8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

August 9, 2005

Date of Report (Date of earliest event reported)

INERGY HOLDINGS, L.P.

(Exact name of registrant as specified in its charter)

Delaware	0-51304	43-1792470
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

Two Brush Creek Boulevard, Suite 200

Kansas City, MO 64112

(Address of Principal Executive Offices) (Zip Code)

(816) 842-8181

Registrant’s telephone number, including area code

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On August 9, 2005, Inergy Holdings, L.P. (the “Partnership”) entered into a Special Unit Purchase Agreement with Inergy , L.P., a Delaware limited partnership and an affiliate of the Partnership (the “MLP”), to purchase $25 million of special units representing limited partner interests in the MLP (the “Special Units”). The Special Units are a new class of equity securities of the MLP that will convert into common units representing limited partnership interests in the MLP (“Common Units”) at a specified conversion rate upon the commercial operation of the expansion project described below. The purchase price was based on the ten-day average closing price for the Common Units ending on August 8, 2005.

The Special Unit Purchase Agreement was entered into to fund the MLP’s recently announced $25 million acquisition of the rights to the Phase II expansion project of the Stagecoach natural gas storage facility located in Tioga County, New York (“Stagecoach”) in connection with the Stagecoach Acquisition (as defined below).

On August 9, 2005, the MLP also entered into a separate Registration Rights Agreement with the Partnership relating to the Special Units to be purchased under the Special Unit Purchase Agreement that allows for the registered resale of the units. Pursuant to the Registration Rights Agreement, the MLP has agreed to file a shelf registration statement for the resale of the Common Units issuable upon conversion of the Special Units within 180 days after the issue date of the Special Units and to use commercially reasonable efforts to cause the shelf registration statement to be declared effective by the SEC within 240 days after the issue date.

On August 9, 2005, Inergy Acquisition Company, LLC, Inergy Storage, Inc. and Inergy Stagecoach II, LLC (each of which is a direct or indirect subsidiary of the MLP) acquired all of the equity interests in the entities that own Stagecoach from Stagecoach Holding, LLC, Stagecoach Energy, LLC and Stagecoach Holding II, LLC for approximately $205 million (which amount includes certain post-closing costs necessary to purchase additional base gas and certain capitalized costs relating to a post-closing commercial arrangement) (the “Stagecoach Acquisition”). Additionally, Inergy Stagecoach II, LLC acquired the rights to the Phase II expansion project of Stagecoach (“Phase II Expansion”) for $25 million (the “Phase II Expansion Acquisition,” together with the Stagecoach Acquisition, the “Acquisition”). The MLP financed the Stagecoach Acquisition and related costs with borrowings of approximately $189.5 million borrowed under its 5-Year Credit Agreement and assumed certain liabilities. The Partnership financed the Phase II Expansion Rights Acquisition with the proceeds from a $25 million private placement of Special Units to the Partnership.

The descriptions of the Special Unit Purchase Agreement and the Registration Rights Agreement above do not purport to be complete and are qualified in their entirety by reference to the complete text of the Special Unit Purchase Agreement and the Registration Rights Agreement, copies of which are filed as Exhibits to this Form 8-K and are incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation

On August 9, 2005, the Partnership entered into a Credit Agreement with Southwest Bank of St. Louis under which the Partnership obtained a $25 million three-year term loan for the purposes of:

• making a capital contribution to the MLP in exchange for equity interests in the MLP; and

• paying costs and expenses incurred in connection with the closing of the transactions contemplated by the Credit Agreement.

The loan bears interest at Libor for one-, three- or six-month interest periods, as selected by us from time to time, plus an applicable margin (which interest is subject to adjustment for any reserve requirements). The applicable margin varies quarterly based on our leverage ratio and may range from 1.75% to 2.75%, and will be 2.0% until August 31, 2005.

The outstanding balance of the loan is payable at maturity of the loan on August 9, 2008 with interest payments due monthly or quarterly dependent upon LIBOR interest rate tranches.

The loan is secured by our pledge of senior and junior subordinated units of the MLP. In addition, the loan is guaranteed by two of our subsidiaries. The Credit Agreement contains various customary covenants limiting the ability of us or our subsidiaries to (subject to various exceptions), among other things, incur indebtedness, enter into a merger, consolidation or acquisition, enter into a sale-leaseback transaction, and enter into certain transactions with our affiliates.

The Credit Agreement requires us to maintain a ratio of our debt (as defined in the Credit Agreement) as of the last day of the most recently ended fiscal quarter to our Cash Flow (as defined in the Credit Agreement) for the four fiscal quarters most recently ended, of not more than 4.0 to 1.0. In addition, the Credit Agreement requires us to cause the MLP to comply with its leverage and interest coverage ratios in effect from time to time in its 5-Year Credit Agreement.

The description of the Credit Agreement above does not purport to be complete and is qualified in its entirety by reference to the complete text of the Credit Agreement, a copy of which is filed as Exhibit 10.2 and is incorporated herein by reference.

Item 8.01 Other Events

On August 9, 2005, the Partnership and MLP issued a press release announcing that the MLP had closed the Acquisition and that the Partnership and MLP had entered into the Special Unit Purchase Agreement. For additional information, see also Item 1.01 of this Form 8-K. A copy of the press release is filed as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

Item 9.01. Financial Statements and Other Exhibits

(c) Exhibits

Exhibit No.	Description
4.1	Registration Rights Agreement dated as of August 9, 2005 by and between Inergy, L.P. and Inergy Holdings, L.P.
10.1	Special Unit Purchase Agreement dated as of August 9, 2005 between Inergy, L.P. and Inergy Holdings, L.P.
10.2	Credit Agreement, dated as of August 9, 2005, between Inergy Holdings, L.P. and Southwest Bank of St. Louis
99.1	Press release dated August 9, 2005

*            *            *

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INERGY HOLDINGS, L.P.
	By:	INERGY HOLDINGS GP, LLC, its General Partner
Dated: August 12, 2005
	By:	/s/    R. BROOKS SHERMAN, JR.
		R. Brooks Sherman, Jr. Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description
4.1	Registration Rights Agreement dated as of August 9, 2005 by and between Inergy, L.P. and Inergy Holdings, L.P.
10.1	Special Unit Purchase Agreement dated as of August 9, 2005 between Inergy, L.P. and Inergy Holdings, L.P.
10.2	Credit Agreement, dated as of August 9, 2005, between Inergy Holdings, L.P. and Southwest Bank of St. Louis
99.1	Press release dated August 9, 2005

*            *            *

EX-4.1

Exhibit 4.1

Execution Copy

REGISTRATION RIGHTS AGREEMENT

by and among

INERGY, L.P.

and

INERGY HOLDINGS, L.P.

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of August 9, 2005, by and among INERGY, L.P., a Delaware limited partnership (“Inergy”) and INERGY HOLDINGS, L.P. (“Holdings” or “Purchaser”).

This Agreement is made in connection with the Closing of the issuance and sale of the Special Units pursuant to the Special Unit Purchase Agreement, dated as of August 9, 2005, by and among Inergy and the Purchaser (the “Purchase Agreement”). Inergy has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchaser of the Special Units pursuant to Section 2.05(i) of the Purchase Agreement. In consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party hereto, the parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.01 Definitions. Capitalized terms used herein without definition shall have the meanings given to them in the Purchase Agreement. The terms set forth below are used herein as so defined:

“Affiliate” means, with respect to a specified Person, any other Person, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, “controlling”, “controlled by”, and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

“Business Day” means any day other than a Saturday, Sunday, or a legal holiday for commercial banks in Wilmington, Delaware.

“Closing” shall have the meaning set forth in the Purchase Agreement.

“Commission” means the United States Securities and Exchange Commission.

“Common Units” means the common units of Inergy that are publicly traded on the NASDAQ.

“Conversion Units” means the Common Units issuable upon conversion of the Special Units.

“Effectiveness Period” has the meaning specified therefore in Section 2.01(a) of this Agreement.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

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“Holder” means the record holder of any Registrable Securities.

“Included Registrable Securities” has the meaning specified therefor in Section 2.02(a) of this Agreement.

“Losses” has the meaning specified therefor in Section 2.08(a) of this Agreement.

“Managing Underwriter” means, with respect to any Underwritten Offering, the book running lead manager of such Underwritten Offering.

“NASDAQ” means the NASDAQ National Market.

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

“Piggyback Registration” has the meaning specified therefor in Section 2.02(a) of this Agreement.

“Purchase Agreement” has the meaning specified therefor in the Recital of this Agreement.

“Purchased Units” shall have the meaning set forth in the Purchase Agreement.

“Purchaser” has the meaning specified therefor in the introductory paragraph of this Agreement.

“Registrable Securities” means the Conversion Units until such time as such securities cease to be Registrable Securities pursuant to Section 1.02 hereof.

“Registration Expenses” has the meaning specified therefor in Section 2.07(a) of this Agreement.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Selling Expenses” has the meaning specified therefor in Section 2.07(a) of this Agreement.

“Selling Holder” means a Holder who is selling Registrable Securities pursuant to a registration statement.

“Shelf Registration” has the meaning specified therefor in Section 2.01(a) of this Agreement.

“Shelf Registration Statement” has the meaning specified therefor in Section 2.01(a) of this Agreement.

“Special Units” shall have the meaning set forth in the Purchase Agreement.

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“Underwritten Offering” means an offering (including an offering pursuant to a Shelf Registration Statement) in which Common Units are sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks.

Section 1.02 Registrable Securities. Any Registrable Security will cease to be a Registrable Security when (a) a registration statement covering such Registrable Security has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) such Registrable Security has been disposed of pursuant to any section of Rule 144 (or any similar provision then in force under the Securities Act); or (c) such Registrable Security is held by Inergy or one of its subsidiaries.

ARTICLE II.

REGISTRATION RIGHTS

Section 2.01 Shelf Registration.

(a) Shelf Registration. As soon as practicable following the Closing of the purchase of the Special Units pursuant to the terms of the Purchase Agreement, but in any event within 180 days of the Closing, Inergy shall prepare and file a registration statement under the Securities Act to permit the public resale of the Registrable Securities from time to time as permitted by Rule 415 of the Securities Act (the “Shelf Registration Statement”). Inergy shall use its commercially reasonable efforts to cause the Shelf Registration Statement to become effective no later than 240 days after the date of the Closing (the “Shelf Registration”). A Shelf Registration Statement filed pursuant to this Section 2.01(a) shall be on such appropriate registration form of the Commission as shall be selected by Inergy; provided, however, that if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from the Shelf Registration Statement and the Managing Underwriter at any time shall notify Inergy in writing that, in the sole judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is of material importance to the success of the Underwritten Offering of such Registrable Securities, Inergy shall use its commercially reasonable efforts to include such information in the prospectus. Inergy will cause the Shelf Registration Statement filed pursuant to this Section 2.01(a) to be continuously effective under the Securities Act until all Registrable Securities covered by the Shelf Registration Statement have been distributed in the manner set forth and as contemplated in the Shelf Registration Statement or there are no longer any Registrable Securities outstanding (the “Effectiveness Period”). The Shelf Registration Statement when declared effective (including the documents incorporated therein by reference) will comply as to form with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

(b) Delay Rights. Notwithstanding anything to the contrary contained herein, Inergy may, upon written notice to any Selling Holder whose Registrable Securities are included in the Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus which

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is a part of the Shelf Registration Statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to the Shelf Registration Statement) if (i) Inergy is pursuing an acquisition, merger, reorganization, disposition or other similar transaction and Inergy determines in good faith that Inergy’s ability to pursue or consummate such a transaction would be materially adversely affected by any required disclosure of such transaction in the Shelf Registration Statement or (ii) Inergy has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of Inergy, would materially adversely affect Inergy. Upon disclosure of such information or the termination of the condition described above, Inergy shall provide prompt notice to the Selling Holders whose Registrable Securities are included in the Shelf Registration Statement, and shall promptly terminate any suspension of sales it has put into effect and shall take such other actions to permit registered sales of Registrable Securities as contemplated in this Agreement.

Section 2.02 Piggyback Registration.

(a) Participation. If Inergy at any time proposes to file a prospectus supplement to an effective shelf registration statement with respect to an Underwritten Offering of Common Units for its own account or to register any Common Units for its own account for sale to the public in an Underwritten Offering other than (x) a registration relating solely to employee benefit plans, (y) a registration relating solely to a Rule 145 transaction, or (z) a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities), then, as soon as practicable following the engagement of counsel to Inergy to prepare the documents to be used in connection with an Underwritten Offering, Inergy shall give notice of such proposed Underwritten Offering to the Holders and such notice shall offer the Holders the opportunity to include in such Underwritten Offering such number of Registrable Securities as each such Holder may request in writing (a “Piggyback Registration”); provided, however, that Inergy shall not be required to offer such opportunity to Holders if Inergy has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the price, timing or distribution of the Common Units. Each Holder of Registrable Securities acknowledges for purposes of clause (ii) that its Registrable Securities are not covered by Inergy’s existing registration statements on Form S-3 (File No. 333-118941 and File No. 333-124098) and Inergy shall have no obligation to include such Registrable Securities in such registration statement, by post-effective amendment or otherwise; provided, however, that if a registration statement covering the Registrable Securities is effective and a prospectus supplement relating to the Form S-3’s described above (File No. 333-118941 and File No. 333-124098) has been proposed with respect to an Underwritten Offering, the Holders shall be entitled to notice and the opportunity to include in such Underwritten Offering, pursuant to the registration statement covering the Registrable Securities, such number of Registrable Securities as each such Holder may request in writing, subject to the other terms and conditions of this Section 2.02(a). Subject to Section 2.02(b), Inergy shall include in such Underwritten Offering all such Registrable Securities (“Included Registrable Securities”) with respect to which Inergy has received requests within one business day after Inergy’s notice has been delivered in accordance with Section 3.01. If no request for inclusion from a Holder is received within the specified time, such Holder shall have no further right to participate in such Piggyback Registration. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such

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Underwritten Offering, Inergy shall determine for any reason not to undertake or to delay such Underwritten Offering, Inergy may, at its election, give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay in the Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such offering by giving written notice to Inergy of such withdrawal up to and including the time of pricing of such offering.

(b) Priority of Piggyback Registration. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of Common Units included in a Piggyback Registration advises Inergy that the total amount of Common Units which the Selling Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the Common Units offered or the market for the Common Units, then the Common Units to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises Inergy can be sold without having such adverse effect, with such number to be allocated (i) first, among those holders with rights under that certain Investors Rights Agreement dated as of January 12, 2001, by and among Inergy Partners, LLC (as predecessor to Inergy) and the investors named therein; (ii) second, if there remains availability for additional Common Units to be included in such Piggyback Registration, pro rata among (W) those holders with rights under that certain Registration Rights Agreement dated as of November 29, 2004, by and between Inergy and Kayne Anderson MLP Investment Company (“Kayne Anderson”), (X) those holders with rights under that certain Registration Rights Agreement dated as of November 29, 2004 by and between Inergy and Tortoise Energy Infrastructure Corporation (“Tortoise”), and (Y) the Selling Holders and any other Persons who are granted registration rights on or after the date of this Agreement (“Other Holders”) who have requested participation in the Piggyback Registration (based, for each of Kayne Anderson, Tortoise, Selling Holder or Other Holder, on the percentage derived by dividing (A) the number of Registrable Securities proposed to be sold by each of Kayne Anderson, Tortoise, such Selling Holder or such Other Holder in such offering, as the case may be; by (B) the aggregate number of Common Units proposed to be sold by all Selling Holders and all Other Holders in the Piggyback Registration; and (iii) third, if there remains availability for additional Common Units to be included in such Piggyback Registration, such additional Common Units shall be allocated pro rata among IPCH Acquisition Corp. (“IPCH”) pursuant to that certain Registration Rights Agreement dated as of December 19, 2001, by and between Inergy and IPCH and the General Partners or any of their Affiliates (as such term is defined in the Partnership Agreement) under Section 7.12 of the Partnership Agreement.

(c) Termination of Piggyback Registration Rights. The Piggyback Registration rights granted pursuant to this Section 2.02 shall terminate the on the date on which all Registrable Securities cease to be Registrable Securities hereunder in accordance with Section 1.02.

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Section 2.03 Underwritten Offering.

(a) Shelf Registration. In the event that a Selling Holder elects to dispose of Registrable Securities under the Shelf Registration Statement pursuant to an Underwritten Offering, Inergy shall enter into an underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08, and shall take all such other reasonable actions as are requested by the Managing Underwriter in order to expedite or facilitate the registration and disposition of the Registered Securities; provided, however, the participation of Inergy management in connection with an Underwritten Offering for the benefit of Selling Holders shall consist of not more than sixteen hours of teleconferences for the benefit of Purchaser annually.

(b) General Procedures. In connection with any Underwritten Offering under this Agreement, Inergy shall be entitled to select the Managing Underwriter or Underwriters. In connection with an Underwritten Offering under Section 2.01 or 2.02 hereof, each Selling Holder and Inergy shall be obligated to enter into an underwriting agreement which contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of securities. No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, Inergy to and for the benefit of such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations. No Selling Holder shall be required to make any representations or warranties to or agreements with Inergy or the underwriters other than representations, warranties or agreements regarding such Selling Holder and its ownership of the securities being registered on its behalf and its intended method of distribution and any other representation required by law. If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to Inergy and the Managing Underwriter; provided, however, that such withdrawal must be made prior to the time in the final sentence of Section 2.02(a) hereof to be effective. No such withdrawal or abandonment shall affect Inergy’s obligation to pay Registration Expenses.

Section 2.04 Registration Procedures. In connection with its obligations contained in Sections 2.01 and 2.02, Inergy will, as expeditiously as possible:

(a) prepare and file with the Commission such amendments and supplements to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Shelf Registration Statement;

(b) furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing the Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies

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of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing the Shelf Registration Statement or such other registration statement or supplement or amendment thereto, and (ii) such number of copies of the Shelf Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Shelf Registration Statement or other registration statement;

(c) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by the Shelf Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request, provided that Inergy will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject;

(d) promptly notify each Selling Holder and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the filing of the Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Shelf Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to the Shelf Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto;

(e) immediately notify each Selling Holder and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by Inergy of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, Inergy agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be

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stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

(f) upon request by a Selling Holder, furnish to such Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;

(g) in the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel for Inergy, dated the effective date of the applicable registration statement or the date of any amendment or supplement thereto, and a letter of like kind dated the date of the closing under the underwriting agreement, and (ii) a “cold comfort” letter, dated the effective date of the applicable registration statement or the date of any amendment or supplement thereto and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified Inergy’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “cold comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus and any prospectus supplement included therein) and as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters in Underwritten Offerings of securities, such other matters as such underwriters may reasonably request;

(h) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

(i) make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and Inergy personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided that Inergy need not disclose any information to any such representative unless and until such representative has entered into a confidentiality agreement with Inergy;

(j) cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by Inergy are then listed;

(k) use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of Inergy to enable the Selling Holders to consummate the disposition of such Registrable Securities;

(l) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement; and

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(m) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of such Registrable Securities.

Each Selling Holder, upon receipt of notice from Inergy of the happening of any event of the kind described in subsection (e) of this Section 2.04, shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by subsection (e) of this Section 2.04 or until it is advised in writing by Inergy that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by Inergy, such Selling Holder will, or will request the managing underwriter or underwriters, if any, to deliver to Inergy (at Inergy’s expense) all copies in their possession or control, other than permanent file copies then in such Selling Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

Section 2.05 Cooperation by Holders. Inergy shall have no obligation to include in the Shelf Registration Statement units of a Holder or in a Piggyback Registration units of a Selling Holder who has failed to timely furnish such information which, in the opinion of counsel to Inergy, is reasonably required in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act.

Section 2.06 Restrictions on Public Sale by Holders of Registrable Securities. Each Holder of Registrable Securities who is included in the Shelf Registration Statement agrees not to effect any public sale or distribution of the Registrable Securities during the 90 calendar day period beginning on the date of a prospectus supplement filed with the Commission with respect to the pricing of an Underwritten Offering, provided that the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the officers or directors or any other unitholder of Inergy on whom a restriction is imposed.

Section 2.07 Expenses.

(a) Certain Definitions. “Registration Expenses” means all expenses incident to Inergy’s performance under or compliance with this Agreement to effect the registration of Registrable Securities in a Shelf Registration or a Piggyback Registration, and the disposition of such securities, including, without limitation, all registration, filing, securities exchange listing and NASDAQ fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the National Association of Securities Dealers, Inc., transfer taxes and fees of transfer agents and registrars, all word processing, duplicating and printing expenses, the fees and disbursements of counsel and independent public accountants for Inergy, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance. Except as otherwise provided in Section 2.08 hereof, Inergy shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder. In addition, Inergy shall not be responsible for any “Selling Expenses,” which means all underwriting fees, discounts and selling commissions allocable to the sale of the Registrable Securities.

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(b) Expenses. Inergy will pay all Registration Expenses in connection with the Shelf Registration Statement filed pursuant to Section 2.01(a) of this Agreement, and Inergy will pay all Registration Expenses in connection with a Piggyback Registration, whether or not the Shelf Registration Statement becomes effective or any sale is made pursuant to the Shelf Registration Statement or Piggyback Registration. Each Selling Holder shall pay all Selling Expenses in connection with any sale of its Registrable Securities hereunder.

Section 2.08 Indemnification.

(a) By Inergy. In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, Inergy will indemnify and hold harmless each Selling Holder thereunder, its directors and officers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder or underwriter or controlling Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder, its directors and officers, each such underwriter and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that Inergy will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder, such underwriter or such controlling Person in writing specifically for use in the Shelf Registration Statement or such other registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such director, officer or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

(b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly to indemnify and hold harmless Inergy, its directors and officers, and each Person, if any, who controls Inergy within the meaning of the Securities Act or of the Exchange Act to the same extent as the foregoing indemnity from Inergy to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Shelf Registration Statement or prospectus supplement relating to the Registrable Securities, or any amendment or supplement thereto; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.

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(c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 2.08. In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense and employ counsel or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, no indemnified party shall settle any action brought against it with respect to which it is entitled to indemnification hereunder without the consent of the indemnifying party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnifying party.

(d) Contribution. If the indemnification provided for in this Section 2.08 is held by a court or government agency of competent jurisdiction to be unavailable to Inergy or any Selling Holder or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses as between Inergy on the one hand and such Selling Holder on the other, in such proportion as is appropriate to reflect the relative fault of Inergy on the one hand and of such Selling Holder on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification. The relative fault of Inergy on the one hand and each Selling Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred

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to in the first sentence of this paragraph. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss which is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

(e) Other Indemnification. The provisions of this Section 2.08 shall be in addition to any other rights to indemnification or contribution which an indemnified party may have pursuant to law, equity, contract or otherwise.

Section 2.09 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, Inergy agrees to use its commercially reasonable efforts to:

(a) Make and keep public information regarding Inergy available, as those terms are understood and defined in Rule 144 of the Securities Act, at all times from and after the date hereof;

(b) File with the Commission in a timely manner all reports and other documents required of Inergy under the Securities Act and the Exchange Act at all times from and after the date hereof; and

(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request a copy of the most recent annual or quarterly report of Inergy, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

Section 2.10 Transfer or Assignment of Registration Rights. The rights to cause Inergy to register Registrable Securities granted to the Purchaser by Inergy under this Article II may be transferred or assigned by the Purchaser to one or more transferee(s) or assignee(s) of such Registrable Securities, provided that (a) unless such transferee is an Affiliate of the Purchaser, each such transferee or assignee holds Registrable Securities representing at least 15% of the number of Special Units sold pursuant to the terms of the Purchase Agreement, (b) Inergy is given written notice prior to any said transfer or assignment, stating the name and address of each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and (c) each such transferee assumes in writing responsibility for its portion of the obligations of the Purchaser under this Agreement.

ARTICLE III.

MISCELLANEOUS

Section 3.01 Communications. All notices and other communications provided for or permitted hereunder shall be made in writing by facsimile, courier service or personal delivery:

(a) if to the Purchaser, at the most current addresses given by the Purchaser to Inergy in accordance with the provisions of this Section 3.01, which addresses initially are, with respect to the Purchaser, the addresses set forth in the Purchase Agreement,

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(b) if to a transferee of the Purchaser, to such Holder at the address provided pursuant to Section 2.10 above, and

(c) if to Inergy, at Two Brush Creek Blvd., Suite 200, Kansas City, Missouri 64112, notice of which is given in accordance with the provisions of this Section 3.01.

All such notices and communications shall be deemed to have been received at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or sent via Internet electronic mail; and when actually received, if sent by any other means.

Section 3.02 Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein.

Section 3.03 Assignment of Rights. All or any portion of the rights and obligations of the Purchaser under this Agreement may be transferred or assigned by the Purchaser in accordance with Section 2.10 hereof.

Section 3.04 Recapitalization, Exchanges, etc. Affecting the Common Units. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all units of Inergy or any successor or assign of Inergy (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, recapitalizations and the like occurring after the date of this Agreement.

Section 3.05 Specific Performance. Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have.

Section 3.06 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

Section 3.07 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

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Section 3.08 Governing Law. The laws of the State of Delaware shall govern this Agreement without regard to principles of conflict of laws.

Section 3.09 Severability of Provisions. 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 or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

Section 3.10 Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by Inergy set forth herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

Section 3.11 Amendment. This Agreement may be amended only by means of a written amendment signed by Inergy and the Holders of a majority of the then outstanding Registrable Securities; provided, however, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder.

Section 3.12 No Presumption. In the event any claim is made by a party relating to any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

INERGY, LP.
By:	Inergy GP, LLC,
	its Managing General Partner
By:
Name:	R. Brooks Sherman, Jr.
Title:	Senior Vice President and Chief Financial Officer
INERGY HOLDINGS, L.P.
By:	Inergy Holdings GP, LLC,
	its General Partner
By:
Name:	Laura L. Ozenberger
Title:	Vice President, General Counsel and Secretary

EX-10.1

Exhibit 10.1

SPECIAL UNIT

PURCHASE AGREEMENT

by and between

INERGY, L.P.

and

INERGY HOLDINGS, L.P.

Table of Contents

		Page
ARTICLE I
DEFINITIONS
Section 1.01	Definitions	1
Section 1.02	Accounting Procedures and Interpretation	5
ARTICLE II
AGREEMENT TO SELL AND PURCHASE
Section 2.01	Authorization of Sale of Special Units	5
Section 2.02	Sale and Purchase	5
Section 2.03	Closing.	6
Section 2.04	Conditions to the Closing.	6
Section 2.05	Inergy Deliveries.	7
Section 2.06	Purchaser Deliveries.	8
Section 2.07	Price Per Unit.	9
Section 2.08	Lock-Up.	9
ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATED TO INERGY
Section 3.01	Corporate Existence	9
Section 3.02	Capitalization and Valid Issuance of Purchased Units.	10
Section 3.03	Inergy SEC Documents	11
Section 3.04	No Material Adverse Change	12
Section 3.05	Litigation	12
Section 3.06	No Conflicts	12
Section 3.07	Authority	13
Section 3.08	Approvals	13
Section 3.09	MLP Status	13
Section 3.10	Offering	13
Section 3.11	Investment Company Status	13
Section 3.12	Certain Fees	13
Section 3.13	No Side Agreements	14
Section 3.14	Accretive Acquisition	14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.01	Corporate Existence	14
Section 4.02	No Conflicts	14
Section 4.03	Certain Fees	15
Section 4.04	No Side Agreements	15
Section 4.05	Unregistered Securities	15

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ARTICLE V
INDEMNIFICATION, COSTS AND EXPENSES
Section 5.01	Indemnification by Inergy	16
Section 5.02	Indemnification by Purchaser	16
Section 5.03	Indemnification Procedure	16
ARTICLE VI
MISCELLANEOUS
Section 6.01	Interpretation and Survival of Provisions	17
Section 6.02	Survival of Provisions	18
Section 6.03	No Waiver: Modifications in Writing.	18
Section 6.04	Binding Effect; Assignment.	18
Section 6.05	Communications	19
Section 6.06	Removal of Legend	19
Section 6.07	Entire Agreement	19
Section 6.08	Governing Law	20
Section 6.09	Execution in Counterparts	20
Exhibit A – Amendment to Partnership Agreement
Exhibit B – Form of Registration Rights Agreement
Exhibit C – Form of Opinion of Inergy Counsel – Sale of Special Units under Registration Statement

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SPECIAL UNIT PURCHASE AGREEMENT

This SPECIAL UNIT PURCHASE AGREEMENT, dated as of August 9, 2005 (this “Agreement”), is by and between INERGY, L.P., a Delaware limited partnership (“Inergy”), and INERGY HOLDINGS, L.P., a Delaware limited partnership and affiliate of Inergy (“Purchaser”).

WHEREAS, Inergy has entered into a definitive agreement to acquire the membership interests of the entities (collectively, “Stagecoach”) that own the Stagecoach natural gas storage facility (the “Stagecoach Acquisition”);

WHEREAS, Inergy desires to conduct an expansion project (“Phase II Project”) of the natural gas storage facility acquired in the Stagecoach Acquisition (the “Stagecoach Facility”), and further, Inergy desires to finance a portion of the Stagecoach Acquisition and the Phase II Project rights through the sale of the Special Units from Inergy in accordance with the provisions of this Agreement;

WHEREAS, it is a condition to the obligations of Purchaser and Inergy hereunder that the Stagecoach Acquisition be consummated;

WHEREAS, Inergy has agreed to provide Purchaser with certain registration rights with respect to the Special Units acquired pursuant hereto.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

“Affiliate” means, with respect to a specified Person, any other Person, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, “controlling”, “controlled by”, and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

“Amendment” means the amendment to the Partnership Agreement providing for the Special Unit Amendment as well as the other matters as are reflected on Exhibit A hereto.

“Anniversary Date” means six months from the Closing Date.

“Basic Documents” means, collectively, this Agreement, the Registration Rights Agreement, and any and all other agreements or instruments executed and delivered to Purchaser by Inergy or any Subsidiary of Inergy hereunder or thereunder.

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“Business Day” means any day other than a Saturday, Sunday, or a legal holiday for commercial banks in Wilmington, Delaware.

“Closing” shall have the meaning specified in Section 2.03.

“Closing Date” shall have the meaning specified in Section 2.03.

“Commission” means the United States Securities and Exchange Commission.

“Common Units” means the common units representing limited partner interests in Inergy.

“Delaware LLC Act” means the Delaware Limited Liability Company Act.

“Delaware LP Act” shall have the meaning specified in Section 3.02.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

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

“General Partners” means Inergy Partners, LLC, a Delaware limited liability company and the non-managing general partner of Inergy, and Inergy GP, LLC, a Delaware limited liability company and the managing general partner of Inergy.

“Governmental Authority” means, with respect to a particular Person, the country, state, county, city and political subdivisions in which such Person or such Person’s Property is located or which exercises valid jurisdiction over any such Person or such Person’s Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authority which exercises valid jurisdiction over any such Person or such Person’s Property. Unless otherwise specified, all references to Governmental Authority herein with respect to Inergy means a Governmental Authority having jurisdiction over Inergy, its Subsidiaries or any of their respective Properties.

“Indemnified Party” shall have the meaning specified in Section 5.03.

“Indemnifying Party” shall have the meaning specified in Section 5.03.

“Inergy” has the meaning set forth in the introductory paragraph.

“Inergy Credit Facility” means the 5-year Credit Agreement dated as of December 17, 2004, as amended through the date hereof, among Inergy and the lenders named therein.

“Inergy Financial Statements” shall have the meaning specified in Section 3.03.

“Inergy Material Adverse Effect” means any material and adverse effect on (a) the assets, liabilities, financial condition, business, operations or affairs of Inergy and its Subsidiaries taken as a whole; (b) the ability of Inergy and its Subsidiaries taken as a whole to carry out their

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business as such business is conducted as of the date hereof or to meet their obligations under the Basic Documents on a timely basis; or (c) the ability of Inergy to consummate the transactions under any Basic Document; provided, however, that an Inergy Material Adverse Effect shall not include any material and adverse effect on the foregoing to the extent such material and adverse effect results from, arises out of, or relates to (w) compliance with the terms of the HSR Act as contemplated by the Stagecoach Purchase Agreement or the agreements entered into in connection with the Stagecoach Acquisition, (x) a general deterioration in the economy or changes in the general state of the industries in which the Inergy Parties operate, except to the extent that the Inergy Parties, taken as a whole, are adversely affected in a disproportionate manner as compared to other industry participants, (y) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis, including acts of terrorism, or (z) any change in accounting requirements or principles imposed upon Inergy and its Subsidiaries or their respective businesses or any change in applicable Law, or the interpretation thereof.

“Inergy Parties” means Inergy, the General Partners, and all of Inergy’s Subsidiaries.

“Inergy Related Parties” shall have the meaning specified in Section 5.02.

“Inergy SEC Documents” shall have the meaning specified in Section 3.03.

“Inergy Significant Subsidiaries” means Inergy Acquisition Company, LLC, a Delaware limited liability company, Inergy Propane, LLC, a Delaware limited liability company, Inergy Sales & Service, Inc., a Delaware corporation, L&L Transportation, LLC, a Delaware limited liability company, Inergy Transportation, LLC, a Delaware limited liability company and Stellar Propane Service, LLC, a Delaware limited liability company.

“Inergy’s Knowledge” means the actual knowledge of Laura L. Ozenberger, R. Brooks Sherman, Jr. and John J. Sherman, after reasonable inquiry.

“Law” means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation.

“Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. For the purpose of this Agreement, a Person shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.

“NASDAQ” means the NASDAQ National Market.

“Partnership Agreement” means the Second Amended and Restated Agreement of Limited Partnership of Inergy dated as of January 7, 2004, as amended.

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“Partnership Securities” means any class or series of equity interest in Inergy (but excluding any options, rights, warrants and appreciation rights relating to an equity interest in Inergy), including without limitation Common Units, Subordinated Units and Incentive Distribution Rights (as defined in the Partnership Agreement).

“Permits” means, with respect to Inergy or any of its Subsidiaries, any licenses, permits, variances, consents, authorizations, waivers, grants, franchises, concessions, exemptions, orders, registrations and approvals of Governmental Authorities or other Persons necessary for the ownership, leasing, operation, occupancy and use of its Properties and the conduct of its businesses as currently conducted.

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

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“Purchase Price” means the monetary commitment amount of $25,000,000.

“Purchased Units” means the number of Special Units equal to the quotient determined by dividing (a) the Purchase Price by (b) the Special Unit Price, rounded to the nearest whole number.

“Purchaser” has the meaning set forth in the introductory paragraph.

“Purchaser Material Adverse Effect” means any material and adverse effect on (a) the assets, liabilities, financial condition, business, operations or affairs of Purchaser; (b) the ability of Purchaser to carry out its business as such business is conducted as of the date hereof or to meet its obligations under the Basic Documents to which it is a party on a timely basis; or (c) the ability of Purchaser to consummate the transactions under any Basic Document to which it is a party.

“Purchaser Related Parties” shall have the meaning specified in Section 5.01.

“Registration Rights Agreement” means the Registration Rights Agreement, to be entered into at the Closing, between Inergy and Purchaser in the form attached hereto as Exhibit B.

“Representatives” of any Person means the officers, directors, employees, agents, counsel, accountants, investment bankers and other representatives of such Person.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

“Special Unit Amendment” shall have the meaning specified in Section 2.01.

“Special Unit Price” shall have the meaning specified in Section 2.07.

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“Special Units” means the special units representing limited partner interests in Inergy.

“Stagecoach Acquisition” has the meaning set forth in the introductory recitals.

“Stagecoach Closing Date” means the date on which the Stagecoach Acquisition is consummated.

“Stagecoach Purchase Agreement” means the purchase agreement among Stagecoach Holding, LLC, Stagecoach Energy, LLC, Stagecoach Holding II, LLC, Inergy Acquisition Company, LLC, Inergy Storage, Inc. and Inergy Stagecoach II, LLC pursuant to which the parties thereto will consummate the Stagecoach Acquisition.

“Subordinated Units” means the senior subordinated units and the junior subordinated units representing subordinated limited partner interests in Inergy.

“Subsidiary” means, as to any Person, any corporation or other entity of which: (i) such Person or a Subsidiary of such Person is a general partner or manager; or (ii) at least a majority of the outstanding equity interest having by the terms thereof ordinary voting power to elect a majority of the board of directors or similar governing body of such corporation or other entity (irrespective of whether or not at the time any equity interest of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries.

Section 1.02 Accounting Procedures and Interpretation. 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 Inergy Financial Statements and certificates and reports as to financial matters required to be furnished to Purchaser hereunder shall be prepared, in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q promulgated by the Commission) and in compliance as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto.

ARTICLE II

AGREEMENT TO SELL AND PURCHASE

Section 2.01 Authorization of Sale of Special Units. Inergy has authorized the issuance and sale to Purchaser of the Purchased Units. The Purchased Units shall have those rights, preferences, privileges and restrictions governing the Special Units which shall be reflected in an amendment to the Partnership Agreement to be adopted immediately prior to the issuance and sale of the Special Units contemplated hereby (the “Special Unit Amendment”).

Section 2.02 Sale and Purchase. Contemporaneous with the consummation of the Stagecoach Acquisition and subject to the terms and conditions hereof, Inergy hereby agrees to issue and sell to Purchaser, and Purchaser hereby agrees to purchase from Inergy, the Purchased Units, and Purchaser agrees to pay Inergy the Purchase Price.

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Section 2.03 Closing. Subject to the terms and conditions hereof, the consummation of the purchase and sale of the Purchased Units hereunder (the “Closing”) shall take place contemporaneous with the Stagecoach Closing Date, provided that Inergy shall have given Purchaser at least two (2) Business Days (or such shorter period as shall be agreeable to all parties hereto) prior notice of such designated closing date (such date, the “Closing Date”), at the offices of Vinson & Elkins L.L.P., 1001 Fannin Street, Suite 2300, Houston, Texas 77002.

Section 2.04 Conditions to the Closing.

(a) Mutual Conditions. The respective obligations of each party to consummate the purchase and issuance and sale of the Purchased Units shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by a particular party on behalf of itself in writing, in whole or in part, to the extent permitted by applicable Law):

(i) no statute, rule, order, decree or regulation shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Authority of competent jurisdiction which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated hereby or makes the transactions contemplated hereby illegal;

(ii) there shall not be pending any suit, action or proceeding by any Governmental Authority seeking to restrain, preclude, enjoin or prohibit the transactions contemplated by this Agreement; and

(iii) Inergy shall have consummated the Stagecoach Acquisition.

(b) Purchaser’s Conditions. The obligation of Purchaser to consummate the purchase of the Purchased Units shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by Purchaser in writing, in whole or in part, to the extent permitted by applicable Law):

(i) Inergy shall have performed and complied with the covenants and agreements contained in this Agreement which are required to be performed and complied with by Inergy on or prior to the Closing Date;

(ii) The representations and warranties of Inergy contained in this Agreement that are qualified by materiality or Inergy Material Adverse Effect shall be true and correct when made and as of the Closing Date and all other representations and warranties shall be true and correct in all material respects when made and as of the Closing Date, in each case as though made at and as of the Closing Date (except that representations made as of a specific date shall be required to be true and correct as of such date only);

(iii) Since the date of this Agreement, no Inergy Material Adverse Effect shall have occurred and be continuing;

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(iv) Inergy shall have delivered, or caused to be delivered, to Purchaser at the Closing, Inergy’s closing deliveries described in Section 2.05:

(c) Inergy’s Conditions. The obligation of Inergy to consummate the sale of the Purchased Units to Purchaser shall be subject to the satisfaction on or prior to the Closing Date of the condition (which may be waived by Inergy in writing, in whole or in part, to the extent permitted by applicable Law) that the representations and warranties of Purchaser contained in this Agreement that are qualified by materiality or a Purchaser Material Adverse Effect shall be true and correct when made and as of the Closing Date, all other representations and warranties shall be true and correct in all material respects when made and as of the Closing Date, in each case as though made at and as of the Closing Date (except that representations made as of a specific date shall be required to be true and correct as of such date only, and Inergy shall have received a certificate signed on behalf of Purchaser to such effect), and Purchaser shall have delivered, or caused to be delivered, to Inergy at the Closing Purchaser’s closing deliveries described in Section 2.06.

Section 2.05 Inergy Deliveries. At the Closing, subject to the terms and conditions hereof, Inergy will deliver, or cause to be delivered, to Purchaser:

(a) The Purchased Units to be purchased by such Purchaser by delivery of certificates evidencing such Purchased Units (bearing the legend set forth in Section 4.05(e)) and meeting the requirements of the Partnership Agreement, free and clear of any Liens of any other Person, other than transfer restrictions under applicable federal and state securities laws;

(b) Copies of the Certificate of Limited Partnership of Inergy and of the Certificate of Formation of Inergy GP, LLC;

(c) A certificate of the Secretary of State of the State of Delaware, dated a recent date, that Inergy is in good standing;

(d) A certificate of the Secretary or Assistant Secretary of Inergy GP, LLC, on behalf of Inergy, certifying as to (1) the Partnership Agreement, (2) board resolutions authorizing the execution and delivery of this Agreement and all of the agreements and instruments to be executed and delivered by Inergy in connection herewith, and the consummation of the transactions contemplated hereby, (3) its incumbent officers authorized to execute and deliver this Agreement and the other agreements and instruments contemplated hereby, setting forth the name and title and bearing the signatures of such officers and (4) the Certificate of Limited Partnership of Inergy and of the Certificate of Formation of Inergy GP, LLC;

(e) A certificate, dated the Closing Date and signed by (x) the President and Chief Executive Officer and (y) the Senior Vice President and Chief Financial Officer of the Inergy GP, LLC, in their capacities as such, stating that:

(i) Inergy has performed and complied with the covenants and agreements contained in this Agreement which are required to be performed and complied with by Inergy on or prior to the Closing Date; and

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(ii) The representations and warranties of Inergy contained in this Agreement that are qualified by materiality or Inergy Material Adverse Effect shall be true and correct when made and as of the Closing Date and all other representations and warranties shall be true and correct in all material respects when made and as of the Closing Date, in each case as though made at and as of the Closing Date (except that representations made as of a specific date shall be required to be true and correct as of such date only);

(f) A certificate of the Secretary of State of the State of Delaware, dated a recent date, that Inergy is in good standing;

(g) A cross-receipt executed by Inergy and delivered to Purchaser certifying that it has received the Purchase Price as of the Closing Date;

(h) An opinion addressed to Purchaser from legal counsel to Inergy, dated as of the Closing, in the form and substance attached hereto as Exhibit C; and

(i) The Registration Rights Agreement in substantially the form attached hereto as Exhibit B, which shall have been duly executed by Inergy.

Section 2.06 Purchaser Deliveries.

(a) Payment to Inergy of the Purchase Price hereto by wire transfer of immediately available funds to an account designated by Inergy in writing at least three (3) Business Days (or such shorter period as shall be agreeable to all parties hereto) prior to the Closing;

(b) A certificate of the Secretary or Assistant Secretary of the Purchaser, on behalf of Purchaser, certifying as to (1) the Partnership Agreement, (2) board resolutions authorizing the execution and delivery of this Agreement and all of the agreements and instruments to be executed and delivered by Purchaser in connection herewith, and the consummation of the transactions contemplated hereby and (3) its incumbent officers authorized to execute and deliver this Agreement and the other agreements and instruments contemplated hereby, setting forth the name and title and bearing the signatures of such officers;

(c) A certificate, dated the Closing Date and signed by (x) the President and Chief Executive Officer and (y) the Chief Financial Officer of Purchaser, in their capacities as such, stating that:

(i) Purchaser has performed and complied with the covenants and agreements contained in this Agreement which are required to be performed and complied with by Purchaser on or prior to the Closing Date; and

(ii) The representations and warranties of Purchaser contained in this Agreement that are qualified by materiality or Purchaser Material Adverse Effect shall be true and correct when made and as of the Closing Date and all other representations and warranties shall be true and correct in all material respects when made and as of the Closing Date, in each case as though made at and as of the Closing Date (except that representations made as of a specific date shall be required to be true and correct as of such date only).

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(d) The Registration Rights Agreement in substantially the form attached hereto as Exhibit B, which shall have been duly executed by Purchaser; and

(e) A cross-receipt executed by Purchaser and delivered to Inergy certifying that it has received the Purchased Units as of the Closing Date.

Section 2.07 Price Per Unit. The amount per Special Unit the Purchaser will pay to Inergy to purchase the Purchased Units (the “Special Unit Price”) shall be $32.47, an amount which represents the average closing price of the Common Units as reported by the Bloomberg Professional Financial Reporting Service for the ten (10) trading days immediately ending prior to the Closing Date.

Section 2.08 Lock-Up. Purchaser agrees that from and after Closing it will not sell any of the Purchased Units prior to the Anniversary Date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES RELATED TO INERGY

Inergy represents and warrants to Purchaser as follows:

Section 3.01 Corporate Existence. Inergy (a) is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware; and (b) has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use and operate its Properties and carry on its business as its business is now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not be reasonably likely to have an Inergy Material Adverse Effect. Each of Inergy’s Subsidiaries that is a corporation is a corporation duly incorporated, validly existing and in good standing under the laws of the State or other jurisdiction of its incorporation and has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use or operate its respective Properties and carry on its business as now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not be reasonably likely to have an Inergy Material Adverse Effect. Each of Inergy’s other Subsidiaries has been duly formed, is validly existing and in good standing under the laws of the State or other jurisdiction of its organization and has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use or operate its respective Properties and carry on its business as now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not be reasonably likely to have an Inergy Material Adverse Effect. None of Inergy or any of its Subsidiaries are in default in the performance, observance or fulfillment of any provision of, in the case of Inergy, the Partnership Agreement or its Certificate of Limited Partnership or, in the case of any Subsidiary of Inergy, its respective certificate of incorporation, certification of formation, bylaws, limited liability company agreement or other similar organizational documents. Each of Inergy and its Subsidiaries is duly qualified or licensed and in good standing as a foreign limited partnership,

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limited liability company or corporation, as applicable, and is authorized to do business in each jurisdiction in which the ownership or leasing of its respective Properties or the character of its respective operations makes such qualification necessary, except where the failure to obtain such qualification, license, authorization or good standing would not be reasonably likely to have an Inergy Material Adverse Effect.

Section 3.02 Capitalization and Valid Issuance of Purchased Units.

(a) As of the date of this Agreement, the issued and outstanding limited partner interests of Inergy consist of 26,254,645 Common Units, 5,478,568 Senior Subordinated Units and 1,145,084 Junior Subordinated Units and the Incentive Distribution Rights, as defined in the Partnership Agreement. The only issued and outstanding general partner interests of Inergy are the interests of the General Partners described in the Partnership Agreement. All outstanding Common Units, Senior Subordinated Units, Junior Subordinated Units and Incentive Distribution Rights and the limited partner interests represented thereby have been duly authorized and validly issued in accordance with the Partnership Agreement and are fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Section 17-607 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware LP Act”).

(b) Other than Inergy’s Long-Term Incentive Plan, as amended, and Inergy’s Employee Unit Purchase Plan, as amended and restated, Inergy has no equity compensation plans that contemplate the issuance of Common Units (or securities convertible into or exchangeable for Common Units). No indebtedness having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which Inergy unitholders may vote are issued or outstanding. Except as set forth in the first sentence of this Section 3.02(b) or as are contained in the Partnership Agreement, there are no outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls, or other rights, convertible or exchangeable securities, agreements, claims or commitments of any character obligating Inergy or any of its Subsidiaries to issue, transfer or sell any partnership interests or other equity interest in, Inergy or any of its Subsidiaries or securities convertible into or exchangeable for such partnership interests, (ii) obligations of Inergy or any of its Subsidiaries to repurchase, redeem or otherwise acquire any partnership interests or equity interests of Inergy or any of its Subsidiaries or any such securities or agreements listed in clause (i) of this sentence or (iii) voting trusts or similar agreements to which Inergy or any of its Subsidiaries is a party with respect to the voting of the equity interests of Inergy or any of its Subsidiaries, other than the Unitholder Agreement of United Propane, Inc. relating to the voting of its Common Units. None of the offering or sale of the Special Units or the registration of the Special Units pursuant to the Registration Rights Agreement, all as contemplated by this Agreement gives rise to any rights for or relating to the registration of any Common Units or other securities of the Partnership other than those rights granted under that certain Investors Rights Agreement dated as of January 12, 2001, by and among Inergy Partners, LLC (as predecessor to Inergy) and the investors named therein, that certain Registration Rights Agreement dated as of December 19, 2001, by and between Inergy and TJPCH Acquisition Corp., and those rights granted to the General Partners or any of their Affiliates (as such term is defined in the Partnership Agreement) under Section 7.12 of the Partnership Agreement.

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(c) (i) All of the issued and outstanding equity interests of each of Inergy’s Subsidiaries are owned, directly or indirectly, by Inergy free and clear of any Liens (except for such restrictions as may exist under applicable Law and except for such Liens as may be imposed under the Inergy Credit Facility), and all such ownership interests have been duly authorized, validly issued and are fully paid (to the extent required in the organizational documents of Inergy’s Subsidiaries, as applicable) and non assessable (except as such nonassessability may be affected by matters arising under Section 18-607 of the Delaware LLC Act) and free of preemptive rights, with no personal liability attaching to the ownership thereof except where the failure to own such interests free and clear of any Liens would not be reasonably likely to have an Inergy Material Adverse Effect.

(d) The Special Units being purchased by Purchaser hereunder and the limited partner interests represented thereby, will be duly authorized by Inergy pursuant to the Partnership Agreement prior to the Closing and, when issued and delivered to Purchaser against payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid (to the extent required by the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Section 17-607 of the Delaware LP Act) and will be free of any and all Liens and restrictions on transfer, other than restrictions on transfer under the Partnership Agreement or this Agreement and under applicable state and federal securities laws and other than such Liens as are created by Purchaser.

(e) The Common Units are quoted on the NASDAQ.

Section 3.03 Inergy SEC Documents. Inergy has timely filed with the Commission all forms, registration statements, reports, schedules and statements required to be filed by it under the Exchange Act or the Securities Act (all such documents together with the Registration Statement, collectively “Inergy SEC Documents”). The Inergy SEC Documents, including, without limitation, any audited or unaudited financial statements and any notes thereto or schedules included therein (the “Inergy Financial Statements”) at the time filed (in the case of registration statements, solely on the dates of effectiveness) (except to the extent corrected by a subsequently filed Inergy SEC Document filed prior to the date hereof) (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, (c) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, (d) were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission), and (e) fairly present (subject in the case of unaudited statements to normal, recurring and year-end audit adjustments) in all material respects the consolidated financial position and status of the business of Inergy as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended. Ernst & Young LLP is an independent public accounting firm with respect to Inergy and the General Partners and has not resigned or been dismissed as independent public accountants of Inergy as a result of or in connection with any disagreement with Inergy on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

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Section 3.04 No Material Adverse Change. Except as set forth in or contemplated by the Inergy SEC Documents filed with the Commission on or prior to the date hereof and except for the proposed Stagecoach Acquisition which has been discussed with Purchaser, since the date of Inergy’s most recent Form 10-K filing with the Commission, Inergy and its Subsidiaries have conducted their respective businesses in the ordinary course, consistent with past practice, and there has been no (a) change, event, occurrence, effect, fact, circumstance or condition that has had or would be reasonably likely to have an Inergy Material Adverse Effect, other than those occurring as a result of general economic or financial conditions or other developments that are not unique to Inergy and its Subsidiaries but also affect other Persons who participate or are engaged in the lines of business of which Inergy and its Subsidiaries participate or are engaged, except, in each case, to the extent such condition or development affects Inergy to a significantly greater extent than other similarly situated companies generally, (b) acquisition or disposition of any material asset by Inergy or any of its Subsidiaries or any contract or arrangement therefor, otherwise than for fair value in the ordinary course of business or as disclosed in the Inergy SEC Documents, or (c) material change in Inergy’s accounting principles, practices or methods.

Section 3.05 Litigation. Except as set forth in the Inergy SEC Documents, there is no action, suit, or proceeding pending (including any investigation, litigation or inquiry) or, to Inergy’s Knowledge, contemplated or threatened against or affecting any of the Inergy Parties or any of their respective officers, directors, properties or assets, which (individually or in the aggregate) (a) questions the validity of this Agreement or the Registration Rights Agreement or the right of Inergy to enter into this Agreement or the Registration Rights Agreement or to consummate the transactions contemplated hereby and thereby or (b) would be reasonably likely to result in an Inergy Material Adverse Effect.

Section 3.06 No Conflicts. The execution, delivery and performance by Inergy of the Basic Documents, the Stagecoach Purchase Agreement and any and all other agreements or instruments executed by Inergy in connection with the Stagecoach Acquisition hereunder or thereunder, and compliance by Inergy with the terms and provisions hereof and thereof, and the issuance and sale by Inergy of the Purchased Units, do not and will not (a) violate any provision of any Law or Permit having applicability to Inergy or any of its Subsidiaries or any of their respective Properties, (b) conflict with or result in a violation or breach of any provision of the Certificate of Limited Partnership or other organizational documents of Inergy, or the Partnership Agreement, or any organizational documents of any of Inergy’s Subsidiaries, (c) require any consent, approval or notice under or result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any contract, agreement, instrument, obligation, note, bond, mortgage, license, loan or credit agreement to which Inergy or any of its Subsidiaries is a party or by which Inergy or any of its Subsidiaries or any of their respective Properties may be bound, or (d) result in or require the creation or imposition of any Lien upon or with respect to any of the Properties now owned or hereafter acquired by Inergy or any of its Subsidiaries; with the exception of the conflicts stated in clause (b) of this Section 3.06, except where such conflict, violation, default, breach, termination, cancellation, failure to receive consent or approval, or acceleration with respect to the foregoing provisions of this Section 3.06 would not be, individually or in the aggregate, reasonably likely to have an Inergy Material Adverse Effect.

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Section 3.07 Authority. Inergy has all necessary partnership power and authority to execute, deliver and perform its obligations under the Basic Documents, the Stagecoach Purchase Agreement and any and all other agreements or instruments executed by Inergy in connection with the Stagecoach Acquisition hereunder or thereunder; and the execution, delivery and performance by Inergy of the Basic Documents, the Stagecoach Purchase Agreement and any and all other agreements or instruments executed by Inergy in connection with the Stagecoach Acquisition hereunder or thereunder, have been duly authorized by all necessary action on its part; and the Basic Documents, the Stagecoach Purchase Agreement and any and all other agreements or instruments executed by Inergy in connection with the Stagecoach Acquisition hereunder or thereunder, constitute the legal, valid and binding obligations of Inergy, enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and similar laws affecting creditors’ rights generally or by general principles of equity. No approval from the holders of the Common Units is required in connection with Inergy’s issuance and sale of the Purchased Units to Purchaser.

Section 3.08 Approvals. Except for the approvals required by the Commission in connection with Inergy’s obligations under the Registration Rights Agreement, no authorization, consent, approval, waiver, license, qualification or written exemption from, nor any filing, declaration, qualification or registration with, any Governmental Authority or any other Person is required in connection with the execution, delivery or performance by Inergy of any of the Basic Documents, the Stagecoach Purchase Agreement and any and all other agreements or instruments executed by Inergy in connection with the Stagecoach Acquisition hereunder or thereunder, except where the failure to receive such authorization, consent, approval, waiver, license, qualification or written exemption from, or to make such filing, declaration, qualification or registration would not, individually or in the aggregate, be reasonably likely to have an Inergy Material Adverse Effect.

Section 3.09 MLP Status. Inergy has, for each taxable year beginning after September 31, 2001, during which Inergy was in existence, met the gross income requirements of Section 7704(c)(2) of the Internal Revenue Code of 1986, as amended.

Section 3.10 Offering. Assuming the accuracy of the representations and warranties of the Purchaser contained in this Agreement, the sale and issuance of the Purchased Units to the Purchaser pursuant to this Agreement is exempt from the registration requirements of the Securities Act, and neither Inergy nor any authorized agent acting on its behalf has taken or will take any action hereafter that would cause the loss of such exemptions.

Section 3.11 Investment Company Status. Inergy is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 3.12 Certain Fees. No fees or commissions are or will be payable by Inergy to brokers, finders, or investment bankers with respect to the sale of any of the Purchased Units or the consummation of the transaction contemplated by this Agreement. Inergy agrees that it will indemnify and hold harmless Purchaser from and against any and all claims, demands, or liabilities for broker’s, finder’s, placement, or other similar fees or commissions incurred by Inergy or alleged to have been incurred by Inergy in connection with the sale of Purchased Units or the consummation of the transactions contemplated by this Agreement.

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Section 3.13 No Side Agreements. There are no agreements by, among or between Inergy or any of its Affiliates, on the one hand, and Purchaser or any of its Affiliates, on the other hand, with respect to the transactions contemplated hereby nor promises or inducements for future transactions between or among any of such parties.

Section 3.14 Accretive Acquisition. The General Partners have determined, in good faith, that the Stagecoach Acquisition is an “Acquisition” (as defined in the Partnership Agreement) that satisfies the requirements of Section 5.7(b) of the Partnership Agreement and thus allows the issuance of the Purchased Units without the prior approval of the Inergy unitholders.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Inergy that:

Section 4.01 Corporate Existence. Purchaser (a) is duly formed, legally existing and in good standing under the laws of its jurisdiction of organization; and (b) has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use and operate its Properties and carry on its business as its business is now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not have or would not reasonably be expected to have a Purchaser Material Adverse Effect. Purchaser is not in default in the performance, observance or fulfillment of any provision of its organizational documents, except where such default would not have or would not be reasonably likely to have a Purchaser Material Adverse Effect.

Section 4.02 No Conflicts. The execution, delivery and performance by Purchaser of this Agreement, the Registration Rights Agreement and all other agreements and instruments to be executed and delivered by Purchaser pursuant hereto or thereto or in connection with the transactions contemplated by this Agreement, the Registration Rights Agreement or any such other agreements and instruments, and compliance by Purchaser with the terms and provisions hereof and thereof, and the purchase of the Purchased Units by Purchaser do not and will not (a) violate any provision of any Law or Permit having applicability to Purchaser or any of its Properties, (b) conflict with or result in a violation or breach of any provision of the organizational documents of Purchaser, (c) require any consent, approval or notice under or result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any contract, agreement, instrument, obligation, note, bond, mortgage, license, loan or credit agreement to which Purchaser is a party or by which Purchaser or any of its Properties may be bound, or (d) result in or require the creation or imposition of any Lien upon or with respect to any of the Properties now owned or hereafter acquired by Purchaser; with the exception of the conflicts stated in clause (b) of this Section 4.02, except where such conflict, violation, default, breach, termination, cancellation, failure to receive consent or approval, or acceleration with respect to the foregoing provisions of this Section 4.02 would not, individually or in the aggregate, be reasonably likely to have a Purchaser Material Adverse Effect.

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Section 4.03 Certain Fees. No fees or commissions are or will be payable by Purchaser to brokers, finders, or investment bankers with respect to the purchase of any of the Purchased Units or the consummation of the transaction contemplated by this Agreement. Purchaser agrees that it will indemnify and hold harmless Inergy from and against any and all claims, demands, or liabilities for broker’s, finder’s, placement, or other similar fees or commissions incurred by Purchaser or alleged to have been incurred by Purchaser in connection with the purchase of the Purchased Units or the consummation of the transactions contemplated by this Agreement.

Section 4.04 No Side Agreements. There are no other agreements by, among or between Purchaser and any of its Affiliates, on the one hand, and Inergy or any of its Affiliates, on the other hand, with respect to the transactions contemplated hereby nor promises or inducements for future transactions between or among any of such parties.

Section 4.05 Unregistered Securities.

(a) Investment. The Purchased Units are being acquired for its own account, not as a nominee or agent, and with no intention of distributing the Purchased Units or any part thereof, and that Purchaser has no present intention of selling or granting any participation in or otherwise distributing the same in any transaction in violation of the securities laws of the United States of America or any State, without prejudice, however, to Purchaser’s right at all times to sell or otherwise dispose of all or any part of the Purchased Units under a registration statement under the Securities Act and applicable state securities laws or under an exemption from such registration available thereunder (including, without limitation, if available, Rule 144 promulgated thereunder). If Purchaser should in the future decide to dispose of any of the Purchased Units, Purchaser understands and agrees (a) that it may do so only (i) in compliance with the Securities Act and applicable state securities law, as then in effect, or (ii) in the manner contemplated by any registration statement pursuant to which such securities are being offered, and (b) that stop-transfer instructions to that effect will be in effect with respect to such securities.

(b) Nature of Purchaser. Purchaser represents and warrants to, and covenants and agrees with, Inergy that, (a) it is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated by the Securities and Exchange Commission pursuant to the Securities Act and (b) by reason of its business and financial experience it has such knowledge, sophistication and experience in making similar investments and in business and financial matters generally so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Units, is able to bear the economic risk of such investment and, at the present time, would be able to afford a complete loss of such investment.

(c) Receipt of Information; Authorization. Purchaser acknowledges that it has (a) had access to Inergy’s periodic filings with the Commission, including Inergy’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and the current reports filed on Form 8-K, (b)had access to information regarding the proposed Stagecoach Acquisition and its potential effect on Inergy’s operations and financial results and (c) been provided a reasonable opportunity to ask questions of and receive answers from Representatives of Inergy regarding such matters.

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(d) Restricted Securities. Purchaser understands that the Purchased Units it is purchasing are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from Inergy in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, Purchaser represents that it is knowledgeable with respect to Rule 144 of the Commission promulgated under the Securities Act.

(e) Legend. It is understood that the certificates evidencing the Purchased Units will bear the following legend: “These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satisfactory to the Company that such registration is not required or unless sold pursuant to Rule 144 of such Act.”

ARTICLE V

INDEMNIFICATION, COSTS AND EXPENSES

Section 5.01 Indemnification by Inergy. Inergy agrees to indemnify Purchaser and its Representatives (collectively, “Purchaser Related Parties”) from, and hold each of them harmless against, any and all actions, suits, proceedings (including any investigations, litigation or inquiries), demands, and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages, or expenses of any kind or nature whatsoever, including, without limitation, the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them as a result of, arising out of, or in any way related to the breach of any of the representations, warranties or covenants of Inergy contained herein, provided such claim for indemnification relating to a breach of a representation or warranty is made prior to the expiration of such representation or warranty.

Section 5.02 Indemnification by Purchaser. Purchaser agrees to indemnify Inergy, the General Partners and their respective Representatives (collectively, “Inergy Related Parties”) from, and hold each of them harmless against, any and all actions, suits, proceedings (including any investigations, litigation or inquiries), demands, and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages, or expenses of any kind or nature whatsoever, including, without limitation, the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them as a result of, arising out of, or in any way related to the breach of any of the representations, warranties or covenants of Purchaser contained herein, provided such claim for indemnification relating to a breach of the representations and warranties is made prior to the expiration of such representations and warranties.

Section 5.03 Indemnification Procedure. Promptly after any Inergy Related Party or Purchaser Related Party (hereinafter, the “Indemnified Party”) has received notice of any

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indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”) written notice of such claim or the commencement of such action, suit or proceeding, but failure to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure. Such notice shall state the nature and the basis of such claim to the extent then known. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel, any such matter as long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and the settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party’s possession or control. Such cooperation of the Indemnified Party shall be at the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled (i) at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party has failed to assume the defense and employ counsel or (B) if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party shall have concluded that there may be reasonable defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, then the Indemnified Party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not settle any indemnified claim without the consent of the Indemnified Party, unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, the Indemnified Party.

ARTICLE VI

MISCELLANEOUS

Section 6.01 Interpretation and Survival of Provisions. Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to.” Whenever Inergy has an obligation under the Basic Documents, the expense of complying with that obligation shall be an expense of Inergy unless otherwise specified. Whenever any determination, consent, or approval is to be made or given

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by Purchaser, such action shall be in Purchaser’s sole discretion unless otherwise specified in this Agreement. If any provision in the Basic Documents is held to be illegal, invalid, not binding, or unenforceable, such provision shall be fully severable and the Basic Documents shall be construed and enforced as if such illegal, invalid, not binding, or unenforceable provision had never comprised a part of the Basic Documents, and the remaining provisions shall remain in full force and effect.

Section 6.02 Survival of Provisions. The representations and warranties set forth in Sections 3.02, 3.12, 3.13, 4.03, 4.04 and 4.05 hereunder shall survive the execution and delivery of this Agreement indefinitely, and the other representations and warranties set forth herein shall survive for a period of twelve (12) months following the Closing Date regardless of any investigation made by or on behalf of Inergy or Purchaser. The covenants made in this Agreement or any other Basic Document shall survive the Closing of the transactions described herein and remain operative and in full force and effect regardless of acceptance of any of the Purchased Units and payment therefor and repayment, conversion, exercise or repurchase thereof. All indemnification obligations of Inergy and Purchaser and the provisions of Article V shall remain operative and in full force and effect unless such obligations are expressly terminated in a writing referencing that individual Section, regardless of any purported general termination of this Agreement.

Section 6.03 No Waiver: Modifications in Writing.

(a) Delay. No failure or delay on the part of any party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any right, power, or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise.

(b) Specific Waiver. Except as otherwise provided herein, no amendment, waiver, consent, modification, or termination of any provision of this Agreement or any other Basic Document shall be effective unless signed by each of the parties hereto or thereto affected by such amendment, waiver, consent, modification, or termination. Any amendment, supplement or modification of or to any provision of this Agreement or any other Basic Document, any waiver of any provision of this Agreement or any other Basic Document, and any consent to any departure by Inergy from the terms of any provision of this Agreement or any other Basic Document shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on Inergy in any case shall entitle Inergy to any other or further notice or demand in similar or other circumstances.

Section 6.04 Binding Effect; Assignment.

(a) Binding Effect. This Agreement shall be binding upon Inergy, Purchaser, and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns.

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(b) Assignment of Purchased Units. All or any portion of Purchased Units purchased pursuant to this Agreement may be sold, assigned or pledged by Purchaser, subject to compliance with applicable securities laws, Section 2.08 herein and the Registration Rights Agreement.

(c) Assignment of Rights. All or any portion of the rights and obligations of Purchaser under this Agreement may not be transferred by Purchaser without the written consent of Inergy.

Section 6.05 Communications. All notices and demands provided for hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, telecopy, air courier guaranteeing overnight delivery or personal delivery to the following addresses:

(a) If to Purchaser:

Inergy Holdings, L.P.

Two Brush Creek Boulevard, Suite 200

Kansas City, Missouri 64112

Attention: Laura L. Ozenberger

Facsimile: (816) 531-4680

(b) If to Inergy:

Inergy, L.P.

Two Brush Creek Boulevard., Suite 200

Kansas City, Missouri 64112

Attention: John J. Sherman

Facsimile: (816) 471-3854

or to such other address as Inergy or Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified mail, return receipt requested, or regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

Section 6.06 Removal of Legend. Purchaser may request Inergy to remove the legend described in Section 4.05(e) from the certificates evidencing the Purchased Units by submitting to Inergy such certificates, together with an opinion of counsel to the effect that such legend is no longer required under the Securities Act or applicable state laws, as the case may be.

Section 6.07 Entire Agreement. This Agreement, the other Basic Documents and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein with respect to the rights granted by Inergy or any of its Affiliates or Purchaser or any of their Affiliates set forth herein or therein. This Agreement, the other Basic Documents and the other agreements and documents referred to herein supersede all prior agreements and understandings between the parties with respect to such subject matter.

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Section 6.08 Governing Law. This Agreement will be construed in accordance with and governed by the laws of the State of Delaware without regard to principles of conflicts of laws.

Section 6.09 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

Section 6.10 Expenses.

Inergy hereby covenants and agrees to reimburse Purchaser for reasonable and documented costs and expenses incurred in connection with the negotiation, execution, delivery and performance of the Basic Documents and the transactions contemplated hereby and thereby (including, without limitation, reasonable legal, consulting and due diligence fees and expenses), provided that any request for such expense reimbursement by Purchaser be accompanied by a detailed invoice for such amount. If any action at law or equity is necessary to enforce or interpret the terms of the Basic Documents, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

INERGY, L.P.
By:	Inergy GP, LLC,
	its Managing General Partner
By:
	R. Brooks Sherman, Jr.
	Senior Vice President and Chief Financial Officer
INERGY HOLDINGS, L.P.
By:	Inergy Holdings GP, LLC,
	its General Partner
By:
	Laura L. Ozenberger
	Vice President, General Counsel and Secretary

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EXHIBIT A

Amendment to Partnership Agreement

A-1

EXHIBIT B

Form of Registration Rights Agreement

A-2

EX-10.2

EXHIBIT 10.2

CREDIT AGREEMENT

dated as of August 9, 2005

between

INERGY HOLDINGS, L.P.

and

SOUTHWEST BANK OF ST. LOUIS

$25,000,000 Term Loan Facility

CREDIT AGREEMENT

This Credit Agreement is made as of August 9, 2005, by and between INERGY HOLDINGS, L.P., a Delaware limited partnership (the “Borrower”), with its chief executive office located at Two Brush Creek Boulevard, Suite 200, Kansas City, Missouri 64112, and SOUTHWEST BANK OF ST. LOUIS, a Missouri banking corporation (the “Bank”), with an office located at 2301 S. Kingshighway Blvd., St. Louis, Missouri 63110.

Preliminary Statements

(a) The Borrower desires to obtain a term loan credit facility from the Bank.

(b) The Bank is willing to extend credit to the Borrower, but only on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Section 1

General Definitions

1.1 Definitions. When used in this Agreement, the following terms have the following meanings:

“5-Year Credit Agreement” means the 5-Year Credit Agreement, dated as of December 17, 2004, among Inergy L.P., the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Lehman Commercial Paper Inc. and Wachovia Bank, National Association, as co-syndication agents, and Fleet National Bank and Bank of Oklahoma, National Association, as co-documentation agents.

“Adjusted Base Rate” means, on any date, the sum of (1) the Base Rate on such date, and (2) the Applicable Margin for Base Rate Loans on such date.

“Adjusted Libor Rate” means, on any date during any Interest Period, the sum of (1) the Libor Rate for such Interest Period, and (2) the Applicable Margin for Libor Loans on such date.

“Affiliate” means a Person (1) which owns or otherwise has an interest in ten percent or more of any equity interest of the Borrower, (2) ten percent or more of the equity interests of which the Borrower (or any shareholder or other equity holder, director, officer, employee or subsidiary of the Borrower or any combination thereof) owns or otherwise has an interest in, or (3) which, directly or through one or more intermediaries, is controlled by, controls, or is under common control with the Borrower. For purposes of subpart (3) above, “control” means the ability, directly or indirectly, to affect the management or policies of a Person by virtue of an ownership interest, by right of contract or any other means.

“Agreement” means this Credit Agreement, as amended, renewed, restated, consolidated, replaced or otherwise modified from time to time.

“Applicable Margin” means, on any date, (1) in the case of any Base Rate Loans, 0%, and (2) in the case of any Libor Loans, 2.75%; provided, however, that, if the Applicable Margin Calculation Certificate delivered by the Borrower to the Bank for its most recently ended four fiscal quarters demonstrates that the Leverage Ratio for such preceding four fiscal quarters was within any of the ranges set forth below, then the Applicable Margin from and after the first day of the first full month after the

date the Bank receives the Applicable Margin Calculation Certificate shall be reduced to (if such is the case) and shall equal, for all Libor Loans, the amount set forth below opposite the Leverage Ratio for such preceding four fiscal quarters.

Level	Leverage Ratio	Applicable Margin for Libor Loans
I.	greater than 3 to 1	2.75	%
II.	greater than 2.5 to 1 but less than or equal to 3 to 1	2.5	%
III.	greater than 2 to 1 but less than or equal to 2.5 to 1	2.25	%
IV.	greater than 1.75 to 1 but less than or equal to 2 to 1	2	%
V.	less than or equal to 1.75 to 1	1.75	%

; provided, further, that (a) from the Closing Date to August 31, 2005, the Applicable Margin for all Libor Loans shall be that set forth in Level IV above, and (b) if the Borrower fails to timely deliver an Applicable Margin Calculation Certificate to the Bank, or the Bank reasonably disputes the calculations set forth therein or the accuracy of the related financial statements (and the Borrower fails, within ten Business Days after being notified by the Bank of such dispute, to provide information reasonably satisfactory to the Bank in support of such calculations or of the accuracy of such financial statements, as the case may be), then the Applicable Margin for all Libor Loans from and after the first day of the first full month after the latest date the Bank could have received the Applicable Margin Calculation Certificate in compliance with Section 6.1(b) hereof shall be the Applicable Margin set forth in Level I above.

“Applicable Margin Calculation Certificate” means a certificate, signed by the chief financial officer, corporate controller or other authorized officer of the Borrower, and reasonably acceptable in form and content to the Bank, which demonstrates, for any particular fiscal quarter, the Applicable Margin for the Borrower’s most recently ended four fiscal quarters, together with such financial statements and supporting detail as the Bank may reasonably request from time to time.

“Applicable Rate” means, on any date, (1) with respect to each Libor Loan, the Adjusted Libor Rate for such Libor Loan on such date, and (2) with respect to each Base Rate Loan, the Adjusted Base Rate on such date. The parties acknowledge that the Applicable Margin for a Libor Loan may change during the Interest Period for such Libor Loan and that, in such event, the Applicable Rate for such Libor Loan will change during such Interest Period.

“Base Rate” means the rate of interest announced publicly by the Bank from time to time as its prime rate or other designation in replacement of the prime rate announced publicly by the Bank. The Base Rate may fluctuate as frequently as daily, and any change in the Base Rate shall take effect on the day any change in the prime rate or such replacement rate occurs. The Base Rate is only a reference rate and may not be the lowest rate offered by the Bank.

Credit Agreement – Page 2

“Business Day” means a day on which the Bank is open for business to the general public other than a Saturday or Sunday.

“Closing Date” means the date of this Agreement, as set forth in the introductory paragraph of this Agreement.

“Collateral” means all property with respect to which a Lien has been granted to or for the benefit of the Bank pursuant to the Pledge Agreements or any of the other Credit Documents or which otherwise secures the payment or performance of any Obligation.

“Common Units” means the common units of Inergy, L.P., as referred to in the Inergy, L.P. Partnership Agreement.

“Covenant Compliance Certificate” means a certificate, in favor of the Bank, signed by the chief financial officer, corporate controller or other authorized officer of the Borrower, in such form as the Bank may reasonably request from time to time, which sets forth in reasonable detail the computations necessary to determine whether the Borrower is in compliance with the financial covenants set forth in this Agreement for the relevant time period.

“Credit Documents” means this Agreement, the Note, the Guaranty, the Pledge Agreements and any other agreements or documents existing on or after the Closing Date evidencing, securing, guaranteeing or otherwise relating to any of the transactions described in or contemplated by this Agreement, and any amendments, renewals, restatements, replacements, consolidations or other modifications of any of the foregoing from time to time.

“Credit Parties” means, collectively, the Borrower, IPCH and NIP.

“Debt” means any of the following: (1) indebtedness or liability for borrowed money; (2) obligations evidenced by bonds, debentures, notes or other similar instruments; (3) obligations for the deferred purchase price of property or services, or arising out of non-compete agreements entered into in connection with asset or equity acquisitions; (4) obligations as lessee under capital leases; (5) current liabilities in respect of unfunded vested benefits under Plans covered by ERISA; (6) obligations under letters of credit or acceptance facilities; (7) all guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person, or otherwise to assure a creditor against loss; and (8) obligations secured by a Lien, whether or not the obligations have been assumed.

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

“Default Rate” has the meaning provided in Section 3.1 of this Agreement.

“Environmental Laws” means all federal, state, local and other applicable statutes, ordinances, rules, regulations, judicial orders or decrees, common law theories of liability, governmental or quasi-governmental directives or notices or other laws or matters existing on or after the Closing Date relating in any respect to occupational safety, health or environmental protection.

Credit Agreement – Page 3

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules and regulations from time to time promulgated thereunder.

“Eurocurrency Reserve Requirement” means, for any Libor Loan for any Interest Period therefor, the daily average of the stated maximum rate (expressed as a decimal) at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion dollars against “Eurocurrency liabilities” (as such term is used in Regulation D) but without benefit or credit of proration, exemptions or offsets that might otherwise be available from time to time under Regulation D. Without limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall reflect any other reserves required to be maintained against (1) any category of liabilities that includes deposits by reference to which the Libor Rate for Libor Loans is to be determined, or (2) any category of extension of credit or other assets that include Libor Loans.

“Event of Default” has the meaning provided in Section 7.1 of this Agreement.

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

“Guarantors” means IPCH and NIP and any other Person who, after the Closing Date, may guarantee the payment or performance of all or any part of the Obligations.

“Guaranty” means, collectively, each guaranty to be executed by a Guarantor on or about the Closing Date, and any other guaranty executed by any Guarantor after the Closing Date, and any amendments, renewals, restatements, replacements, consolidations or other modifications of any of the foregoing from time to time.

“Hazardous Substance” means any hazardous, toxic, dangerous or otherwise environmentally unsound substance, waste or other material, in whatever form, as defined or described in, or contemplated by, any Environmental Law and any other hazardous, toxic, dangerous or otherwise environmentally unsound substance, waste or other material in whatever form, or any other substance, waste or other material regulated by any Environmental Law.

“Holdings Cash Flow” means, for any period, (1) all cash distributions received from Inergy, L.P. by the Borrower and its consolidated subsidiaries (excluding, however, Inergy, L.P. and its direct or indirect wholly-owned subsidiaries) during such period, less (2) all operating expenses (excluding interest, taxes, depreciation and amortization) of the Borrower and its consolidated subsidiaries (excluding, however, Inergy, L.P. and its direct or indirect wholly-owned subsidiaries) during such period.

“Holdings Debt” means Debt of the Borrower and its consolidated subsidiaries on a consolidated basis, excluding, however, all Debt of Inergy, L.P. and its direct or indirect wholly-owned subsidiaries.

“Holdings Pledge Agreement” means the Pledge Agreement to be executed by the Borrower on or about the Closing Date in favor of the Bank and by which the Borrower shall grant to the Bank, as security for the Obligations, a security interest in, among other things, certain Senior Subordinated Units and Junior Subordinated Units owned by the Borrower, as the same may be amended, renewed, replaced, restated, consolidated or otherwise modified from time to time.

“Inergy, L.P.” means Inergy, L.P., a Delaware limited partnership.

Credit Agreement – Page 4

“Inergy, L.P. Partnership Agreement” means the Second Amended and Restated Agreement of Limited Partnership of Inergy, L.P., dated as of January 7, 2004, as amended by (1) Amendment No. 1 to Second Amended and Restated Agreement of Limited Partnership of Inergy, L.P., dated as of February 9, 2004, and (2) Amendment No. 2 to Second Amended and Restated Agreement of Limited Partnership of Inergy, L.P., dated as of January 21, 2005.

“Interest Period” means, with respect to any Libor Loan, the period commencing on the date such Loan is made and ending (as the Borrower may select pursuant to Section 3.7) on the numerically corresponding day in the first, third or sixth calendar month thereafter, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; provided, however, that (1) no Interest Period may extend beyond the Termination Date, and (2) if an Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended to the next Business Day unless such Business Day would fall in the next calendar month, in which event such Interest Period shall end on the immediately preceding Business Day.

“IPCH” means IPCH Acquisition Corp., a Delaware corporation.

“Junior Subordinated Units” means the junior subordinated units of Inergy, L.P., as referred to in the Inergy, L.P. Partnership Agreement.

“Leverage Ratio” means, on any date, the ratio of (1) Holdings Debt as of the last day of the most recently ended fiscal quarter of the Borrower, to (2) Holdings Cash Flow, for the Borrower’s four fiscal quarters then most recently ended.

“Libor Loan” means any one or more tranches of the Term Loan, as described in Section 2.3 of this Agreement, with respect to which interest accrues at the Adjusted Libor Rate.

“Libor Rate” means, for any Interest Period, the rate per annum determined by the Bank to equal the quotient of (1) the London interbank offered rate for dollars for such Interest Period, as quoted in the “Money Rates” section of The Wall Street Journal or by Bloomberg, Telerate or any other financial news services (electronic or otherwise) used by the Bank from time to time in accordance with commercially reasonable industry standards, divided by (2) one minus the Eurocurrency Reserve Requirement for such Interest Period.

“Lien” means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority, or other security agreement or preferential arrangement, charge or encumbrance of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction to evidence any of the foregoing.

“Loan” means the Term Loan or, depending on the context in which such term is used, any Libor Loan or Base Rate Loan which comprises the Term Loan. “Loans” means all Libor Loans and all Base Rate Loans which comprise the Term Loan. All Loans shall be Libor Loans, except as otherwise provided in Section 3.11 of this Agreement.

“LTV Ratio” has the meaning provided in Section 3.4 of this Agreement.

Credit Agreement – Page 5

“Material Adverse Effect” means (1) a material adverse effect on the assets, liabilities, business, prospects, operations, income or condition, financial or otherwise, of a Credit Party or Inergy, L.P., (2) a material impairment of the ability of a Credit Party to pay, perform or observe its obligations under the Credit Documents, or (3) a material impairment of the enforceability or availability of the rights or remedies stated to be available to the Bank under the Credit Documents.

“NIP” means New Inergy Propane, LLC, a Delaware limited liability company.

“NIP Pledge Agreement” means the Pledge Agreement to be executed by NIP on or about the Closing Date in favor of the Bank and by which NIP shall grant to the Bank, as security for the Obligations, a security interest in, among other things, certain Common Units, Senior Subordinated Units and Junior Subordinated Units owned by NIP, as the same may be amended, renewed, replaced, restated, consolidated or otherwise modified from time to time.

“Note” means the Term Loan Note.

“Obligations” means the Loan and all other advances, debts, liabilities, obligations, covenants and duties owing, arising, due or payable from the Borrower to the Bank of any kind or nature, existing or future, whether or not evidenced by any note, letter of credit, guaranty or other instrument, whether arising under this Agreement or any of the other Credit Documents or otherwise and whether direct or indirect (including, without limitation, those acquired by assignment), absolute or contingent, primary or secondary, due or to become due, existing on or after the Closing Date and however acquired, and all amendments, renewals, restatements, replacements or other modifications of the foregoing from time to time. The term includes, without limitation, all principal, interest, fees, expenses and any other sums chargeable to the Borrower under any of the Credit Documents.

“Permitted Debt” means any of the following: (1) Debt to the Bank, (2) Permitted Enterprise Bank Debt, and (3) other Debt approved in advance by the Bank in writing in the exercise of its sole and absolute discretion and subject to such terms and conditions, including, without limitation, subordination terms, as the Bank may require.

“Permitted Enterprise Bank Debt” means (1) the Debt and other obligations evidenced by or arising under the Credit Agreement, dated as of July 22, 2005, among the Borrower, IPCH and Enterprise Bank & Trust and/or the other Credit Documents referred to therein, as such Credit Agreement and/or other Credit Documents may be amended, renewed, restated, replaced, consolidated or otherwise modified from time to time, provided that the principal amount of such Debt does not exceed $20,000,000, and (2) any subsequent refinancings of the Debt described in subpart (1) immediately above, provided that the maximum principal amount of such refinanced Debt does not exceed $20,000,000.

“Permitted Enterprise Bank Liens” means Liens in favor of Enterprise Bank & Trust, as security for the Permitted Enterprise Bank Debt, encumbering the following securities and proceeds thereof: (1) 6,526 Common Units and 21,588 Senior Subordinated Units owned by the Borrower; (2) 789,202 Common Units owned by IPCH; and (3) 238,272 Common Units and 627,380 Senior Subordinated Units owned by NIP; provided, however, that none of the foregoing securities or proceeds thereof are Collateral which has been encumbered in favor of the Bank pursuant to any of the Pledge Agreements.

“Permitted Liens” means any of the following: (1) Liens for taxes, assessments or governmental charges not delinquent or being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on a Person’s books; (2) Liens arising out of deposits in connection with workers’ compensation, unemployment insurance, old age pensions or other social security or retirement benefits legislation; (3) deposits or pledges to secure bids, tenders, contracts

Credit Agreement – Page 6

(other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds, and other obligations of like nature arising in the ordinary course of a Person’s business; (4) Liens imposed by law, such as mechanics’, workers’, materialmen’s, carriers’ or other like Liens (excluding, however, any Lien in favor of a landlord) arising in the ordinary course of a Person’s business which secure the payment of obligations which are not past due or which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on such Person’s books; (5) to the extent the same constitutes a Lien, the transfer restrictions set forth in the Inergy, L.P. Partnership Agreement with respect to the Common Units, the Senior Subordinated Units and the Junior Subordinated Units; (6) Permitted Enterprise Bank Liens; and (7) Liens in favor of the Bank.

“Person” means an individual, corporation, limited liability company, partnership, trust, governmental entity or any other entity, organization or group whatsoever.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained for employees of the Borrower on or after the Closing Date.

“Pledge Agreements” means the Holdings Pledge Agreement and the NIP Pledge Agreement.

“Pledged Collateral Market Value” means, at any date, the value on such date of the Common Units, the Senior Subordinated Units and the Junior Subordinated Units which have been pledged by the Credit Parties to the Bank and with respect to which the Bank has a perfected Lien (and, if such Lien is capable of being perfected by control under UCC §8-106(b)(1), with such Lien being so perfected), as security for the Obligations, subject to no other Liens. For purposes of the preceding sentence, (1) the value of Common Units on any date shall be the closing price for such Common Units as reflected on the NASDAQ securities exchange on such date, (2) the value of Senior Subordinated Units on any date shall be deemed to equal 90% of the value of the Common Units on such date, and (3) the value of the Junior Subordinated Units on any date shall be deemed to equal 85% of the value of the Common Units on such date.

“Regulatory Change” means any change after the Closing Date in federal, state, local or foreign laws or regulations (including, without limitation, Regulation D), or the adoption or making after such date of any interpretations, directives or requirements applying to a class of banks including the Bank under any federal, state, local or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as amended or supplemented from time to time.

“Senior Subordinated Units” means the senior subordinated units of Inergy, L.P., as described in the Inergy, L.P. Partnership Agreement.

“Term Loan” has the meaning provided in Section 2.2(a) of this Agreement.

“Term Loan Note” has the meaning provided in Section 2.2(b) of this Agreement.

“Termination Date” means three years after the Closing Date.

“UCC” means the Uniform Commercial Code as in effect in the State of Missouri from time to time.

Credit Agreement – Page 7

1.2 Accounting Terms; Other. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. Unless the context clearly requires otherwise, all references to “dollars” or “$” are to United States dollars. This Agreement and the other Credit Documents shall be construed without regard to any presumption or rule requiring construction against the party causing any such document or any portion thereof to be drafted. The Section and other headings in this Agreement and any index at the beginning of this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms of this Agreement. Similarly, any page footers or headers or similar word processing, document or page identification numbers in this Agreement or any index or exhibit are for convenience of reference only and shall not limit or otherwise affect any of the terms of this Agreement, nor shall there be any requirement that any such footers or other numbers be consistent from page to page. Unless the context clearly requires otherwise, any reference to a Section of this Agreement refers to all Sections and Subsections thereunder. Any pronoun used herein shall be deemed to cover all genders. Defined terms used in this Agreement may be set forth in Section 1.1 or other Sections of this Agreement, and all such definitions defined in the singular shall have a corresponding meaning when used in the plural and vice versa.

Section 2

Credit Facility

2.1 General. The Bank agrees, subject to the terms and conditions of this Agreement, to make a credit facility available to the Borrower upon its request therefor, as provided in this Section 2.

2.2 Term Loan.

(a) General. The Bank agrees, subject to the terms and conditions of this Agreement, to make a term loan (the “Term Loan”) to the Borrower on or about the Closing Date in the principal amount of $25,000,000. In no event shall the Bank be obligated to make the Term Loan if (1) any Default or Event of Default exists or would result from the making of the Term Loan, or (2) after giving effect to the disbursement of the Term Loan on or about the Closing Date, the outstanding principal balance of the Term Loan would exceed 80% of the Pledged Collateral Market Value on such date. Principal borrowed and repaid under the Term Loan may not be re-borrowed.

(b) Term Loan Note. The Term Loan shall be evidenced by, and shall be payable in accordance with the terms and conditions of, a promissory note substantially in the form of Exhibit A hereto (as amended, renewed, restated, replaced, consolidated or otherwise modified from time to time, the “Term Loan Note”).

2.3 Libor Loan Tranches. Subject to the terms and conditions of this Agreement, the Borrower may periodically select, in accordance with Section 3.7 hereof, to have the principal amount of the Loan or one or more portions thereof made or continued as Libor Loans; provided, however, that (a) not more than five portions of the principal amount of the Loan may be outstanding as Libor Loans at any time; (b) a Libor Loan may be converted into a Base Rate Loan to the extent permitted under Section 3.11 of this Agreement; and (c) except as otherwise provided in Section 3.11 of this Agreement, the Borrower shall not have the right to request that the principal amount of the Loan or any portion of it be disbursed or continued as or converted into a Base Rate Loan.

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Section 3

Finance Charges, Repayment And Other Terms

3.1 Interest Rate.

(a) Applicable Rate. Interest shall accrue on the outstanding principal balance of each Loan at the end of each day at the Applicable Rate in effect on such day.

(b) Default Rate. Upon or after the occurrence and during the continuation of any Event of Default, the principal amount of each Loan shall bear interest at a rate per annum equal to three percent (3.0%) above the interest rate that would otherwise apply under Section 3.1(a) above (the “Default Rate”).

(c) Late Fee. In addition to interest payable at the Default Rate or any other amounts payable under this Agreement or the other Credit Documents, the Borrower shall pay to the Bank a late fee in an amount equal to five percent (5%) of the amount of each payment due by the Borrower under this Agreement which is not received by the Bank within five (5) days after its due date.

(d) Computation of Interest. In all cases, interest on the outstanding principal balance of each Loan and all other Obligations with respect to which interest accrues pursuant to the terms of this Agreement shall be calculated on a daily basis, computed on the basis of a 360-day year for the actual number of days elapsed.

(e) Usury. In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Note and charged or collected pursuant to the terms of this Agreement or any other Credit Documents exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable thereto. If such a court determines that the Bank has charged or received interest hereunder or under the other Credit Documents from the Borrower in excess of the highest applicable rate, the Bank shall apply such excess to any other Obligations then due and payable, whether for principal, interest, fees or otherwise, and shall refund the remainder of such excess interest, if any, to the Borrower, and such rate shall automatically be reduced to the maximum rate permitted by such law.

3.2 Payments of Principal, Interest and Costs. Except as otherwise provided in this Agreement, the Borrower agrees to pay the Obligations as follows:

(a) Interest: Generally End of Interest Period But At Least Quarterly. Accrued interest on the outstanding principal balance of the Term Loan is payable on the earlier to occur of (1) in the case of a Libor Loan that has a one-month or three-month Interest Period, the end of such Interest Period, (2) in the case of a Libor Loan that has a six-month Interest Period, three months after the date such Libor Loan is made or continued, as the case may be, and at the end of such Interest Period, or (3) the Termination Date. Accrued interest on the outstanding principal balance of any portion of the Term Loan that is a Base Rate Loan is payable on the earlier to occur of (1) the first day of each calendar quarter, or (2) the Termination Date.

(b) Principal. The outstanding principal balance of the Loan is payable on the Termination Date.

(c) Other Obligations. Costs, fees and expenses and any other Obligations payable pursuant to this Agreement or the other Credit Documents shall be payable as and when provided in this Agreement or the other Credit Documents, as the case may be, or, if no specific provision for payment is made, on demand.

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3.3 Voluntary Prepayments. The Borrower has the right, without penalty or premium (except as otherwise provided in subpart (2) immediately below), to prepay the Loan, in whole or in part, at any time and from time to time after the Closing Date on the following terms and conditions: (1) the Borrower shall give the Bank at least three Business Days’ prior written notice of its intent to prepay any Libor Loan, which notice shall specify the amount of the Loan to be prepaid and the specific Libor Loan to which the prepayment relates; and (2) if the Borrower prepays all or any part of a Libor Loan on any day other than the last day of then-current Interest Period for such Libor Loan, the Borrower shall pay to the Bank the amounts due the Bank under such circumstances in accordance with Section 3.11 of this Agreement. Notwithstanding anything in this Section 3.3 to the contrary, the Borrower has the right, without penalty or premium, to prepay any Base Rate Loan, in whole or in any part, at any time.

3.4 Mandatory Prepayments; Decline in Market Value of Pledged Collateral. If, at any time, the outstanding principal balance of the Loan exceeds 80% of the Pledged Collateral Market Value (such ratio of the outstanding principal balance of the Loan to the Pledged Collateral Market Value being referred to herein as the “LTV Ratio”), the Borrower shall, within 10 days thereafter, either (1) prepay the Loan in an amount sufficient to reduce the aggregate unpaid principal amount of the Loan by an amount equal to such excess, or (2) pledge additional Collateral (subject to Section 3.12 below) to the Bank in an amount sufficient to increase the Pledged Collateral Market Value so as to be in compliance with the foregoing 80% LTV Ratio.

3.5 Method of Payment. Payments due the Bank under this Agreement and the other Credit Documents shall be made in immediately available funds to the Bank at its office described in the introductory paragraph of this Agreement unless the Bank gives notice to the contrary. Payments so received at or before 1:00 p.m. Kansas City time on any Business Day shall be deemed to have been received by the Bank on that Business Day. Payments received after 1:00 p.m. Kansas City time on any Business Day shall be deemed to have been received on the next Business Day, and interest, if payable in respect of such payment, shall accrue thereon until such next Business Day.

3.6 Use of Proceeds.

(a) General. The Loan shall be used by the Borrower solely for purposes of (1) making a capital contribution to Inergy, L.P., in exchange for equity interests of Inergy, L.P. (provided that Inergy L.P., in turn, uses such contributed funds in connection with its acquisition of the entities that own or the assets that comprise the Stagecoach natural gas storage facilities); and (2) paying costs and expenses incurred in connection with the closing of the transactions contemplated by this Agreement.

(b) No Margin Loans. Notwithstanding anything herein to the contrary, the Borrower shall not, directly or indirectly, use any part of its Loan proceeds for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or to extend credit to any Person for the purpose of purchasing or carrying any such margin stock, or for any purpose which violates, or is inconsistent with, Regulation X of such Board of Governors.

3.7 Notice and Manner of Borrowing. On or before the Closing Date, the Borrower shall give the Bank written notice directing the application of the proceeds of the Term Loan, which notice shall also specify the number of Libor Loans of which the Term Loan shall be initially comprised and the amount of each such Libor Loan and the duration of its Interest Period. Prior to the expiration of each such Interest Period and prior to the expiration of each subsequent Interest Period, the Borrower shall give

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the Bank written notice, not later than 12:00 noon, Kansas City time, on the last day of the then-current Interest Period, of the duration of the subsequent Interest Period for such Libor Loan. If the Borrower fails to specify the Interest Period for a Libor Loan in accordance with the foregoing procedures, the Interest Period for such Libor Loan shall be as if the Borrower had specified a one-month Interest Period. For purposes of this Section, the Borrower agrees that the Bank may rely and act upon any request relating to the Term Loan or any Libor Loan thereunder from any individual who the Bank, absent gross negligence or willful misconduct, believes to be a representative of the Borrower.

3.8 Capital Adequacy. If the Bank determines that the adoption of any law, rule or regulation regarding capital adequacy, or any change therein or in the interpretation or application thereof or compliance by the Bank with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or governmental authority, does or shall have the effect of reducing the rate of return on the Bank’s capital as a consequence of its obligations hereunder to a level below that which the Bank could have achieved but for such adoption, change or compliance (taking into consideration the Bank’s policies with respect to capital adequacy) by an amount deemed by the Bank, in its sole discretion, to be material, then from time to time, after submission by the Bank to the Borrower of a written demand therefor, the affected Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such reduction. A certificate of the Bank claiming entitlement to payment as set forth in this Section shall be conclusive in the absence of manifest error. Such certificate shall set forth the nature of the occurrence giving rise to such payment, the additional amount or amounts to be paid to the Bank, and the method by which such amounts were determined. In determining such amount, the Bank may use any reasonable averaging and attribution method.

3.9 Application of Payments and Collections. The Borrower irrevocably waives the right to direct the application of any and all payments and collections at any time or times after the Closing Date received by the Bank from or on behalf of the Borrower, and the Borrower agrees that the Bank has the continuing exclusive right to apply and reapply any and all such payments and collections received at any time or times after the Closing Date by the Bank or its agent against the Obligations owing by the Borrower, in such manner as the Bank may deem advisable, notwithstanding any entry by the Bank upon any of its books and records.

3.10 Periodic Statement. The Bank will account to the Borrower with a periodic statement of loan balances, charges and payments made or received pursuant to this Agreement, and any such statement rendered by the Bank shall be deemed final, binding and conclusive upon the Borrower unless the Bank is notified by the Borrower in writing to the contrary within 60 days after the date each such statement is made available to the Borrower. Any such notice by the Borrower shall only be deemed an objection to those items specifically objected to in such notice.

3.11 Libor Loan Provisions.

(a) Continuation and Conversion; Number of Loans. The Borrower has the right, by giving notice to the Bank, to continue an existing Libor Loan at the end of an Interest Period into a Libor Loan for a subsequent Interest Period subject to the terms and conditions of Section 3.7 of this Agreement. In no event may more than five Libor Loans be outstanding at any time.

(b) Market Disruption. Notwithstanding anything herein to the contrary, if, prior to the determination of any Libor Rate for any Interest Period, the Bank determines (which determination shall be conclusive) that any condition exists which impairs the Bank’s ability to readily or reliably ascertain the Applicable Rate for Libor Loans (whether due to disruption in the relevant markets, suspension of quotations, or otherwise), then the Bank shall give the Borrower prompt notice thereof, and so long as such condition remains in effect, the Bank shall be under no obligation to continue Libor Loans, and the Borrower shall, on the last day of the then current Interest Period, either prepay such Libor Loans or convert such Libor Loans into Base Rate Loans.

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(c) Illegality; Regulatory Change. Notwithstanding anything herein to the contrary, if it becomes unlawful for the Bank to honor its obligation to maintain Libor Loans hereunder, then the Bank shall promptly notify the Borrower and the Bank’s obligation to continue Libor Loans shall be suspended until such time as the Bank may again lawfully maintain Libor Loans and the then outstanding Libor Loans shall be converted into Base Rate Loans in accordance with Subsection (d) immediately below. Furthermore, if, by reason of any Regulatory Change, the Bank becomes subject to restrictions on the amount of a category of deposits or liabilities which it may hold which includes deposits by reference to which the interest rate on Libor Loans is determined as provided in this Agreement or a category of assets of the Bank which includes Libor Loans, then, if the Bank so elects by notice to the Borrower, the obligation of the Bank to continue Libor Loans shall be suspended until such Regulatory Change ceases to be in effect; and all Libor Loans then outstanding shall be converted into Base Rate Loans.

(d) Affected Loans. If Libor Loans (such Loans being herein called “Affected Loans”) are to be converted pursuant to Subsections (b) or (c) immediately above, the Affected Loans shall be automatically converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for the Affected Loans (or, in the case of a Loan converted under Subsection (c) immediately above, such earlier date as the Bank may specify to the Borrower) and, unless and until the Bank gives notice as provided below that the circumstances specified in Subsections (b) or (c) immediately above which gave rise to such conversion no longer exist: (1) to the extent that the Affected Loans have been so converted, all payments and prepayments of principal which would otherwise be applied to the Affected Loans shall be applied instead to Base Rate Loans; and (2) all Loans which would otherwise be continued by the Bank as Libor Loans shall be continued instead as Base Rate Loans. The Bank agrees to give notice to the Borrower promptly after the circumstances specified in Subsections (b) or (c) immediately above which give rise to the conversion or non-continuation of the Affected Loans pursuant to this Section no longer exist.

(e) Breakage Costs; Funding Indemnification. If any payment or prepayment is made or applied in respect of any Libor Loan before the last day of the applicable Interest Period (whether due to voluntary prepayment, acceleration of the Loan, or otherwise), the Borrower shall pay to the Bank if the Bank so requests, as liquidated damages for the loss of the bargain and/or anticipated resulting damages and not as a penalty, an amount which, when added to the interest otherwise accruing at the Applicable Rate in respect of such Loan, would enable the Bank to realize the Base Rate on the principal amount of such Loan for the entirety of such Interest Period; provided, however, that the Borrower shall not be obligated to pay any liquidated damages or other amounts under this Subsection (e) solely because a Libor Loan was converted to a Base Rate Loan by virtue of the provisions of Subsections (b) or (c) immediately above.

3.12 Conversion of All Subordinated Units to Common Units; Partial Release of Collateral. If (a) all Collateral consisting of Senior Subordinated Units and all Collateral consisting of Junior Subordinated Units are converted by the issuer thereof to Common Units, and (b) the Borrower causes the certificates evidencing all such converted Common Units to be delivered to the Bank, together with such executed blank stock powers or the like relating thereto as the Bank may reasonably request, such that the Bank has a perfected first priority Lien on such converted Common Units subject to no other Lien with the Bank’s Lien being perfected by “control” within the meaning of UCC §8-106(b)(1), and (c) at the time of the Borrower’s satisfaction of the requirements of subpart (b) immediately above (the “Delivery Date”), the LTV Ratio is less than 60%, then the Bank shall cause its Lien to be released on such portion of the Collateral selected by the Bank as is necessary to cause the LTV Ratio to equal but not exceed 60% as of the Delivery Date (and, in connection therewith, return to the applicable Credit Party the

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certificate(s) representing such released Collateral); provided, however, that (1) the Bank shall not be obligated to release any Lien if any Default or Event of Default exists on the Delivery Date; and (2) if the number of units represented by a certificate representing any particular Collateral is such that, were the Bank to release its Lien on all of the units represented by such certificate, the LTV Ratio would exceed 60% (the number of units represented by such certificate which cause the LTV ratio to exceed 60% being referred to herein as the “Excess Units”), the Bank shall not be obligated to release its Lien on such certificate (the “Original Pledged Certificate”) unless (i) the issuer of the Original Pledged Certificate or its transfer agent first agrees in a writing reasonably acceptable to the Bank to re-issue such certificate into two certificates and to return the certificate evidencing the Excess Units to the applicable Credit Party and to return the certificate evidencing the remaining units to the Bank (the “Replacement Pledged Certificate”), and (ii) the Borrower causes the applicable Credit Party to execute and deliver a blank stock power or the like relating to the Replacement Pledged Certificate as the Bank may reasonably request. Nothing in this Section 3.12 shall affect the Borrower’s obligations under Section 3.4 above except that, if the Bank has released any Lien pursuant to this Section 3.12 and thereafter the LTV Ratio exceeds 80%, the “additional Collateral” which may be pledged to the Bank pursuant to subpart (2) of Section 3.4 shall be limited to Common Units.

Section 4

Lending Conditions

4.1 Credit Documents. Notwithstanding anything herein or in the other Credit Documents to the contrary, the Bank shall not be obligated to make the Loan until the Bank has received the following documents, duly executed and delivered by all parties thereto, and otherwise satisfactory in form and content to the Bank:

(a) Credit Agreement. This Agreement;

(b) Note. The Note;

(c) Holdings Pledge Documents. (1) The Holdings Pledge Agreement, together with the Consent and Acknowledgment of Issuer attached thereto; (2) the originals of the certificates evidencing the Senior Subordinated Units and Junior Subordinated Units pledged thereby, together with such endorsements thereto as the Bank may request, and (3) a Uniform Commercial Code financing statement from the Borrower, as debtor, to the Bank, as secured party, from such jurisdictions as the Bank deems necessary or desirable to perfect its security interest in the collateral described in the Holdings Pledge Agreement;

(d) Guaranty. A Guaranty from each of IPCH and NIP;

(e) Guaranty Reimbursement and Contribution Agreement. A guaranty reimbursement and contribution agreement among the Credit Parties;

(f) NIP Pledge Documents. (1) The NIP Pledge Agreement, together with the Consent and Acknowledgment of Issuer attached thereto; (2) the originals of the certificates evidencing the Common Units, Senior Subordinated Units and Junior Subordinated Units pledged thereby, together with such endorsements thereto as the Bank may request, and (3) a Uniform Commercial Code financing statement from NIP, as debtor, to the Bank, as secured party, from such jurisdictions as the Bank deems necessary or desirable to perfect its security interest in the collateral described in the NIP Pledge Agreement;

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(g) Inergy, L.P. Letters. (1) a letter from Inergy, L.P. to the transfer agent for the Common Units regarding the adequacy of the Bank’s counsel’s opinion letter with respect to the transferability of certain Common Units, and (2) a letter from Inergy, L.P. to the Bank regarding the adequacy of the Bank’s counsel’s opinion letter with respect to the transferability of certain Senior Subordinated Units and Junior Subordinated Units;

(h) Form U-1. A Form U-1 for the Borrower whereby the Borrower represents and warrants that no proceeds of the Loan will be used to purchase or carry any margin stock;

(i) Loan Disbursement Instructions. Written instructions from the Borrower to the Bank directing the application of proceeds of the Loan;

(j) Opinion of Credit Parties’ Counsel. The favorable written opinion to the Bank of Stinson Morrison Hecker LLP, counsel to the Credit Parties, regarding the Credit Parties, the Credit Documents and the transactions contemplated by this Agreement and the other Credit Documents;

(k) Certificate of Borrower’s Secretary. A certificate executed by the Borrower’s secretary whereby such secretary affirms that, among other things, attached to such certificate is (1) a copy of the Borrower’s general partner’s members’ resolutions authorizing the borrowing of monies, the granting of Liens and all other matters set forth in or contemplated by the Credit Documents, (2) a copy of the Borrower’s certificate of limited partnership as in effect on the Closing Date, (3) a copy of the Borrower’s limited partnership agreement and all amendments thereto, and (4) a certificate of good standing for the Borrower, dated on or within 10 days prior to the Closing Date, from the Secretary or State of the state of organization of the Borrower;

(l) Certificate of IPCH’s Secretary. A certificate executed by IPCH’s secretary whereby such secretary affirms that, among other things, attached to such certificate is (1) a copy of IPCH directors’ resolutions authorizing the guarantee of the Obligations and all other matters set forth in or contemplated by the Credit Documents, (2) a copy of IPCH’s articles or certificate of incorporation as in effect on the Closing Date, (3) a copy of IPCH’s by-laws and all amendments thereto, and (4) a certificate of good standing for IPCH, dated on or within 10 days prior to the Closing Date, from the Secretary or State of the state of incorporation of IPCH;

(m) Certificate of NIP’s Secretary. A certificate executed by NIP’s secretary whereby such secretary affirms that, among other things, attached to such certificate is (1) a copy of NIP’s members’ resolutions authorizing the guarantee of the Obligations, the granting of Liens and all other matters set forth in or contemplated by the Credit Documents, (2) a copy of NIP’s certificate of formation as in effect on the Closing Date, (3) a copy of NIP’s operating agreement and all amendments thereto, and (4) a certificate of good standing for NIP, dated on or within 10 days prior to the Closing Date, from the Secretary or State of the state of organization of NIP; and

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(n) Other Items. Such other agreements, documents and assurances as the Bank may reasonably request in connection with the transactions described in or contemplated by the Credit Documents.

If the Bank, in its sole and absolute discretion, elects to make the Loan notwithstanding the Borrower’s failure to comply with the terms of subparts (a) through (m) immediately above, then the Bank shall not be deemed to have waived the Borrower’s compliance therewith, nor to have waived any of the Bank’s other rights under this Agreement; and in any event the Bank, if it so elects, may declare an immediate Event of Default if the Borrower fails to furnish to the Bank on demand any of the Credit Documents described in this Section or otherwise fails to comply with any condition precedent set forth in any Credit Document, in each case irrespective of whether such failure occurs on or after the Closing Date or the making of the Loan.

4.2 Additional Conditions Precedent to Loan. The Bank’s obligation to make the Loan shall also be subject to the satisfaction, in the Bank’s sole judgment, of each of the following conditions precedent:

(a) Since the date of the financial statements of the Borrower and its consolidated subsidiaries submitted by the Borrower to the Bank immediately prior to the Closing Date, there shall not have occurred any act or event which reasonably could be expected to have a Material Adverse Effect;

(b) No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is related to or arises out of this Agreement or the other Credit Documents or the consummation of the transactions contemplated hereby or thereby or which, in the Bank’s reasonable determination, would make it inadvisable to consummate the transactions contemplated by this Agreement or the other Credit Documents; and

(c) The Borrower shall have paid all legal fees and other closing or like costs and expenses of the Bank which the Borrower is obligated to pay hereunder.

4.3 Further Conditions Precedent to Loan. The obligation of the Bank to make the Loan shall be further subject to the conditions precedent that, on the date of the Loan:

(a) The following statements shall be true: (1) the representations and warranties regarding the Credit Parties contained in this Agreement and the other Credit Documents are correct on and as of the date of the Loan as though made on and as of such date, and (2) there exists no Default or Event of Default as of such date, nor would any Default or Event of Default result from the making of the Loan; and

(b) The Bank shall have received such other approvals or documents as it may reasonably request.

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Section 5

Representations And Warranties

5.1 Representations and Warranties of the Borrower. The Borrower represents and warrants to the Bank as follows:

(a) Organization and Existence. Each Credit Party is a limited partnership, limited liability company or corporation, as the case may be, duly organized and validly existing and in good standing under the laws of the state of its organization, (2) is in good standing in all other jurisdictions in which it is required to be qualified to do business as a foreign limited partnership, limited liability company or corporation, as the case may be, and (3) has obtained all licenses and permits and has filed all registrations necessary to the operation of its business; except where the failure to so qualify or to obtain such licenses or permits could not reasonably be expected to have a Material Adverse Effect. The Borrower’s consolidated subsidiaries under GAAP are set forth in Schedule 5.1(a) to this Agreement. Inergy Holdings GP, LLC, a Delaware limited liability company, is the sole general partner of the Borrower and is duly organized and validly existing under the laws of the State of Delaware.

(b) Authorization by Credit Parties. The execution, delivery and performance by each Credit Party of the Credit Documents to which it is a party (1) are within such Credit Party’s limited partnership, limited liability company or corporate powers, as the case may be, (2) have been duly authorized by all necessary limited partnership, limited liability company, corporate or similar action, as the case may be, (3) do not contravene such Credit Party’s certificate of partnership, certificate of formation, partnership agreement, operating agreement, certificate of incorporation or by-laws, as the case may be, or any law or contractual restriction binding on or affecting such Credit Party or its properties, and (4) do not result in or require the creation of any Lien upon any of the Collateral other than a Lien in favor of the Bank.

(c) Third-Party Notices and Approvals. No authorization or approval or other action by, and no notice to or filing with, Inergy, L.P., any governmental authority or regulatory body or any other Person, is required for the due execution, delivery and performance by any Credit Party of the Credit Documents to which it is a party or the exercise by the Bank of its rights thereunder, including, without limitation, the sale or other disposition of any of the Collateral in accordance with the terms of the applicable Credit Documents, except (i) for any such approvals, actions, notices or filings as have been obtained, undertaken, given or made by the Credit Parties on or before the Closing Date, and (ii) as may be required under laws affecting the offering and sale of securities generally in connection with any foreclosure or other disposition by the Bank of the Collateral.

(d) Enforceability of Obligations. The Credit Documents to which each Credit Party is a party are the legal, valid and binding obligations of such Credit Party, enforceable against such Credit Party in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforceability of creditors’ rights generally and subject to the discretion of courts in applying equitable remedies.

(e) Financial Statements. All financial statements of each Credit Party which have been furnished to the Bank fairly present the financial condition of such Credit Party as of the dates reflected on the financial statements, and fairly present the results of its operations for the period covered thereby, all in accordance with GAAP, except for the omission of footnotes in interim financial statements and subject to normal year-end audit adjustments. As of the Closing Date, there has been no material adverse change in the financial condition or results from operations of any Credit Party since the date of the most recent financial statements of such Credit Party submitted to the Bank.

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(f) Fiscal Year. Each Credit Party’s fiscal year begins on October 1 and ends on September 30 of the following year. The Borrower and NIP each have a calendar tax year, and IPCH has a tax year that begins on October 1 and ends on September 30 of the following year.

(g) Litigation. There is no pending or, to the Borrower’s knowledge, threatened action or proceeding affecting any Credit Party or any of its properties before any court, governmental agency or arbitrator which, if determined adversely to such Credit Party, could reasonably be expected to have a Material Adverse Effect.

(h) Existing Debt. No Credit Party has any Debt other than Permitted Debt.

(i) Taxes. Each Credit Party has filed all required federal, state, local and other tax returns and has paid, or made adequate provision for the payment of, any taxes due pursuant thereto or pursuant to any assessment received by such Credit Party except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided.

(j) Stock and Records. All outstanding equity interests of each Credit Party were and are properly issued, and all books and records of each Credit Party, including but not limited to each Credit Party’s minute books and books of account, are accurate and complete in all material respects. The Borrower owns all of the outstanding equity interests of IPCH and all of the outstanding common equity of NIP. No Credit Party is obligated on or after the Closing Date to redeem or otherwise acquire, or pay any dividends or make any other distributions in respect of, any of its equity interests.

(k) Hazardous Materials. Each Credit Party has complied with all Environmental Laws and all of its facilities, leaseholds, assets and other property comply with all Environmental Laws, except where such failure to comply could not reasonably be expected to have a Material Adverse Effect. There are no outstanding or, to the Borrower’s knowledge, threatened citations, notices or orders of non-compliance relating to Environmental Laws issued to any Credit Party or relating to its facilities, leaseholds, assets or other property. Each Credit Party has been issued all licenses, certificates, permits or other authorizations required under any Environmental Law or by any federal, state or local governmental or quasi-governmental entity, except where the failure to obtain such license, certificate, permit or other authorization could not reasonably be expected to have a Material Adverse Effect.

(l) Negative Pledges. No Credit Party is a party to or bound by any indenture, contract or other instrument or agreement which prohibits the creation, incurrence or sufferance to exist of any Lien upon any of the Collateral.

(m) Title to Property; Liens. Each Credit Party has good and marketable title to all assets and other property purported to be owned by it, and the Bank has a perfected first priority Lien on all of the Collateral subject to no other Lien.

(n) Insolvency. After the execution and delivery of the Credit Documents and the disbursement of the Loan hereunder, and after giving effect to rights of reimbursement and contribution, no Credit Party will be insolvent within the meaning of the United States Bankruptcy Code or unable to pay its debts as they mature.

(o) Survival of Representations. All representations and warranties made in this Section 5 shall survive the execution and delivery of the Credit Documents and the making of the Loan.

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Section 6

Covenants

6.1 Affirmative Covenants. So long as any Obligations remain unpaid or the Bank has any commitment to extend credit to or for the benefit of the Borrower, the Borrower covenants to the Bank as follows:

(a) Compliance with Laws. The Borrower shall comply, and shall cause each other Credit Party to comply, with all applicable laws, rules, regulations and orders affecting such Credit Party or its properties, including, without limitation, all Environmental Laws, except where such failure to comply could not reasonably be expected to have a Material Adverse Effect.

(b) Reporting Requirements. The Borrower shall furnish to the Bank:

(1) Borrower’s Unaudited Quarterly Financial Statements. As soon as available and in any event within 45 days after the end of each fiscal quarter of the Borrower, an internally prepared balance sheet of the Borrower and an internally prepared consolidating balance sheet of the Borrower and its consolidated subsidiaries (including, without limitation, IPCH and NIP), in each case as of the end of such quarter, and an internally prepared income statement and consolidated income statements (as above) as of the end of such quarter for such quarter and for the fiscal year-to-date, each certified by the Borrower’s chief financial officer;

(2) Borrower’s Audited Year-End Statements. As soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, final audited consolidated and consolidating financial statements (including, without limitation, an income statement, balance sheet and statement of changes in financial position) as of the end of such fiscal year of the Borrower and its consolidated subsidiaries (including, without limitation, IPCH and NIP) prepared by Ernst & Young or other independent certified accountants reasonably satisfactory to the Bank and a copy of any management, operation or other letter or correspondence from such accountant to the Borrower or any such consolidated subsidiary in connection therewith;

(3) Inergy, L.P. Audited Year-End Statements. As soon as available and in any event within 90 days after the end of each fiscal year of Inergy, L.P., final audited financial statements (including, without limitation, an income statement, balance sheet and statement of changes in financial position) as of the end of such fiscal year of Inergy, L.P. prepared by Ernst & Young or other independent certified accountants selected by Inergy, L.P.’s board of directors or similar governing body and a copy of any management, operation or other letter or correspondence from such accountant to Inergy, L.P. in connection therewith;

(4) Covenant Compliance Certificate. As soon as available and in any event within 45 days after the end of each fiscal quarter of the Borrower, a Covenant Compliance Certificate; and

Credit Agreement – Page 18

(5) Borrower’s Tax Returns. Promptly after being filed with the relevant taxing authority, copies of all federal income tax returns filed by the Borrower and all amendments thereto;

(6) Applicable Margin Calculation Certificate. As soon as available and in any event within 45 days after the end of each fiscal quarter of the Borrower, an Applicable Margin Calculation Certificate; and

(7) Other. Such other information respecting the condition or operations, financial or otherwise, of the Credit Parties as the Bank may reasonably request from time to time.

All financial statements described in clauses (1), (2) and (3) above shall be prepared in accordance with GAAP on a basis consistent with the financial statements of such Person or Persons, as the case may be, delivered to the Bank for the period ending most immediately prior to the Closing Date, except that unaudited financial statements shall be subject to normal year-end audit adjustments and need not contain footnotes.

(c) Preservation of Business and Corporate Existence. The Borrower shall, and shall cause each other Credit Party to, (1) carry on and conduct its principal business substantially as it is now being conducted; (2) maintain in good standing its existence and its right to transact business in those states in which it is now or may after the Closing Date be doing business; and (3) maintain all licenses, permits and registrations necessary to the conduct of its business; except where the failure to so maintain its right to transact business or to maintain such licenses, permits or registrations could not reasonably be expected to have a Material Adverse Effect.

(d) Payment of Taxes. The Borrower shall, and shall cause each other Credit Party to, pay and discharge, before they become delinquent, all taxes, assessments and other governmental charges imposed upon it, its properties, or any part thereof, or upon the income or profits therefrom and all claims for labor, materials or supplies which if unpaid might be or become a Lien or charge upon any of its property, except such items as it is in good faith appropriately contesting and as to which adequate reserves have been provided to the Bank’s satisfaction.

(e) Employee Plans. The Borrower shall, and shall cause each other Credit Party to, (1) notify the Bank promptly of the establishment of any Plan, except that prior to the establishment of any “welfare plan” (as defined in Section 3(1) of ERISA) covering any employee of a Credit Party for any period after such employee’s termination of employment other than such period required by the Consolidated Omnibus Budget Reconciliation Act of 1986 or “defined benefit plan” (as defined in Section 3(35) of ERISA), it will obtain the Bank’s prior written approval of such establishment; (2) at all times make prompt payments or contributions to meet the minimum funding standards of Section 412 of the Internal Revenue Code of 1986, as amended, with respect to each Plan; (3) promptly after the filing thereof, furnish to the Bank a copy of any report required to be filed pursuant to Section 103 of ERISA in connection with each Plan for each Plan year, including but not limited to the Schedule B attached thereto, if applicable; (4) notify the Bank promptly of any “reportable event” (as defined in ERISA) or any circumstances arising in connection with any Plan which might constitute grounds for the termination thereof by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer the Plan, the initiation of any audit or inquiry by the Internal Revenue Service or the Department of Labor of any Plan or transaction(s) involving or related to any Plan, or any “prohibited transaction” as defined in Section 406 of ERISA or Section 4975(c) of the Internal Revenue Code of 1986, as amended; (5) notify the Bank prior to any action that could result in the assertion of liability under Subtitle E of Title IV of ERISA caused by the complete or partial

Credit Agreement – Page 19

withdrawal from any multiemployer plan or to terminate any defined benefit plan sponsored by a Credit Party; and (6) promptly furnish such additional information concerning any Plan as the Bank may from time to time request.

(f) Notice of Default. The Borrower shall, and shall cause each other Credit Party to, give prompt written notice to the Bank of the occurrence of any Default or Event of Default under any of the Credit Documents. Similarly, the Borrower shall, and shall cause each other Credit Party to, give prompt written notice to the Bank of any failure to pay, perform or observe or any other default by any Credit Party under any other existing of future agreement to which any Credit Party is bound if such default could reasonably be expected to have a Material Adverse Effect.

(g) Books and Records; Inspection; Bank Audits. The Borrower shall, and shall cause each other Credit Party to, (1) maintain complete and accurate books and financial records in accordance with GAAP (except that interim financial statements need not contain footnotes and may be subject to normal year-end audit adjustments); (2) during normal working hours permit the Bank and Persons designated by the Bank to visit and inspect its properties, to inspect its books and financial records (including its journals, orders, receipts and correspondence which relates to its accounts receivable), and to discuss its affairs, finances and accounts receivable and operations with its directors, officers, employees and agents and its independent public accountants; and (3) permit the Bank and Persons designated by the Bank to perform audits of such books and financial records when and as requested by the Bank.

(h) Bank May Perform Obligations; Further Assurances. The Borrower shall, and shall cause each other Credit Party to, permit the Bank, if the Bank so elects in its sole discretion, to pay or perform any Credit Party’s Obligations hereunder or under the other Credit Documents and to reimburse the Bank, on demand for all amounts expended by or on behalf of the Bank in connection therewith and all costs and expenses incurred by or on behalf of the Bank in connection therewith. The Borrower further agrees to execute, deliver or perform, or cause to be executed, delivered or performed, all such documents, agreements or acts, as the case may be, as the Bank may reasonably request from time to time to create, perfect, continue or otherwise assure the Bank with respect to any Lien created or purported to be created by any of the Credit Documents or to otherwise create, evidence or assure the Bank’s rights and remedies under, or as contemplated by, the Credit Documents or at law or in equity.

(i) Registration of Pledged Common Units. The Borrower agrees, if so requested in writing by the Bank at any time after the occurrence of an Event of Default, to use its best efforts to cause, within 60 days thereafter, all Collateral consisting of Common Units to be registered under the Securities Act of 1933, as amended, pursuant to an effective registration statement.

6.2 Negative Covenants. So long as any Obligations remain unpaid or the Bank has any commitment to extend credit to or for the benefit of the Borrower, the Borrower covenants to the Bank as follows:

(a) Liens. The Borrower shall not, and shall not permit any other Credit Party to, create or suffer to exist any Lien upon or with respect to any of its properties, whether the Borrower or such other Credit Party owns or has an interest in such properties on the Closing Date or at any time thereafter and without regard to whether such properties are Collateral, except that each Credit Party may create or suffer to exist Permitted Liens on that part of its properties which is not Collateral.

(b) Debt. The Borrower shall not, and shall not permit any other Credit Party to, create or suffer to exist any Debt except for Permitted Debt.

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(c) Structure; Disposition of Assets. The Borrower shall not, and shall not permit any other Credit Party to, merge or consolidate with or otherwise be acquired by any other Person. Without first obtaining the Bank’s consent, the Borrower shall not, and shall not permit any other Credit Party to, purchase or otherwise acquire all or a material part of the equity interests or assets of any other Person. The Borrower shall not, and shall not permit any other Credit Party to, sell or otherwise transfer any Collateral (except as otherwise permitted under Section 6(a)(ii) of each Pledge Agreement).

(d) Conflicting Agreements. The Borrower shall not, and shall not permit any other Credit Party to, enter into any agreement any term or condition of which conflicts with any provision of this Agreement or the other Credit Documents.

(e) Changes in Accounting Principles; Fiscal Year. The Borrower shall not, and shall not permit any other Credit Party to, make any change in its principles or methods of accounting as currently in effect, except for such changes as are required by GAAP; nor shall the Borrower change, or permit any other Credit Party to change, its fiscal year, in each without first obtaining the Bank’s written consent.

(f) Transactions With Affiliates. The Borrower shall not, and shall not permit any other Credit Party to, enter into or be a party to any transaction or arrangement, including without limitation, the purchase, sale or exchange of property of any kind or the rendering of any service, with any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of a Credit Party’s business and upon fair and reasonable terms substantially as favorable to the Credit Party as those which would be obtained in a comparable arms-length transaction with a non-Affiliate.

(g) Amendment of 5-Year Credit Agreement. The Borrower shall not, and shall not permit any other Credit Party to, permit or otherwise allow Inergy L.P. or any other Person to amend or otherwise modify any of the financial covenants or related definitions set forth in the 5-Year Credit Agreement if, at the time of such amendment or modification, the Leverage Ratio exceeds 4 to 1, in which event the Borrower shall first obtain the prior written consent of the Bank to such amendment or modification, which consent shall not be unreasonably withheld. If the Bank’s consent is required for any requested amendment or modification, the Bank agrees to respond to any such request within five Business Days after its receipt of a written notice from the Borrower which reasonably describes the requested amendment or modification. If the Bank fails to object to such request within such five Business Day period, the Bank shall be deemed to have consented to such request. So long as the Leverage Ratio is less than or equal to 4 to 1, the Borrower or other Credit Party may amend or otherwise modify, or cause or permit any other Person to amend or otherwise modify, any of the financial covenants or related definitions set forth in the 5-Year Credit Agreement without obtaining the prior written consent of the Bank to such amendment or modification.

6.3 Specific Financial Covenants. So long as any Obligations remain unpaid or the Bank has any commitment to extend credit to or for the benefit of the Borrower, the Borrower covenants to the Bank as follows.

(a) Maximum Total Leverage Ratio. The Borrower shall cause Inergy, L.P. to comply with the financial covenant set forth in Section 6.12(a) of the 5-Year Credit Agreement, as in effect from time to time (subject to the provisions of Section 6.2(g) above).

(b) Maximum Senior Secured Leverage Ratio. The Borrower shall cause Inergy, L.P. to comply with the financial covenant set forth in Section 6.12(b) of the 5-Year Credit Agreement, as in effect from time to time (subject to the provisions of Section 6.2(g) above).

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(c) Minimum Interest Coverage Ratio. The Borrower shall cause Inergy, L.P. to comply with the financial covenant set forth in Section 6.12(c) of the 5-Year Credit Agreement, as in effect from time to time (subject to the provisions of Section 6.2(g) above).

(d) Leverage Ratio. The Borrower will maintain, as of the last day of each fiscal quarter, a Leverage Ratio of not more than 4 to 1.

Section 7

Default

7.1 Events of Default. Each of the following events shall constitute an Event of Default hereunder:

(a) Monetary Default. A Credit Party fails to pay any monetary Obligation under any Credit Document in accordance with its terms, and such Credit Party fails to cure such default within five days after written notice from the Bank specifying the nature of such default is received by the Borrower; or

(b) Material Non-Monetary Default. A Credit Party fails to perform or observe any term, covenant or other provision contained in Sections 6.1(f), 6.1(g), 6.1(i), 6.2(a), 6.2(b), 6.2(c), 6.2(e), 6.2(g) or 6.3 of this Agreement in accordance with the terms thereof; or

(c) Other Non-Monetary Default. (1) A Credit Party fails to perform or observe any other term, covenant or other provision in any Credit Document (other than any term, covenant or provision addressed in Subsections (a) or (b) immediately above) in accordance with its terms and, if such default is curable, such Credit Party fails to cure such default within 30 days after written notice from the Bank specifying in reasonable detail the nature of such default is received by the Borrower; or (2) any “Event of Default” (as such term is defined in any other Credit Document to which any Credit Party is a party) occurs, or a Credit Party fails to perform or observe any obligation, term or other provision of any Credit Document beyond any applicable grace, cure or notice period; or

(d) Misrepresentation. Any representation or warranty made or furnished by a Credit Party in connection with this Agreement or the other Credit Documents proves to be incorrect, incomplete or misleading in any material respect when made, or any such representation or warranty becomes incorrect, incomplete or misleading in any material respect and a Credit Party fails to give the Bank prompt written notice thereof; or

(e) Cross-Default. (1) A Credit Party fails to pay any Debt (other than a monetary Obligation due the Bank under the Credit Documents, as contemplated by Subsection (a) immediately above) or to perform or observe any other obligation or term in respect of such Debt, and, as a result of any such failure, the holder of such Debt accelerates or is entitled to accelerate the maturity thereof or requires or is entitle to require a Credit Party or some other Person to purchase or otherwise acquire such Debt (including, without limitation, the occurrence of an “Event of Default” (as defined therein) under the credit agreement or any of the other credit or security documents that evidence or otherwise relate to any Permitted Enterprise Bank Debt); or (2) an “Event of Default” (as defined

Credit Agreement – Page 22

therein) occurs under (i) the Indenture, dated as of December 22, 2004, among Inergy, L.P., Inergy Finance Corp., the guarantors listed on the signature page thereof and U.S. Bank National Association, as trustee, relating to the 6.875% Senior Notes due 2014 referred to therein, as the same may be amended, renewed, restated, replaced, consolidated or otherwise modified from time to time, or (ii) the 5-Year Credit Agreement, as the same may be amended, renewed, restated, consolidated, replaced or otherwise modified from time to time; or

(f) Insolvency. A Credit Party ceases to be solvent or suffers the appointment of a receiver, trustee, custodian or similar fiduciary or makes an assignment for the benefit of creditors; or any petition for an order for relief is filed by or against a Credit Party under the federal Bankruptcy Code or any similar state insolvency statute (except, in the case of a petition filed against a Credit Party, if such proceeding is dismissed within 60 days after the petition is filed, unless prior thereto an order for relief is entered under the federal Bankruptcy Code); or a Credit Party makes any offer of settlement, extension or composition to its unsecured creditors generally; or

(g) Subsidiaries. The Borrower ceases to own and control, beneficially and of record, all of the outstanding equity interests of IPCH and all of the outstanding common equity interests of NIP; or

(h) Contest Credit Documents. A Credit Party challenges or contests in any action, suit or proceeding the validity or enforceability of any of the Credit Documents, the legality or enforceability of any of the Obligations or the perfection or priority of any Lien granted to the Bank; or

(i) Guaranty. A Guarantor revokes or attempts to revoke (in whole or in part) the Guaranty signed by such Guarantor, or repudiates (in whole or in part) such Guarantor’s liability thereunder or is in default under the terms thereof; or

(j) Judgments. One or more judgments, decrees or orders for the payment of money in excess of $500,000 is rendered against a Credit Party and such judgments, decrees or orders for the payment of money shall continue unsatisfied and in effect for a period of 60 consecutive days without being vacated, discharged, satisfied, or stayed or bonded pending appeal; or

(k) Lien. The Bank shall cease to have a duly perfected first priority security interest in the Collateral subject to no other Lien; or

(l) Material Adverse Change. In the Bank’s reasonable judgment, any material adverse change occurs in the financial condition or economic prospects of a Credit Party or Inergy, L.P.

7.2 Acceleration. Upon or after the occurrence and during the continuation of any Event of Default, the Bank may declare the Note, all interest thereon, and all other Obligations to be forthwith due and payable, whereupon the Note, all such interest thereon and all such other Obligations shall become and be forthwith due and payable, without presentment, protest or further notice or demand of any kind, all of which are waived by the Borrower. If, notwithstanding the foregoing, after the occurrence and during the continuation of any Event of Default, the Bank elects (any such election to be in the Bank’s

Credit Agreement – Page 23

sole and absolute discretion) to not accelerate all or any of the Obligations, any such election shall not preclude the Bank from electing thereafter (in its sole and absolute discretion) to accelerate all or any of the Obligations, as the case may be.

7.3 Remedies. Upon or after the occurrence and during the continuation of any Event of Default, the Bank has and may exercise from time to time the following rights and remedies:

(a) All of the rights and remedies of a secured party under the UCC or under other applicable law, and all other legal and equitable rights to which the Bank may be entitled, all of which rights and remedies shall be cumulative, and none of which shall be exclusive, and all of which shall be in addition to any other rights or remedies contained in this Agreement or any of the other Credit Documents.

(b) The right to take immediate possession of the Collateral, and (1) to require the Borrower to assemble, at the Borrower’s expense, any Collateral not already in the Bank’s possession, and make it available to the Bank at a place designated by the Bank which is reasonably convenient to both parties, and (2) to enter upon and use any premises in which the Borrower has an ownership, leasehold or other interest, or wherever any of the Collateral shall be located, and to store, remove, abandon, dispose of or otherwise use all or any part of the Collateral on such premises without the payment of rent or any other fees by the Bank to the Borrower or any other Person for the use of such premises or such Collateral.

(c) The right to sell or otherwise dispose of all or any Collateral at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as the Bank, in its sole discretion, may deem advisable. The Borrower agrees that not less than 10 days prior written notice to the Borrower of any public or private sale or other disposition of such Collateral shall be reasonable notice thereof, and such sale shall be at such locations as the Bank may designate in such notice. The Bank has the right to sell or otherwise dispose of such Collateral, or any part thereof, for cash, credit or any combination thereof, and the Bank may purchase all or any part of such Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set-off or credit the amount of such price against the Obligations owing by the Borrower.

(d) The proceeds realized from the sale of any Collateral may be applied, after the Bank is in receipt of good funds, as follows: first, to the reasonable costs, expenses and attorneys’ fees and expenses incurred by the Bank for collection and for storage, sale and delivery of the Collateral; second, to any fees or expenses due the Bank under the Credit Documents; third, to interest due upon any of the Obligations; and fourth, to the principal of the Obligations; or in such other manner as the Bank may elect in its sole discretion. If any deficiency shall arise, the Credit Parties shall remain jointly and severally liable to the Bank therefor. Any surplus remaining after payment in full of the Obligations may be returned to the Borrower or to whomever may be legally entitled thereto.

7.4 Right of Set-off. Upon or after the occurrence and during the continuation of any Event of Default, the Bank is authorized at any time and from time to time, without notice to the Borrower (any such notice being waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Borrower against any and all of the Obligations irrespective of whether or not the Bank has made any demand under this Agreement or the other Credit Documents and although such Obligations may be unmatured. The rights of the Bank under this Section are in addition to other rights and remedies (including, without limitation, other rights of setoff) which the Bank may have.

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Section 8

Miscellaneous

8.1 Notices. Except as otherwise provided herein, all notices, requests and demands to or upon a party to this Agreement to be effective shall be in writing and shall be deemed validly given upon receipt thereof, whether by personal delivery, U.S. mail, fax, other electronic transmission or otherwise, in each case addressed as follows:

If to the Bank:

Southwest Bank of St. Louis

2301 S. Kingshighway Blvd.

St. Louis, Missouri 63110

Attn.: Mr. John Billings

Fax No.: 314-268-2540

with a copy (which shall not constitute notice) to:

Shook, Hardy & Bacon L.L.P.

2555 Grand Blvd.

Kansas City, Missouri 64108

Attn.: Mark Ovington, Esq.

Fax No.: 816-421-5547

If to the Borrower:

Inergy Holdings, L.P.

Two Brush Creek Boulevard

Suite 200

Kansas City, Missouri 64112

Attn.: Mr. John J. Sherman

Fax No.: (816) 531-4680

with a copy (which shall not constitute notice) to:

Stinson Morrison Hecker LLP

1201 Walnut Street

Kansas City, Missouri 64106

Attn.: Paul McLaughlin, Esq.

Fax No.: 816-691-3495

or to such other address or telecopy number as a party may designate for itself by like notice given in accordance with this Section.

8.2 Power of Attorney. The Borrower irrevocably designates, makes, constitutes and appoints the Bank, and all Persons designated by the Bank, as the Borrower’s true and lawful attorney and agent-in-fact (such power of attorney and agency being coupled with an interest and therefore irrevocable until the Obligations have been indefeasibly paid in full and the Bank has no duty to extend credit to or for the benefit of the Borrower), and the Bank, and any Persons designated by the Bank, may, at any time except as otherwise provided below, and without notice to or the consent of the Borrower and in either the Borrower’s or the Bank’s name, but at the cost and expense of the Borrower, (1) pay and perform any

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Obligation to be paid or performed under any of the Credit Documents, and (2) at any time an Event of Default exists, (a) to the extent the Collateral consists of accounts receivable, demand payment of all such accounts from the account debtors, enforce payment of the accounts by legal proceedings or otherwise, and generally exercise all of the Borrower’s rights and remedies with respect to the collection of the accounts, and settle, adjust, compromise, discharge or release any accounts or other Collateral or any legal proceedings brought to collect any accounts or other Collateral, (b) endorse the Borrower’s name on any checks, notes, acceptances, drafts, money orders or any other evidence of payment or proceeds of the Collateral which come into the possession of the Bank or under the Bank’s control (c) sell or otherwise transfer any Collateral upon such terms, for such amounts and at such time or times as the Bank deems advisable, (d) take control, in any manner, of any item of payment or proceeds relating to any Collateral, (e) prepare, file and sign the Borrower’s name to a proof of claim in bankruptcy or similar document against any account debtor or to any notice of Lien, assignment or satisfaction of Lien or similar document in connection with any of the Collateral, (f) endorse the name of the Borrower upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to any Collateral, (g) use the information recorded on or contained in any data processing equipment and computer hardware and software relating to any Collateral and to which the Borrower has access, and (h) do all other acts and things necessary, in the Bank’s determination, to fulfill the Borrower’s obligations under this Agreement.

8.3 Indemnity. The Borrower agrees to indemnify, defend and hold harmless the Bank and each shareholder, director, officer, employee and agent of the Bank from and against any and all damages, settlement amounts, expenses (including, without limitation, reasonable attorney’s fees and court costs), other losses, claims or other assertions of liability of any nature whatsoever incurred by or on behalf of or asserted against, as the case may be, any one or more of such indemnified parties at any time arising in whole or in part out of any Credit Party’s failure to observe, perform or discharge any of its duties under any of the Credit Documents to which it is a party or any misrepresentation made by or on behalf of such Credit Party under any of the Credit Documents. Without limiting the generality of the foregoing, this indemnity shall extend to any claims asserted against the Bank or such other indemnitees by any Person under any Environmental Laws or similar laws by reason of any Credit Party’s or any other Person’s failure to comply with laws applicable to Hazardous Substances. All indemnities given by the Borrower to the Bank under the Credit Documents, including, without limitation, the indemnities set forth in this Section, shall survive the repayment of the Loan and the termination of this Agreement.

8.4 Entire Agreement; Modification of Agreement; Sale of Interest. This Agreement and the other Credit Documents, together with all other instruments, agreements and certificates executed by the parties in connection therewith or with reference thereto, embodies the entire agreement between the parties hereto and thereto with respect to the subject matter hereof and thereof and supersedes all prior agreements, understandings and inducements, whether express or implied, oral or written. This Agreement may not be modified, altered or amended, except by an agreement in writing signed by the Borrower and the Bank. The Borrower may not directly or indirectly sell, assign or transfer any interest in or rights under this Agreement or any of the other Credit Documents. The Borrower consents to the Bank’s participation, sale, assignment, transfer or other disposition, at any time or times on or after the Closing Date, of this Agreement and any of the other Credit Documents, or of any portion hereof or thereof, including, without limitation, the Bank’s rights, title, interests, remedies, powers and duties hereunder or thereunder.

8.5 Reimbursement of Expenses. If, at any time or times prior or subsequent to the Closing Date, regardless of whether an Event of Default then exists or any of the transactions contemplated hereunder are concluded, the Bank employs counsel for advice or other representation, or incurs reasonable legal and/or appraisers’, liquidators’, and/or other costs or out-of-pocket expenses in connection with: (a) the negotiation and preparation of this Agreement and any of the other Credit

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Documents, any amendment or other modification of this Agreement or any of the other Credit Documents, or any sale or attempted sale of any interest herein or therein to a participating lender or other Person; (b) any litigation, contest, dispute, suit, proceeding or action (whether instituted by the Bank, the Borrower or any other Person) in any way relating to the Collateral, this Agreement, any of the other Credit Documents or the Borrower’s affairs; (c) any attempt to enforce any rights of the Bank against the Borrower or any other Person which may be obligated to the Bank by virtue of this Agreement or any of the other Credit Documents, including, without limitation, any issuers of any Collateral, irrespective of whether litigation is commenced in pursuance of such rights; or (d) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral (all of which are hereinafter collectively referred to as the “Expenses”); then, in any and each such event, such Expenses shall be payable by the Borrower to the Bank on demand, and shall be additional Obligations and be secured by the Collateral. Additionally, if any taxes (excluding taxes imposed upon or measured by the income of the Bank) shall be payable on account of the execution or delivery of this Agreement or the other Credit Documents, or the execution, delivery, issuance or recording of any of the Credit Documents, or the creation of any of the Obligations hereunder, by reason of any federal, state or local statute or other law existing on or after the Closing Date, the Borrower agrees to pay all such taxes, including, but not limited to, any interest and penalties thereon, and will indemnify and hold the Bank harmless from and against all liabilities in connection therewith.

8.6 Indulgences Not Waivers. The Bank’s failure, at any time or times on or after the Closing Date, to require strict performance by a Credit Party of any provision of this Agreement or the other Credit Documents shall not waive, affect or diminish any right of the Bank thereafter to demand strict compliance and performance therewith. Any suspension or waiver by the Bank of a Default or an Event of Default by a Credit Party under this Agreement or any of the other Credit Documents shall not suspend, waive or affect any other Default or Event of Default by a Credit Party under this Agreement or any of the other Credit Documents, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of a Credit Party contained in this Agreement or any of the other Credit Documents and no Default or Event of Default shall be deemed to have been suspended or waived by the Bank, unless such suspension or waiver is by an instrument in writing specifying such suspension or waiver and is signed by a duly authorized representative of the Bank and directed and delivered to a Credit Party.

8.7 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

8.8 Successors and Assigns. This Agreement and the other Credit Documents, shall be binding upon and inure to the benefit of the respective successors and assigns of the Borrower and the Bank. This provision, however, shall not be deemed to modify Section 8.4 hereof.

8.9 General Waivers by Borrower. Except as otherwise expressly provided for in this Agreement, the Borrower waives: (a) presentment, protest, demand for payment, notice of dishonor demand and protest and notice of presentment, default, notice of nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts receivable, contract rights, documents, instruments, chattel paper and guaranties at any time held by the Bank on which the Borrower may in any way be liable and ratifies and confirms whatever the Bank may do in this regard; (b) notice prior to taking possession or control of the Collateral or any bond or security which might be required by any court prior to allowing the Bank to exercise any of the Bank’s remedies, including the issuance of an immediate writ of possession; (c) the benefit of all valuation, appraisement

Credit Agreement – Page 27

and exemption laws; and (d) any and all other notices, demands and consents in connection with the delivery, acceptance, performance, default or enforcement of this Agreement or any of the other Credit Documents and/or any of the Bank’s rights and remedies in respect of the Collateral.

8.10 Incorporation by Reference. All of the terms of the other Credit Documents are incorporated in and made part of this Agreement by reference; provided, however, that to the extent of any inconsistency between this Agreement and such other Credit Documents, this Agreement shall prevail and govern.

8.11 Execution in Counterparts; Facsimile Signatures. This Agreement and the other Credit Documents may be executed in any number of counterparts and by different parties thereto, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. A signature of a party to any of the Credit Documents sent by facsimile or other electronic transmission shall be deemed to constitute an original and fully effective signature of such party.

8.12 Governing Law; Consent to Forum. This Agreement shall be governed by the laws of the State of Missouri without giving effect to any choice of law rules thereof. As part of the consideration for new value this day received, the Borrower consents to the jurisdiction of any federal court located in the City of St. Louis, Missouri or any state court located in St. Louis County, Missouri (collectively, the “Chosen Forum”), and waives personal service of any and all process upon it and consents that all such service of process be made by certified or registered mail directed to the Borrower at its address stated in Section 8.1 hereof and service so made shall be deemed to be completed upon delivery thereto. The Borrower waives any objection to jurisdiction and venue of any action instituted against it as provided herein and agrees not to assert any defense based on lack of jurisdiction or venue. The Borrower further agrees not to assert against the Bank (except by way of a defense or counterclaim in a proceeding initiated by the Bank) any claim or other assertion of liability relating to any of the Credit Documents, the Obligations, the Collateral or the Bank’s actions or inactions in respect of any of the foregoing in any jurisdiction other than the Chosen Forum. Nothing in this Agreement shall affect the Bank’s right to bring any action or proceeding relating to this Agreement or the other Credit Documents against the Borrower or its properties in courts of other jurisdictions.

8.13 Waiver of Jury Trial; Limitation on Damages. To the fullest extent permitted by law, and as separately bargained-for consideration to the Bank, the Borrower waives any right to trial by jury (which the Bank also waives) in any action, suit, proceeding or counterclaim of any kind arising out of or otherwise relating to any of the Credit Documents, the Obligations, the Collateral or the Bank’s actions or inactions in respect of any of the foregoing. To the fullest extent permitted by law, and as separately bargained-for consideration to the Bank, the Borrower also waives any right it may have at any time to claim or recover in any litigation or other dispute involving the Bank, whether the underlying claim or dispute sounds in contract, tort or otherwise, any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The Borrower acknowledges that the Bank is relying upon and would not enter into the transactions described in the Credit Documents on the terms and conditions set forth therein but for the Borrower’s waivers and agreements under this Section.

8.14 Mo. Rev. Stat. § 432.047 Statement. The following statement is given pursuant to Mo. Rev. Stat. § 432.047: “Oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises to extend or renew such debt are not enforceable, regardless of the legal theory upon which it is based that is in any way related to the credit agreement. To protect you (borrower(s)) and us (creditor) from misunderstanding or disappointment, any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as we may later agree in writing to modify it.”

[signature page(s) to follow]

Credit Agreement – Page 28

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized representatives as of the date first above written.

INERGY HOLDINGS, L.P.
By:	Inergy Holdings GP, LLC, its sole general partner
By:
Name:
Title:
SOUTHWEST BANK OF ST. LOUIS
By:
Name:
Title:
By:
Name:
Title:

Credit Agreement – Signature Page

Exhibit A

TERM LOAN NOTE

$25,000,000 August 9, 2005

For value received, the undersigned, INERGY HOLDINGS, L.P., a Delaware limited partnership (the “Borrower”), promises to pay to the order of SOUTHWEST BANK OF ST. LOUIS, a Missouri banking corporation (the “Bank”; which term shall include any subsequent holder hereof), in lawful money of the United States of America, without setoff, deduction or counterclaim, the principal sum of Twenty-Five Million and 00/100 Dollars ($25,000,000.00).

This Term Loan Note (the “Note”) is the Term Loan Note referred to in, is issued pursuant to, and is subject to the terms and conditions of, the Credit Agreement, dated on or about the date hereof between the Borrower and the Bank, as the same may be amended, renewed, restated, replaced, consolidated or otherwise modified from time to time (the “Credit Agreement”). To the extent of any direct conflict between the terms and conditions of this Note and the terms and conditions of the Credit Agreement, the terms and conditions of the Credit Agreement shall prevail and govern. Capitalized terms used and not defined in this Note have the meanings given to them in the Credit Agreement.

Interest shall accrue on the outstanding principal balance of this Note as provided in the Credit Agreement. Principal, interest and all other amounts, if any, payable in respect of this of this Note shall be payable as provided in the Credit Agreement. The Borrower’s right, if any, to prepay this Note is subject to the terms and conditions of the Credit Agreement.

The termination of the Credit Agreement or the occurrence of an Event of Default shall entitle the Bank, at its option, to declare the then outstanding principal balance hereof, all accrued interest thereon, and all other amounts, if any, payable in respect of this Note to be, and the same shall thereupon become, immediately due and payable without notice to or demand on the Borrower, all of which the Borrower waives.

Time is of the essence of this Note. To the fullest extent permitted by applicable law, the Borrower, for itself and its successors and assigns, waives presentment, demand, protest, notice of dishonor, and any and all other notices, demands and consents in connection with the delivery, acceptance, performance, default or enforcement of this Note, and consents to any extensions of time, renewals, releases of any parties to or guarantors of this Note, waivers and any other modifications that may be granted or consented to by the Bank from time to time in respect of the time of payment or any other provision of this Note.

This Note shall be governed by the laws of the State of Missouri, without regard to any choice of law rule thereof giving effect to the laws of any other jurisdiction.

[signature page to follow]

Exhibit A – Page 1

IN WITNESS WHEREOF, the Borrower has executed and delivered this Note as of the date first above written.

INERGY HOLDINGS, L.P.
By:	Inergy Holdings GP, LLC, its sole general partner
By:
Name:
Title:

Exhibit A – Page 2

Schedule 5.1(a)

(Consolidated Subsidiaries of Inergy Holdings, L.P.)

1. Inergy Partners, LLC

2. New Inergy Propane, LLC

3. Inergy GP, LLC

4. IPCH Acquisition Corp.

5. Wilson Oil Company of Johnston County, Inc.

6. Rolesville Gas & Oil Company, Inc.

Schedule 5.1(a)

EX-99.1

Exhibit 99.1

	For more information:
	Mike Campbell, 816-842-8181
FOR IMMEDIATE RELEASE	investorrelations@inergyservices.com

Inergy, L.P. Completes Acquisition of Natural Gas Storage Facility in New York State

Kansas City, MO (August 9, 2005)—Inergy, L.P. (NASDAQ:NRGY) announced today that it has completed the previously announced acquisition of the membership interests of the entities that own the Stagecoach natural gas storage facility located in Tioga County, New York, for approximately $205 million.

In addition to the approximate $205 million purchase price for the in-service Stagecoach facility, Inergy, L.P. has purchased the rights to the Phase II expansion project of Stagecoach for $25 million. The Phase II expansion is expected to add approximately 13 Bcf of additional working gas capacity. In connection with the financing of the Phase II expansion rights, Inergy Holdings, L.P. (NASDAQ:NRGP) has purchased for cash 769,941 Special Units from Inergy, L.P. that, while not entitled to a current cash distribution, are convertible to Inergy, L.P. common units upon the Phase II expansion becoming commercially operational.

As previously announced, Inergy, L.P. expects EBITDA from its new operations to be approximately $20 million in fiscal year 2006, increasing to approximately $40 to $45 million in fiscal year 2008 which is expected to be the first full year of commercial operations for the Phase II expansion. Upon completion of the Phase II expansion, Inergy expects total invested capital in Stagecoach to be approximately $350 million.

Inergy, L.P., headquartered in Kansas City, Missouri, is among the fastest growing master limited partnerships in the country. The company’s operations include the retail marketing, sale and distribution of propane to residential, commercial, industrial and agricultural customers. Today, the company serves over 600,000 retail customers from approximately 280 customer service centers throughout the eastern half of the United States. The company also operates a natural gas storage business and a supply logistics, transportation and wholesale marketing business that serves independent dealers and multi-state marketers in the United States and Canada.

Inergy Holdings, L.P.’s assets consist of its ownership interest in Inergy, L.P., including limited partnership interests, ownership of the general partners, and the incentive distribution rights.

This news release contains forward-looking statements, which are statements that are not historical in nature such as the expectation that the acquisition will be immediately accretive on a distributable cash flow per unit basis, that the EBITDA from operation of the Stagecoach facility will be approximately $20 million in fiscal year 2006 and increases to approximately $40 to $45 million in fiscal year 2008, that the phase II expansion will be approximately 13 Bcf of additional working gas capacity, and that the first full year of commercial operations for the Phase II expansion will be fiscal year 2008. Forward-looking statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or any underlying assumption proves

incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the key factors that could cause actual results to differ materially from those referred to in the forward-looking statements are: weather conditions that vary significantly from historically normal conditions, the demand for high deliverability natural gas storage capacity in the Northeast, the general level of petroleum product demand and the availability of supplies, our ability to successfully implement our business plan for the Stagecoach facility, whether necessary regulatory approvals will be obtained, whether the Phase II expansion will become commercially operational, our ability to generate available cash for distribution to unitholders, and the costs and effects of legal and administrative proceedings against us or which may be brought against us. These and other risks and assumptions are described in Inergy’s annual report on Form 10-K and other reports that are available from the United States Securities and Exchange Commission.

Corporate news, unit prices and additional information about Inergy, including reports from the United States Securities and Exchange Commission, are available on the company’s Web site, www.InergyPropane.com. For more information, contact Mike Campbell in Inergy’s Investor Relations Department at 816-842-8181 or via e-mail at investorrelations@inergyservices.com.

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