[BANK OF AMERICA LETTERHEAD]
                                        May 15, 1996

          VIA FACSIMILE AND CERTIFIED MAIL
          RETURN RECEIPT REQUESTED

          Empire Gas Corporation
          1700 South Jefferson Street
          Lebanon, Missouri 65536
          Attention: Valeria Schall

          RE: LOANS BY BANK OF AMERICA ILLINOIS
              TO EMPIRE GAS CORPORATION

          Ladies and Gentlemen:

                    Reference is made hereby to the certain Loan
          and Security Agreement dated as of June 29, 1994 between
          Empire Gas Corporation ("Borrower") and Bank of America
          Illinois (f/k/a Continental Bank N.A.), as agent
          ("Agent") and as lender ("Lender"), as amended to date
          (the "Loan Agreement").  Unless defined herein,
          capitalized terms used herein shall have the meanings
          provided to such terms in the Loan Agreement.

                    Borrower has informed Agent that Borrower has
          failed to comply with the limitation on the acquisition
          of fixed assets for the 1996 Fiscal Year set forth in
          Section 6.2 of Supplement A to the Loan Agreement.  Such
          breach has continued for a period exceeding ten (10) days
          after the occurrence thereof.  The occurrence and
          continuance of such breach constitutes an Event of
          Default under Section 6.1(h) of the Loan Agreement.

                    Borrower has further informed Agent that the
          foregoing Event of Default (the "Existing Default")
          remains in existence as of the date hereof. 
          Consequently, Borrower has requested that Requisite
          Lenders agree to waive the Existing Default.  Requisite
          Lenders have agreed to do so, on the terms and conditions
          contained herein.

                    Requisite Lenders hereby agree to waive the
          Existing Default and any and all rights and remedies that
          Agent and Lenders have under the Loan Agreement and
          applicable law in respect thereof, conditional upon the
          occurrence of the following events on or before June 30,
          1996:

                    a.   Borrower shall have delivered to Agent, in
               form and substance satisfactory to Agent, revised
               projections for the period from April 1, 1996
               through June 30, 1997, which shall consist of a
               detailed statement of cash flow projections and a
               borrowing base analysis;

                    b.   Borrower shall have delivered to Agent, in
               form and substance satisfactory to Agent, such other
               information regarding Borrower's and any
               Subsidiary's financial condition and business as
               Agent shall request;

                    c.   Borrower shall have promptly notified
               Agent in writing of the sale by Borrower or any
               Subsidiary during the period from the date hereof
               through June 30, 1996 of the capital stock or assets
               of any Subsidiary permitted under the Loan
               Agreement, specifying in each case the capital stock
               or assets sold and the amount of the proceeds
               received therefor;

                    d.   No Events of Default (other than the
               Existing Default) or Unmatured Events of Default
               shall have occurred; and

                    e.   Borrower and Requisite Lenders shall have
               agreed on an amendment to the financial covenant
               contained in Section 6.2 of Supplement A to the Loan
               Agreement, which amendment shall be based on the
               projections described in paragraph (a) above, and
               shall be satisfactory to Requisite Lenders.

                    If any of the above conditions has not been
          completed to Agent's and Requisite Lenders' satisfaction
          on or before June 30, 1996, the above waiver shall
          immediately cease to be effective, the Existing Default
          shall be immediately reinstated and the financial
          covenant contained in Section 6.2 of Supplement A to the
          Loan Agreement, as it presently exists, shall remain in
          effect for all testing dates.  In such case, Agent and
          Lenders shall have the immediate right, without further
          notice to any Person, to take any and all actions
          available to Agent or Lenders under the Loan Agreement
          and applicable law with respect to the Existing Default.

                    Except as specifically set forth herein, this
          letter shall not constitute a waiver by Agent or Lenders
          of any Events of Default or Unmatured Events of Default
          that are now in existence or may hereafter occur or any
          rights or remedies that Agent or any Lender may have
          under the Loan Agreement or applicable law with respect
          thereto, all of which rights and remedies Agent and
          Lenders hereby specifically reserve.

                                        Very truly yours,

                                        BANK OF AMERICA ILLINOIS,
                                          as Agent for the Lenders

                                        By /s/ Steve Standbridge   
                                           _________________________
                                          Its  Vice President