55% per annum and on overdue
8
payments at the rate specified therein, and to be substantially in the form of
Exhibit A-1 hereto in the case of Notes issued on or prior to the time of the
Closing (as defined below) and Exhibit A-2 hereto in the case of any Notes
issued after the time of the Closing, in each case, with such changes therein,
if any, as may be approved by each of the Purchasers and the Company. The term
"Notes" as used herein shall include each such senior secured promissory note
delivered pursuant to any provision of this Agreement and each such senior
secured promissory note delivered in substitution or exchange for any other
Note pursuant to any such provision. The Notes will be secured by the Security
Agreement referred to in Section 3H. The Security Agreement and the Notes, to
the extent secured thereby, are subject to the terms of the Intercreditor
Agreement referred to in Section 3H.

2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell
to each Purchaser and, subject to the terms and conditions herein set forth,
each Purchaser agrees to purchase from Heritage the aggregate principal amount
of Notes set forth opposite such Purchaser's name in the Purchaser Schedule
attached hereto at 100% of such aggregate principal amount. The sale of the
Notes to the Purchasers shall take place at the offices of ▇▇▇▇▇ & ▇▇▇▇▇,
L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., New York
City time, at a closing (the "Closing") on June 28, 1996, or such later date
(which shall not be later than July 20, 1996) as may be agreed upon by the
Company and each Purchaser. At the Closing, the Company will deliver to each
Purchaser one or more Notes registered in such Purchaser's name (or in the name
of its nominee), evidencing the aggregate principal amount of Notes to be
purchased by such Purchaser and in the denomination or denominations specified
with respect to such Purchaser in the Purchaser Schedule against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the Company's account on the date of Closing (the "Closing Date") (as specified
in a notice to each Purchaser at least three Business Days prior to the Closing
Date).

3. CONDITIONS OF CLOSING. Each Purchaser's obligation to
purchase and pay for the Notes to be purchased by such Purchaser hereunder is
subject to the satisfaction, on or before the Closing Date, of the following
conditions:

3A. OPINION OF PURCHASERS' SPECIAL COUNSEL. Such Purchaser shall
have received from Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, who are acting as
special counsel for the Purchasers in connection with the transactions
contemplated by this Agreement, a favorable opinion satisfactory to such
Purchaser and substantially in the form of Exhibit B-1 attached hereto.

3B. OTHER OPINIONS OF COUNSEL. Such Purchaser shall have received
favorable opinions from ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., special counsel for Heritage
and the Operating Partnership, and Doerner, Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
special counsel for Heritage and

- 3 -
9
the Operating Partnership, satisfactory to such Purchaser and substantially in
the form of Exhibits B-2 and B-3, respectively, attached hereto. Such
Purchaser shall have received copies of each of the opinions substantially in
the form required to be delivered pursuant to the Underwriting Agreement (as
defined below) (other than the opinion of counsel to the Underwriters),
accompanied by letters, dated the Closing Date and addressed to the Purchasers,
from each counsel rendering such opinions, stating that the Purchasers are
entitled to rely on such opinions as if they were addressed to such Purchasers.
Heritage and the Operating Partnership each hereby directs each of their
counsel referred to in this Section 3B, and each of their counsel who deliver
opinions pursuant to the Underwriting Agreement, to deliver to the Purchasers
such opinions and letters to be delivered by it pursuant to this Section 3B and
authorizes the Purchasers to rely thereon.

3C. LEGAL INVESTMENT. On the Closing Date, the purchase of Notes
shall be permitted by the laws and regulations of each jurisdiction to which
each Purchaser's investments are subject, but without recourse to provisions
(such as section 1404(b) or 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies in securities not
otherwise legally eligible for investment. If requested by a Purchaser by
adequate prior written request to Heritage, such Purchaser shall have received
an Officer's Certificate of Heritage and the Operating Partnership certifying
as to such matters of fact as such Purchaser may reasonably specify to enable
such Purchaser to determine whether such purchase is still so permitted.

3D. REPRESENTATIONS AND WARRANTIES; NO DEFAULT.

(i) The representations and warranties of Heritage and
the Operating Partnership contained in this Agreement (including, without
limitation, Section 8), the other Financing Documents, the Operative
Agreements, and those otherwise made in writing by or on behalf of Heritage or
the Operating Partnership pursuant to this Agreement, the other Financing
Documents or the Operative Agreements shall be true and correct when made and
on and as of the Closing Date, except to the extent (a) of changes caused by
the transactions herein contemplated and (b) that such representations and
warranties expressly relate to an earlier time or date, in which case such
representations and warranties shall have been true and correct as of such
earlier time or date.

(ii) There shall exist on the Closing Date, immediately
after giving effect to the transactions contemplated by the Registration
Statement (including, without limitation the transactions contemplated by this
Agreement, the other Financing Documents and the Operative Agreements), no
Default or Event of Default hereunder or under any of the Financing Documents
or default by Heritage or the Operating Partnership under any Operative
Agreement.

- 4 -
10
(iii) Heritage and the Operating Partnership each shall
have delivered to each Purchaser an Officer's Certificate, dated the Closing
Date, with respect to clauses (i) and (ii) hereto.

3E. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of
and payment for the Notes to be purchased by such Purchaser on the Closing Date
on the terms and conditions herein provided (including the use of the proceeds
of such Notes by Heritage and the Operating Partnership) shall not violate any
applicable law or governmental regulation (including, without limitation,
Section 5 of the Securities Act or Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and shall not subject such Purchaser
to any tax, penalty, liability or other onerous condition under or pursuant to
any applicable law or governmental regulation, and such Purchaser shall have
received such certificates or other evidence as it may request to establish
compliance with this condition.

3F. PERFORMANCE; TRANSFER OF ASSETS; PROCEEDINGS.

(i) Heritage and the Operating Partnership each shall
have performed and complied in all material respects with all agreements and
covenants contained in this Agreement, any other Financing Document and any
Operative Agreement required to be performed or complied with by it prior to or
at the Closing.

(ii) The transactions (including, without limitation, the
Transactions) contemplated under the Operative Agreements and the Registration
Statement to occur at or prior to the time of the Closing shall have been
completed substantially as contemplated therein. The business of Heritage and
of the Operating Partnership shall be as described in the Registration
Statement.

(iii) All organizational and other proceedings taken or to
be taken in connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in substance and form to such
Purchaser, and such Purchaser shall have received all such additional
certificates and all such counterpart originals or certified or other copies of
such documents as it may reasonably request.

3G. SALE OF NOTES TO OTHER PURCHASERS. The Company shall have
sold to the other Purchasers the Notes to be purchased by them at the Closing
and shall have received payment in full therefor.

3H. OPERATIVE AGREEMENTS; SECURITY DOCUMENTS; INTERCREDITOR
AGREEMENT; OTHER AGREEMENTS.

(i) Each of the Operative Agreements shall have been duly
authorized, executed and delivered by the respective parties thereto
substantially in the form

- 5 -
11
previously provided to the Purchasers, shall be in full force and effect, and
shall constitute the legal, valid and binding obligations of the respective
parties thereto, and no default or accrued right of termination on the part of
any of the parties thereto shall exist thereunder as of the Closing Date, and
each Purchaser shall have received a fully executed original, or a true and
correct copy, of each Operative Agreement.

(ii) The Administrative Agent and the Purchasers shall
have entered into an Intercreditor and Agency Agreement (as amended,
supplemented or otherwise modified from time to time, the "INTERCREDITOR
AGREEMENT") substantially in the form of Exhibit C hereto, with the financial
institution named as collateral agent therein (together with its successors as
such collateral agent, the "COLLATERAL AGENT"), providing for the terms on
which the Collateral Agent shall hold the Collateral under the Security
Agreement.

(iii) Heritage and the Operating Partnership shall have
entered into a Security Agreement (as amended, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT") substantially in the form
of Exhibit D hereto, with the Collateral Agent, and shall have delivered to the
Collateral Agent such certificates representing shares of Capital Stock
included in the Collateral and proper stock powers with respect thereto duly
endorsed in blank (the "CERTIFICATES AND STOCK POWERS") and such proper
financing statements (whether Form UCC-1 or any other form that may be required
by any jurisdiction) (as amended, supplemented or otherwise modified from time
to time the "FINANCING STATEMENTS") under the Uniform Commercial Code of such
jurisdictions, as may be necessary, or in the opinion of the Purchasers'
special counsel desirable, to perfect the Liens created by the Security
Agreement. The Financing Statements shall have been filed in all of such
necessary jurisdictions to perfect the assignment and security interest
purported to be created by the Security Agreement.

(iv) The Company shall have delivered to each Purchaser
true and complete copies of the Credit Agreement, as fully executed and
delivered, the Underwriting Agreement and the Registration Statement and each
of the Credit Agreement and the Underwriting Agreement shall be in full force
and effect and in form and substance satisfactory to each Purchaser and all
conditions precedent contained therein (including, without limitation, all
conditions precedent in the Credit Agreement to permit the initial borrowings
under the Acquisition Facility and the Revolving Working Capital Facility)
shall have been duly satisfied or unconditionally waived or shall occur
simultaneously with the Closing.

3I. SALE OF UNITS. At the time of the Closing, the Registration
Statement shall have been declared effective by the Commission, and all
transactions contemplated by the Registration Statement and the Underwriting
Agreement shall have been consummated or shall be consummated simultaneously
with the Closing, as contemplated therein.

- 6 -
12
3J. RATING. Prior to the Closing, the Notes shall have received,
and there shall remain in effect, a rating of BBB or better from Fitch
Investors Service, Inc. Such rating shall not have been withdrawn prior to the
Closing Date.

3K. PAYMENT OF CLOSING FEES. The Company shall have paid the fees
and disbursements of the Purchasers' special counsel required by Section 11B to
be paid by the Company on the Closing Date.

3L. PRIVATE PLACEMENT NUMBER. The Company shall have obtained
for the Notes a Private Placement Number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners).

3M. INSURANCE. Such Purchaser shall have received from Heritage a
summary description of all insurance policies, fidelity bonds or other
insurance service contracts providing coverage for the Business.

4. PREPAYMENTS. The Notes shall be subject to prepayment only
with respect to the required prepayments specified in Sections 4A and 4C and
the optional prepayments permitted by Section 4B.

4A. REQUIRED PREPAYMENTS; MATURITY. Until the Notes shall be paid
in full, the Company shall apply to the prepayment of the Notes, without
premium, the sum of $12,000,000 (or, if less, the principal amount of the Notes
as shall at the time be outstanding) on June 30 in each of the years 2002 to
2010, inclusive, and such principal amounts of the Notes, together with
interest thereon to the prepayment dates, shall become due on such prepayment
dates, provided, however, that if the Company shall prepay all or any portion
of the Notes pursuant to Section 4B or Section 4C, or acquire any Notes
pursuant to the provisions of Section 4G, each of the principal amount payable
at maturity and the principal amount of each required prepayment of the Notes
becoming due under this Section 4A on and after the date of such prepayment or
purchase shall be reduced in the same proportion as the aggregate unpaid
principal amount of the Notes is reduced as a result of such prepayment or
acquisition. The remaining outstanding principal amount of the Notes, together
with all interest accrued on the Notes, shall become due and payable on June
30, 2011.

4B. OPTIONAL PREPAYMENT. The Notes shall be subject to
prepayment, in whole at any time or from time to time in part (in multiples of
$5,000,000 or, if less than $5,000,000, the principal amount of the Notes as
shall be outstanding at the time of such partial prepayment), at the option of
the Company, at 100% of the principal amount so prepaid plus interest thereon
to the prepayment date and the Yield Maintenance Amount, if any, with respect
to each Note.

- 7 -
13
4C. CONTINGENT PREPAYMENTS ON DISPOSITION, LOSS OF ASSETS OR
MERGER OR CHANGE OF CONTROL.

(i) If at any time the Company or any of its Subsidiaries
disposes of assets or issues or sells Capital Stock of any Subsidiary with the
result that there are Excess Sale Proceeds, and the Company does not apply such
Excess Sale Proceeds in the manner described in Section 6G(iii)(c)(II)(x), the
Company will offer to prepay (at the price specified below and upon notice as
provided in Section 4D) a principal amount of the outstanding Notes equal to
the Allocable Proceeds.

(ii) In the event of any damage to, or destruction,
condemnation or other taking of, all or any portion of the properties or assets
of the Company or any of its Subsidiaries, to the extent that the Company or
any such Subsidiary receives insurance or condemnation proceeds with the result
that Unutilized Taking Proceeds exceed $2,500,000 in respect of any fiscal year
(such excess amount being herein called "EXCESS TAKING PROCEEDS"), the Company
will offer to prepay (at the price specified in clause (v) of this Section 4C
below and upon notice as provided in Section 4D) a principal amount of the
outstanding Notes equal to the Allocable Proceeds.

(iii) (a) If at any time any Responsible Officer has
knowledge of the occurrence of any Control Event, the Company will give notice
as provided in Section 4D of such Control Event to each holder of Notes. Such
notice shall contain and constitute an offer to prepay all, but not less than
all, of the Notes held by each holder. Upon the occurrence of a Control Event,
the Company will not take any voluntary action that consummates or finalizes
the Change of Control resulting from such Control Event unless
contemporaneously with such action, the Company prepays all Notes required to
be prepaid in accordance with this Section 4C and Section 4D.

(b) The obligation of the Company to prepay Notes
pursuant to the offer required by paragraph (a) of this clause (iii) and
accepted in accordance with Section 4D is subject to the consummation of the
Change of Control in respect of which any such offer and acceptance shall have
been made. In the event that such Change of Control does not occur on or
before the proposed prepayment date in respect thereof, the prepayment shall be
deferred until and shall be made on the date on which such Change of Control
occurs. The Company shall keep each holder of Notes reasonably and timely
informed of (I) any such deferral of the date of prepayment, (II) the date on
which such Change of Control and the prepayment are expected to occur, and
(III) any determination by the Company that efforts to effect such resulting
Change of Control have ceased or been abandoned (in which case any offer and
acceptance made pursuant to this Section 4C in respect of such Change of
Control shall be deemed rescinded).

- 8 -
14
(iv) Each such offer to prepay the Notes pursuant to
Section 4C(i) or 4C(ii) shall be made (a) to the extent such prepayment
represents all or a portion of an amount equal to $7,500,000 in the aggregate
in respect of any fiscal year or $12,500,000 in the aggregate for all fiscal
years of unapplied Excess Sale Proceeds and Excess Taking Proceeds (such
unapplied amounts being herein called, "EXCESS PROCEEDS"), at a price equal to
100% of the principal amount of the Notes to be prepaid, plus interest thereon
to the prepayment date, and (b) to the extent such prepayment represents such
Excess Proceeds in excess of the $7,500,000 in the aggregate for any fiscal
year or $12,500,000 in the aggregate for all fiscal years, at a price equal to
100% of the principal amount of the Notes to be prepaid, plus interest thereon
to the prepayment date plus the Yield-Maintenance Amount, if any, thereon.

(v) Each offer to prepay the Notes pursuant to Section
4C(iii) shall be made at a price equal to the principal amount of the Notes to
be prepaid, plus interest thereon to the prepayment date plus a premium of 1%
of the principal amount to be so prepaid.

4D. PREPAYMENT PROCEDURE FOR CONTINGENT PREPAYMENTS.

(i) If at any time there are Excess Proceeds, and the
Company is required to offer to prepay the Notes with such Excess Proceeds
pursuant to clause (i) or (ii) of Section 4C, the Company will give written
notice as provided in Section 11I (which shall be in the form of an Officers'
Certificate) to the holders of the Notes not later than twelve months after the
date of the applicable Asset Sale or the end of the twelve month period
following receipt of the applicable Unutilized Taking Proceeds, as the case may
be, stating that any holder failing to elect not to accept the offer shall be
deemed to have accepted such offer and (a) setting forth in reasonable detail
all calculations required to determine the amount of Excess Proceeds and the
Yield-Maintenance Amount, if any, (b) setting forth the aggregate amount of the
Allocable Proceeds and the amount of the Allocable Proceeds which is allocable
to each Note, determined by applying the Allocable Proceeds pro rata among all
Notes outstanding on the date such prepayment is to be made according to the
aggregate then unpaid amounts of the Notes, and in reasonable detail the
calculations used in determining such amounts, and (c) stating that the Company
irrevocably offers to prepay on the date specified in such notice, which shall
not be less than 25 nor more than 45 days after the date of such notice, a
principal amount of each outstanding Note equal to the amount of Allocable
Proceeds allocated to such Note as described in paragraph (b) above, plus such
Note's share of the Allocable Proceeds allocable to any other Note the holder
of which elects on a timely basis not to accept the Company's offer
(collectively, the "NON-ACCEPTING HOLDERS"), all in accordance with the
procedures set forth in this Section 4D. Such notice shall also indicate that
any Accepting Holder that fails to elect not to accept the Pro Rata Option
shall be deemed to have accepted such option as set forth below.

- 9 -
15
(ii) If at any time the Company is required to offer to
prepay the Notes following the occurrence of a Control Event which could result
in a Change in Control, the Company will give written notice as provided in
Section 11I (which shall be in the form of an Officer's Certificate) to the
holders of the Notes not later than ten business days following such Control
Event, stating that any holder failing to elect not to accept the offer shall
be deemed to have accepted such offer and (a) setting forth in reasonable
detail the facts and circumstances underlying such Control Event known to it,
and (b) stating that the Company irrevocably offers to prepay on the date
specified in such notice, which shall be not less 25 nor more than 45 days
after the date of such notice, at the price specified in clause (v) of Section
4C, each outstanding Note, all in accordance with the procedures set forth in
this Section 4D.

(iii) Each holder of a Note electing not to accept an offer
to prepay given pursuant to this Section 4D shall make such election by notice
delivered to the Company at least 10 days prior to the date of prepayment
specified in the notice given by the Company pursuant to clause (i) or (ii) of
this Section 4D. Each other holder of a Note (collectively, the "ACCEPTING
HOLDERS") shall be deemed to accept the Company's offer with respect to
prepayment of such Note. In the case of a notice given by the Company pursuant
to clause (i) of this Section each Accepting Holder shall be deemed to have
accepted the Company's offer to the extent of its Allocable Proceeds and shall
be deemed to have accepted an agreement (the "PRO RATA OPTION") to have
prepaid, in addition to the Allocable Proceeds allocable to such Note (up to
the total Allocable Proceeds), all or any part of the balance of the principal
amount of such Note using the Allocable Proceeds that would have been paid to
the Non-Accepting Holders; provided that any Accepting Holder may elect not to
agree to the Pro Rata Option by notice delivered to the Company at least 5 days
prior to the date of prepayment specified in the notice given by the Company
pursuant to clause (i) of this Section 4D.

(iv) Upon receipt of all timely notices from Non-Accepting
Holders and Accepting Holders pursuant to clause (iii) of this Section 4D, the
Company shall give written notice as provided in Section 11I (which shall be in
the form of an Officers' Certificate) to the holders of the Notes setting forth
(a) the names of each Accepting Holder and each Non-Accepting Holder, (b) the
principal amounts of the Notes of such Accepting Holders and Non-Accepting
Holders affected by the Company's offer of prepayment, (c) in the case of a
notice given by the Company pursuant to clause (i) of this Section 4D, if there
shall be any Allocable Proceeds remaining in addition to the amounts so to be
prepaid, the principal amounts of the Notes as to which such Accepting Holders
shall have exercised their Pro Rata Options together with a calculation of each
Accepting Holder's Pro Rata Option in accordance with clause (v) of this
Section 4D and (d) after giving effect to the prepayment contemplated by clause
(v) of this Section 4D in respect of such offer, the reduced amount of each
required payment thereafter becoming due with respect to the Notes under
Section 4A and upon the maturity thereof, specifying how each

- 10 -
16
such amount was determined, and certifying that such reduction has been
computed in accordance with such Section.

(v) Upon receipt of all timely notices from Non-Accepting
Holders and Accepting Holders pursuant to clause (iii) of this Section 4D, the
Company shall, in the case of a notice given by the Company pursuant to clause
(i) of this Section 4D, allocate that portion of the Allocable Proceeds that
had been allocated to the Notes of such Non- Accepting Holders among the Notes
of Accepting Holders in proportion to the respective Allocable Proceeds
allocable to the Notes of Accepting Holders (after giving effect to any Pro
Rata Option). Where the portion of the Allocable Proceeds thus allocated to
the Note of an Accepting Holder would exceed the maximum principal amount of
such Note which such Accepting Holder has agreed to have prepaid (including,
without limitation, pursuant to a Pro Rata Option), such excess shall be
allocated among the Notes of Accepting Holders who have agreed to accept
prepayments (including, without limitation, pursuant to a Pro Rata Option) in
amounts which still exceed the amount of prepayments previously allocated to
them pursuant to this Section 4D in proportion to the respective Allocable
Proceeds allocable to the Notes of such Accepting Holders (after giving effect
to any Pro Rata Option); and such allocation shall be repeated as many times as
shall be necessary until (a) the Allocable Proceeds have been fully allocated
or (b) it is no longer possible to allocate the Allocable Proceeds without
exceeding the maximum principal amounts of Notes which all Accepting Holders
respectively have agreed to have prepaid (including, without limitation,
pursuant to all the Pro Rata Options).

(vi) The principal amount of any Notes with respect to
which an offer to prepay pursuant to this Section 4D has been made and not
rejected shall become due and payable on the date specified in the notice of
such offer given by the Company pursuant to clause (i) or (ii), as the case may
be of this Section 4D. In the case of a notice given by the Company pursuant
to clause (i) of this Section 4D, it is understood that all Allocable Proceeds
not applied to the prepayment of the Notes or to the payment of Parity Debt
pursuant to Section 4C and this Section 4D shall constitute amounts included
within clause (x) of the definition of "Unused Proceeds Reserve".

(vii) Each holder of a Note shall receive, not more than
two Business Days prior to the date scheduled for any prepayment pursuant to
this Section 4D an Officers' Certificate (i) certifying that the conditions of
this Section 4D have been fulfilled with respect to such prepayment and
specifying the particulars of such fulfillment, including, without limitation,
in reasonable detail the calculations used in computing the amount of the
prepayment in respect of the Notes and the appropriate Premium (together with,
in the case of a calculation of any Yield-Maintenance Amount, copies of the
source of market data by reference to which the Reinvestment Yield was
determined) with respect thereto, and (ii) in the case of any such prepayment
that is a partial prepayment of the Notes setting forth (a) the principal
amount to be prepaid with

- 11 -
17
respect to each of the Notes and specifying how each such amount was determined
and (b) after giving effect to such partial prepayment the reduced amount to be
prepaid with respect to each required payment thereafter becoming due with
respect to the Notes under Section 4A and upon the maturity thereof, specifying
how each such amount was determined, and certifying that such reduction has
been computed in accordance with such Section. If for any reason the holder of
a Note so to be prepaid by written notice to the Company, objects to such
calculation of the Yield-Maintenance Amount, the Company shall notify all other
holders of Notes so to be prepaid of such objection. If after any such notice
and objection, a calculation of the Yield-Maintenance Amount shall be approved
by the Required Holders of the Notes to be prepaid and specified in a written
notice provided to the Company and the holders of such Notes, such calculation
shall be final and binding upon the Company and the holders of the Notes absent
manifest error.

4E. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the
holder of each Note irrevocable written notice as provided in Section 11I of
any prepayment pursuant to Section 4B not less than 30 days and not more than
60 days prior to the prepayment date, stating that such prepayment is to be
made pursuant to Section 4B and specifying (i) such prepayment date, (ii) the
principal amount of the Notes, and of the Notes held by such holder, to be
prepaid on such date, and (iii) a calculation of the estimated
Yield-Maintenance Amount, if any, with respect to such prepayment. Notice of
prepayment having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the prepayment
date, and the Yield-Maintenance Amount with respect thereto, shall become due
and payable on such prepayment date. The Company shall, on or before the day
on which it gives written notice of any prepayment pursuant to Section 4B, give
telephonic notice (confirmed in writing by facsimile transmission or overnight
courier) of the principal amount of the Notes to be prepaid and the prepayment
date to each holder which shall have designated a recipient of such notices in
the Purchaser Schedule attached hereto or by notice in writing to the Company.
In addition, each holder of a Note shall receive, at least 2 Business Days
prior to the date scheduled for any such prepayment an Officers' Certificate
(i) certifying that the conditions of Section 4B have been fulfilled and
specifying the particulars, including, without limitation, a calculation in
reasonable detail of the Yield-Maintenance Amount with attached copies of the
source of market data by reference to which the Reinvestment Yield was
determined, of such fulfillment and (ii) in the case of any such prepayment
that is a partial prepayment of the Notes, setting forth (a) the principal
amount to be prepaid with respect to each of the Notes and specifying how each
such amount was determined, and (b) after giving effect to such partial
prepayment the reduced amount to be prepaid with respect to each required
payment thereafter becoming due with respect to the Notes under Section 4A and
upon the maturity thereof, specifying how each such amount was determined, and
certifying that such reduction has been computed in accordance with such
Section. If for any reason the holder of a Note so to be prepaid, by

- 12 -
18
written notice to the Company, objects to such calculation of the
Yield-Maintenance Amount, the Company shall notify all other holders of Notes
so to be prepaid of such objection. If after any such notice and objection, a
calculation of the Yield-Maintenance Amount shall be approved by the Required
Holders and specified in a written notice provided to the Company and the other
holders of such Notes, such calculation shall be final and binding upon the
Company and the holders of the Notes absent manifest error.

4F. ALLOCATION OF PARTIAL PAYMENTS. Upon any partial prepayment
of the Notes, the principal amount so prepaid shall be allocated to all Notes
at the time outstanding in proportion to the respective outstanding principal
amounts thereof, provided, that in the case of any prepayment of less than all
of the Notes pursuant to Section 4C, the principal amount of the Notes to be
prepaid will be allocable to the Notes to be prepaid as provided in Section 4C.

4G. RETIREMENT OF NOTES. The Company shall not, and shall not
permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in
whole or in part prior to their stated final maturity (other than by prepayment
pursuant to Section 4A, 4B or 4C or upon acceleration of such final maturity
pursuant to Section 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder, unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or purchase or
otherwise acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes held by each other holder of Notes at the time
outstanding, upon the same terms and conditions and such offer shall remain
open for a period of at least 20 Business Days; provided that (x) neither the
Company nor any of its Affiliates or Subsidiaries shall make any such offer to
prepay, redeem, retire, purchase or acquire Notes at a price of less than 100%
of the principal amount thereof and (y) at the time of such offer and purchase
no Default or Event of Default shall have occurred and be continuing. Any
Notes prepaid or otherwise retired or purchased or otherwise acquired by the
Company or any of its Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement.

5. AFFIRMATIVE COVENANTS. The Company hereby covenants and
agrees that, from the Closing and thereafter so long as any of the Notes remain
unpaid, it will perform and comply with the terms and provisions of this
Section 5.

5A. FINANCIAL STATEMENTS. The Company will maintain, and will
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with GAAP. The Company covenants that it will
deliver to each Purchaser, so long as such Purchaser or its nominee shall be
the holder of any Note, and to each holder in triplicate:

- 13 -
19
(i) as soon as practicable and in any event within 50
days after the end of each quarterly period in each fiscal year,
consolidated statements of income, partners' capital and cash flows of
the Company and its Subsidiaries for such quarterly period and (in the
case of the second and third quarterly periods) for the period from
the beginning of the current fiscal year to the end of such quarterly
period, and consolidated balance sheets of the Company and its
Subsidiaries as at the end of such quarterly period, setting forth in
each case with respect to financial statements delivered as of any
date and for any period after August 31, 1997, in comparative form
figures for the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in form to the Required
Holder(s) and certified by an authorized financial officer of the
Company as presenting fairly, in all material respects, the
information contained therein (except for the absence of footnotes and
subject to changes resulting from normal year-end adjustments), in
accordance with GAAP; provided, however, that at any time when the
Master Partnership shall be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act delivery within the time
period specified above of copies of the Quarterly Report on Form 10-Q
of the Master Partnership for such quarterly period filed with the
Commission shall be deemed to satisfy the requirements of this clause
(i) if (x) the Consolidated Net Income of the Company and its
Subsidiaries accounts for at least 95% of the net income of the Master
Partnership for such quarterly period, and (y) all such statements
required to be delivered pursuant to this clause (i) with respect to
the Company and its Subsidiaries are either included in such Form 10-Q
or delivered separately by the Company together with such Form 10-Q;

(ii) as soon as practicable and in any event within 95
days after the end of each fiscal year, consolidated and consolidating
statements of income and cash flows and a consolidated and
consolidating statement of partners' capital (or stockholders' equity,
as applicable) of the Company and its Subsidiaries for such year, and
consolidated and consolidating balance sheets of the Company and its
Subsidiaries, as at the end of such year, setting forth in each case
with respect to financial statements delivered as of any date and for
any period after August 31, 1997, in comparative form corresponding
consolidated and, where applicable, consolidating figures from the
preceding annual audit, all in reasonable detail and, as to the
consolidated statements, reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or other
independent public accountants of recognized national standing
selected by the Company whose report shall be without limitation as to
the scope of the audit and, as to the consolidating statements,
certified by an authorized financial officer of the Company as
presenting fairly, in all material respects, the information contained
therein, in accordance with GAAP (except, in the case of such
consolidating financial statements, for the absence of footnotes);
provided,

- 14 -
20
however, that at any time when the Master Partnership shall be subject
to the reporting requirements of Section 13 or 15(d) of the Exchange
Act delivery within the time period specified above of copies of the
Annual Report on Form 10-K of the Master Partnership for such fiscal
year prepared in compliance with the requirements therefor and filed
with the Commission shall be deemed to satisfy the requirements of this
clause (ii) if (x) the Consolidated Net Income of the Company and its
Subsidiaries accounts for at least 95% of the net income of the Master
Partnership for such fiscal year, and (y) all such statements required
to be delivered pursuant to this clause (ii) with respect to the
Company and its Subsidiaries are either included in such Form 10-K and
such reports or delivered separately by the Company together with such
Form 10-K and such reports;

(iii) promptly upon receipt thereof by the Company, copies
of all reports submitted to the Company by independent public
accountants in connection with each special, annual or interim audit
of the books of the Company or any Subsidiary thereof made by such
accountants, including without limitation the comment letter submitted
by each such accountant to management in connection with their annual
audit;

(iv) promptly upon transmission thereof, copies of (a) all
financial statements, proxy statements, notices and reports as the
Company or the Master Partnership shall send or make available to the
public Unitholders of the Master Partnership, (b) all registration
statements (without exhibits), all prospectuses and all reports which
the Company or the Master Partnership files with the Commission (or
any governmental body or agency succeeding to the functions of the
Commission), (c) all press releases and other similar written
statements made available by the Company or the Master Partnership to
the public concerning material developments in the business of the
Company or the Master Partnership, as the case may be, and (d) all
reports, notices and other similar written statements sent or made
available by the Company or the Master Partnership to any holder of
its Indebtedness pursuant to the terms of any agreement, indenture or
other instrument evidencing such Indebtedness, including without
limitation the Credit Agreement, except to the extent the same
substantive information is already being provided pursuant to this
Section 5A;

(v) as soon as reasonably practicable, and in any event
within 5 Business Days after a Responsible Officer obtains knowledge
that any Default or Event of Default has occurred, a written statement
of such Responsible Officer setting forth details of such Default or
Event of Default and the action which the Company has taken, is taking
and proposes to take with respect thereto;

- 15 -
21
(vi) as soon as reasonably practicable, and in any event
within 5 Business Days after a Responsible Officer obtains knowledge
of (a) the occurrence of an adverse development with respect to any
litigation or proceeding involving the Company or any of its
Subsidiaries which in the reasonable judgment of the Company could
reasonably be expected to have a Material Adverse Effect or (b) the
commencement of any litigation or proceeding involving the Company or
any of its Subsidiaries which in the reasonable judgment of the
Company could reasonably be expected to have a Material Adverse
Effect, a written notice of such Responsible Officer describing in
reasonable detail such commencement of, or adverse development with
respect to, such litigation or proceeding;

(vii) as soon as possible after, and in any event within 10
Business Days after any Responsible Officer of the Company or any
ERISA Affiliate knows or has reason to know that, any ERISA Event has
occurred or is expected to occur that, alone or together with any
other ERISA Events that have occurred, in the opinion of the principal
financial officer of the Company could reasonably be expected to
result in liability of the Company in an aggregate amount exceeding
$2,000,000, a statement setting forth a detailed description of such
ERISA Event and the action, if any, that the Company or any ERISA
Affiliate has taken, is taking or proposes to take or cause to be
taken with respect thereto (together with a copy of any notice, report
or other written communication filed with or given to or received from
the PBGC, the Internal Revenue Service or the Department of Labor with
respect to such event or condition);

(viii) as soon as reasonably practicable, and in any event
within five Business Days after a Responsible Officer obtains
knowledge of a violation or alleged violation of any Environmental Law
or the presence or release of any Hazardous Substance within, on,
from, relating to or affecting any property, which in the reasonable
judgment of the Company could reasonably be expected to have a
Material Adverse Effect, notice thereof, and upon request, copies of
relevant documentation;

(ix) together with each delivery of financial information
pursuant to clause (i) or clause (ii) of this Section 5A, a statement
setting forth, together with computations in reasonable detail, the
amount of Available Cash as of the date of the balance sheet contained
therein and the amounts of all Net Proceeds, Excess Sale Proceeds,
Unutilized Taking Proceeds and Unused Proceeds Reserves held by the
Company at the end of the applicable quarterly period or fiscal year,
as the case may be;

(x) as soon as reasonably practicable, and in any event
within 5 Business Days after a Responsible Officer obtains knowledge
that the holder of any Note

- 16 -
22
has given any notice to the Company or any Subsidiary thereof or taken
any other action with respect to a claimed Default or Event of Default
under this Agreement or any other Financing Documents, or that any
Person has given any notice to the Company or any such Subsidiary or
taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 7A(iii), a written
statement of such Responsible Officer describing such notice or other
action in reasonable detail and the action which the Company has
taken, is taking and proposes to take with respect thereto;

(xi) prior to the Closing Date and within 45 days after
the end of each calendar year ending thereafter, commencing with the
year ending December 31, 1996, a report prepared by the Company or its
broker or agent (a) setting forth the insurance maintained pursuant to
Section 5I, substantially in the form delivered at the Closing and
referred to in Section 3M, and including, without limitation, the
amounts thereof, the names of the insurers and the property, hazards
and risks covered thereby, and certifying that all premiums with
respect to the policies described in such report then due thereon have
been paid and that the same are in full force and effect, (b) setting
forth all self-insurance maintained by the Company pursuant to Section
5I and (c) certifying that such insurance or self insurance complies
with the requirements of such Section; and

(xii) with reasonable promptness, such other information
and data (financial or other) as from time to time may be reasonably
requested by any holder of Notes.

Together with each delivery of financial statements required by
clauses (i) and (ii) above, the Company will deliver to each holder of Notes an
Officers' Certificate (I) stating that the signers have reviewed the terms of
this Agreement and the other Financing Documents, and have made, or caused to
be made under their supervision, a review in reasonable detail of the
transactions and condition of the Company and its Subsidiaries during the
accounting period covered by such financial statements, and that no Default or
Event of Default has occurred and is continuing, or, if any such Default or
Event of Default then exists, specifying the nature and approximate period of
existence thereof and what action the Company has taken or is taking or
proposes to take with respect thereto, (II) specifying the amount available at
the end of such accounting period for Restricted Payments in compliance with
Section 6F and showing in reasonable detail all calculations required in
arriving at such amount, (III) demonstrating (with computations in reasonable
detail) compliance at the end of such accounting period by the Company and its
Subsidiaries with the provisions of Sections 4C, ▇▇, ▇▇, ▇▇, ▇▇, ▇▇(▇),
▇▇(▇)(▇), ▇▇(▇)(▇), 6G(iii) and 6L, and (IV) if not specified in the related
financial statements being delivered pursuant to clauses (i) and (ii) above,
specifying the aggregate amount of interest paid or accrued by, and aggregate
rental expenses of, the Company and

- 17 -
23
its Subsidiaries, and the aggregate amount of depreciation, depletion and
amortization charged on the books of the Company and its Subsidiaries, during
the fiscal period covered by such financial statements.

Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver a certificate of such accountants stating
that they have reviewed the terms of this Agreement and the other Financing
Documents and that in making the audit necessary for their report on such
financial statements, they have obtained no knowledge of any Event of Default
or Default, or, if they have obtained knowledge of any Event of Default or
Default, specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards.

5B. INFORMATION REQUIRED BY RULE 144A. The Company will, upon the
request of a holder of any Note, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at such times as
the Company is subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act. For the purpose of this Section 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.

5C. INSPECTION OF PROPERTY. The Company will permit any Person
designated in writing by any holder of the Notes which is an institutional
investor, at the Company's expense during the continuance of a Default or Event
of Default and otherwise at such holder's expense, to visit and inspect any of
the properties of the Company and its Subsidiaries, to examine the corporate
books and financial records of the Company and its Subsidiaries and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of any of such partnerships or corporations with the principal officers of the
Company and its independent public accountants, all at such reasonable times
and as often as such holder may reasonably request. The Company hereby
authorizes, and agrees to cause each of its Subsidiaries to authorize, its and
their independent public accountants to discuss with such Person the affairs,
finances and accounts of the Company and its Subsidiaries in accordance with
this Section 5C.

5D. COVENANT TO SECURE NOTES EQUALLY. If the Company or any of
its Subsidiaries shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of Sections 6C and 6D (unless prior written consent to the
creation or assumption thereof shall have been obtained pursuant to Section
11C), the Company will make or cause to be

- 18 -
24
made effective provision whereby the Notes will be contemporaneously secured by
such Lien equally and ratably with any and all other Indebtedness thereby
secured so long as any such other Indebtedness shall be so secured (including,
without limitation, the provision of any financial accommodations extended to
the holders of such other Indebtedness in connection with the release of such
Lien and/or the sale of any property subject thereto), it being understood that
the provision of such equal and ratable security shall not constitute a cure or
waiver of any related Event of Default.

5E. PARTNERSHIP OR CORPORATE EXISTENCE, ETC.; COMPLIANCE WITH
LAWS.

(i) Except as otherwise expressly permitted in accordance
with Section 6G or 6J, (a) the Company will at all times preserve and keep in
full force and effect its partnership existence and its status as a partnership
not taxable as a corporation for U.S. federal income tax purposes, (b) the
Company will cause each of its Subsidiaries to keep in full force and effect
its partnership or corporate existence, as the case may be, and (c) the Company
will, and will cause each of its Subsidiaries to, at all times preserve and
keep in full force and effect all of its material rights and franchises;
provided, however, that the partnership or corporate existence of any
Subsidiary, and any right or franchise of the Company or any Subsidiary, may be
terminated notwithstanding this Section 5E if such termination (x) is in the
best interest of the Company and the Subsidiaries, (y) is not disadvantageous
to the holders of the Notes in any material respect and (z) could not
reasonably be expected to have a Material Adverse Effect.

(ii) The Company will, and will cause each of its
Subsidiaries to, at all times comply with all laws, regulations and statutes
(including without limitation any zoning or building ordinances or code or
Environmental Laws) applicable to it except for any failure to so comply which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

(iii) The Company will notify the holders of the Notes a
reasonable time prior to the adoption of any amendment to the Partnership
Agreement, the Credit Agreement or any Operative Agreement and will include in
that notice a reasonably detailed description of such amendment and the
intended effects thereof.

5F. PAYMENT OF TAXES AND CLAIMS. The Company will, and will
cause each of its Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its Subsidiaries, or any of its
or its Subsidiaries' properties or assets or in respect of any of its or any of
its Subsidiaries' franchises, business, income or profits when the same become
due and payable, and all claims (including without limitation claims for labor,
services, materials and supplies) for sums which have become due and payable
and which by law have or might become a Lien upon any of its or any of its
Subsidiaries' properties or assets; provided that no such tax, assessment,
charge or claim

- 19 -
25
need be paid if it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and if such 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 Board of
Directors of the General Partner.

5G. COMPLIANCE WITH ERISA. The Company will, and will cause its
Subsidiaries to, comply in all material respects with the provisions of ERISA
and the Code applicable to the Company and its Subsidiaries and their
respective employee benefit programs.

5H. MAINTENANCE AND SUFFICIENCY OF PROPERTIES.

(i) The Company will maintain or cause to be maintained
in good repair, working order and condition, ordinary wear and tear excepted,
all properties used in the business of the Company and its Subsidiaries and
from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof, all to the extent necessary to avoid a
Material Adverse Effect.

(ii) The Company will maintain and will cause to be
maintained as employees of the Company and its Subsidiaries such number of
individuals, having appropriate skills, as may be necessary from time to time
to sustain continuous operation of the Business at the time. Except as
described on Schedule 8H, the Company will continue and will cause its
Subsidiaries to continue to own or have valid rights to use all of the Assets
constituting personal or intellectual property (including without limitation
computer equipment, computer software and other intellectual property)
reasonably necessary for the operation of the Business, in each case subject to
no Liens except such as are permitted by Section 6C.

5I. INSURANCE.

(i) The Company will, and will cause its Subsidiaries to,
at its or their expense, at all times maintain, or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to their
properties and business with coverages comparable to those generally carried by
companies of similar size that conduct the same or similar business and have
similar properties in the same general areas in which the Company conducts its
business; provided, however, that the Company may maintain a system of
self-insurance in an amount not exceeding an amount as is customary for
companies with established reputations engaged in the same or similar business
and owning and operating similar properties.

(ii) The Company will, and will cause each of its
Subsidiaries to, pay as and when the same become due and payable the premiums
for all insurance policies that the Company and its Subsidiaries are required
to maintain hereunder.

- 20 -
26
5J. ENVIRONMENTAL LAWS. The Company will, and will cause each of
its Subsidiaries to:

(i) comply with all applicable Environmental Laws
and any permit, license, or approval required under any
Environmental Law, except for failures to so comply which
could not reasonably be expected to have a Material Adverse
Effect;

(ii) store, use, release, or dispose of any
Hazardous Substance at any property owned or leased by the
Company or any of its Subsidiaries in a manner which could not
reasonably be expected to have a Material Adverse Effect;

(iii) avoid committing any act or omission which
would cause any Lien to be asserted against any property owned
by the Company or any of its Subsidiaries pursuant to any
Environmental Law, except where such Lien could not reasonably
be expected to have a Material Adverse Effect;

(iv) use, handle or store any propane in
compliance, in all material respects, with all applicable
laws.

5K. OPERATIVE AGREEMENTS. The Company will perform and comply
with all of its obligations under each of the Operative Agreements to which it
is a party, will enforce each such Operative Agreement against each other party
thereto and will not accept the termination of any such Operative Agreement or
any amendment or supplement thereof or modification or waiver thereunder,
unless any such failure to perform, comply or enforce or any such acceptance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

5L. AFTER-ACQUIRED PROPERTY. From and after the date of the
Closing, the Company will, and will cause each of its Subsidiaries to, execute
and deliver such amendments to the Security Agreement, execute and deliver such
instruments and agreements (including, without limitation, such Certificates
and Stock Powers) and execute and cause to be duly recorded, published,
registered or filed in the appropriate jurisdictions such Financing Statements,
as shall be necessary to grant to the Collateral Agent a valid, perfected,
first priority security interest, subject to Liens permitted by the Security
Agreement, in any asset acquired by the Company or any Subsidiary of the
Company (including, without limitation, the Capital Stock of any Subsidiary)
after the Closing, to the extent such asset would have been included in the
Collateral granted at the Closing had the Company or one of its Subsidiaries
owned such asset as of the Closing. The Company will pay or cause to be paid
all taxes, fees and other governmental charges

- 21 -
27
in connection with the execution, delivery, recording, publishing, registration
and filing of such documents and instruments in such places.

5M. FURTHER ASSURANCES. At any time and from time to time
promptly, the Company shall, at its expense, execute and deliver to each holder
of a Note and the Collateral Agent such instruments and documents, and take
such further action, as the holders of the Notes may from time to time
reasonably request, in order to further carry out the intent and purpose of
this Agreement and the other Financing Documents and to establish, perfect,
preserve and protect the rights, interests and remedies created, or intended to
be created, in favor of the holders of the Notes hereunder and thereunder,
including, without limitation, the execution and delivery of Certificates and
Stock Powers and the execution, delivery, recordation and filing of Financing
Statements and continuation statements under the Uniform Commercial Code of any
applicable jurisdiction, and the delivery of satisfactory opinions of counsel.

5N. NO ACTION REQUIRING REGISTRATION. Neither the Company nor
anyone acting on its behalf will take any action which would subject the
issuance and sale of the Notes to the registration and prospectus delivery
provisions of the Securities Act or to the registration or qualification
provisions of any securities or Blue Sky law of any applicable jurisdiction.

5O. BOOKS AND ACCOUNTS. The Company will, and will cause each of
its Subsidiaries to, maintain proper books of record and account in which full,
true and proper entries shall be made of its transactions and set aside on its
books from its earnings for each fiscal year all such proper reserves as in
each case shall be required in accordance with GAAP.

5P. AVAILABLE CASH RESERVES. The Company will maintain an amount
of cash reserves that is necessary or appropriate in the reasonable discretion
of the General Partner to (i) provide for the proper conduct of the business of
the Company and its Subsidiaries (including reserves for future capital
expenditures) subsequent to such quarter, (ii) comply with applicable law or
any loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which the Company or any Subsidiary is a party or by
which it is bound or its assets are subject (including the Financing Documents)
and (iii) provide funds for distributions to partners of the Master Partnership
and the General Partner in respect of any one or more of the next four
quarters; provided that the General Partner need not establish cash reserves
pursuant to clause (iii) if the effect of such reserves would be that the
Master Partnership is unable to distribute the Minimum Quarterly Distribution
(as defined in the Agreement of Limited Partnership of the Master Partnership)
on all Common Units with respect to such quarter; and provided, further, that
disbursements made by the Company or a Subsidiary of the Company or cash
reserves established, increased or reduced after the end of such quarter

- 22 -
28
but on or before the date of determination of Available Cash with respect to
such quarter shall be deemed to have been made, established, increased or
reduced for purposes of determining Available Cash, within such quarter if the
General Partner so determines. In addition, without limiting the foregoing,
Available Cash for any fiscal quarter shall reflect reserves equal to (x) 50%
of the interest projected to be paid on the Notes in the next succeeding fiscal
quarter, plus (y) beginning with a date three fiscal quarters before a
scheduled principal payment date on the Notes, 25% of the aggregate principal
amount thereof due on any such payment date in the third succeeding fiscal
quarter, 50% of the aggregate principal amount due on any such payment date in
the second succeeding fiscal quarter and 75% of the aggregate principal amount
due on any quarterly payment date in the next succeeding fiscal quarter, plus
(z) the Unused Proceeds Reserve as of the date of determination; provided that
the foregoing reserves for amounts to be paid on the Notes shall be reduced by
the aggregate amount of advances available to the Company from responsible
financial institutions under binding, irrevocable (a) credit or financing
commitments (which are subject to no conditions which the Company is unable to
meet) and (b) letters of credit (which are subject to no conditions which the
Company is unable to meet), in each case to be used to refinance such amounts
to the extent such amounts could be borrowed and remain outstanding under
Sections 6A and 6B.

5Q. PARITY DEBT.

(i) The Company shall ensure that the lenders from time
to time in respect of any outstanding Parity Debt shall, in the documents
governing the terms of such Indebtedness, (a) recognize the existence and
validity of the obligations represented by the Notes and (b) agree to refrain
from making or asserting any claim that the Financing Documents or the
obligations represented by the Notes are invalid or not enforceable in
accordance with its and their terms as a result of the circumstances
surrounding the incurrence of such obligations.

(ii) Each holder of Notes from time to time, as evidenced
by its acceptance of such Notes, (a) acknowledges the existence and validity of
the obligations of the Company under the Credit Agreement (and any replacement,
extension, renewal, refunding or refinancing thereof permitted by clause (ii)
or (iii) of Section 6B, as the case may be) and (b) agrees to refrain from
making or asserting any claim that such obligations or the instruments
governing the terms thereof are invalid or not enforceable in accordance with
its and their terms as a result of the circumstances surrounding the incurrence
of such obligations.

6. NEGATIVE COVENANTS. The Company hereby covenants and agrees
that from the Closing and thereafter so long as any of the Notes are
outstanding:

6A. FINANCIAL RATIOS. The Company will not permit:

- 23 -
29
(i) Ratio of Consolidated Funded Indebtedness to
Consolidated EBITDA. The ratio as of the end of any fiscal
quarter of Consolidated Funded Indebtedness to Consolidated
EBITDA to exceed 5.25 to 1.00; or

(ii) MINIMUM INTEREST COVERAGE. The ratio as of
the end of any fiscal quarter of Consolidated EBITDA to
Consolidated Interest Expense to be less than (a) 2.00 to 1.00
prior to the first anniversary of the Closing Date or (b) 2.25
to 1.00 on or after the first anniversary of the Closing Date.

Notwithstanding any of the provisions of this Agreement the Company
will not, and will not permit any Subsidiary to, enter into any transaction
pursuant to Section 6B, clauses (vii), (viii) and (xiv)(b) of Section 6C,
Section 6F, or clauses (i)(b), (i)(c), (ii)(b) and (iii) of Section 6G, (x) if
after giving effect to any such transaction a Default or Event of Defaults
exists, or (y) if the consummation of any such transaction would result in a
violation of this Section 6A, calculated for such purpose as of the date on
which such transaction were to be consummated both immediately before and after
giving effect to the consummation thereof; provided, however, that in the case
of transactions pursuant to Section 6G, the calculation shall be made on a pro
forma basis in accordance with GAAP after giving effect to any such
transaction, with the ratio recomputed as at the last day of the most recently
ended fiscal quarter of the Company as if such transaction had occurred on the
first day of the relevant four quarter period.

6B. INDEBTEDNESS. The Company will not, and will not permit any
of its Subsidiaries to, create, incur, assume, or otherwise become directly or
indirectly liable with respect to, any Indebtedness, except (subject to the
provisions of Section 6D):

(i) the Company may become and remain liable with
respect to Indebtedness evidenced by the Notes and
Indebtedness incurred in connection with any extension,
renewal, refunding or refinancing of Indebtedness evidenced by
the Notes, provided that (x) the principal amount of such
Indebtedness shall not exceed the principal amount of the
Indebtedness evidenced by the Notes, together with any accrued
interest and Yield Maintenance Amount, with respect thereto
being extended, renewed, refunded or refinanced, and (y) such
Indebtedness may not have an average life to maturity shorter
than the remaining average life to maturity of the
Indebtedness being extended, renewed, refunded or refinanced;

(ii) the Company may become and remain liable with
respect to Indebtedness incurred under the Revolving Working
Capital Facility and for any purpose permitted by the
Revolving Working Capital Facility and

- 24 -
30
any Indebtedness incurred for any such permitted purpose which
replaces, extends, renews, refunds or refinances any such
Indebtedness, in whole or in part; provided that the aggregate
principal amount of Indebtedness permitted under this clause
(ii) shall not at any time exceed an amount equal to (x)
$15,000,000 less (y) the amount of Indebtedness, if any,
outstanding under the revolving working capital facility
permitted by clause (v) of this Section 6B;

(iii) the Company may become and remain liable with
respect to Indebtedness incurred by the Company under the
Acquisition Facility and any Indebtedness incurred for such
permitted purpose which replaces, extends, renews, refunds or
refinances any such Indebtedness, in whole or in part;
provided that the aggregate principal amount of Indebtedness
permitted under this clause (iii) shall not at any time exceed
$35,000,000;

(iv) any Subsidiary of the Company may become and
remain liable with respect to Indebtedness of such Subsidiary
owing to the Company or to a Wholly-Owned Subsidiary of the
Company;

(v) Heritage Service Corp. may become and remain
liable with respect to Indebtedness incurred under a revolving
working capital facility and for any purpose permitted by such
revolving working capital facility and any Indebtedness
incurred for any permitted purpose which replaces, extends,
renews, refunds or refinances any such Indebtedness, in whole
or in part; provided that the aggregate principal amount of
Indebtedness permitted under this clause (v) shall not at any
time exceed $1,000,000;

(vi) the Company and any of its Subsidiaries may
become and remain liable with respect to Indebtedness relating
to any business, property or assets acquired by or contributed
to the Company or such Subsidiary or which is secured by a
loan on any property or assets acquired by or contributed to
the Company or such Subsidiary to the extent such Indebtedness
existed at the time such business, property or assets were so
acquired or contributed, and if such Indebtedness is secured
by such property or assets, such security interest does not
extend to or cover any other property of the Company or any of
its Subsidiaries; provided that (a) immediately after giving
effect to such acquisition or contribution, the Company could
incur at least $1.00 of additional Indebtedness pursuant to
clause (xiii) of this Section 6B and (b) such Indebtedness was
not incurred in anticipation of such acquisition or
contribution;

- 25 -
31
(vii) the Company and any of its Subsidiaries may
become and remain liable with respect to Indebtedness arising
from the honoring by a bank or other financial institution of
a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business,
provided that such Indebtedness is extinguished within 2
Business Days of its incurrence;

(viii) M-P Oils Partnership may become and remain
liable with respect to Indebtedness in an aggregate principal
amount not to exceed $3,000,000, and the Company may become
and remain liable with respect to Guarantees of such
Indebtedness of M-P Oils Partnership and of Indebtedness of
Bi-State Propane, provided that the aggregate amount of all
Guarantees permitted by this clause (viii) shall not exceed
$5,000,000;

(ix) any Person that after the date of Closing
becomes a Subsidiary of the Company may become and remain
liable with respect to any Indebtedness to the extent such
Indebtedness existed at the time such Person became a
Subsidiary; provided that (a) immediately after giving effect
to such Person becoming a Subsidiary of the Company, the
Company could incur at least $1.00 of additional Indebtedness
in compliance with clause (xiii) of this Section 6B and (b)
such Indebtedness was not incurred in anticipation of such
Person becoming a Subsidiary of the Company;

(x) the Company and any of its Subsidiaries may
become and remain liable with respect to Indebtedness owed to
any person providing workers' compensation, health, disability
or other employee benefits or property, casualty or liability
insurance to the Company or any of its Subsidiaries, pursuant
to reimbursement or indemnification obligations to such
person;

(xi) the Company and any of its Subsidiaries may
become and remain liable with respect to Indebtedness in
respect of performance bonds, bid bonds, appeal bonds, surety
bonds and similar obligations, in each case provided in the
ordinary course of business, including those incurred to
secure health, safety and environmental obligations in the
ordinary course of business, and any extension, renewal or
refinancing thereof to the extent not provided to secure the
repayment of other Indebtedness and to the extent that the
amount of refinancing Indebtedness is not greater than the
amount of Indebtedness being refinanced;

(xii) the Company may become and remain liable with
respect to Indebtedness incurred in respect of Capitalized
Lease Obligations; provided

- 26 -
32
that the Lien in respect thereof is permitted by clause (viii)
of Section 6C; and

(xiii) the Company and its Subsidiaries may become
and remain liable with respect to Indebtedness, in addition to
that otherwise permitted by the other clauses of this Section
6B, if on the date the Company or any of its Subsidiaries
becomes liable with respect to any such additional
Indebtedness and immediately after giving effect thereto and
to the substantially concurrent repayment of any other
Indebtedness (a) the ratio of Consolidated EBITDA to
Consolidated Debt Service is equal to or greater than 2.50 to
1.0, (b) the ratio of Consolidated EBITDA to Consolidated Pro
Forma Maximum Debt Service is equal to or greater than 1.25 to
1.0 and (c) no Default or Event of Default shall exist.

6C. LIENS. The Company will not, and will not permit any of its
Subsidiaries to, create, assume, incur or suffer to exist any Lien upon or with
respect to any of its properties or assets, whether now owned or hereafter
acquired, or any income or profits therefrom (whether or not provision is made
for the equal and ratable securing of the Notes in accordance with the
provisions of Section 5D), except:

(i) Liens existing on the date hereof on the
property and assets of the Company or any of its Subsidiaries
as described in Schedule 6C;

(ii) Liens for taxes, assessments or other
governmental charges the payment of which is not yet due and
payable or the validity of which is being contested in good
faith in compliance with Section 5F;

(iii) attachment or judgment Liens not giving rise
to an Event of Default and with respect to which the
underlying action has been appealed or is being contested in
good faith in compliance with Section 5F;

(iv) Liens of lessors, landlords, carriers,
vendors, mechanics, materialmen, warehousemen, repairmen and
other like Liens incurred in the ordinary course of business
the payment of which is not yet due or which is being
contested in good faith in compliance with Section 5F, in each
case not incurred or made in connection with the borrowing of
money, the obtaining of advances or credit or the payment of
the deferred purchase price of property, provided that such
Liens do not materially interfere with the conduct of the
business of the Company and its Subsidiaries taken as a whole;

(v) Liens (other than any Lien imposed by ERISA)
incurred and pledges and deposits made in the ordinary course
of business (a) in

- 27 -
33
connection with workers' compensation, unemployment insurance,
old age pensions, retiree health benefits and other types of
social security, or (b) to secure (or to obtain letters of
credit that do not constitute Indebtedness and that secure)
the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, performance bonds, contracts and
other similar obligations, in each case not incurred or made
in connection with the borrowing of money or the obtaining of
advances or credit; provided that such Liens do not materially
interfere with the conduct of the business of the Company and
its Subsidiaries taken as a whole;

(vi) zoning restrictions, easements, licenses,
reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or irregularities of title
(and with respect to leasehold interests, mortgages,
obligations, liens and other encumbrances incurred, created,
assumed or permitted to exist and arising by, through or under
a landlord or owner of the leased property, with or without
consent of the lessee) which do not in the aggregate
materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its
business;

(vii) Liens existing on any property of a Person at
the time such Person becomes a Subsidiary of the Company or
existing at the time of acquisition upon any property acquired
by the Company or any of its Subsidiaries at the time such
property is so acquired, through purchase, merger or
consolidation or otherwise (whether or not the Indebtedness
secured thereby shall have been assumed); provided, however,
that in the case of any such Lien (1) such Lien shall at all
times be confined solely to any such property and, if required
by the terms of the instrument creating such Lien, other
property which is an improvement to such acquired property,
(2) such Lien was not created in anticipation of such
transaction, and (3) the Indebtedness secured by such Lien
shall be permitted under Section 6B;

(viii) Liens created to secure all or any part of
the purchase price, or to secure Indebtedness (other than
Parity Debt) incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property acquired
or constructed by the Company or any of its Subsidiaries after
the Closing Date or to secure obligations incurred in
consideration of non-compete agreements ("NON-COMPETE
OBLIGATIONS") entered into in connection with any such
acquisition, including an acquisition complying with clause
(b)(y) of Section 6I; provided that (a) any such Lien shall be
confined solely to the item or items of such property (or
improvement thereon) so acquired or constructed and, if
required by the terms of the

- 28 -
34
instrument creating such Lien, other property (or improvement
thereon) which is an improvement to such acquired or
constructed property (and, in the case of any Lien securing
Non-Compete Obligations, shall also be limited to (x) such
items of property so acquired which are not of the character
included in the definition of Collateral and (y) such
additional items of the property so acquired, having a total
fair market value (as determined in good faith by the Board of
Directors of the General Partner) for the sum of (x) and (y)
that is not more than the amount of the Non-Compete
Obligations so secured), (b) such item or items of property so
acquired are not required to become part of the Collateral
under the terms of the Security Documents, (c) any such Lien
shall be created contemporaneously with, or within 180 days
after, the acquisition or construction of such property, (d)
such Lien does not exceed an amount equal to 85% of the fair
market value (100% in the case of Capitalized Lease
Obligations and 35% in the case of Non-Compete Obligations) of
such property (as determined in good faith by the Board of
Directors of the General Partner) at the time of acquisition
thereof and (e) after giving effect to such Lien no Default or
Event of Default shall exist;

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

(x) leases or subleases of equipment to customers
which do not materially interfere with the conduct of the
business of the Company and its Subsidiaries taken as a whole;

(xi) easements, exceptions or reservations in any
property of the Company or any 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
Company or any of its Subsidiaries;

(xii) Liens (other than Liens securing
Indebtedness) on the property or assets of any Subsidiary of
the Company in favor of the Company or any other Wholly-Owned
Subsidiary of the Company;

(xiii) Liens on the property or assets of Heritage
Service Corp. securing Indebtedness permitted by clause (v) of
Section 6B provided that (i) such Liens shall at all times be
confined to property or assets having an

- 29 -
35
aggregate fair market value not exceeding $2,000,000, and (ii)
as a result of any such Lien no Default or Event of Default
shall exist;

(xiv) Liens created by any of the Security
Documents securing (a) Indebtedness evidenced by the Notes,
the Acquisition Facility or the Revolving Working Capital
Facility) and (b) Additional Parity Debt; and

(xv) any Lien renewing, extending or refunding any
Lien permitted by this Section 6C, provided that (a) the
principal amount of the Indebtedness secured by any such Lien
shall not exceed the principal amount of such Indebtedness
outstanding immediately prior to the renewal, extension or
refunding of such Lien and (b) no assets encumbered by any
such Lien other than the assets encumbered immediately prior
to such renewal, extension or refunding shall be encumbered
thereby.

Notwithstanding the foregoing, the Company will not, and will not
permit any of its Subsidiaries to, create, assume or incur any Lien upon or
with respect to (a) any Subsidiary stock held by the Company or any Subsidiary
of the Company, or (b) any of its proprietary software developed by or on
behalf of the Company or its Affiliates necessary and useful for the conduct of
the Business. No Lien permitted under this Section 6C shall result in
over-collateralization except as required by conventional practice for specific
types of borrowings.

6D. PRIORITY DEBT. The Company will not permit Priority Debt, at
any time, to exceed the sum of (i) $5,000,000 plus (ii) 10% of the then
Consolidated Tangible Net Worth of the Company and its Subsidiaries (but only
to the extent such Consolidated Tangible Net Worth is positive). The
provisions of this Section 6D are further limitations on Priority Debt that
shall otherwise be permitted by Section 6A, 6B, or 6C.

6E. LOANS, ADVANCES, INVESTMENTS AND CONTINGENT LIABILITIES.
The Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, purchase or own any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any Person, make or
permit to remain outstanding any loan or advance to, or guarantee, endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the obligations of any Person, or make any other Investment,
except:

(i) the Company or any of its Subsidiaries may
make and own Investments (w) consisting of Units issued for
purposes of making acquisitions, (x) arising out of loans and
advances to employees incurred in the ordinary course of
business and consisting of advances to pay reimbursable
expenditures, (y) arising out of extensions of trade credit or

- 30 -
36
advances to third parties in the ordinary course of business
and (z) acquired by reason of the exercise of customary
creditors' rights upon default or pursuant to the bankruptcy,
insolvency or reorganization of a debtor;

(ii) Guarantees that constitute Indebtedness to
the extent permitted by Sections 6A and 6B and other
Guarantees that are not Guarantees of Indebtedness and are
undertaken in the ordinary course of business;

(iii) investment in (collectively, "CASH
EQUIVALENTS")

(a) marketable obligations issued or
unconditionally guaranteed by the United States of
America, or issued by any agency thereof and backed
by the full faith and credit of the United States of
America, 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 of America 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 Rating Group or ▇▇▇▇▇'▇ Investors
Service, Inc.,

(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
Standard & Poor's Rating Group or ▇▇▇▇▇'▇ Investors
Service, Inc.,

(d) certificates of deposit maturing one
year or less from the date of acquisition thereof (1)
issued by commercial banks incorporated under the
laws of the United States of America or any state
thereof or the District of Columbia or Canada or
issued by the United States branch of any commercial
bank organized under the laws of any country in
Western Europe or Japan, with capital and
stockholders' equity of at least $500,000,000 (or the
equivalent in the currency of such country), (A) 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 Standard & Poor's Rating Group or Prime-2
or better (or comparably if the rating system is
changed) by Moody's Investors

- 31 -
37
Service, Inc. or (B) 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
Standard & Poor's Rating Group or A2 or better (or
comparably if the rating system is changed) by
▇▇▇▇▇'▇ Investors Service, Inc. ("PERMITTED BANKS")
or (2) issued by Bank of Oklahoma, National
Association, in an aggregate amount for all such
certificates of deposit issued by Bank of Oklahoma,
National Association, not to exceed $1,000,000,

(e) Eurodollar time deposits having a
maturity of less than 270 days from the date of
acquisition thereof purchased directly from any
Permitted Bank,

(f) bankers' acceptances eligible for
rediscount under requirements of The Board of
Governors of the Federal Reserve System and accepted
by Permitted Banks, and

(g) obligations of the type described in
clause (a), (b), (c), (d) or (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 Company or any of its
Subsidiaries by a custodian which is a Permitted Bank
and which is not a counterparty to the repurchase
agreement in question;

(iv) the Company or any of its Subsidiaries may
acquire Capital Stock or other ownership interests of a Person
(i) located in the United States of America or Canada, (ii)
incorporated or otherwise formed pursuant to the laws of the
United States of America or Canada or any state or province
thereof or the District of Columbia and (iii) engaged in
substantially the same business as the Company which Person at
the time of such acquisition is, or as a result thereof
becomes, a Subsidiary of the Company;

(v) the Company or any of its Subsidiaries may
make and own Investments (in addition to Investments permitted
by clauses (i), (ii), (iii), and (iv) of this Section 6E) in
any Person incorporated or otherwise formed pursuant to the
laws of the United States of America or Canada or any state or
province thereof or the District of Columbia; provided,
however, that (i)

- 32 -
38
the sum of (a) the aggregate amount of all such Investments
made by the Company and its Subsidiaries following the Closing
Date which are outstanding pursuant to this clause (v) plus
(b) all other Investments held by the Company and its
Subsidiaries which are outstanding as of the Closing Date and
listed on Schedule 6E shall not at any date of determination
exceed 10% of Consolidated Net Tangible Assets (the
"INVESTMENT LIMIT"); (ii) the representation in Section 8S
shall be true and correct as of the date of determination; and
(iii) the aggregate amount of all such Investments made by the
Company and its Subsidiaries and outstanding pursuant to this
clause (v) in Persons engaged in a business which is not
substantially the same as a line of business described in
Section 6H shall not at any date exceed $3,000,000; and (iv)
no Investment pursuant to this clause (v) may be made unless
if after giving effect thereto no Default or Event of Default
exists;

(vi) the Company may make and become liable with
respect to any Interest Rate Agreements; and

(vii) any Subsidiary of the Company may make
Investments in the Company or in a Wholly-Owned Subsidiary of
the Company.

6F. RESTRICTED PAYMENTS. The Company will not directly or
indirectly declare, order, pay, make or set apart any sum for any Restricted
Payment, except that the Company may declare or order, and make, pay or set
apart, during each fiscal quarter a Restricted Payment if (i) such Restricted
Payment, together with all other Restricted Payments during such fiscal
quarter, do not in the aggregate exceed the amount of Available Cash with
respect to the immediately preceding quarter, and (ii) no Default or Event of
Default exists before or immediately after any such proposed action.

6G. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,

(i) consolidate with or merge into any other
Person or permit any other Person to consolidate with or merge
into it, except that:

(a) any Subsidiary of the Company may
consolidate with or merge into the Company or a
Wholly-Owned Subsidiary of the Company if the Company
or a Wholly-Owned Subsidiary of the Company, as the
case may be, shall be the surviving Person; and

(b) any entity (other than a Subsidiary
of the Company) may consolidate with or merge into
the Company or a Subsidiary if the Company or a
Subsidiary of the Company, as the case may be,

- 33 -
39
shall be the surviving Person and if, immediately
after giving effect to such transaction, (I) the
Company and its Subsidiaries (x) shall not have a
Consolidated Net Worth, determined in accordance with
GAAP applied on a basis consistent with the
consolidated financial statements of the Company most
recently delivered pursuant to Section 5A, of less
than the Consolidated Net Worth of the Company
immediately prior to the effectiveness of such
transaction, satisfaction of this requirement to be
set forth in reasonable detail in an Officers'
Certificate delivered to each holder of a Note at the
time of such transaction, and (y) could incur at
least $1.00 of additional Indebtedness in compliance
with Section 6A and clause (xiii) of Section 6B.
(II) substantially all of the assets of the Company
and its Subsidiaries, taken as a whole, shall be
located and substantially all of their business shall
be conducted within the continental United States of
America or Canada and (III) no Default or Event of
Default shall exist and be continuing; and

(c) the Company may consolidate with or
merge into any other entity if (I) the surviving
entity is a corporation or limited partnership
organized and existing under the laws of the United
States of America or any state thereof or the
District of Columbia, with substantially all of its
properties located and its business conducted within
the continental United States of America, (II) such
corporation or limited partnership expressly and
unconditionally assumes in writing the obligations of
the Company under this Agreement, the Notes and the
other Financing Documents, and delivers to each
holder of a Note at the time outstanding an opinion
of counsel satisfactory to the Required Holders with
respect to the due authorization and execution of the
related agreement of assumption and the
enforceability of such agreement against such
corporation or partnership, (III) immediately after
giving effect to such transaction, such corporation
or limited partnership (x) shall not have a
Consolidated Net Worth, determined in accordance with
GAAP applied on a basis consistent with the
consolidated financial statements of the Company most
recently delivered pursuant to Section 5A (or if no
such financials have yet been delivered under Section
5A, consistent with the consolidated financial
statements referred to in Section 8D), of less than
the Consolidated Net Worth of the Company immediately
prior to the effectiveness of such transaction,
satisfaction of this requirement to be set forth in
reasonable detail in an Officers' Certificate
delivered to each holder of

- 34 -
40
a Note at the time of such transaction, and (y) could
incur at least $1.00 of additional Indebtedness in
compliance with Section 6A and clause (xiii) of
Section 6B, and (IV) no Default or Event of Default
shall exist and be continuing immediately before or
after giving effect to such transaction; or

(ii) sell, lease, abandon or otherwise dispose of
all or substantially all its assets, except that:

(a) any Subsidiary of the Company may
sell, lease or otherwise dispose of all or
substantially all its assets to the Company or to a
Wholly-Owned Subsidiary of the Company; and

(b) the Company may sell, lease or
otherwise dispose of all or substantially all its
assets to any corporation or limited partnership into
which the Company could be consolidated or merged in
compliance with clause (i)(c) of this Section 6G,
provided that each of the conditions set forth in
such clause (i)(c) shall have been fulfilled; or

(iii) sell, lease, convey, abandon or otherwise
dispose of (including, without limitation, in connection with
a Sale and Lease-Back Transaction) any of its assets (except
in a transaction permitted by clause (i)(a), (i)(b), (i)(c),
(ii)(a) or (ii)(b) of this Section 6G or sales of inventory in
the ordinary course of business consistent with past practice)
or issue or sell Capital Stock of any Subsidiary of the
Company, whether in a single transaction or a series of
related transactions (each of the foregoing non-excepted
transactions, an "ASSET SALE"), unless:

(a) immediately after giving effect to
such proposed disposition no Default or Event of
Default shall exist and be continuing, satisfaction
of this requirement to be set forth in reasonable
defail in an Officer's Certificate delivered to each
holder of a Note at the time of such transaction in
the case of any Asset Sale involving assets that
generate EBITDA and such Asset Sale involves
consideration of $250,000 or more;

(b) such sale or other disposition is
for cash consideration or for consideration
consisting of not less than 75% cash and not more
than 25% interest-bearing promissory notes; provided,
that the 75% limitation referred to in this clause
(b) shall not apply to any Asset Sale consisting
solely of a sale or other disposition of land and

- 35 -
41
buildings for an interest bearing promissory note as
long as the amount of such promissory note does not
exceed $250,000;

(I) (x) the aggregate Net Proceeds
of all assets so disposed of (whether or not leased
back) over the immediately preceding 12-month period
does not exceed $3,000,000 and (y) the aggregate Net
Proceeds of all assets so disposed of (whether or not
leased back) from the Closing Date through the date
of such disposition does not exceed $10,000,000; or

(II) in the event that such Net
Proceeds (less the amount thereof previously applied
in accordance with clause (x) of this clause (c)(II))
exceeds the limitations determined pursuant to
clauses (x) and (y) of clause (c)(I) of this Section
6G (such excess amount being herein called "EXCESS
SALE PROCEEDS"), the Company shall within 12 calendar
months of the date on which such Net Proceeds
exceeded any such limitation, cause an amount equal
to such Excess Sale Proceeds to be applied (x) to the
acquisition of assets in replacement of the assets so
disposed of or of assets which may be productively
used in the United States of America or Canada in the
conduct of the Business, or (y) to the extent not
applied pursuant to the immediately preceding clause
(x), to offer to make prepayments on the Notes
pursuant to Section 4C hereto and, allocated on the
basis specified for such prepayments in the
definition of Allocable Proceeds, to offer to repay
other Parity Debt (other than Indebtedness under
Section 6B(ii) or that by its terms does not permit
such offer to be made); and

(d) the Company shall have delivered to
the Noteholders a Certificate of the Board of
Directors of the General Partner, certifying that
such sale or other disposition is for fair value and
is in the best interests of the Company.

Notwithstanding the foregoing, Asset Sales shall not be deemed to include (1)
any transfer of assets or issuance or sale of Capital Stock by the Company or
any of its Subsidiaries to the Company or a Wholly-Owned Subsidiary of the
Company, (2) any transfer of assets or issuance or sale of Capital Stock by the
Company or any of its Subsidiaries to any Person in exchange for, or the Net
Proceeds of which are applied within 12 months to the purchase of, other assets
used in a line of business permitted under Section 6H and having a fair market
value (as determined in good faith by the

- 36 -
42
Board of Directors of the General Partner) not less than that of the assets so
transferred or Capital Stock so issued or sold and (3) any transfer of assets
pursuant to an Investment permitted by Section 6E.

6H. BUSINESS. The Company will not and will not permit any of its
Subsidiaries to engage in any line of business if as a result thereof the
Company and its Subsidiaries would not be principally and predominately
engaged in the Business and related general and administrative operations, as
more fully described in the Memorandum and subject in all respects to the
provisions of clause (iii) of the proviso to Section 6E(v).

6I. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, engage in
any transaction with any Affiliate unless (i) (a) such transaction is on fair
and reasonable terms that are no less favorable to the Company or such
Subsidiary, as the case may be, than those which would be obtained in an
arm's-length transaction from a Person other than an Affiliate and (b) (x) such
transaction is entered into in the ordinary course of business and pursuant to
the reasonable requirements at the time of the Company's or such Subsidiary's
operations, or (y) such transaction involves the acquisition by the Company
from the General Partner of assets formerly owned by an entity, the Capital
Stock of which was purchased by the General Partner, which acquisition is for a
substantially equivalent value as the value of such purchase and is consummated
within ten days after the consummation of such purchase, as long as such
transaction otherwise would be permitted hereunder had the Company acquired
such assets directly from such entity (including, for example, the acquisition
by the Company from the General Partner of assets formerly owned by Kingston
Propane, Inc.), (ii) such transaction is in connection with the incurrence of
Indebtedness pursuant to Section 6B(viii), (iii) such transaction is in
connection with the making of an Investment pursuant to Section 6E(i), (iv)
such transaction is a Restricted Payment permitted by Section 6F, (v) such
transaction involves performance under the Contribution Agreement
(substantially in the form in effect on the Closing Date), (vi) such
transaction involves indemnification and contribution under Section 7.7 of the
Partnership Agreement (as said section is in effect on the Closing Date), to
the extent such indemnification or contribution arises from operations or
activities in connection with the Business (including securities issuances in
connection with funding the Business) or (vii) such transaction is a specific
transaction described in the Registration Statement.

6J. SUBSIDIARY STOCK AND INDEBTEDNESS.

(i) The Company will not permit any of its Subsidiaries
directly or indirectly to issue or sell any Equity Interest of such Subsidiary
of the Company to any Person other than the Company or a Wholly-Owned
Subsidiary of the Company except (a) for the purpose of qualifying directors or
(b) in satisfaction of pre-emptive rights of

- 37 -
43
holders of minority interests which are triggered by an issuance of Equity
Interests to the Company or a Subsidiary of the Company and permit such
holders to maintain their pro rata interests.

(ii) The Company will not directly or indirectly sell,
assign, pledge or otherwise dispose of any Equity Interest in or any
Indebtedness of any of its Subsidiaries, and will not permit any of its
Subsidiaries directly or indirectly to sell, assign, pledge or otherwise
dispose of any Equity Interest in or any Indebtedness of any other Subsidiary
of the Company except to the Company or a Wholly-Owned Subsidiary of the
Company, unless (a) simultaneously with such sale, transfer or disposition, all
of the Equity Interests (other than an Equity Interest representing less than
2% of the outstanding Equity Interests of all classes of such Subsidiary taken
together, provided that such Equity Interest is considered an Investment
pursuant to Section 6E(v) and is permitted thereunder) or Indebtedness of such
Subsidiary owned by the Company and its Subsidiaries is sold, transferred or
disposed of as an entirety, (b) the Board of Directors of the General Partner
shall have determined, as evidenced by a resolution thereof, that the proposed
sale, transfer or disposition of such Equity Interests or Indebtedness is in
the best interests of the Company, (c) such Equity Interests or Indebtedness
are sold, transferred or otherwise disposed of for cash or Cash Equivalents or
other assets used in a line of business permitted by Section 6H and having a
fair market value (as determined in good faith by the Board of Directors of the
General Partner) not less than that of the Equity Interests or Indebtedness so
transferred, to a Person upon terms deemed by the Board of Directors of the
General Partner to be acceptable, (d) the Subsidiary being sold, transferred or
otherwise disposed of shall not have any continuing investment in the Company
or any Subsidiary of the Company not being so sold, transferred or disposed and
(e) such sale, transfer or disposition is permitted by Section 6G.

6K. PAYMENT OF DIVIDENDS BY SUBSIDIARIES. The Company will
not, and will not permit any of its Subsidiaries to, be subject to or enter
into any agreement which restricts the ability of any Subsidiary of the Company
to declare or pay any dividend to the Company, to make any distribution on any
Equity Interest of such Subsidiary to the Company, or to lend money to the
Company.

6L. SALES OF RECEIVABLES. The Company will not, and will not
permit any of its Subsidiaries to, discount, pledge, sell (with or without
recourse), or otherwise sell for less than face value thereof any of its
accounts or notes receivable, except for sales of receivables (i) without
recourse which are seriously past due and which have been substantially written
off as uncollectible or collectible only after extended delays, or (ii) made in
connection with the sale of a business but only with respect to the receivables
directly generated by the business so sold.

- 38 -
44
6M. MATERIAL AGREEMENTS; TAX STATUS.

The Company will not:

(i) amend or directly or indirectly modify in any manner
the definitions of "Lenders' Portion" or "Designated Net Proceeds" of
the Credit Agreement or any similar provisions of any agreement
applicable to any extensions, renewals or refundings thereof as Parity
Debt under the provisions of paragraph 6B(ii) or 6B(iii);

(ii) amend or modify in any manner adverse to the holders
of the Notes, or grant any waiver or release under (if such action
shall be adverse to the holders of the Notes), any Partnership
Document, any notes evidencing Parity Debt or any agreement relating
to Parity Debt or terminate in any manner any Partnership Document, it
being understood, without limitation, that no modification that
reduces principal, interest or fees, premiums, make-wholes or penalty
charges, or extends any scheduled or mandatory payment, prepayment or
redemption of principal or interest, or makes less restrictive any
agreement or releases away any security, or waives any condition
precedent or default shall be adverse to the holders of the Notes for
purposes of this Agreement; or

(iii) permit the Master Partnership or the Company to be
treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes.

7. EVENTS OF DEFAULT.

7A. ACCELERATION. If any of the following conditions or events
("EVENTS OF DEFAULT") shall occur and be continuing for any reason whatsoever
(and whether such occurrence shall be voluntary or involuntary or come about or
be effected by operation of law or otherwise):

(i) the Company defaults in the payment of any principal
of, or Premium, if any, on any Note when the same becomes due and
payable, either by the terms thereof or otherwise as herein provided;
or

(ii) the Company defaults in the payment of any interest
on any Note for more than 5 days after the same becomes due and
payable; or

(iii) the Company or any Subsidiary of the Company (whether
as primary obligor or as guarantor or other surety) defaults in any
payment of principal of or interest on any Parity Debt or any other
Indebtedness other than the Notes (including without limitation any
Capitalized Lease Obligation, any obligation

- 39 -
45
under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for property
whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of
credit), beyond any period of grace provided with respect thereto, or
the Company or any Subsidiary of the Company fails to perform or
observe any other agreement or term or condition contained in any
agreement under which any such obligation is created (or if any other
event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee
on behalf of such holder or holders) to cause, such obligation to
become due or to be repurchased prior to any stated maturity, provided
that the aggregate amount of all Indebtedness as to which such a
default (payment or other) shall occur and be continuing or such a
failure or other event causing or permitting acceleration (or resale
to the Company or any Subsidiary of the Company) shall occur and be
continuing exceeds $2,000,000; provided, further, that no waiver,
modification or amendment relating to any such a default (payment or
other) or such a failure or other event with respect to any Parity
Debt or agreement or instrument relating to any Parity Debt shall be
effective for purposes of this clause (iii) if any consideration
(other than the payment of reasonable attorney's fees) is given,
directly or indirectly, by the Company or any of its Subsidiaries or
Affiliates in respect thereof, unless substantially the same
consideration is given to the holders of the Notes; or

(iv) any representation or warranty made in any writing by
or on behalf of the Company, Heritage or the Operating Partnership in
this Agreement, any other Financing Document or any instrument
furnished pursuant to this Agreement or any Financing Document shall
prove to have been false or incorrect in any material respect on the
date as of which made; or

(v) the Company fails to perform, observe or comply with
any agreement contained in Section 6; or

(vi) the Company fails to perform or observe any other
agreement, term or condition contained in this Agreement or the other
Financing Documents and such failure shall not be remedied within 30
days after any Responsible Officer obtains actual knowledge or notice
thereof; or

(vii) the General Partner, the Company or any Significant
Subsidiary Group makes an assignment for the benefit of creditors or
is generally not paying its debts as such debts become due; or

- 40 -
46
(viii) any decree or order for relief in respect of the
General Partner, the Company or any Significant Subsidiary Group is
entered under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect (herein called the
"BANKRUPTCY LAW"), of any jurisdiction; or

(ix) the General Partner, the Company or any Significant
Subsidiary Group petitions or applies to any tribunal for, or consents
to, the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the General Partner, the
Company or any Significant Subsidiary Group , or of any substantial
part of the assets of the General Partner, the Company or any
Significant Subsidiary Group, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of the
General Partner, the Company or any Significant Subsidiary Group)
relating to the General Partner, the Company or any Significant
Subsidiary Group under the Bankruptcy Law of any other jurisdiction;
or

(x) any such petition or application is filed, or any
such proceedings are commenced, against the General Partner, the
Company or any Significant Subsidiary Group and the General Partner,
the Company or any Significant Subsidiary Group by any act indicates
its approval thereof, consents thereto or acquiescences therein, or an
order, judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order, judgment or decree
remains unstayed and in effect for more than 30 days; or

(xi) a judgment or judgments for the payment of money in
excess of $2,000,000 in the aggregate (except to the extent covered by
insurance as to which the insurer has acknowledged in writing its
obligation to cover in full) shall be rendered against the Company or
any Subsidiary of the Company and either (i) enforcement proceedings
have been commenced by any creditor upon such judgment or order or
(ii) within 45 days after entry thereof, such judgment is not
discharged or execution thereof stayed pending appeal, or within 45
days after the expiration of any such stay, such judgment is not
discharged; or

(xii) any order, judgment or decree is entered in any
proceedings against the General Partner, the Company or any
Significant Subsidiary Group decreeing the dissolution of the General
Partner, the Company or any Significant Subsidiary Group and such
order, judgment or decree remains unstayed and in effect for more than
30 days or any other event occurs that results in the termination,
dissolution

- 41 -
47
or winding up of the Company, subject to Section 6G, the General
Partner or any Significant Subsidiary Group; or

(xiii) any order, judgment or decree is entered in any
proceedings against the Company or any of its Subsidiaries decreeing a
split-up of the Company or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary of the Company whose assets
represent a substantial part of the consolidated assets of the Company
and its Subsidiaries (determined in accordance with GAAP) or which
requires the divestiture of assets, or stock of a Subsidiary of the
Company, which shall have contributed a substantial part of the
Consolidated Net Income of the Company and its Subsidiaries for any of
the three fiscal years then most recently ended, and such order,
judgment or decree shall not be dismissed or execution thereon stayed
pending appeal or review within 45 days after entry thereof, or in the
event of such a stay, such order, judgment or decree shall not be
dismissed within 45 days after such stay expires; or

(xiv) any of the Security Documents shall at any time, for
any reason cease to be in full force and effect or shall fail to
constitute a valid, perfected first priority Lien with respect to the
Collateral, subject to Liens permitted by the Security Agreement, or
shall be declared to be null and void in whole or in any material
respect (i.e., relating to the validity or priority of the Liens
created by the Security Documents or the remedies available
thereunder) by the judgment of any court or other Governmental
Authority having jurisdiction in respect thereof, or if the validity
or the enforceability of any of the Security Documents shall be
contested by or on behalf of the Company, or the Company shall
renounce any of the Security Documents, or deny that it is bound by
the terms of any of the Security Documents; or

(xv) (a) the General Partner shall be engaged in any
business or activities other than those permitted by the Partnership
Agreement as in effect on the Closing Date, or (b) Heritage ceases to
be the sole general partner of the Company or the Master Partnership,
or (c) Current Management shall own, directly or indirectly, less than
51% of the Capital Stock of the General Partner; or

(xvi) an ERISA Event shall have occurred that, when taken
together with all other such ERISA Events that have occurred, could
reasonably be expected to result in liability of the Company and its
ERISA Affiliates in an aggregate amount exceeding $2,000,000; or

(xvii) an event of default under any of the Security
Documents has occurred and is continuing

- 42 -
48
then (a) if such event is an Event of Default specified in clause (i)
or (ii) of this Section 7A, the holder of any Note (other than the
Company or any of its Subsidiaries or Affiliates) may at its option,
by notice in writing to the Company, declare such Note to be, and such
Note shall thereupon be and become, immediately due and payable
together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to such Note, without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company, (b) if such event is an Event of
Default specified in clause (viii), (ix) or (x) of this Section 7A
with respect to the Company, all of the Notes at the time outstanding
shall automatically become immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each such Note, without presentment
demand, protest or notice of any kind, all of which are hereby waived
by the Company, and (c) if such event is not an Event of Default
specified in clause (i), (ii), (viii), (ix) or (x) of this Section 7A
with respect to the Company, the Required Holder(s) may at its or
their option, by notice in writing to the Company, declare all of the
Notes to be, and all of the Notes shall thereupon be and become,
immediately due and payable together with interest accrued thereon and
together with the Yield-Maintenance Amount, if any, with respect to
each Note, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company.

The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically provided for) and
that the provision for payment of the Yield-Maintenance Amount by the Company
in the event that the Notes are prepaid or are accelerated as a result of an
Event of Default is intended to provide prepaid compensation for the
deprivation of such right under such circumstances.

7B. RESCISSION OF ACCELERATION. At any time after any or all of
the Notes shall have been declared immediately due and payable pursuant to
Section 7A, the Required Holder(s) may, by notice in writing to the Company,
rescind and annul such declaration and its consequences if (i) the Company
shall have paid all overdue interest on the Notes, the principal of and
Premium, if any, payable with respect to any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
interest and overdue principal and Premium at the rate specified in the Notes,
(ii) the Company shall not have paid any amounts which have become due solely
by reason of such declaration, (iii) all Events of Default and Defaults, other
than non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to Section 11C, and (iv)
no judgment or decree shall have been entered for the payment of any amounts
due pursuant to the Notes or this Agreement. No such rescission or annulment
shall extend to or affect any subsequent Event of Default or Default or impair
any right arising therefrom.

- 43 -
49
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall
be declared immediately due and payable pursuant to Section 7A or any such
declaration shall be rescinded and annulled pursuant to Section 7B, the Company
shall forthwith give written notice thereof to the holder of each Note at the
time outstanding.

7D. OTHER REMEDIES. If any Event of Default or Default shall
occur and be continuing, the holder of any Note may proceed to protect and
enforce its rights under this Agreement and such Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or in aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the holder of any Note is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.

8. REPRESENTATIONS, COVENANTS AND WARRANTIES. Each of Heritage
and the Company represents, covenants and warrants as follows:

8A. ORGANIZATION. Heritage is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and operate its
properties (including without limitation the assets owned and operated by it
after giving effect to the Transactions), to conduct its business, to enter
into this Agreement, the other Financing Documents to which it is a party and
the Operative Agreements, to issue and sell the Notes and to carry out the
terms of this Agreement, the Notes, and such other Financing Documents and the
Operative Agreements. The Operating Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite partnership power and authority to own and
operate its properties (including without limitation the assets owned and
operated by it after giving effect to the Transactions), to conduct its
business, to enter into this Agreement and the other Financing Documents to
which it is a party and the Operative Agreements, to assume all of Heritage's
obligations under the Notes and to carry out the terms of this Agreement, the
Notes, such other Financing Documents and Operative Agreements. Each
Subsidiary of the Company is duly organized, validly existing and in good
standing under the laws of its state of organization and has all requisite
power and authority to own and operate its properties (including without
limitation the assets owned and operated by it).

8B. PARTNERSHIP INTERESTS. The sole general partner of the
Operating Partnership is Heritage, which upon the Closing will own a 1.0101%
general partner interest in the Operating Partnership. Upon the Closing (a)
the only limited partner of the Operating Partnership will be the Master
Partnership, which will own a 98.9899% limited

- 44 -
50
partner interest in the Operating Partnership as provided in the Registration
Statement, and (b) the Operating Partnership will not have any partners other
than Heritage and the Master Partnership. The Operating Partnership does not
have, and immediately after giving effect to the Transactions will not have,
any Subsidiary other than the Subsidiaries of the Company as set forth on
Schedule 8B or any Investments in any Person (other than as set forth on
Schedule 6E or 8B or Investments of the types described in Section 6E(i), (ii),
(iii) or (vi)).

8C. QUALIFICATION. Heritage is duly qualified or registered and
is in good standing as a foreign corporation for the transaction of business,
the Operating Partnership is duly qualified or registered and is in good
standing as a foreign limited partnership for the transaction of business, and
each of the Subsidiaries of the Company is duly qualified or registered and is
in good standing as a foreign corporation or partnership, as the case may be,
for the transaction of business, in the states and to the extent listed in
Schedule 8C, and, except as reflected on Schedule 8C, there are no other
jurisdictions in which the nature of their respective activities or the
character of the properties they own, lease or use makes such qualification or
registration necessary and in which the failure so to qualify or to be so
registered would have a Material Adverse Effect. Heritage has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of this Agreement, the Notes, the other Financing Documents to which it
is a party and the Operative Agreements. The Operating Partnership has taken
all necessary partnership action to authorize the execution, delivery and
performance by it of this Agreement, the other Financing Documents to which it
is a party and the Operative Agreements, and to assume all of Heritage's
obligations under the Notes. At or prior to the Closing, Heritage will have
duly executed and delivered each of this Agreement, the Notes, the other
Financing Documents to which it is a party and the Operative Agreements, and
each of such documents and instruments and the Notes and the Security Documents
will constitute the legal, valid and binding obligation of Heritage enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
At or prior to the Closing, the Operating Partnership will have duly executed
and delivered each of this Agreement, the other Financing Documents and the
Operative Agreements to which it is a party, and each of such documents and
agreements and the Notes and the Security Documents will constitute the legal,
valid and binding obligation of the Operating Partnership enforceable against
it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, moratorium or similar laws affecting creditors'
rights generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

- 45 -
51
8D. BUSINESS; FINANCIAL STATEMENTS.

(i) Heritage has delivered to you complete and correct
copies of (a) the Registration Statement and (b) the Memorandum. The pro forma
condensed consolidated financial statements of the Master Partnership set forth
in the Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and the published
rules and regulations thereunder and the assumptions on which the pro forma
adjustments reflected in such pro forma condensed consolidated financial
statements are based provide a reasonable basis for presenting the significant
effects of the transactions contemplated by such pro forma condensed
consolidated financial statements and such pro forma adjustments give
appropriate effect to such assumptions and are properly applied in such pro
forma condensed consolidated financial statements.

(ii) The Operating Partnership has not engaged in any
business or activities prior to the date of this Agreement, except for
activities related to its formation, organization and prospective operations,
and will not have any significant assets or liabilities prior to the completion
of the Transactions, except as contemplated by this Agreement. Immediately
prior to the date of this Agreement each Subsidiary of the Company was engaged
in the business indicated on Schedule 8B.

(iii) The Registration Statement contains complete and
correct copies of (a) the audited balance sheets of Heritage as of August 31,
1995 and August 31, 1994, and the related audited statements of operations and
cash flows for the fiscal years ended August 31, 1995, August 31, 1994 and
August 31, 1993 and (b) the unaudited condensed balance sheets of Heritage as
of February 29, 1996 and the related unaudited condensed statements of
operations and cash flows for the six months ended February 29, 1996 and
February 28, 1995. Such financial statements (including any related schedules
and notes) are true and correct in all material respects (subject, as to
interim statements, to changes resulting from audits and year-end adjustments),
have been prepared in accordance with GAAP consistently followed throughout the
periods involved and show all liabilities, direct and contingent, of Heritage
required to be shown in accordance with such principles. The balance sheets
fairly present the financial condition of Heritage as at the respective dates
thereof, and the results of operations and cash flows fairly present the
results of operations of Heritage and its consolidated cash flows for the
periods indicated.

(iv) Heritage has delivered to you complete and correct
copies of the unaudited pro forma condensed consolidated balance sheet of the
Operating Partnership as of February 29, 1996 giving effect to the
Transactions. Such balance sheet has been prepared in accordance with GAAP to
the extent applicable to such balance sheet and fairly presents in all material
respects the financial position of the Operating Partnership

- 46 -
52
on a pro forma basis immediately after the Transactions in accordance with the
assumptions disclosed therein at the date of such balance sheet.

(v) Heritage has delivered to you true and correct copies
of the documents and other materials listed on Schedule 8D.

8E. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of Heritage or the Operating
Partnership, threatened against Heritage, Operating Partnership or any of the
Subsidiaries of the Company, or any properties or rights of Heritage, the
Operating Partnership or any of the Subsidiaries of the Company, by or before
any court, arbitrator or administrative or governmental body (i) which
questions the validity or enforceability of this Agreement, the Notes, any
other Financing Document or any Operative Agreement or any action to be taken
pursuant to this Agreement, the Notes, any other Financing Document or any
Operative Agreement or (ii) which could reasonably be expected to result in a
Material Adverse Effect.

8F. CHANGES. Except as contemplated by this Agreement, the Notes,
the other Financing Documents or the Operative Agreements or as described in
the Registration Statement or the Memorandum, (i) none of Heritage, the
Operating Partnership or any of the Subsidiaries of the Company has incurred
any material liabilities or obligations, direct or contingent, nor entered into
any material transaction, in each case other than in the ordinary course of
business, and (ii) there has not been any material adverse change in or effect
on the business, assets, financial condition or prospects of Heritage or the
Operating Partnership or any of the Subsidiaries of the Company. There has not
been, and on or prior to the Closing Date there will not be, any Restricted
Payment of any kind declared, paid or made by Heritage or the Operating
Partnership except as specifically described in the Registration Statement.
There has not been, prior to the Transactions, any incurrence of Indebtedness
under the Acquisition Facility or the Revolving Working Capital Facility.

8G. OUTSTANDING INDEBTEDNESS. Other than the Indebtedness
represented by the Notes, neither Heritage, the Operating Partnership nor any
of the Subsidiaries of the Company as set forth on Schedule 8B has outstanding
any Indebtedness except as set forth on Schedule 8G and any such Indebtedness
which is indicated in Schedule 8G to be paid in full on the Closing Date will
be paid in full at the time of Closing. There exists no default under the
provisions of any instrument evidencing such Indebtedness or of any agreement
relating thereto. Immediately after giving effect to the Transactions, no
instrument or agreement to which the Operating Partnership or any of the
Subsidiaries of the Company is a party or by which the Operating Partnership,
any such Subsidiary, or their respective properties is bound (other than this
Agreement and the Credit Agreement and other than as indicated in Schedule 8G)
will contain any restriction on the incurrence

- 47 -
53
by the Operating Partnership or any of the Subsidiaries of the Company of
additional Indebtedness.

8H. TRANSFER OF ASSETS AND BUSINESS; TITLE TO PROPERTIES.

(i) Except as set forth on Schedule 8H, each of Heritage,
the Operating Partnership and the Subsidiaries of the Company will at the
Closing, after giving effect to the Transactions, be in possession of, and
operating in compliance with, all franchises, grants, authorizations,
approvals, licenses, permits, easements, rights- of-way, consents, certificates
and orders (collectively, the "PERMITS") required (a) to own, lease or use its
properties (including without limitation to own, lease or use the Assets owned,
leased or used by it) and (b) considering all such Permits in the possession
of, and complied with by, the Operating Partnership and its Subsidiaries taken
together, to permit the conduct of the Business as now conducted and proposed
to be conducted, except for those Permits (x) which are routine and
administrative in nature and are expected in the reasonable judgment of the
Operating Partnership to be obtained or given in the ordinary course of
business after the Closing , and (y) which, if not obtained or given, would
not, individually or in the aggregate, present a reasonable likelihood of
having a Material Adverse Effect,

(ii) Except as set forth on Schedule 8H, on the date
hereof, Heritage has, and on the Closing Date and after giving effect to the
Transactions, the Operating Partnership and the Subsidiaries of the Company
will have, (i) good and marketable title to, or valid leasehold interests in,
all of the Assets constituting real property except for defects in, or lack of
recorded title and exceptions to leasehold interests that either alone or in
the aggregate could not reasonably be expected to result in a Material Adverse
Effect, and (ii) good and sufficient title to, or valid rights to use, all of
the Assets constituting personal property reasonably necessary for the
operation of such personal property as it is used on the date hereof and
proposed to be used in the Business, in each case subject to no Liens except
such as are permitted by Section 6C and Liens, if any, which will be discharged
at the Closing. The Assets owned by the Operating Partnership and the
Subsidiaries of the Company after giving effect to the Transactions will be all
of the assets and properties reasonably necessary to enable the Operating
Partnership and its Subsidiaries to conduct the Business after the Transactions
as described in the Registration Statement and the Memorandum. Subject to such
exceptions as would not, individually or in the aggregate, present a reasonable
likelihood of having a Material Adverse Effect (A) on the date hereof Heritage
and its Subsidiaries enjoy, and upon the completion of the Transactions the
Operating Partnership and the Subsidiaries of the Company will enjoy, peaceful
and undisturbed possession under all leases and subleases necessary in any
material respect for the conduct of the Business, and (B) all such leases and
subleases are valid and subsisting and are in full force and effect. None of
the properties or assets of Heritage, the Operating Partnership or any of the
Subsidiaries of

- 48 -
54
the Company is subject to any Lien other than Liens that would be permitted to
be imposed pursuant to Section 6C as of the Closing Date, immediately after
giving effect to the Transactions.

(iii) Except as set forth on Schedule 8H, upon the
completion of the Closing, Heritage will have transferred to the Operating
Partnership record and beneficial ownership of properties, easements and
licenses comprising all of the Assets previously owned or operated by it
(including the assets of any entity consolidating with or merging into
Heritage).

(iv) Except as set forth on Schedule 8H, on the Closing
Date and immediately after giving effect to the Transactions, the Assets will
constitute all of the ▇▇▇▇▇▇▇▇▇▇.

▇▇. TAXES. On the Closing Date and after giving effect to the
Transactions, each of the Operating Partnership and its Subsidiaries will have
filed all federal, state and other income tax returns which, to the knowledge
of the Operating Partnership, are required to be filed or will have properly
filed for extensions of time for the filing thereof, and has paid all taxes,
assessments and other governmental charges levied upon it or any of its
properties, assets, income or franchises as shown to be due on such returns,
except those which are not past due or are being contested in good faith in
compliance with Section 5F. The Operating Partnership is a limited partnership
not subject to taxation with respect to its income or gross receipts under
applicable state laws and is treated as a pass-through entity for U.S. federal
income tax purposes.

8J. COMPLIANCE WITH OTHER INSTRUMENTS, ETC.; SOLVENCY.

(i) On the Closing Date, immediately prior to the
completion of any of the transactions contemplated by the Registration
Statement (including without limitation the transactions contemplated by this
Agreement, the Notes, the other Financing Documents and the Operative
Agreements), neither Heritage, the Operating Partnership nor any of the
Subsidiaries of the Company will be in violation of (a) any provision of its
certificate or articles of incorporation or other constitutive documents or its
by-laws, (b) any provision of any agreement or instrument to which it is a
party or by which any of its properties is bound or (c) any applicable law,
ordinance, rule or regulation of any Governmental Authority or any applicable
order, judgment or decree of any court, arbitrator or Governmental Authority
except (in the case of clauses (b) and (c) above only) for such violations
which would not, individually or in the aggregate, present a reasonable
likelihood of having a Material Adverse Effect.

(ii) The execution, delivery and performance of this
Agreement, the Notes, the other Financing Documents and the Operative
Agreements, and the completion

- 49 -
55
of the transactions contemplated by the Registration Statement to occur prior
to or at the time of the Closing (including without limitation the transactions
contemplated by this Agreement, the Notes, the other Financing Documents and
the Operative Agreements) will not violate (a) any provision of the certificate
or articles of incorporation or other constitutive documents or by-laws of
Heritage, the Operating Partnership or any of the Subsidiaries of the Company,
(b) any applicable law, ordinance, rule or regulation of any Governmental
Authority or any applicable order, judgment or decree of any court, arbitrator
or Governmental Authority, or (c) any provision of any agreement or instrument
to which Heritage, the Operating Partnership or any of the Subsidiaries of the
Company is a party or by which any of its properties is bound.

(iii) Upon giving effect to the issuance of the Notes on
the Closing Date both before and after giving effect to the assumption of the
Notes by the Operating Partnership, no Note shall be "in default", as that term
is used in section 1405(a)(2) of the New York Insurance Law. Each of Heritage
and the Operating Partnership is, and upon giving effect to the issuance by
Heritage, and the assumption by the Operating Partnership, of the Notes on the
Closing Date, will be, a "solvent institution", as that term is used in section
1405 of the New York Insurance Law, whose "obligations are not in default as to
principal or interest", as those terms are used in said section 1405(c).

(iv) Upon completion of the transactions contemplated by
the Registration Statement to occur prior to or at the time of Closing
(including, without limitation, the transactions contemplated by this
Agreement, the Notes, the other Financing Documents and the Operative
Agreements), none of Heritage, the Operating Partnership or any Subsidiary of
the Company shall (a) be insolvent, (b) be engaged or about to engage in
business or a transaction at a time Heritage, the Operating Partnership or any
Subsidiary of the Company could be viewed as having unreasonably small capital,
or (c) intend to incur, or believe that it would incur, debts that would be
beyond its ability to pay as such debts matured.

8K. GOVERNMENTAL CONSENT. No consent, approval or authorization
of, or declaration or filing with, any Governmental Authority is required for
the valid execution, delivery and performance of this Agreement, the Notes, the
other Financing Documents or the Operative Agreements, or for the valid offer,
issue, sale, delivery and performance of the Notes pursuant to this Agreement.

8L. OFFERING OF NOTES. Neither Heritage, the Operating
Partnership nor any of their respective Affiliates nor any agent acting on
behalf of any of the foregoing has, directly or indirectly, offered the Notes
or any part thereof or any similar security of Heritage or the Operating
Partnership for sale to, or solicited any offers to buy any of the same from,
or otherwise approached or negotiated with respect thereto with, any Person
other than the Purchasers and not more than [85] other institutional investors,
and neither

- 50 -
56
Heritage, the Operating Partnership nor anyone acting on their respective
behalfs has taken or will take any action which would subject the issuance or
sale of the Notes to the provisions of section 5 of the Securities Act or to
the provisions of any securities or "blue sky" laws of any applicable
jurisdiction.

8M. USE OF PROCEEDS. The net proceeds from the sale of the Units
by the Partnership will be used as contemplated by the Registration Statement,
including the final form of prospectus filed under Rule 424(b)(1) of the
Securities Act. The net proceeds of the sale of the Notes will be used to
repay a portion of the pre-existing Indebtedness of Heritage assumed by the
Operating Partnership and to repurchase equity interests of the stockholders of
Heritage (the "EQUITY REPURCHASE"), all as contemplated by the Registration
Statement, including such final form of prospectus. None of such proceeds will
be used, directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of purchasing or carrying any margin stock (as defined in Section
8R hereof) or for the purpose of maintaining, reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of such Regulation G.
Neither Heritage nor the Operating Partnership nor anyone acting on their
respective behalfs has taken or will take any action which might cause this
Agreement or the Notes to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.

8N. ERISA. Each of Heritage and the Operating Partnership and
their respective ERISA Affiliates is in compliance in all material respects
with the applicable provisions of ERISA and the Code and the regulations and
published interpretations thereunder. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events, could reasonably be expected to result in a Material Adverse
Effect. The present value of all benefit liabilities under each Plan (based on
those assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the last annual valuation date applicable
thereto, exceed by more than $2,000,000 the fair market value of the assets of
such Plan, and the present value of all benefit liabilities of all underfunded
Plans (based on those assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the last annual valuation dates
applicable thereto, exceed by more than $2,000,000 the fair market value of the
assets of all such underfunded Plans.

8O. ENVIRONMENTAL COMPLIANCE.

(i) Except where the failure to be in compliance could not present
a reasonable likelihood of having a Material Adverse Effect, as of the date
hereof Heritage is, and immediately after giving effect to the Transactions,
the Operating Partnership and each

- 51 -
57
Subsidiary of the Company will be, in compliance with all Environmental Laws
applicable to it and to the Business or Assets. Heritage has obtained and at
Closing the Operating Partnership and each Subsidiary of the Company will be in
compliance with all franchises, grants, authorizations, permits, licenses, and
approvals required under Environmental Laws, except for any non-compliance or
failure to obtain such Permits which could not reasonably be expected to have a
Material Adverse Effect. Heritage has submitted timely and complete
applications to renew any expired or expiring Permits required pursuant to any
Environmental Law, except for any non-compliance or failure to obtain such
Permits which could not reasonably be expected to have a Material Adverse
Effect. All reports, documents, or other submissions required by Environmental
Laws to be submitted by Heritage or the Operating Partnership to any
Governmental Authority or Person have been filed by Heritage and the Operating
Partnership, except where the failure to do so would not present a reasonable
likelihood of having a Material Adverse Effect.

(ii) (a) There is no Hazardous Substance present at any of the
real property currently owned or leased by Heritage, the Operating Partnership
or any of the Subsidiaries of the Company except to the extent that such
presence could not reasonably be expected to have a Material Adverse Effect,
and (b) to the knowledge of Heritage and the Operating Partnership, there was
no Hazardous Substance present at any of the real property formerly owned or
leased by Heritage during the period of ownership or leasing by such Person;
and with respect to such real property and subject to the same knowledge and
temporal qualifiers concerning Hazardous Substances with respect to formerly
owned or leased real properties, there has not occurred (x) any release, or to
the knowledge of Heritage and the Operating Partnership, any threatened release
of a Hazardous Substance, or (y) any discharge or, to the knowledge of Heritage
and the Operating Partnership, threatened discharge of any Hazardous Substance
into the ground, surface or navigable waters which discharge or threatened
discharge violates any federal, state, local or foreign laws, rules or
regulations concerning water pollution.

(iii) None of Heritage, the Operating Partnership or any of the
Subsidiaries of the Company has disposed of, transported, or arranged for the
transportation or disposal of any Hazardous Substance where such disposal,
transportation, or arrangement would give rise to liability pursuant to CERCLA
or any analogous state statute other than any such liabilities that could not
reasonably be expected to have a Material Adverse Effect.

(iv) As of the date hereof: (a) no Lien has been asserted by any
Governmental Authority or person resulting from the use, spill, discharge,
removal, or remediation of any Hazardous Substance with respect to any real
property currently owned or leased by Heritage or the Operating Partnership,
and (b) to the knowledge of Heritage and the Operating Partnership, no such
Lien was asserted with respect to any of the real property

- 52 -
58
formerly owned or leased by Heritage during the period of ownership or leasing
of the real property by such Person.

(v) (a) There are no underground storage tanks, asbestos-containing
materials, polychlorinated biphenyls, or urea formaldehyde insulation at any of
the real property currently owned or leased by Heritage or the Operating
Partnership in violation of any Environmental Law, and (b) to the knowledge of
Heritage and the Operating Partnership, there were no underground storage
tanks, asbestos-containing materials, polychlorinated biphenyls, or urea
formaldehyde insulation at any of the real property formerly owned or leased by
Heritage in violation of any Environmental Law during the period of ownership
or leasing of such real property by such Person.

(vi) As of the date hereof, any propane is stored, used and handled
by Heritage, the Operating Partnership and the Subsidiaries of the Company in
compliance with all applicable Environmental Laws except for any storage, use
or handling of propane that could not reasonably be expected to have a Material
Adverse Effect.

8P. PRE-EMPTIVE RIGHTS. There are no pre-emptive rights to which
a holder of a minority interest in any Subsidiary of the Company is entitled.

8Q. DISCLOSURE. This Agreement, the Notes, the other Financing
Documents, the Operative Agreements, the Memorandum and any other document,
certificate or statement furnished to any Purchaser by or on behalf of
Heritage, the Operating Partnership or their respective Subsidiaries or
Affiliates, in connection herewith, taken together, do not contain and the
Registration Statement does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to Heritage or the Operating
Partnership which has or in the future could reasonably be expected to have (so
far as Heritage or the Operating Partnership can now foresee) a Material
Adverse Effect and which has not been set forth in this Agreement or in the
other documents, certificates and statements furnished to each Purchaser by or
on behalf of Heritage or the Operating Partnership (including the Registration
Statement) prior to the date hereof in connection with the transactions
contemplated hereby.

8R. FEDERAL RESERVE REGULATIONS. None of Heritage, the Operating
Partnership, or any Subsidiary of the Company will, directly or indirectly, use
any of the proceeds of the sale of the Notes for the purpose, whether
immediate, incidental or ultimate, of buying a "margin stock" or of
maintaining, reducing or retiring any indebtedness originally incurred to
purchase a stock that is currently a "margin stock", or for any other purpose
which might constitute this transaction a "purpose credit" which is secured
"directly or indirectly by margin stock", in each case within the meaning of

- 53 -
59
Regulation G of the Board of Governors of the Federal Reserve System (12 C.F.R.
207, as amended), or otherwise take or permit to be taken any action which
would involve a violation of such Regulation G or of Regulation X (12 C.F.R.
224, as amended) or any other applicable regulation of such Board. No
indebtedness being retired, directly or indirectly, out of the proceeds of the
sale of the Notes was incurred for the purpose of purchasing or carrying any
stock which is currently a "margin stock", and neither Heritage nor the
Operating Partnership owns or has any present intention of acquiring any amount
of such "margin stock".

8S. INVESTMENT COMPANY ACT. None of Heritage, the Operating
Partnership or any Subsidiary of the Company is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.

8T. PUBLIC UTILITY HOLDING COMPANY ACT. Each of Heritage, the
Operating Partnership and each Subsidiary of the Company is exempt from all of
the provisions of the Public Utility Holding Company Act of 1935, as amended
(the "PUHCA") and the rules thereunder other than Section 9(a)(2) thereof based
upon a no-action letter from the Commission dated June 19, 1996.

8U. MATTERS RELATING TO THE GENERAL PARTNER. Immediately after
the Transactions, the ownership of Heritage and the Master Partnership shall
be, in all material respects, as described in the Registration Statement.
Heritage will own, in addition to the interest described in Section 8B, a 1%
general partner interest in the Master Partnership and 3,702,943 Subordinated
Units, representing a 47.0% limited partner interest in the Master Partnership
and the Operating Partnership on a combined basis, if no overallotment option
is exercised by the Underwriters or representing a 43.6% limited partnership
interest in the Master Partnership and the Operating Partnership on a combined
basis, if the overallotment option is exercised in full by the Underwriters.

9. REPRESENTATIONS OF EACH PURCHASER. Each Purchaser severally
and not jointly represents as follows:

9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes
to be purchased by it hereunder with a view to or for sale in connection with a
distribution of the Notes within the meaning of the Securities Act, provided
that the disposition of such Purchaser's property shall at all times be and
remain within its control.

9B. SOURCE OF FUNDS. At least one of the following statements is
an accurate representation as to the source of funds (the "SOURCE") to be used
by such Purchaser to pay the purchase price of the Notes purchased by such
Purchaser hereunder:

- 54 -
60
(i) the Source is a general account of an insurance
company, and the amount of the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the
National Association of Insurance commissioners (the "NAIC ANNUAL
STATEMENT")) for the general account contract(s) held by or on behalf
of any employee benefit plans (as defined by Section 3(3) of ERISA)
together with the amount of the reserves and liabilities (as defined
by the NAIC Annual Statement) for the general account contract(s) held
by or on behalf of any other such employee benefit plans maintained by
the same employer (or affiliate thereof as defined in United States
Department of Labor's Prohibited Transaction Class Exemption ("PTCE")
95-60) or by the same employee organization do not exceed 10% of the
total reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurance
company. For purposes of the percentage limitation above, the amount
of reserves and liabilities for the general account contract(s) held
by or on behalf of an employee benefit plan shall be determined before
reduction for credits on account of any reinsurance ceded on a
coinsurance basis; or

(ii) the Source is either (a) an insurance company pooled
separate account, within the meaning of ▇▇▇▇ ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇), ▇▇ (▇) a bank collective investment fund, within the meaning of
PTCE 91-38 (issued July 12, 1991) and, except as disclosed on a list
that has been provided by such Purchaser to the Company, no employee
benefit plan or group of plans maintained by the same employer or
employee organization participates to the extent of 10% or more of all
assets allocated to such pooled separate account or collective
investment fund; or

(iii) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of ▇▇▇▇ ▇▇- ▇▇ (▇▇▇ "▇▇▇▇ ▇▇▇▇▇▇▇▇▇"))
managed by a "qualified professional asset manager" or "QPAM" (within
the meaning of Part V of the QPAM Exemption), no employee benefit
plan's assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning
of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition
of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and (i) the identity of such QPAM and (ii) the
names of all employee benefit plans whose assets are included in such
investment fund have been disclosed on Schedule 9B hereto; or

- 55 -
61
(iv) the Source is a governmental plan; or

(v) the Source is one or more employee benefit plans or
plans or a separate account, trust fund or other entity the assets of
which consist of "plan assets" of any employee benefit plans or plans
as defined in Department of Labor regulation Section 2510.3-101, and
each such employee benefit plan or plan has been disclosed on Schedule
9B hereto; or

(vi) the Source does not include assets of any employee
benefit plan (other than a plan exempt from the coverage of ERISA) or
plan or any other entity the assets of which consist of "plan assets"
of employee benefit plans or plans as defined in Department of Labor
regulation Section 2510.3-101.

As used in this Section 9B, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA, and the term "plan" has
the meaning assigned thereto in Section 4975(e)(1) of the Code.

9C. STATUS OF PURCHASER. By its execution of this Agreement,
each Purchaser severally represents that it is an "accredited investor" by
reason of the provisions of clause (1), (3) or (7) of the definition of that
term in Regulation D under the Securities Act.

9D. REPRESENTATIONS OF EACH PURCHASER TO EACH OTHER PURCHASER. By
its execution of this Agreement, each Purchaser severally represents and
acknowledges to each other Purchaser that it has, independently and without
reliance upon any other Purchaser and based on the financial statements
referred to in Section 8D, the Memorandum and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Purchaser also severally
represents and acknowledges to each other Purchaser that it will, independently
and without reliance upon any other Purchaser and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. The
provisions of this Section 9C are for the sole benefit of the Purchasers and
are not intended to benefit or to confer any right upon the Company or any
other Person.

10. DEFINITIONS. For the purpose of this Agreement, the terms
defined in the introductory sentence and in Sections 1 and 2 shall have the
respective meanings specified therein, and the following terms shall have the
meanings specified with respect thereto below:

- 56 -
62
10A. YIELD-MAINTENANCE TERMS.

"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City are required or
authorized to be closed.

"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 4B or 4C or is
declared to be immediately due and payable pursuant to Section 7A, as the
context requires.

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

"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (i) the
yields reported, as of 10:00 a.m. (New York City time) on the Business Day next
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields shall not
be reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H. 15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield shall be determined,
if necessary, by (a) converting U.S. Treasury ▇▇▇▇ quotations to bond-
equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between yields reported for various maturities if no
maturity corresponds to the applicable Remaining Average Life.

"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year)

- 57 -
63
which will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.

"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date with respect
to such Called Principal if no payment of such Called Principal were made prior
to its scheduled due date.

"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 4B or 4C or is declared to be immediately due and payable
pursuant to Section 7A, as the context requires.

"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal plus
(ii) interest accrued thereon as of (including interest due on) the Settlement
Date with respect to such Called Principal. The Yield-Maintenance Amount shall
in no event be less than zero.

10B. OTHER TERMS.

"ACCEPTING HOLDERS" shall have the meaning specified in
Section 4D(iii).

"ACQUIRED DEBT" shall mean with respect to any specified
Person, (i) Indebtedness of any other Person existing at the time such other
Person merged with or into or became a Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of,
such other Person merging with or into or becoming a Subsidiary of such
specified Person and (ii) Indebtedness encumbering any asset acquired by such
specified Person.

"ACQUISITION FACILITY" shall mean the proposed $35,000,000
acquisition revolving credit facility of the Company provided for in the Credit
Agreement for the purpose of financing acquisitions and improvements and
repairs.

"ADDITIONAL PARITY DEBT" shall mean Indebtedness of the
Company incurred in accordance with Section 6A and, clause (xiii) of Section 6B
to fund acquisitions or provide working capital, provided that the covenants
imposed on the Company therein or in any agreement or instrument relating
thereto are no more restrictive than the covenants imposed on the Company
herein, and provided, further, that no such Indebtedness shall be deemed
Additional Parity Debt unless immediately before and after giving effect to the
incurrence thereof no Default or Event of Default shall have occurred and be
continuing.

- 58 -
64
"ADMINISTRATIVE AGENT" shall mean The First National Bank of
Boston, as administrative agent under the Credit Agreement, together with its
successors as such administrative agent.

"AFFILIATE" shall mean, with respect to any Person any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person , except a Subsidiary of such
Person. A Person shall be deemed to control a corporation if such Person (i)
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise or (ii) owns at least
5% of the Voting Stock of a corporation. As applied to the Company,
"Affiliate" includes without limitation the General Partner and the Master
Partnership.

"AGENTS" shall mean the Administrative Agent and Bank of
Oklahoma, National Association, as documentation agent under the Credit
Agreement, collectively.

"AGREEMENT" shall have the meaning set forth in Section 11C.

"ALLOCABLE PROCEEDS" shall mean, with respect to Excess Sale
Proceeds or Excess Taking Proceeds, as the case may be, to be applied on any
date pursuant to Sections 4C and 4D, the principal amount thereof available to
prepay the Notes determined by allocating such Excess Sale Proceeds or Excess
Taking Proceeds, as the case may be, pro rata among the holders of all Notes
and other Parity Debt (other than Indebtedness permitted by Section 6(B)(ii)),
if any, according to the aggregate principal amounts of the Notes and such
other Parity Debt outstanding on the date the applicable prepayment is to be
made in accordance with Sections 4C and 4D.

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

"ASSET SALE" shall have the meaning specified in Section
6G(iii).

"ASSETS" shall have the meaning specified in the second
opening paragraph hereof.

"ATTRIBUTABLE DEBT" shall mean, with respect to any Sale and
Lease-Back Transaction not involving a Capitalized Lease Obligation, as of any
date of determination,

- 59 -
65
the total obligation (discounted to present value at the rate of interest
implicit in the lease included in such transaction) of the lessee for rental
payments (other than accounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining portion of the term (including extensions which are at the
sole option of the lessor) of the lease included in such transaction (in the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such rental obligation shall also include the amount of such penalty,
but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated).

"AVAILABLE CASH" shall mean, with respect to any fiscal
quarter of the Company: (i) the sum of (a) all cash and cash equivalents of the
Company and its Subsidiaries on hand at the end of such quarter and (b) all
additional cash and cash equivalents of the Company and its Subsidiaries on
hand on the date of determination of Available Cash with respect to such
quarter resulting from borrowings for working capital purposes made subsequent
to the end of such quarter, less (ii) the amount of any cash reserves that is
necessary or appropriate in the reasonable discretion of the General Partner to
(a) provide for the proper conduct of the business of the Company and its
Subsidiaries (including reserves for future capital expenditures) subsequent to
such quarter, (b) comply with applicable law or any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which
the Company or any Subsidiary is a party or by which it is bound or its assets
are subject (including the Financing Documents) and (c) provide funds for
distributions to partners of the Master Partnership and the General Partner in
respect of any one or more of the next four quarters; provided that the General
Partner need not establish cash reserves pursuant to clause (c) if the effect
of such reserves would be that the Master Partnership is unable to distribute
the Minimum Quarterly Distribution (as defined in the Agreement of Limited
Partnership of the Master Partnership) on all Common Units with respect to such
quarter; and provided, further, that disbursements made by the Company or a
Subsidiary of the Company or cash reserves established, increased or reduced
after the end of such quarter but on or before the date of determination of
Available Cash with respect to such quarter shall be deemed to have been made,
established, increased or reduced for purposes of determining Available Cash,
within such quarter if the General Partner so determines. In addition, without
limiting the foregoing, Available Cash for any fiscal quarter shall reflect
reserves equal to (A) 50% of the interest projected to be paid on the Notes in
the next succeeding fiscal quarter plus (B) beginning with a date three fiscal
quarters before a scheduled principal payment date on the Notes, 25% of the
aggregate principal amount thereof due on any such payment date in the third
succeeding fiscal quarter, 50% of the aggregate principal amount due on any
such payment date in the second succeeding fiscal quarter and 75% of the
aggregate principal amount due on any quarterly payment date in

- 60 -
66
the next succeeding fiscal quarter, plus (C) the Unused Proceeds Reserve as of
the date of determination, provided that the foregoing reserves for amounts to
be paid on the Notes shall be reduced by the aggregate amount of advances
available to the Company from responsible financial institutions under binding
irrevocable (x) credit or financing commitments (which are subject to no
conditions which the Company is unable to meet) and (y) letters of credit
(which are subject to no conditions which the Company is unable to meet), in
each case, to be used to refinance such amounts to the extent such amounts
could be borrowed and remain outstanding under Sections 6A and 6B.

"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of Section 7A.

"BI-STATE" shall mean Heritage - Bi State Corp. a Delaware
corporation.

"BUSINESS" shall have the meaning specified in the opening
paragraph hereof.

"CAPITAL STOCK" shall mean, with respect to any Person, any
and all shares, units representing interests, participations, rights in or
other equivalents (however designated) of such Person's capital stock,
including, with respect to partnerships, partnership interests (whether general
or limited) and any other interest or participation that confers upon a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, such partnership, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.

"CAPITALIZED LEASE OBLIGATION" shall mean any rental
obligation which under GAAP would be required to be capitalized on the books of
the Company or any of its Subsidiaries, taken at the amount thereof accounted
for as indebtedness (net of interest expense) in accordance with such
principles.

"CASH EQUIVALENTS" shall have the meaning set forth in Section
6E(iii).

"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as the
same may be amended from time to time.

"CERTIFICATES AND STOCK POWERS" shall have the meaning
specified in Section 3H.

"CHANGE OF CONTROL" shall mean the acquisition by any Person
or group of related persons (as such terms are defined in the Exchange Act)
(other than the Current

- 61 -
67
Management or group of related persons (as so defined) including the Current
Management) of beneficial ownership of more than 50% of the Units.

"CLOSING" shall have the meaning specified in Section 2.

"CLOSING DATE" shall have the meaning specified in Section 2.

"CODE" shall mean the Internal Revenue Code of 1986, as
amended.

"COLLATERAL" shall have the meaning specified in the Security
Agreement; provided, however, that Collateral shall not include for any purpose
under this Agreement or any other Financing Document any property subject to a
Lien incurred pursuant to clause (i), (vii) or (viii) of Section 6C or any
renewals of any such Lien pursuant to clause (xv) of Section 6C, unless the
Indebtedness secured by such Lien shall have been paid or discharged.

"COLLATERAL AGENT" shall have the meaning specified in Section
3H.

"COMMISSION" shall mean the United States Securities and
Exchange Commission.

"COMMON UNITS" shall have the meaning specified in the second
opening paragraph hereof.

"COMPANY" shall have the meaning specified in the third
opening paragraph hereof.

"CONSOLIDATED DEBT SERVICE" shall mean, as of any date of
determination, the total amount payable by the Company and its Subsidiaries on
a consolidated basis during the four consecutive calendar quarters next
succeeding the date of determination, in respect of scheduled principal and
interest payments with respect to Indebtedness of the Company and its
Subsidiaries outstanding on such date of determination, after giving effect to
any Indebtedness proposed on such date to be incurred and to the substantially
concurrent repayment of any other Indebtedness (a) including actual payments
under Capitalized Lease Obligations, (b) assuming, in the case of Indebtedness
(other than Indebtedness referred to in clause (c) below) bearing interest at
fluctuating interest rates which cannot be determined in advance, that the rate
actually in effect on such date will remain in effect throughout such period,
(c) including only actual interest (but not principal) payments associated with
the Indebtedness incurred pursuant to Section 6B(ii) and Section 6B(v) during
the most recent four consecutive calendar quarters and (d) treating the
principal amount of all Indebtedness outstanding as of such date of
determination under a revolving credit or similar agreement (other than the
Indebtedness incurred pursuant to Section 6B(ii) and Section 6B(v)) as maturing
and becoming due and

- 62 -
68
payable on the scheduled maturity date or dates thereof (including the maturity
of any payment required by any commitment reduction or similar amortization
provision), without regard to any provision permitting such maturity date to be
extended (except for such extensions as may be made in the sole discretion of
the borrower thereunder and without any conditions that remain to be fulfilled
by the borrower or waived by the lender thereunder). See Section 10C.

"CONSOLIDATED EBITDA" shall mean, as of any date of
determination for any applicable period, (1) the sum of, without duplication,
the amounts for such period, taken as a single accounting period, of (a)
Consolidated Net Income and (b) to the extent deducted in the determination of
Consolidated Net Income, after excluding amounts attributable to minority
interests in Subsidiaries and without duplication, (i) Consolidated Non-Cash
Charges, (ii) Consolidated Interest Expense and (iii) Consolidated Income Tax
Expense less (2) any non-cash items increasing Consolidated Net Income for such
period to the extent that such items constitute reversals of a Consolidated
Non-Cash Charge for a previous period and which were included in the
computation of Consolidated EBITDA for such previous period pursuant to the
provisions of the preceding clause (1). Consolidated EBITDA shall be
calculated after giving effect, on a pro forma basis and in accordance with
GAAP, to, without duplication, any Asset Sales or Asset Acquisitions (including
without limitation any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or one of its Subsidiaries incurring,
assuming or otherwise being liable for Acquired Debt) occurring during the
period commencing on the first day of such period to and including the date of
the transaction (the "REFERENCE PERIOD"), as if such Asset Sale or Asset
Acquisition occurred on the first day of the Reference Period; provided,
however, that Consolidated EBITDA generated by an acquired business or asset
shall be determined by the actual gross profit (revenues minus cost of goods
sold) of such acquired business or asset during the immediately preceding four
full fiscal quarters in the Reference Period minus the pro forma expenses that
would have been incurred by the Company and its Subsidiaries in the operation
of such acquired business or asset during such period computed on the basis of
personnel expenses for employees retained or to be retained by the Company and
its Subsidiaries in the operation of such acquired business or asset and
non-personnel costs and expenses incurred by the Company and its Subsidiaries
in the operation of the Company's business at similarly situated facilities of
the Company or any of its Subsidiaries (as determined in good faith by the
General Partner based upon reasonable assumptions). As used herein,
Consolidated EBITDA shall be determined (a) on the basis of 100% of that amount
for the period of the four most recent fiscal quarters ending on or prior to
the date of determination, or (b) 50% of that amount for the period of the
eight most recent fiscal quarters ending on or prior to the date of
determination, whichever is higher. See Section 10C.

- 63 -
69
"CONSOLIDATED FUNDED INDEBTEDNESS" shall mean, as of any date
of determination, the aggregate amount of Indebtedness of the Company and its
Subsidiaries outstanding on that date and maturing in more than 12 months,
including the Notes and borrowings under the Acquisition Facility (including
current maturities of any such Indebtedness). Notwithstanding anything to the
contrary contained herein, Consolidated Funded Indebtedness shall not include
borrowings under the Revolving Working Capital Facility to the extent permitted
hereby.

"CONSOLIDATED INCOME TAX EXPENSE" shall mean, with respect to
the Company and its Subsidiaries, for any period, the provision for federal,
state, local and foreign income taxes of the Company and its Subsidiaries for
such period as determined on a consolidated basis in accordance with GAAP. See
Section 10C.

"CONSOLIDATED INTEREST EXPENSE" shall mean, as of any date of
determination for any applicable period, without duplication, the sum of (i)
the interest expense of the Company and its Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, including without
limitation (a) any amortization of debt discount, (b) the net cost under
Interest Rate Agreements, (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and (e) all
accrued interest and (ii) the interest component of Capitalized Lease
Obligations paid, accrued or scheduled to be paid or accrued by the Company and
its Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP. In computing Consolidated Interest Expense for any
period prior to the end of the first four fiscal quarters ending after the
Closing Date, Consolidated Interest Expense of the Company and its Subsidiaries
shall be determined on the basis of interest accruing at a rate equal to the
average interest rate payable on the date of determination with respect to
Indebtedness outstanding from time to time under the Notes, the Acquisition
Facility and the Revolving Working Capital Facility, rather than the rates of
interest applicable to the interest expense of the Indebtedness refinanced
thereby. In computing Consolidated Interest Expenses for purposes of clause
(ii) of Section 6A, the applicable period for the determination thereof shall
be the four most recent fiscal quarters ending on or prior to the date of
determination. See Section 10C.

"CONSOLIDATED NET INCOME" shall mean the net income of the
Company and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP and after provision for minority interests and as adjusted
to exclude (i) net after-tax extraordinary gains or losses, (ii) net after-tax
gains or losses attributable to Asset Sales, (iii) the net income or loss of
any Person which is not a Subsidiary of the Company and which is accounted for
by the equity method of accounting, provided that Consolidated Net Income shall
include the amount of cash dividends or distributions actually paid to the
Company or any Subsidiary of the Company, (iv) the net income or loss prior to
the

- 64 -
70
date of acquisition of any Person combined with the Company or any Subsidiary
of the Company in a pooling of interest, (v) the net income of any Subsidiary
of the Company to the extent that dividends or distributions of such net income
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 and (vi) the cumulative effect of any changes in accounting
principles. See Section 10C.

"CONSOLIDATED NET TANGIBLE ASSETS" shall mean, as of any date
of determination, the Total Assets of the Company and its Subsidiaries, minus
the net book value of all assets of the Company and its Subsidiaries (after
deducting any reserves applicable thereto) which would be shown as intangible
assets on a consolidated balance sheet of the Company and its Subsidiaries as
of such time prepared in accordance with GAAP. See Section 10C.

"CONSOLIDATED NET WORTH" shall mean, with respect to any
Person, as of any date of determination, the total partners' capital (in the
case of a partnership) or stockholders' equity (in the case of a corporation)
of such Person at such date, as would be shown on a consolidated balance sheet
of such Person and its Subsidiaries, if any, prepared in accordance with GAAP.
See Section 10C.

"CONSOLIDATED NON-CASH CHARGES" shall mean with respect to the
Company and its Subsidiaries, for any period, the aggregate depreciation and
amortization, in each case reducing Consolidated Net Income of the Company and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP. See Section 10C.

"CONSOLIDATED PRO FORMA MAXIMUM DEBT SERVICE" shall mean, as
of any date of determination, the maximum amount payable by the Company and its
Subsidiaries on a consolidated basis during all periods of four consecutive
calendar quarters, commencing with the calendar quarter in which such date of
determination occurs and ending June 30, 2011, in respect of scheduled
principal and interest payments with respect to all Indebtedness of the Company
and its Subsidiaries outstanding on such date of determination, after giving
effect to any Indebtedness proposed on such date to be incurred and to the
substantially concurrent repayment of any other Indebtedness (a) including all
payments under Capitalized Lease Obligations, (b) assuming, in the case of
Indebtedness (other than Indebtedness referred to in clause (c) below) bearing
interest at fluctuating interest rates which cannot be determined in advance,
that the rate actually in effect on such date will remain in effect throughout
such period, (c) including only actual interest (but not principal) payments
associated with the Indebtedness incurred pursuant to Section 6B(ii) during the
most recent four consecutive calendar quarters and (d) treating the principal
amount of all Indebtedness outstanding as of such date of determination under a
revolving credit or similar agreement (other than the Indebtedness

- 65 -
71
incurred pursuant to Section 6B(ii)) as maturing and becoming due and payable
on the scheduled maturity date or dates thereof (including the maturity of any
payment required by any commitment reduction or similar amortization
provision), without regard to any provision permitting such maturity date to be
extended (except for such extensions as may be made in the sole discretion of
the borrower thereunder and without any conditions that remain to be fulfilled
by the borrower or waived by the lender thereunder). See Section 10C.

"CONSOLIDATED TANGIBLE NET WORTH" shall mean, with respect to
any Person, at any date of determination, the then Consolidated Net Worth of
such Person minus the net book value of all assets of such Person and its
Subsidiaries, if any (after deducting any reserves applicable thereto), which
would be shown as intangible assets on a consolidated balance sheet of such
Person and its Subsidiaries, if any, as of such time prepared in accordance
with GAAP. See Section 10C.

"CONTRIBUTION AGREEMENT" shall mean the Contribution,
Conveyance and Assumption Agreement, dated as of June 28, 1996, among Heritage,
the Operating Partnership and the other signatories thereto, as the same may
from time to time be amended, supplemented or otherwise modified in accordance
with the terms thereof and hereof.

"CONTROL EVENT" shall mean:

(i) the execution of any written agreement to which the
Company or any Affiliate of the Company is a party which could
reasonably be expected to result in a Change of Control, or

(ii) the commencement (as such term is used in Rule
14d-2(a) under the Exchange Act as in effect on the date of the
Closing) of a tender offer by any person (as such term is used in
Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect on
the date of the Closing) or related person constituting a group (as
such term issued in Rule 13d-5 under the Exchange Act as in effect on
the date of the Closing) for units which would result in such person
or group owning, directly or indirectly, more than 50% of the
outstanding Units.

"CONVEYANCE AGREEMENTS" shall mean (a) the Contribution
Agreement and (b) each of the individual bills of sale and other conveyance
documents delivered to the Company pursuant to the Contribution Agreement in
each case as the same may from time to time be amended, supplemented or
otherwise modified in accordance with the terms thereof and hereof.

"CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
the date hereof among the Operating Partnership, the Agents and the financial
institutions which

- 66 -
72
are or become parties from time to time thereto, evidencing the Acquisition
Facility and the Revolving Working Capital Facility, as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.

"CURRENT MANAGEMENT" shall mean the individual executive
officers of the General Partner named as such in the Registration Statement,
together with the heirs of, and trusts for the benefit of family members
controlled by, any such executive officer.

"ENVIRONMENTAL LAWS" shall mean all applicable federal, state,
local and foreign laws, rules or regulations as amended from time to time,
relating to emissions, discharges, releases, threatened releases, removal,
remediation or abatement of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into or in the environment (including
without limitation air, surface water, ground water or land), or otherwise used
in connection with the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, toxic or
hazardous substances or wastes, as defined under such applicable laws.

"EQUITY INTEREST" shall mean, with respect to any Person, any
capital stock issued by such Person, regardless of class or designation, or any
limited or general partnership interest in such Person, regardless of
designation, and all warrants, options, purchase rights, conversion or exchange
rights, voting rights, calls or claims of any character with respect thereto.

"EQUITY REPURCHASE" shall have the meaning specified in
Section 8M.

"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

"ERISA AFFILIATE" shall mean any trade or business (whether or
not incorporated) that, together with the Company, is treated as a single
employer under Section 414(b) or (c) of the Code, or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

"ERISA EVENT" shall mean (i) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder, with
respect to a Plan; (ii) the adoption of any amendment to a Plan that would
require the provision of security pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA; (iii) the existence with respect to any Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (iv) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (v) the
incurrence of any liability under Title IV of ERISA with respect to the
termination of any Plan or the withdrawal or partial withdrawal of the Company
or any of its ERISA Affiliates from any

- 67 -
73
Plan or Multiemployer Plan; (vi) the receipt by the Company or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (vii) the receipt by the Company or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; and (viii) the occurrence of a
"prohibited transaction" with respect to which the Company or any of its
Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of
the Code) and with respect to which the Company or such Subsidiary would be
liable for the payment of an excise tax.

"EVENT OF DEFAULT" shall mean any of the events specified in
Section 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "DEFAULT" shall mean
any of such events, whether or not any such requirement has been satisfied.

"EXCESS PROCEEDS" shall have the meaning set forth in Section
4C(iv).

"EXCESS SALE PROCEEDS" shall have the meaning set forth in
Section 6G(iii)(c)(II).

"EXCESS TAKING PROCEEDS" shall have the meaning set forth in
Section 4C(ii).

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.

"FINANCING DOCUMENTS" shall mean this Agreement and the
Security Documents.

"FINANCING STATEMENTS" shall have the meaning specified in
Section 3H.

"GAAP" shall have the meaning specified in Section 10C.

"GENERAL PARTNER" shall have the meaning specified in the
third opening paragraph hereof.

"GOVERNMENTAL AUTHORITY" shall mean any governmental agency,
authority, instrumentality or regulatory body, other than a court or other
tribunal, in each case whether federal, state, local or foreign.

"GUARANTY" shall mean, with respect to any Person, any direct
or indirect liability, contingent or otherwise, of such Person with respect to
any Indebtedness of

- 68 -
74
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business) or discounted or sold with recourse by such
Person, or in respect of each such Person is otherwise directly or indirectly
liable, including, without limitation, any such obligation in effect guaranteed
by such Person through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise),
or to maintain the solvency or any balance sheet or other financial condition
of the obligor of such obligation, or to make payment for any products,
materials or supplies or for any transportation or services regardless of the
non-delivery or non- furnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected against loss in
respect thereof. The amount of any Guaranty shall be equal to the outstanding
principal amount of the obligation guaranteed or such lesser amount to which
the maximum exposure of the guarantor shall have been specifically limited.

"HAZARDOUS SUBSTANCE" shall mean any substance so designated
pursuant to CERCLA, asbestos, petroleum, urea formaldehyde insulation and
petroleum by-products (other than propane).

"HERITAGE" shall have the meaning specified in the first
opening paragraph hereof.

"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication,

(a) any indebtedness for borrowed money, all obligations
upon which interest charges are customarily paid and all obligations evidenced
by any bond, note, debenture or other similar instrument which such Person has
directly or indirectly created, incurred or assumed;

(b) all obligations of others secured by any Lien in
respect of property owned by such Person, whether or not such Person has
assumed or become liable for the payment of such indebtedness; provided that
the amount of such Indebtedness, if such 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 of the property subject to such Lien;

(c) any indebtedness, whether or not for borrowed money
(excluding trade payables and accrued expenses arising in the ordinary course
of business), with

- 69 -
75
respect to which such 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 service or business acquired by such Person, whether by purchase,
consolidation, merger or otherwise;

(d) the principal component of any Capitalized Lease
Obligations to the extent such obligations would, in accordance with GAAP,
appear on a balance sheet of such Person;

(e) all Attributable Debt of such Person in respect of
Sale and Lease-Back Transactions not involving a Capitalized Lease Obligation;

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

(g) any Preferred Stock of any Subsidiary of such Person
valued at the liquidation preference thereof, or any mandatory redemption
payment obligations in respect thereof plus, in either case, accrued dividends
thereon;

(h) any indebtedness of the character referred to in
clause (a), (b), (c), (d), (e), (f) or (g) of this definition deemed to be
extinguished under GAAP but for which such Person remains legally liable;

(i) any indebtedness of any other Person of the character
referred to in clause (a), (b), (c), (d), (e), (f), (g) or (h) of this
definition with respect to which the Person whose Indebtedness is being
determined has become liable by way of a Guaranty;

(j) all obligations, contingent or fixed, of such person
as an account party in respect of letters of credit (other than letters of
credit incurred in the ordinary course of business and consistent with past
practice);

(k) all liabilities of such Person in respect of unfunded
vested benefits under pension plans (determined on a net basis for all such
plans) and all asserted withdrawal liabilities of such Person or a commonly
controlled entity to a Multiemployer Plan;

(l) Swaps (other than Interest Rate Agreements);

(m) all obligations of such Person in respect of bankers'
acceptances (other than in respect of accounts payable to suppliers incurred in
the ordinary course of business consistent with past practice); and

- 70 -
76
(n) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a) through (m) above.

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 such Redeemable Capital Stock as
if such Redeemable Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Agreement and
if such price is based upon, or measured by, the fair market value of such
Redeemable Capital Stock, such fair market value shall be determined in good
faith by the board of directors or a similar governing body of the issuer of
such Redeemable Capital Stock.

"INTERCREDITOR AGREEMENT" shall have the meaning specified in
Section 3H.

"INTEREST RATE AGREEMENT" shall mean any fully matched
interest rate Swap entered into with the intent to protect the Company against
fluctuations in interest rates and entered into as a bona fide hedging
arrangement and not for purposes of investment or speculation.

"INVESTMENT" shall mean, as applied to any Person, any direct
or indirect purchase or other acquisition by such Person of stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, and any other item
which would be classified as an "investment" on a balance sheet of such Person
prepared in accordance with GAAP, including without limitation any direct or
indirect contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an interest
(it being understood that a direct or indirect purchase or other acquisition by
such Person of assets of any other Person (other than stock or other
securities) shall not constitute an "Investment" for purposes of this Agreement
so long as such assets are all used in the Business). For the purposes of
Section 6E(v), the amount involved in Investments made during any period shall
be the aggregate cost to the Company and its Subsidiaries of all such
Investments made during such period, determined in accordance with GAAP, but
without regard to unrealized increases or decreases in value, or write-ups,
write-downs or write-offs, of such Investments and without regard to the
existence of any undistributed earnings or accrued interest with respect
thereto accrued after the respective dates on which such Investments were made,
less any net return of capital realized during such period upon the sale,
repayment or other liquidation of such Investments (determined in accordance
with GAAP, but without regard to any amounts received during such period as
earnings (in the form of dividends not constituting a return of capital,
interest or

- 71 -
77
otherwise) on such Investments or as loans from any Person in whom such
Investments have been made). See Section 10C.

"INVESTMENT LIMIT" shall have the meaning specified in Section
6E.

"LEGAL REQUIREMENT" shall mean any law, statute, ordinance,
decree, requirement, order, judgment, rule or regulation (or published official
interpretation of any of the foregoing by any Governmental Authority) of any
Governmental Authority.

"LIABILITIES" shall have the meaning specified in the second
opening paragraph hereof.

"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, contractual deposit arrangement, lien (statutory or otherwise) or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction) or any other type of
preferential arrangement for the purpose, or having the effect, of protecting a
creditor against loss or securing the payment or performance of an obligation.

"MASTER PARTNERSHIP" shall have the meaning specified in the
second opening paragraph hereof.

"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect on the business, assets or financial condition of the Company or the
Company and its Subsidiaries taken as a whole after giving effect to the
Transactions, (b) a material impairment of the ability of the Company or any
Subsidiary of the Company to perform any of its obligations under the Financing
Documents to which it is a party or (c) a material adverse effect on the
enforceability of any of the Financing Documents.

"MEMORANDUM" shall mean the memorandum dated May, 1996,
prepared by Prudential Securities Incorporated for use in connection with the
Company's private placement of the Notes.

"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in section 4001(a)(3) of ERISA.

"NET PROCEEDS" shall mean the proceeds of any sale of assets
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 net of (i) brokerage commissions and other fees and expenses
related to such sale, (ii) provisions for any taxes payable as a result of such
sale, (iii) amounts required to be paid to any Person (other than the Company
or any Subsidiary of the Company) owning a beneficial interest in the assets

- 72 -
78
sold, (iv) appropriate amounts to be provided by the Company or any Subsidiary
of the Company, as the case may be, as a reserve required in accordance with
GAAP against any liabilities associated with such sale of assets and retained
by the Company or any Subsidiary of the Company, as the case may be, after
such sale and (v) amounts required to be applied to the repayment of
Indebtedness (other than the Notes and amounts due under the Revolving Working
Capital Facility or Acquisition Facility) secured by a Lien on the assets sold.

"NON-ACCEPTING HOLDERS" shall have the meaning specified in
Section 4D(i).

"NON-COMPETE OBLIGATIONS" shall have the meaning specified in
Section 6C(viii).

"NOTES" shall have the meaning specified in Section 1.

"OFFERING" shall have the meaning specified in the second
opening paragraph hereof.

"OFFICER'S CERTIFICATE" shall mean, as to any corporation, a
certificate executed on its behalf by the Chairman of the Board of Directors
(if an officer) or its President or one of its Vice Presidents, and its
Treasurer, or Controller, or one of its Assistant Treasurers or Assistant
Controllers, and, as to the Master Partnership or the Operating Partnership, a
certificate executed on behalf of the Master Partnership or the Operating
Partnership, as the case may be, by its general partner in a manner which would
qualify such certificate (a) if such general partner were a corporation, as an
Officer's Certificate of such general partner hereunder or (b) if such general
partner were a partnership or other entity, as a certificate executed on its
behalf by Persons authorized to do so pursuant to the constituting documents of
such partnership or other entity.

"OPERATING PARTNERSHIP" shall have the meaning specified in
the second opening paragraph hereof.

"OPERATIVE AGREEMENTS" shall mean the Contribution Agreement,
the Conveyance Agreements, and the Partnership Agreement.

"PARITY DEBT" shall mean (a) Indebtedness of the Company
(other than the Notes) incurred in accordance with clauses (i), (ii) and (iii)
of Section 6B and (b) Additional Parity Debt.

"PARTNERSHIP AGREEMENT" shall mean the Agreement of Limited
Partnership of the Operating Partnership as in effect on the Closing Date, and
as the same

- 73 -
79
may from time to time be amended, supplemented or otherwise modified in
accordance with the terms thereof.

"PARTNERSHIP DOCUMENTS" shall mean the Agreement of Limited
Partnership of the Master Partnership and the Partnership Agreement, in each
case as in effect on the Closing Date and as the same may from time to time be
amended, supplemented or otherwise modified in accordance with the terms hereof
and thereof.

"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any Governmental Authority succeeding to any of its functions.

"PERMITS" shall have the meaning specified in Section 8H.

"PERMITTED BANKS" shall have the meaning specified in Section
6E.

"PERSON" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

"PLAN" shall mean any "employee pension benefit plan" as such
term is defined in Section 3 of ERISA (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code or Section
302 of ERISA, and in respect of which the Company or any ERISA Affiliate is
(or, if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.

"PREFERRED STOCK" shall mean, as applied to the Capital Stock
of any Person, Capital Stock of any class or classes (however designated),
which is preferred as to the payment of distributions or 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.

"PREMIUM" shall mean the Yield-Maintenance Amount and any
premium payable in connection with a Change of Control.

"PRIORITY DEBT" shall mean as of any date of determination,
the sum, without duplication, of (i) Indebtedness of the Subsidiaries of the
Company (other than Indebtedness owed to the Company or another Wholly-Owned
Subsidiary), plus (ii) Indebtedness of the Company and its Subsidiaries secured
by Liens permitted by clauses (i) and (vii) of Section 6C and any renewals of
such Liens permitted by clause (xv) of Section 6C.

- 74 -
80
"PROPERTY" shall mean any interest in any kind of property or
asset whether real, personal, or mixed, or tangible or intangible.

"PRO RATA OPTION" shall have the meaning specified in Section
4D(iii).

"PTCE" shall have the meaning specified in Section 9B.

"PUHCA" shall have the meaning specified in Section 8U.

"PURCHASERS" shall have the meaning specified in the second
opening paragraph hereof.

"QPAM EXEMPTION" shall have the meaning specified in Section
9B.

"REDEEMABLE CAPITAL STOCK" shall mean, as of any date of
determination, any shares of any class or series of Capital Stock, that, either
by the terms thereof, by the terms of any security into which such shares are
convertible or exchangeable or by contract or otherwise, are or upon the
happening of an event or passage of time would be, required to be redeemed
prior to the stated maturity with respect to the principal of any Note or are
redeemable at the option of the holder thereof at any time prior to the stated
maturity of any Note, or are convertible into or exchangeable for Indebtedness
at any time prior to the stated maturity of any Note.

"REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-1 of Heritage Propane Partners, L.P. (Registration No. 333-4018)
filed with the Securities and Exchange Commission on April 25, 1996, as amended
by Amendment No. 1, filed with the Securities and Exchange Commission on June
4, 1996, Amendment No. 2, filed with the Securities and Exchange Commission on
June 14, 1996, and Amendment No. 3, filed with the Securities and Exchange
Commission on June 21, 1996, in the form when declared effective by the
Commission and as amended on or prior to the date of this Agreement.

"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least 51% of the aggregate principal amount of the Notes from time to time
outstanding.

"RESPONSIBLE OFFICER" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting officer of
the Company or any other officer of the Company involved principally in its
financial administration or its controllership function.

"RESTRICTED PAYMENT" shall mean any payment or other
distribution, direct or indirect, in respect of any partnership or other equity
interest in the Company, except a distribution payable solely in additional
partnership or other equity interests in the

- 75 -
81
Company, and any payment, direct or indirect on account of the redemption,
retirement, purchase or other acquisition of any partnership or other equity
interest in the Company.

"REVOLVING WORKING CAPITAL FACILITY" shall mean the proposed
$15,000,000 revolving credit facility of the Company provided for in the Credit
Agreement for working capital and other general partnership purposes not to
exceed $15,000,000 aggregate principal amount at any time outstanding.

"SALE AND LEASE-BACK TRANSACTION" shall mean, with respect to
any Person (a "TRANSFEROR"), any arrangement (other than between the Company
and a Wholly-Owned Restricted Subsidiary or between Wholly-Owned Restricted
Subsidiaries) whereby (a) property (the "SUBJECT PROPERTY") has been or is to
be disposed of by such Transferor to any other Person with the intention on the
part of such Transferor of taking back a lease of such Subject Property
pursuant to which the rental payments are calculated to amortize the purchase
price of such Subject Property substantially over the useful life of such
Subject Property, and (b) such Subject Property is in fact so leased by such
Transferor or an Affiliate of such Transferor.

"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.

"SECURITY AGREEMENT" shall have the meaning specified in
Section 3H.

"SECURITY DOCUMENTS" shall mean the Security Agreement, the
Certificates and Stock Powers and the Financing Statements.

"SENIOR DEBT" shall mean Indebtedness of the Company which is
not expressed to be junior or subordinate to any other Indebtedness of the
Company.

"SIGNIFICANT SUBSIDIARY GROUP" shall mean any Subsidiary of
the Company, or any group of Subsidiaries of the Company, which at any time of
determination account for (or in the case of a recently formed or acquired
Subsidiary would have so accounted for on a pro forma basis) more than 5% of
consolidated operating revenues of the Company and its Subsidiaries for the
fiscal year most recently ended or more than 5% of consolidated total assets of
the Company and its Subsidiaries as of the end of the most recently ended
fiscal quarter, in each case computed in accordance with GAAP.

"SOURCE" shall have the meaning specified in Section 9B.

"SUBORDINATED UNITS" shall have the meaning specified in the
second opening paragraph hereof.

- 76 -
82
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, limited liability company, partnership, joint venture,
association, trust or other entity of which (or in which) more than 50% of (a)
the issued and outstanding Capital Stock having ordinary voting power to elect
a majority of the board of directors of such corporation (irrespective of
whether at the time Capital Stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interests in the capital or profits of such partnership,
limited liability company, joint venture or association with ordinary voting
power to elect a majority of the board of directors (or Persons performing
similar functions) of such partnership, limited liability company, joint
venture or association, or (c) the beneficial interests in such trust or other
entity with ordinary voting power to elect a majority of the board of trustees
(or Persons performing similar functions) of such trust or other entity, is at
the time directly or indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries, or by one or more of such
Person's other Subsidiaries. For the purposes of any computation under Section
6A or clause (xiii) of Section 6B, the defined terms Consolidated Debt Service,
Consolidated EBITDA, Consolidated Funded Indebtedness, Consolidated Interest
Expense and Consolidated Pro Forma Maximum Debt Service shall be calculated on
the basis that Bi-State is a Subsidiary of the Company, but only as long as the
Company shall own 50% or more of the interests in the capital or profits of
Bi-State with ordinary voting power to elect a majority of the board of
directors (or Persons performing similar functions) thereof.

"SWAPS" shall mean, with respect to any Person, payment
obligations (fixed or contingent) with respect to interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
currency swaps and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For the purposes
of this Agreement, the amount of the obligation under any Swap shall be the
amount determined in respect thereof as of the end of the then most recently
ended fiscal quarter of such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.

"TOTAL ASSETS" shall mean, as of any date of determination,
the consolidated total assets of the Company and its Subsidiaries as would be
shown on a consolidated balance sheet of the Company and its Subsidiaries
prepared in accordance with GAAP as of that date. See Section 10C.

"TRANSACTIONS" shall have the meaning specified in the third
opening paragraph hereof.

- 77 -
83
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this Agreement.

"UNDERWRITING AGREEMENT" shall mean the Underwriting
Agreement, dated June 25, 1996, among the Partnership, the underwriters named
in Schedule I thereto and the other signatories thereto, relating to the Common
Units registered under the Registration Statement.

"UNITS" shall mean, collectively, the Common Units and the
Subordinated Units.

"UNUSED PROCEEDS RESERVE" shall mean, as of any date of
determination, all amounts theretofore offered to prepay Parity Debt under
Section 6G(iii)(c)(II) and to prepay Notes under Section 4C, the prepayment of
which was declined by the applicable lenders, less the portion of such amounts
theretofore applied by the Company to operations or capital expenditures in
connection with the conduct of the Company's business.

"UNUTILIZED TAKING PROCEEDS" shall mean, as of any date, any
insurance or condemnation proceeds (net of the reasonable costs of proceedings
in connection therewith and settlements in respect thereof) in excess of
$100,000 with respect to any single occurrence that were received by the
Company or any of its Subsidiaries in respect of any damage, destruction,
condemnation or other taking of all or any portion of the properties or assets
of the Company or any of its Subsidiaries and that have not been reinvested by
the Company or any of its Subsidiaries within a period of twelve months after
such receipt in the restoration, modification or replacement of the properties
or assets in respect of which such insurance or condemnation proceeds were
received.

"VOTING STOCK" shall mean, with respect to any corporation,
any shares of stock of such corporation the holders of which are entitled under
ordinary circumstances to vote for the election of directors of such
corporation (irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).

"WHOLLY-OWNED" shall mean, as applied to any Subsidiary of any
Person, a Subsidiary at least 98% (by vote or value) of the outstanding Equity
Interests (other than directors' qualifying shares, if required by law) of all
classes, taken together as a whole, of which are at the time owned by such
Person or by one or more of its Wholly-Owned Subsidiaries or by such Person and
one or more of its Wholly-Owned Subsidiaries.

- 78 -
84
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS.

(i) All references in this Agreement to "generally
accepted accounting principles" or to "GAAP" shall be deemed to refer to
generally accepted accounting principles in effect in the United States at the
time of application thereof, but subject to the provisions of this Section 10C.
Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be prepared hereunder shall be
prepared in accordance with generally accepted accounting principles, applied
on a basis consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered pursuant to clause
(ii) of Section 5A or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (iii) of Section 8D.

(ii) All references herein to "the Company and its
Subsidiaries" for the purposes of computing the consolidated financial
position, results of operations or other balance sheet or financial statement
items (including without limitation the computation of , Available Cash,
Consolidated Debt Service, Consolidated EBITDA, Consolidated Income Tax
Expense, Consolidated Indebtedness, Consolidated Interest Expense, Consolidated
Net Income, Consolidated Non- Cash Charges, Consolidated Pro Forma Maximum Debt
Service and Consolidated Total Assets) shall be deemed to include only the
Company and its Subsidiaries as separate legal entities and, unless otherwise
provided herein, shall not include the financial position, results of
operations, cash flows or other such items of any other Person , whether or not
in any particular instance, such accounting treatment would be in accordance
with GAAP.

11. MISCELLANEOUS.

11A. NOTE PAYMENTS. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of, interest
on and any Premium payable with respect to such Note, which comply with the
terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to such
Purchaser's account or accounts as specified in the Purchaser Schedule attached
hereto, or such other account or accounts in the United States as such
Purchaser may designate in writing, notwithstanding any contrary provision
herein or in any Note with respect to the place of payment, and without any
requirement of presenting such Note for payment. Each Purchaser agrees that,
before

- 79 -
85
disposing of any Note, such Purchaser will make a notation thereon (or on a
schedule attached thereto) of all principal payments previously made thereon
and of the date to which interest thereon has been paid. The Company agrees to
afford the benefits of this Section 11A to any Transferee which shall have made
the same agreement as each Purchaser has made in this Section 11A.

11B. EXPENSES. The Company covenants and agrees, whether or not
the transactions contemplated hereby shall be consummated, to pay, and save
each Purchaser and any Transferee harmless against liability for the payment
of, all out-of-pocket expenses arising in connection with such transactions,
including without limitation or duplication all fees and expenses referred to
in Section 3K and (i) all document production and duplication charges and the
fees and expenses (including those incurred after the Closing) of not more than
one special counsel engaged by all of the Purchasers in connection with this
Agreement, and the transactions contemplated hereby and of any special counsel
employed by such Purchaser or such Transferee in connection with any subsequent
proposed modification of, or proposed consent under, this Agreement, whether or
not such proposed modification shall be effected or proposed consent granted,
(ii) the costs and expenses of the Collateral Agent, and (iii) the costs and
expenses, including attorneys' fees, incurred by such Purchaser or such
Transferee in obtaining or perfecting any security for the Notes, in enforcing
(or determining whether or how to enforce) any rights under this Agreement, the
Notes or the Security Documents or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or any Security Document or the transactions contemplated hereby or
by reason of such Purchaser's or such Transferee's having acquired any Note,
including without limitation costs and expenses incurred in any bankruptcy case
or a workout. The obligations of the Company under this Section 11B shall
survive the transfer of any Note or portion thereof or interest therein by any
Purchaser or any Transferee and the payment of any Note.

11C. CONSENT TO AMENDMENTS.

(i) This Agreement may be amended, and the Company may
take any action herein prohibited, or omit to perform any act herein required
to be performed by it, if the Company shall obtain the written consent to such
amendment, action or omission to act of the Required Holder(s) except that,
without the written consent of the holder or holders of all Notes at the time
outstanding, no amendment to this Agreement shall change the maturity of any
Note, or change the principal of, or the rate or time of payment of interest on
or any Premium payable with respect to any Note, or affect the time, amount or
allocation of any prepayments, or change the proportion of the principal amount
of the Notes required with respect to any consent, amendment, waiver or
declaration, or change the relative priority of the Notes in relation to any
other Indebtedness of the Company. Each holder of any Note at the time or
thereafter

- 80 -
86
outstanding shall be bound by any consent authorized by this Section 11C,
whether or not such Note shall have been marked to indicate such consent but
any Notes issued thereafter may bear a notation referring to any such consent.
No course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein and in the
Notes, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

(ii) So long as there are any Notes outstanding, neither
the Company nor any of its Affiliates will submit a request to the holder of
any Note for any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of Notes (irrespective of the amount
of Notes then owned by it) shall be informed thereof by the Company and shall
be afforded the opportunity of considering the same and shall be supplied by
the Company with sufficient information to enable it to make an informed
decision with respect thereto. Neither the Company nor any of its Subsidiaries
or Affiliates will, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest fee or
otherwise, to any holder of Notes as consideration for or as inducement to
entering into any waiver or amendment of any of the terms and provisions of
this Agreement or the Notes by any holder of Notes unless such remuneration is
concurrently offered, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.

(iii) Any consent given pursuant to this Section 11C by a
holder of a Note which has (i) transferred or agreed to transfer all or a
portion of its Notes to the Company or any of its Affiliates and (ii) provided
such consent as a condition to such transfer shall be valid and binding only
upon such holder. Any amendment or waiver which becomes effective only with
such consent (and the consents of all other holders of the Notes which were
acquired under the same or similar conditions) shall be valid and binding only
upon such holder or holders, as the case may be.

11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $100,000 except as may be necessary to reflect any
principal amount less than or not evenly divisible by $100,000. The Company
shall keep at its principal office a register in which the Company shall
provide for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the principal office of
the Company, the Company shall, at its expense within 5 Business Days, execute
and deliver one or more new Notes of like tenor and of a like aggregate
principal amount registered in the name of such transferee or transferees. At
the option of the holder of any Note, such Note may be exchanged for other
Notes of like tenor and of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Note to be exchanged at the principal
office of the Company. Whenever any Notes are so

- 81 -
87
surrendered for exchange, the Company shall, at its expense within 5 Business
Days, execute and deliver the Notes which the holder making the exchange is
entitled to receive. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such holder's attorney
duly authorized in writing. Any Note or Notes issued in exchange for any Note
or upon transfer thereof shall carry the rights to unpaid interest and interest
to accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement (or, in the case of any holder of a Note other than an
institutional investor, upon receipt of an indemnity bond in such reasonable
amount as the Company may determine), or in the case of any such mutilation
upon surrender and cancellation of such Note, the Company will make and deliver
a new Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Note within 5 Business Days.

11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of, interest on and any Premium
payable with respect to such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be
affected by notice to the contrary. Subject to the preceding sentence, the
holder of any Note may from time to time grant participations in such Note to
any Person on such terms and conditions as may be determined by such holder in
its sole and absolute discretion, provided that any such participation shall be
in a principal amount of at least $100,000.

11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any Transferee, regardless of any investigation made at
any time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement
and understanding between the Purchasers and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.

11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.

- 82 -
88
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges that
the holder of any Note may deliver copies of any financial statements and other
documents delivered to such holder, and disclose any other information
disclosed to such holder, by or on behalf of the Company or any of its
Subsidiaries in connection with or pursuant to this Agreement to (i) such
holder's directors, trustees, officers, employees, agents and professional
consultants, (ii) any other holder of any Note, (iii) any Person to which such
holder offers to sell such Note or any part thereof, (iv) any Person to which
such holder sells or offers to sell a participation in all or any part of such
Note, (v) any Person from which such holder offers to purchase any security of
the Company, (vi) any federal or state regulatory authority having jurisdiction
over such holder, (vii) the National Association of Insurance Commissioners or
any similar organization or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with any law,
rule, regulation or order applicable to such holder, (b) in response to any
subpoena or other legal process or informal investigative demand, (c) in
connection with any litigation to which such holder is a party or (d) in
connection with the enforcement (or attempted enforcement) of any of the
Financing Documents. Each Purchaser agrees (and any Transferee which avails
itself of the benefits of Section 5A(iii) or (xii) or Section 5C shall be
deemed to have likewise agreed) (such Purchaser and any such Transferee each
herein called a "HOLDER") to hold in confidence in accordance with its internal
corporate practice for treating confidential information received from third
parties and not disclose any information (other than information (a) which was
publicly known or otherwise known to such Holder at the time of disclosure
(except pursuant to disclosure in connection with this Agreement), (b) which
subsequently becomes publicly known through no act or omission by such Holder,
or (c) which otherwise becomes known to such Holder, other than through
disclosure by the Company or any of its Subsidiaries) delivered or made
available by or on behalf of the Company or any of its Subsidiaries to such
Holder (including without limitation any nonpublic information obtained
pursuant to Section 5A or 5C) in connection with or pursuant to this Agreement
which is clearly marked or labeled as being confidential information, provided
that nothing herein shall prevent the holder of any Note from disclosing such
information as provided in the preceding sentence.

11I. NOTICES. All written communications provided for hereunder
shall be sent by first class mail or nationwide overnight delivery service
(with charges prepaid) and by telecopy (such delivery confirmed by telephone)
and (i) if to any Purchaser, addressed to such Purchaser at the address (or
facsimile telephone number) specified for such communications in the Purchaser
Schedule attached hereto, or at such other address (or facsimile telephone
number) as such Purchaser shall have specified to the Company in writing, (ii)
if to any other holder of any Note, addressed to such other holder at such
address (or facsimile telephone number) as such other holder shall have
specified to the Company in writing or, if any such other holder shall not have
so specified an address to

- 83 -
89
the Company, then addressed to such other holder in care of the last holder of
such Note which shall have so specified an address to the Company, (iii) if to
the Company, to Heritage Operating, L.P., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, or at such other
address (or facsimile telephone number) as the Company shall have specified to
the holder of each Note in writing.

11J. SUBSTITUTION OF WHOLLY-OWNED SUBSIDIARY. With respect to the
Notes being purchased by any institutional investor, such Purchaser shall have
the right to substitute one of its Wholly-Owned Subsidiaries as the purchaser
of any of the Notes to be purchased by such Purchaser hereunder, by written
notice delivered to the Company, which notice shall be signed by such Purchaser
and such Subsidiary, shall contain such Subsidiary's agreement to be bound by
this Agreement and shall contain a confirmation by such Subsidiary of the
accuracy with respect to it of the representations contained in Section 9,
provided that such confirmation may contain a statement to the effect that such
Subsidiary shall at all times have the right to transfer the Notes being
purchased by it to such Purchaser. The Company agrees that, upon receipt of
any such notice, whenever the terms "Purchaser" and "holder" are used in this
Agreement (other than this Section 11J), in reference to such transferring
Purchaser, such terms shall be deemed to refer to such Subsidiary in lieu of
said transferring Purchaser. In the event that such Subsidiary is so
substituted hereunder and thereafter transfers its Notes or any portion thereof
to such transferring Purchaser, upon receipt by the Company of notice of such
transfer, whenever the terms "Purchaser" and "holder" are used in this
Agreement (other than in this Section 11J) in reference to such transferring
Purchaser, such terms shall be deemed to refer to such transferring Purchaser
to the extent it owns all or any portion of the Notes, and such transferring
Purchaser and such Subsidiary to such extent shall each have all the rights of
any original Purchaser of Notes under this Agreement.

11K. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation of
the interest payable on such Business Day.

11L. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Purchaser or to the Required
Holder(s), the determination of such satisfaction shall be made by such
Purchaser or the Required Holder(s), as the case may be, in the sole and
exclusive judgment (exercised in good faith) of the Person or Persons making
such determination.

- 84 -
90
11M. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW PRINCIPLES.

11N. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

11O. DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

11P. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one instrument.

11Q. SEVERALTY OF OBLIGATIONS. The sales of Notes to the
Purchasers are to be several sales, and the obligations of the Purchasers under
this Agreement are several obligations. Except as provided in Section 3G, no
failure by any Purchaser to perform its obligations under this Agreement shall
relieve any other Purchaser or the Company of any of its obligations hereunder,
and no Purchaser shall be responsible for the obligations of, or any action
taken or omitted by, any other Purchaser hereunder.

11R. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT, ANY EXHIBIT HERETO OR ANY FINANCING DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER ORAL OR WRITTEN) MADE HEREIN
BY THE PARTIES.

- 85 -
91
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterparts of this letter and return the same to
Heritage and the Operating Partnership, whereupon this letter shall become a
binding agreement among Heritage, the Operating Partnership and the Purchasers.

Very truly yours,

HERITAGE HOLDINGS, INC.

By /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President & CFO

HERITAGE OPERATING, L.P.

By /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President & CFO