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                                                                     EXHIBIT 2.1

                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                          EL PASO ENERGY CORPORATION,

                         EL PASO ENERGY ACQUISITION CO.

                                      AND

                           CRYSTAL GAS STORAGE, INC.

                                OCTOBER 15, 1999


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                               TABLE OF CONTENTS

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ARTICLE I
     THE MERGER.............................................    1
     SECTION 1.1.  The Merger...............................    1
     SECTION 1.2.  Effective Time...........................    1
     SECTION 1.3.  Effects of the Merger....................    1
     SECTION 1.4.  Certificate of Incorporation and
      By-laws...............................................    1
     SECTION 1.5.  Directors................................    2
     SECTION 1.6.  Officers.................................    2
     SECTION 1.7.  Effect on Capital Stock..................    2
            (a)       Capital Stock of Sub..................    2
            (b)       Cancellation of Treasury Stock and
            Parent Owned Stock..............................    2
            (c)       Conversion of Shares..................    2
            (d)       Conversion of Senior Preferred
            Stock...........................................    2
            (e)       Shares of Dissenting Stockholders.....    2

ARTICLE II
     EXCHANGE PROCEDURE.....................................    3
     SECTION 2.1.  Exchange of Certificates.................    3
            (a)       Paying Agent..........................    3
            (b)       Parent to Provide Funds...............    3
            (c)       Exchange Procedure....................    3
            (d)       No Further Ownership Rights in
            Shares..........................................    3

ARTICLE III
     REPRESENTATIONS AND WARRANTIES.........................    4
     SECTION 3.1.  Representations and Warranties of the
      Company...............................................    4
            (a)       Organization, Standing and Power......    4
            (b)       Subsidiaries..........................    4
            (c)       Capital Structure.....................    4
            (d)       Authority; Non-contravention..........    5
            (e)       SEC Documents.........................    6
            (f)       Information Supplied..................    6
            (g)       Absence of Certain Changes or
            Events..........................................    6
            (h)       State Takeover Statutes; Absence of
            Supermajority Provision.........................    7
            (i)        Brokers..............................    7
            (j)        Litigation...........................    7
            (k)       Employee Benefit Matters..............    7
            (l)        Taxes................................    9
            (m)      No Excess Parachute Payments...........   10
            (n)       Environmental Matters.................   10
            (o)       Compliance with Laws..................   10
            (p)       Material Contracts and Agreements.....   10
            (q)       Title to Properties...................   11
            (r)       Intellectual Property.................   11
            (s)       Labor Matters.........................   11
            (t)       Undisclosed Liabilities...............   11
            (u)       Pipeline Imbalances...................   12
            (v)       Year 2000.............................   12
            (w)       Opinion of Financial Advisor..........   12
            (x)       Board Recommendation..................   12
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SECTION 3.2.  Representations and Warranties of Parent and
Sub.........................................................   12
            (a)       Organization; Standing and Power......   12
            (b)       Authority; Non-contravention..........   12
            (c)       Information Supplied..................   13
            (d)       Brokers...............................   13
            (e)       Litigation............................   13

ARTICLE IV
     COVENANTS RELATING TO CONDUCT OF BUSINESS..............   13
     SECTION 4.1.  Conduct of Business of the Company.......   13
            (a)       Ordinary Course.......................   13
            (b)       Changes in Employment Arrangements....   15
            (c)       Severance.............................   15
            (d)       Other Actions.........................   15
            (e)       Internal Restructuring and Hattiesburg
            Owner Trust Matters.............................   15
            (f)       Base Gas..............................   16

ARTICLE V
     ADDITIONAL AGREEMENTS..................................   16
     SECTION 5.1.  Stockholder Approval; Preparation of
      Proxy Statement.......................................   16
     SECTION 5.2.  Access to Information....................   16
     SECTION 5.3.  Reasonable Efforts; Notification.........   17
     SECTION 5.4.  Employee Benefit Matters.................   19
     SECTION 5.5.  Indemnification..........................   20
     SECTION 5.6.  Fees and Expenses........................   21
     SECTION 5.7.  Public Announcements.....................   21
     SECTION 5.8.  Internal Restructuring...................   21
     SECTION 5.9.  Redemption of Senior Preferred Stock.....   21

ARTICLE VI
     CONDITIONS PRECEDENT...................................   21
     SECTION 6.1.  Conditions to Each Party's Obligation to
      Effect the Merger.....................................   21
            (a)       Stockholder Approval..................   21
            (b)       Other Approvals.......................   21
            (c)       No Injunctions or Restraints..........   21
     SECTION 6.2.  Conditions to Obligations of Parent and
      Sub...................................................   22
     SECTION 6.3.  Condition to Obligations of the
      Company...............................................   22

ARTICLE VII
     TERMINATION, AMENDMENT AND WAIVER......................   22
     SECTION 7.1.  Termination..............................   22
     SECTION 7.2.  Procedure for Termination, Amendment,
      Extension or Waiver...................................   23
     SECTION 7.3.  Effect of Termination....................   23
     SECTION 7.4.  Amendment................................   23
     SECTION 7.5.  Extension; Waiver........................   23

ARTICLE VIII
     SPECIAL PROVISIONS AS TO CERTAIN MATTERS...............   23
     SECTION 8.1.  Takeover Defenses of the Company and
      Standstill Agreements.................................   23
     SECTION 8.2.  No Solicitation..........................   24
     SECTION 8.3.  Fee and Expense Reimbursements...........   26
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ARTICLE IX
     GENERAL PROVISIONS.....................................   26
     SECTION 9.1.  Nonsurvival of Representations and
      Warranties............................................   26
     SECTION 9.2.  Notices..................................   26
     SECTION 9.3.  Definitions..............................   27
     SECTION 9.4.  Interpretation...........................   28
     SECTION 9.5.  Counterparts.............................   28
     SECTION 9.6.  Entire Agreement; No Third-Party
      Beneficiaries.........................................   28
     SECTION 9.7.  Governing Law............................   28
     SECTION 9.8.  Assignment...............................   28
     SECTION 9.9.  Enforcement of the Agreement.............   28
     SECTION 9.10. Performance by Sub.......................   29
     SECTION 9.11. Severability.............................   29

Schedule I -- Company Disclosure Document...................  S-1
Exhibit A -- Internal Restructuring Description.............  A-1
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                             LIST OF DEFINED TERMS

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Acquisition Agreement.......................................   25
Acquisition Transaction.....................................   24
affiliate...................................................   27
Agreement...................................................    1
Applicable Period...........................................   24
CERCLA......................................................   27
Certificates................................................    3
Certificates of Merger......................................    1
Code........................................................    7
Company.....................................................    1
Company Benefit Plan........................................    7
Company Charter.............................................    5
Company Financial Advisor...................................   12
Company HSR Documents.......................................   18
Company NOLs................................................    9
Company Permits.............................................   10
Company Stockholder Approval................................    7
Confidentiality and Standstill Agreements...................   23
conversion..................................................   15
DGCL........................................................    1
Dissenting Stockholders.....................................    1
Effective Time of the Merger................................    1
environmental laws..........................................   27
ERISA.......................................................    7
Exchange Act................................................    5
Fairness Opinion............................................   12
Gas Storage Expansion Project...............................   13
Governmental Entity.........................................    5
HSR Act.....................................................    5
include, includes or including..............................   28
Indemnified Parties.........................................   19
Internal Restructuring......................................   15
IRS.........................................................    8
knowledge...................................................   27
LBCL........................................................    1
Liens.......................................................    4
material adverse change or material adverse effect..........   27
Merger......................................................    1
Merger Consideration........................................    2
Notice of Superior Proposal.................................   24
Parent......................................................    1
Parent Benefit Plan.........................................   19
Parent HSR Documents........................................   18
Paying Agent................................................    2
person......................................................   28
Proxy Statement.............................................    5
Replacement Plan............................................   19
SEC.........................................................    5
SEC Documents...............................................    5
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Securities Act..............................................    6
Senior Preferred Stock......................................    4
Severance Agreements........................................    8
Share or Shares.............................................    1
Shareholders Agreement......................................    1
Sub.........................................................    1
subsidiary..................................................   28
superior proposal...........................................   25
Surviving Corporation.......................................    1
takeover proposal...........................................   24
Tax or Taxes................................................    9
Tax Return..................................................    9
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        AGREEMENT AND PLAN OF MERGER dated as of October 15, 1999, among EL
     PASO ENERGY CORPORATION, a Delaware corporation ("Parent"), EL PASO
     ENERGY ACQUISITION CO., a Delaware corporation ("Sub") and a wholly
     owned subsidiary of Parent, and CRYSTAL GAS STORAGE, INC., a Louisiana
     corporation (the "Company").

     WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions of this Agreement and Plan of Merger (this "Agreement");

     WHEREAS, in order to effectuate such acquisition of the Company, the
respective Boards of Directors of Parent, Sub and the Company have approved the
merger of the Company with and into Sub (the "Merger"), upon the terms and
subject to the conditions of this Agreement, whereby each issued and outstanding
share of common stock, $.01 par value, of the Company (singularly "Share" and
plurally "Shares") not owned directly or indirectly by Parent or the Company,
except (unless the Merger is approved by eighty percent or more of the Company's
total voting power, in which event there will be no dissenters rights) Shares
held by persons who object to the Merger and comply with all the provisions of
Louisiana law concerning the right of holders of Shares to dissent from the
Merger and require appraisal of their Shares ("Dissenting Stockholders"), will
be converted into the right to receive $57 per Share;

     WHEREAS, contemporaneously with the execution and delivery of this
Agreement certain stockholders of the Company have executed and delivered a
Shareholders Agreement pursuant to which they have entered into certain
agreements with Parent and Sub regarding the Shares beneficially owned by them
(the "Shareholders Agreement"); and

     WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;

     NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:

                                   ARTICLE I

                                   THE MERGER

     SECTION 1.1. The Merger. Upon the terms and subject to the conditions
hereof and in accordance with the Delaware General Corporation Law (the "DGCL")
and the Louisiana Business Corporation Law (the "LBCL"), the Company shall be
merged with and into Sub at the Effective Time of the Merger. Following the
Merger, the separate corporate existence of the Company shall cease and Sub
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of the Company in
accordance with the DGCL and the LBCL.

     SECTION 1.2. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the parties
shall file certificates of merger or other appropriate documents (in any such
case, the "Certificates of Merger") executed in accordance with the relevant
provisions of the DGCL and the LBCL. The Merger shall become effective at such
time as the Certificates of Merger are duly filed with the Delaware and
Louisiana Secretaries of State, which the parties agree will be done
simultaneously, or simultaneously at such other time as Sub and the Company
shall agree should be specified in the Certificates of Merger (the time the
Merger becomes effective being the "Effective Time of the Merger").

     SECTION 1.3. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL and in Louisiana Revised Statute 12:115, which
constitutes a provision of the LBCL.

     SECTION 1.4. Certificate of Incorporation and By-laws.

        (a) The Certificate of Incorporation of Sub, as in effect at the
     Effective Time of the Merger, shall be the Certificate of Incorporation of
     the Surviving Corporation until thereafter changed or amended as
<PAGE>   8

     provided therein or by applicable law; provided that such Certificate of
     Incorporation shall be amended hereby as of the Effective Time of the
     Merger to change the name of Sub to Crystal Gas Storage, Inc.

        (b) The By-laws of Sub as in effect at the Effective Time of the Merger
     shall be the By-laws of the Surviving Corporation until thereafter changed
     or amended as provided therein or by applicable law.

     SECTION 1.5. Directors. The directors of Sub at the Effective Time of the
Merger shall be the directors of the Surviving Corporation and shall hold office
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.

     SECTION 1.6. Officers. The officers of Sub at the Effective Time of the
Merger shall be the officers of the Surviving Corporation and shall hold office
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.

     SECTION 1.7. Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any Shares:

        (a) Capital Stock of Sub. Each issued and outstanding share of the
     capital stock of Sub shall be converted into and become one fully paid and
     nonassessable share of common stock, par value $1.00 per share, of the
     Surviving Corporation.

        (b) Cancellation of Treasury Stock and Parent Owned Stock. All Shares
     that are owned directly or indirectly by the Company as treasury stock or
     by any wholly owned subsidiary of the Company and any Shares owned by
     Parent, Sub or any other wholly owned subsidiary of Parent shall be
     canceled, and no consideration shall be delivered in exchange therefor.

        (c) Conversion of Shares. Subject to Section 1.7(d), each issued and
     outstanding Share (other than Shares to be canceled in accordance with
     Section 1.7(b)) shall be converted into the right to receive from the
     Surviving Corporation in cash, without interest, $57 per Share (the "Merger
     Consideration").

        (d) Conversion of Senior Preferred Stock. To the extent that any shares
     of Senior Preferred Stock are issued and outstanding at the Effective Time
     of the Merger, each such share shall be converted into one share of senior
     preferred stock of the Surviving Corporation having terms identical to the
     terms of the Senior Preferred Stock and having no alteration or change in
     the powers, preferences or rights given to the holders of shares of such
     senior preferred stock of the Surviving Corporation from those of the
     holders of shares of Senior Preferred Stock.

        (e) Shares of Dissenting Stockholders. Notwithstanding anything in this
     Agreement to the contrary (unless the Merger is approved by eighty percent
     or more of the Company's total voting power, in which event there will be
     no dissenters rights), any issued and outstanding Shares held by a
     Dissenting Stockholder shall not be converted as described in Section
     1.7(c) but shall become the right to receive such consideration as may be
     determined to be due to such Dissenting Stockholder pursuant to the laws of
     the State of Louisiana; provided, however, that Shares outstanding
     immediately prior to the Effective Time of the Merger and held by a
     Dissenting Stockholder who shall, after the Effective Time of the Merger,
     withdraw his demand for appraisal or lose his right of appraisal, in either
     case pursuant to the LBCL, shall be deemed to be converted, as of the
     Effective Time of the Merger, into the right to receive the Merger
     Consideration. The Company shall give Parent (i) prompt notice of any
     written demands for appraisal of Shares received by the Company and (ii)
     the opportunity to direct all negotiations and proceedings with respect to
     any such demands. The Company shall not, without the prior written consent
     of Parent, voluntarily make any payment with respect to, or settle, offer
     to settle or otherwise negotiate, any such demands.

                                        2
<PAGE>   9

                                   ARTICLE II

                               EXCHANGE PROCEDURE

     SECTION 2.1. Exchange of Certificates.

        (a) Paying Agent. Prior to the Effective Time of the Merger, Parent
     shall select a bank or trust company to act as paying agent (the "Paying
     Agent") for the payment of the Merger Consideration upon surrender of
     certificates representing Shares.

        (b) Parent to Provide Funds. Parent shall take all steps necessary to
     enable and cause the Surviving Corporation to provide the Paying Agent on a
     timely basis funds necessary to pay for the Shares pursuant to Section 1.7.

        (c) Exchange Procedure. Promptly after the Effective Time of the Merger,
     the Paying Agent shall mail to each holder of record of a certificate or
     certificates that immediately prior to the Effective Time of the Merger
     represented outstanding Shares (the "Certificates"), other than the
     Company, Parent and any subsidiary of the Company or Parent, (i) a letter
     of transmittal (which shall specify that delivery shall be effected, and
     risk of loss and title to the Certificates shall pass, only upon delivery
     of the Certificates to the Paying Agent and which shall be in a form and
     have such other provisions as Parent may reasonably specify) and (ii)
     instructions for use in effecting the surrender of the Certificates in
     exchange for the Merger Consideration. Upon surrender of a Certificate for
     cancellation to the Paying Agent or to such other agent or agents as may be
     appointed by the Surviving Corporation, together with such letter of
     transmittal, duly executed, and such other documents as may reasonably be
     required by the Paying Agent, the holder of such Certificate shall be
     entitled to receive in exchange therefor the amount of cash into which the
     Shares theretofore represented by such Certificate shall have been
     converted pursuant to Section 1.7(c), and the Certificate so surrendered
     shall forthwith be canceled. No interest will be paid or will accrue on the
     cash payable upon the surrender of any Certificate. If payment is to be
     made to a person other than the person in whose name the Certificate so
     surrendered is registered, it shall be a condition of payment that such
     Certificate shall be properly endorsed or otherwise in proper form for
     transfer and that the person requesting such payment shall pay any transfer
     or other taxes required by reason of the payment to a person other than the
     registered holder of such Certificate or establish to the satisfaction of
     the Surviving Corporation that such tax has been paid or is not applicable.
     Until surrendered as contemplated by this Section 2.1, each Certificate
     shall be deemed at any time after the Effective Time of the Merger to
     represent only the right to receive upon such surrender the amount of cash,
     without interest, into which the Shares theretofore represented by such
     Certificate shall have been converted pursuant to Section 1.7(c).
     Notwithstanding the foregoing, neither the Paying Agent nor any party shall
     be liable to a former stockholder of the Company for any cash or interest
     delivered to a public official pursuant to applicable abandoned property,
     escheat or similar laws. If any Certificates shall not have been
     surrendered prior to seven years after the Effective Time of the Merger (or
     immediately prior to such earlier date on which any payment pursuant to
     this Section 2.1 would otherwise escheat to or become the property of any
     governmental body or agency) the payment in respect of such Certificate
     shall, to the extent permitted by applicable law, become the property of
     the Surviving Corporation, free and clear of all claims or interest of any
     person previously entitled thereto. Any funds made available to the Paying
     Agent that remain unclaimed by holders of Certificates for six months after
     the Effective Time of the Merger shall be delivered to the Surviving
     Corporation upon demand and any holder of Certificates who has not
     theretofore complied with this Section 2.1(c) shall thereafter look only to
     Parent for payment of their claim for Merger Consideration.

        (d) No Further Ownership Rights in Shares. All cash paid upon the
     surrender of Certificates in accordance with the terms of this Article II
     shall be deemed to have been paid in full satisfaction of all rights
     pertaining to the Shares theretofore represented by such Certificates, and
     there shall be no further registration of transfers on the stock transfer
     books of the Surviving Corporation of the Shares that were outstanding
     immediately prior to the Effective Time of the Merger. If, after the
     Effective Time of the Merger, Certificates are presented to the Surviving
     Corporation for any reason, they shall be canceled and exchanged as
     provided in this Article II.
                                        3
<PAGE>   10

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, Parent and Sub as follows, subject
to any exceptions specified in the Company Disclosure Document in the form
attached hereto as Schedule I to the extent such exceptions reference a specific
Section of this Article III:

        (a) Organization, Standing and Power. The Company is a corporation duly
     organized, validly existing and in good standing under the laws of the
     State of Louisiana and has the requisite corporate power and authority to
     carry on its business as now being conducted. The Company is duly qualified
     to do business and is in good standing in each jurisdiction in which the
     nature of its business or the ownership or leasing of its properties makes
     such qualification necessary, other than in such jurisdictions where the
     failure to be so qualified to do business or in good standing (individually
     or in the aggregate) would not have, or be reasonably likely to have, a
     material adverse effect on the Company.

        (b) Subsidiaries. The Company's subsidiaries are corporations, limited
     liability companies or general partnerships that are duly organized,
     validly existing and in good standing under the laws of their respective
     jurisdictions of organization and have the requisite corporate power and
     authority (or comparable power and authority in the case of limited
     liability companies or general partnerships) to carry on their respective
     businesses as they are now being conducted and to own, operate and lease
     the assets they now own, operate or hold under lease. The Company's
     subsidiaries are duly qualified to do business and are in good standing in
     each jurisdiction in which the nature of their respective businesses or the
     ownership or leasing of their respective properties makes such
     qualification necessary, other than in such jurisdictions where the failure
     to be so qualified or in good standing would not have, or be reasonably
     likely to have, a material adverse effect on the Company. All the
     outstanding shares of capital stock of the Company's subsidiaries that are
     corporations, and all the ownership interests of the Company in its other
     subsidiaries, have been duly authorized and validly issued and are, except
     in the case of any subsidiary that is a general partnership, fully paid and
     non-assessable and were not issued in violation of any preemptive rights or
     other preferential rights of subscription or purchase of any person. All
     such stock and ownership interests are owned of record and beneficially by
     the Company or by a wholly owned subsidiary of the Company, free and clear
     of all liens, pledges, security interests, charges, claims and other
     encumbrances of any kind or nature ("Liens"). Except for the capital stock
     of, or ownership interests in, its subsidiaries, the Company does not own,
     directly or indirectly, any capital stock, equity interest or other
     ownership interest in any corporation, partnership, association, joint
     venture, limited liability company or other entity.

        (c) Capital Structure. The authorized capital stock of the Company
     consists of 20,000,000 shares of common stock, $.01 par value, and
     51,200,773 shares of preferred stock, $.01 par value, of which 21,488,353
     shares have been designated $.06 Senior Convertible Voting Preferred Stock
     (Non-Cumulative) and 27,717,570 of which have been designated Series A
     Preferred Stock. At the close of business on June 30, 1999, (i) 2,668,122
     Shares were issued and outstanding, (ii) 192,875 Shares were reserved for
     issuance pursuant to options granted under the Company's Employee Stock
     Option Plan, (iii) no Shares were reserved for issuance pursuant to options
     not yet granted under the Company's Employee Stock Option Plan, (iv)
     7,360,753 shares of $.06 Senior Convertible Voting Preferred Stock ("Senior
     Preferred Stock") were issued and outstanding, (v) 16,562 Shares were
     reserved for issuance upon conversion of such outstanding shares of Senior
     Preferred Stock and (vi) no shares of Series A Preferred Stock were issued
     or outstanding. Except as set forth above, no shares of capital stock or
     other equity or voting securities of the Company are reserved for issuance
     or outstanding. All outstanding shares of capital stock of the Company are,
     and all such Shares issuable upon the exercise of stock options or
     conversion of Senior Preferred Stock will be when issued thereunder,
     validly issued, fully paid and nonassessable and not subject to preemptive
     rights. No capital stock has been issued by the Company since June 30,
     1999, other than Shares issued pursuant to options outstanding on or prior
     to such date in accordance with their terms at such date. Except for
     options described above and Senior

                                        4
<PAGE>   11

     Preferred Stock described above, there are no outstanding or authorized
     securities, options, warrants, calls, rights, commitments, preemptive
     rights, agreements, arrangements or undertakings of any kind to which the
     Company or any of its subsidiaries is a party, or by which any of them is
     bound, obligating the Company or any of its subsidiaries to issue, deliver
     or sell, or cause to be issued, delivered or sold, any shares of capital
     stock or other equity or voting securities of, or other ownership interests
     in, the Company or of any of its subsidiaries or obligating the Company or
     any of its subsidiaries to issue, grant, extend or enter into any such
     security, option, warrant, call, right, commitment, agreement, arrangement
     or undertaking.

        (d) Authority; Non-contravention. The Company has the requisite
     corporate power and authority to enter into this Agreement and, subject to
     Company Stockholder Approval, to consummate the transactions contemplated
     hereby and to take such actions, if any, as shall have been taken with
     respect to the matters referred to in Section 3.1(h). The execution and
     delivery of this Agreement by the Company and the consummation by the
     Company of the transactions contemplated hereby have been duly authorized
     by all necessary corporate action on the part of the Company, subject to
     Company Stockholder Approval. This Agreement has been duly and validly
     executed and delivered by the Company and constitutes a valid and binding
     obligation of the Company, enforceable against the Company in accordance
     with its terms, except that (i) such enforcement may be subject to
     bankruptcy, insolvency, reorganization, moratorium or other similar laws or
     judicial decisions now or hereafter in effect relating to creditors' rights
     generally and (ii) the remedy of specific performance and injunctive relief
     may be subject to equitable defenses and to the discretion of the court
     before which any proceeding therefor may be brought. The execution and
     delivery of this Agreement by the Company do not, and the consummation of
     the transactions contemplated hereby and compliance with the provisions
     hereof will not, conflict with, or result in any violation of, or default
     (with or without notice or lapse of time, or both) under, or give rise to a
     right of termination, cancellation or acceleration of or "put" right with
     respect to any obligation or to loss of a material benefit under, or result
     in the creation of any lien, security interest, charge or encumbrance upon
     any of the properties or assets of the Company or any of its subsidiaries
     under, any provision of (i) the Amended and Restated Articles of
     Incorporation, as amended (the "Company Charter"), or By-laws of the
     Company or any provision of the comparable organizational documents of its
     subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
     indenture, lease, or other agreement, instrument, permit, concession,
     franchise or license applicable to the Company or any of its subsidiaries
     or their respective properties or assets or (iii) subject to governmental
     filings and other matters referred to in the following sentence, any
     judgment, order, decree, statute, law, ordinance, rule or regulation or
     arbitration award applicable to the Company or any of its subsidiaries or
     their respective properties or assets, other than, in the case of clause
     (ii), any such conflicts, violations, defaults, rights or liens, security
     interests, charges or encumbrances that individually or in the aggregate
     would not have, or be reasonably likely to have, a material adverse effect
     on the Company and would not, or be reasonably likely to, materially impair
     the ability of the Company to perform its obligations hereunder or prevent
     the consummation of any of the transactions contemplated hereby. No
     consent, approval, order or authorization of, or registration, declaration
     or filing with, any court, administrative agency or commission or other
     governmental authority or agency, domestic or foreign, including local
     authorities (a "Governmental Entity"), is required by or with respect to
     the Company or any of its subsidiaries in connection with the execution and
     delivery of this Agreement by the Company or the consummation by the
     Company of the transactions contemplated hereby, except for (i) the filing
     of a premerger notification and report form by the Company under the
     Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
     Act"), (ii) the filing with the Securities and Exchange Commission (the
     "SEC") of (A) a proxy statement relating to the Company Stockholder
     Approval (such proxy statement as amended or supplemented from time to
     time, the "Proxy Statement") and (B) such reports under Section 13(a) of
     the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
     may be filed in connection with this Agreement and the transactions
     contemplated hereby, and (iii) the filing of the Certificates of Merger
     with the Delaware and Louisiana Secretaries of State with respect to the
     Merger as provided in the DGCL and the LBCL and appropriate documents with
     the relevant authorities of other jurisdictions in which the Company is
     qualified to do

                                        5
<PAGE>   12

     business and such other consents, approvals, orders, authorizations,
     registrations, declarations and filings the failure of which to be obtained
     or made would not have, or be reasonably likely to have, a material adverse
     effect on the Company.

        (e) SEC Documents. The Company has filed all required reports,
     schedules, forms, statements and other documents with the SEC since January
     1, 1998 (such documents, together with all exhibits and schedules thereto
     and documents incorporated by reference therein, collectively referred to
     herein as the "SEC Documents"). As of their respective dates, the SEC
     Documents complied in all material respects with the requirements of the
     Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
     Act, as the case may be, and the rules and regulations of the SEC
     promulgated thereunder applicable to such SEC Documents, and none of the
     SEC Documents contained any untrue statement of a material fact or omitted
     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. The consolidated financial statements
     of the Company included in the SEC Documents comply in all material
     respects with applicable accounting requirements and the published rules
     and regulations of the SEC with respect thereto, have been prepared in
     accordance with generally accepted accounting principles (except, in the
     case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
     on a consistent basis during the periods involved (except as may be
     indicated in the notes thereto) and fairly present the consolidated
     financial position of the Company and its consolidated subsidiaries as of
     the dates thereof and the consolidated results of their operations and cash
     flows for the periods then ended (subject, in the case of unaudited
     statements, to normal year-end audit adjustments and other adjustments
     described therein).

        (f) Information Supplied. None of the information supplied or to be
     supplied by the Company for inclusion or incorporation by reference in the
     Proxy Statement will, at the date the Proxy Statement is first mailed to
     the Company's stockholders and at the time of the Company's stockholders
     meeting convened for the purpose of obtaining the Company Stockholder
     Approval, contain any untrue statement of a material fact or omit to state
     any material fact required to be stated therein or necessary in order to
     make the statements therein, in light of the circumstances under which they
     are made, not misleading. The Proxy Statement, as it relates to the Company
     Stockholders Meeting, will comply as to form in all material respects with
     the requirements of the Exchange Act and the rules and regulations
     thereunder, except that no representation or warranty is made by the
     Company with respect to statements made or incorporated by reference
     therein based on information supplied by Parent or Sub for inclusion or
     incorporation by reference therein.

        (g) Absence of Certain Changes or Events. Except as disclosed in the SEC
     Documents, since December 31, 1998, the Company has conducted its business
     only in the ordinary course consistent with past practice, and there has
     not been (i) any event or circumstance that has had or been reasonably
     likely to have a material adverse effect with respect to the Company; (ii)
     any declaration, setting aside or payment of any dividend (whether in cash,
     stock or property) with respect to any of the Company's capital stock;
     (iii) (A) any granting by the Company or any of its subsidiaries to any
     executive officer of the Company or any of its subsidiaries of any increase
     in compensation, except in the ordinary course of business consistent with
     prior practice or as was required under employment agreements in effect as
     of December 31, 1998, (B) any granting by the Company or any of its
     subsidiaries to any such executive officer of any increase in severance or
     termination pay, except as was required under employment, severance or
     termination agreements in effect as of December 31, 1998, or (C) except in
     accordance with past practice as to executive officers, any entry by the
     Company or any of its subsidiaries into any employment, severance or
     termination agreement with any such executive officer; (iv) any damage,
     destruction or loss, whether or not covered by insurance, that has or
     reasonably could be expected to have a material adverse effect on the
     Company; (v) any change in accounting methods, principles or practices by
     the Company materially affecting its assets, liabilities or business,
     except insofar as may have been required by a change in generally accepted
     accounting principles; or (vi) any event which, if it had taken place
     following the execution of this Agreement, would not have been permitted by
     Section 4.1.

                                        6
<PAGE>   13

        (h) State Takeover Statutes; Absence of Supermajority Provision. The
     Company has taken all action to assure that no state takeover statute or
     similar statute or regulation, shall apply to the Merger or, the
     Shareholders Agreement, or any of the other transactions contemplated
     hereby or by the Shareholders Agreement. Except for the approval of the
     Merger by the holders of two-thirds of the voting power of Shares and
     Senior Preferred Stock, present at the meeting of stockholders held for
     such purpose, voting together as a class pursuant to which each Share is
     entitled to one vote and each share of Senior Preferred Stock is entitled
     to .001 votes per share (unless the shares of Senior Preferred Stock have
     been called for redemption prior to such meeting and the provisions of
     Louisiana Revised Statute 12:75 shall have been satisfied so that such
     shares shall not be entitled to vote at such meeting) ("Company Stockholder
     Approval"), no other stockholder action on the part of the Company is
     required for approval of the Merger and the transactions contemplated
     hereby.

        (i) Brokers. Except for Goldman, Sachs & Co., which has rendered the
     Fairness Opinion referred to in Section 3.1(u) and whose fees are to be
     paid by the Company, no broker, investment banker or other person is
     entitled to receive from the Company or any of its subsidiaries any
     investment banking, brokerage or finder's fees in connection with this
     Agreement or the transactions contemplated hereby, including any fee for
     any opinion rendered by any investment banker. The engagement letter
     between the Company and Goldman, Sachs & Co. provided to Parent on or prior
     to the date of this Agreement constitutes the entire understanding of the
     Company and Goldman, Sachs & Co. with respect to the matters referred to
     therein, and has not been amended or modified, nor will it be amended or
     modified prior to the Effective Time of the Merger.

        (j) Litigation. Except as disclosed in the SEC Documents, there is no
     suit, action, proceeding or investigation pending or, to the best of the
     Company's knowledge, threatened against or affecting the Company or any of
     its subsidiaries that has had or could reasonably be expected to have a
     material adverse effect on the Company or prevent, hinder or materially
     delay the ability of the Company to consummate the transactions
     contemplated by this Agreement, nor is there any judgment, decree,
     injunction, rule or order of any Governmental Entity or arbitrator
     outstanding against the Company or any of its subsidiaries which has had,
     or which, insofar as reasonably can be foreseen, in the future could have,
     any such effect.

        (k) Employee Benefit Matters. As used in this Section 3.1(k), the term
     "Employer" shall mean the Company as defined in the preamble of this
     Agreement and any member of a controlled group or affiliated service group,
     as defined in sections 414(b), (c), (m) and (o) of the Internal Revenue
     Code of 1986, as amended ("Code"), of which the Company is a member.

           (i) With respect to each employee welfare benefit plan, employee
        pension benefit plan and employee benefit plan as defined in sections
        3(1), 3(2), and 3(3) of the Employee Retirement Income Security Act of
        1974, as amended ("ERISA"), which have been or are sponsored by,
        participated in, or contributed to by the Employer at any time during
        the three-year period ending on the date of this Agreement, or with
        respect to which the Employer may have any liability, and except for any
        matter that would not individually or in the aggregate have, or be
        reasonably likely to have, a material adverse effect on the Company, to
        the extent applicable: (A) the plan is in substantial compliance with
        the Code and ERISA, including all reporting and disclosure requirements
        of Part 1 of Subtitle B of Title I of ERISA; (B) the appropriate Form
        5500 has been timely filed for each year of its existence; (C) there has
        been no transaction described in section 406 or section 407 of ERISA or
        section 4975 of the Code unless exempt under section 408 of ERISA or
        section 4975 of the Code, as applicable; (D) the bonding requirements of
        section 412 of ERISA have been satisfied; (E) there is no issue pending
        nor any issue resolved adversely to the Employer which may subject the
        Company to the payment of a penalty, interest, tax or other amount, (F)
        the plan can be unilaterally terminated or amended on no more than 90
        days notice; (G) all contributions or other amounts payable by the
        Employer as of the Effective Time of the Merger with respect to the plan
        have either been paid or accrued in the Employer's most recent financial
        statements included in the SEC Documents and (H) no notice has been
        received or given by the Employer of an increase or proposed increase in
        the cost of any such plan or any other employee
                                        7
<PAGE>   14

        benefit agreement or arrangement, including deferred compensation plans,
        incentive plans, bonus plans or arrangements, stock option plans, stock
        purchase plans, golden parachute agreements, severance pay plans or
        agreements, dependent care plans, cafeteria plans, employee assistance
        programs, scholarship programs, employment contracts and other similar
        plans, agreements and arrangements that are currently in effect or were
        maintained within three years of the date hereof, or have been approved
        before this date but are not yet effective, for the benefit of
        directors, officers or employees, or former directors, officers or
        employees (or their beneficiaries) of the Employer (each, a "Company
        Benefit Plan"). There are no pending or, to the Company's knowledge,
        threatened or anticipated claims (other than routine claims for
        benefits), actions, arbitrations, investigations or suits by, on behalf
        of or against any Company Benefit Plan or their related trusts. The
        Company has made available to Parent true and correct copies of all of
        the Company Benefit Plans.

           (ii) Neither the Company nor any entity (whether or not incorporated)
        that was at any time during the six years before the date of this
        Agreement treated as a single employer together with the Company under
        section 414 of the Code has ever maintained, had any obligation to
        contribute to or incurred any liability with respect to a pension plan
        that is or was subject to the provisions of Title IV of ERISA or section
        412 of the Code. Neither the Company nor any entity (whether or not
        incorporated) that was at any time during the six years before the date
        of this Agreement treated as a single employer together with the Company
        under section 414 of the Code has ever maintained, had an obligation to
        contribute to, or incurred any liability with respect to a multiemployer
        pension plan as defined in section 3(37) of ERISA. During the last six
        years, the Company has not maintained, had an obligation to contribute
        to or incurred any liability with respect to a voluntary employees
        beneficiary association that is or was intended to satisfy the
        requirements of section 501(c)(9) of the Code. No plan, arrangement or
        agreement will cause the Employer to have liability for severance pay as
        a result of the Merger, except as otherwise set forth in the Amended and
        Restated Executive Compensation and Severance Agreements between the
        Company and each of the persons named in the Company Disclosure Document
        and the Severance Plan described therein, covering employees who are not
        parties to Amended and Restated Executive Compensation and Severance
        Agreements (collectively the "Severance Agreements"). The Employer does
        not provide employee benefits, including without limitation, death,
        post-retirement medical or health coverage (whether or not insured) or
        contribute to or maintain any employee benefit plan which provides for
        benefit coverage following termination of employment except (A) as is
        required by section 4980B(f) of the Code or other applicable statute,
        (B) death benefits or retirement benefits under any employee pension
        benefit plan as defined in section 3(2) of ERISA, (C) benefits the full
        cost of which is borne by the current or former employee (or his
        beneficiary), nor has it made any representations, agreements, covenants
        or commitments to provide that coverage, or (D) deferred compensation
        benefits which have been accrued as liabilities on the books of the
        Employer and disclosed on its financial statements included in the SEC
        Documents. All group health plans maintained by the Employer have been
        operated in material compliance with section 4980B(f) of the Code.

           (iii) All Company Benefit Plans that are intended to qualify under
        section 401(a) of the Code have been submitted to and approved as
        qualifying under section 401(a) of the Code by the Internal Revenue
        Service ("IRS") or the applicable remedial amendment period will not
        have ended prior to the Effective Time of the Merger.

           (iv) Except as expressly provided in this Agreement or the Severance
        Agreements and except pursuant to certain options under the Company's
        Employee Stock Option Plan as described in section 3.1(c), the
        transactions contemplated by this Agreement will not accelerate the time
        of payment or vesting, or increase the amount, of compensation or
        benefits due any director, officer or employee or former director,
        officer or employee (including any beneficiary) of the Employer.

           (v) With respect to any entity (whether or not incorporated) that is
        both treated as a single employer together with the Company under
        section 414 of the Code and located outside of the
                                        8
<PAGE>   15

        United States, any benefit plans maintained by it for the benefit of its
        directors, officers, employees or former employees (or any of their
        beneficiaries) are in compliance with applicable laws pertaining to such
        plans in the jurisdiction of such entity, except where such failure to
        be in compliance would not, either individually or in the aggregate,
        have, or be reasonably likely to have, a material adverse effect on the
        Company.

        (l) Taxes. (i) Each of the Company and each of its subsidiaries, and any
     consolidated, combined, unitary or aggregate group for Tax purposes of
     which the Company or any of its subsidiaries is or has been a member, has
     timely filed (taking into account any extensions) all Tax Returns required
     to be filed by it on or before the Effective Time of the Merger and has
     timely paid or deposited (or the Company has paid or deposited on its
     behalf) all Taxes and estimated Taxes which are required to be paid or
     deposited before the Effective Time of the Merger. Each of the Tax Returns
     filed by the Company or any of its subsidiaries is accurate and complete in
     all material respects. The Company has delivered or made available to
     Parent accurate and complete copies of all Tax Returns of the Company and
     its subsidiaries that have been requested by Parent. The Company shall give
     Parent an opportunity to review and comment upon any Tax Returns of the
     Company and its subsidiaries to be filed after the date of this Agreement.
     No extension or waiver of the limitation period applicable to any of the
     Tax Returns of the Company or its subsidiaries has been granted, and no
     such extension or waiver has been requested from any of the Company or its
     subsidiaries. The most recent consolidated financial statements of the
     Company contained in the filed SEC Documents reflect an adequate reserve
     for all Taxes payable by the Company and its subsidiaries for all taxable
     periods and portions thereof through the date of such financial statements;

           (ii) No material deficiencies for any Taxes have been proposed,
        asserted or assessed against the Company or any of its subsidiaries, no
        requests for waivers of the time to assess any such Taxes have been
        granted or are pending, and there are no tax liens upon any assets of
        the Company or any of its subsidiaries (except for liens for ad valorem
        Taxes not yet delinquent and other Taxes not yet due and payable) and no
        claim has been made by any authority in a jurisdiction where any of the
        Company and its subsidiaries does not file Tax Returns that it is or may
        be subject to taxation in that jurisdiction. There are no current
        examinations of any Tax Return of the Company or any of its subsidiaries
        being conducted and there are no settlements of any prior examinations
        which could reasonably be expected to materially adversely affect any
        taxable period for which the statute of limitations has not run.

           (iii) None of the Company or its subsidiaries is, or has been, a
        party to or bound by any tax indemnity agreement, tax sharing agreement,
        tax allocation agreement or similar contract.

           (iv) For federal income Tax purposes, the net operating losses of the
        Company and its subsidiaries as reflected on the federal income Tax
        Returns of the Company and its subsidiaries (the "Company NOLs") exceed
        the gain the Company and the subsidiaries will recognize as a result of
        the Internal Restructuring, the Merger, and any other transactions
        contemplated by this Agreement. The Company NOLs are not subject to any
        limitations (e.g., under Section 382 of the Code, Section 384 of the
        Code, or the consolidated return regulations).

           (v) The limited liability company subsidiaries of the Company
        resulting from the Internal Restructuring are, or will be at the
        Effective Time of the Merger, treated as disregarded entities for
        federal income Tax purposes and the assets of such subsidiaries are, or
        will be at the Effective Time of the Merger, treated as owned directly
        by the Company for federal income Tax purposes.

           (vi) At the Effective Time of the Merger, no subsidiary of the
        Company will be treated as a partnership for federal income Tax
        purposes.

           (vii) No person is required to withhold any amounts pursuant to
        Section 1445 of the Code from any payments of Merger Consideration made
        to holders of Shares pursuant to the Merger. The Company has delivered
        or made available to Parent accurate and complete copies of all audit
        reports and similar documents relating to Tax Returns of the Company and
        its subsidiaries;

                                        9
<PAGE>   16

           (viii) As used herein, "Tax" or "Taxes" shall mean all taxes of any
        kind, including, without limitation, those on or measured by or referred
        to as income, gross receipts, sales, use, ad valorem, franchise,
        profits, license, withholding, payroll, employment, estimated, excise,
        severance, stamp, occupation, premium, value added, property or windfall
        profits taxes, customs, duties or similar fees, assessments or charges
        of any kind whatsoever, together with any interest and any penalties,
        additions to tax or additional amounts imposed by any Governmental
        Entity, domestic or foreign. As used herein, "Tax Return" shall mean any
        return, report, statement or information required to be filed with any
        Governmental Entity with respect to Taxes.

        (m) No Excess Parachute Payments. Any amount that could be received
     (whether in cash or property or the vesting of property) as a result of any
     of the transactions contemplated by this Agreement by any employee, officer
     or director of the Company or any of its affiliates who is a "disqualified
     individual" (as such term is defined by the IRS in proposed Treasury
     Regulation section 1.280G-1) under any employment, severance or termination
     agreement, other compensation arrangement or Company Benefit Plan currently
     in effect would not be characterized as an "excess parachute payment" (as
     such term is defined in section 280G(b)(1) of the Code).

        (n) Environmental Matters. Except as would not have, or be reasonably
     likely to have, a material adverse effect on the Company, (i) the business
     operations of the Company and its subsidiaries are being conducted, and to
     the Company's knowledge have at all times been conducted, in compliance
     with all limitations, restrictions, standards and requirements established
     under environmental laws, (ii) no facts or circumstances exist that impose
     on the Company or any of its subsidiaries an obligation under environmental
     laws to conduct any removal, remediation, or similar response action, or
     that would form the basis of any claim, action, lawsuit, proceeding or
     investigation against, or any liability of, the Company or any of its
     subsidiaries under any environmental law, (iii) there is no obligation,
     undertaking or liability arising out of or relating to environmental laws
     that the Company or any of its subsidiaries has agreed to, assumed or
     retained, by contract or otherwise, or that has been imposed on the Company
     or any of its subsidiaries by any writ, injunction, decree, order or
     judgment, (iv) neither the Company nor any of its subsidiaries has received
     any written request for information, or been notified that it is a
     potentially responsible party, under CERCLA or any similar state law, and
     (v) there are no lawsuits, claims, actions, investigations or proceedings
     pending or, to the knowledge of the Company, threatened against the Company
     or any of its subsidiaries that arise out of or relate to environmental
     laws.

        (o) Compliance with Laws. The Company and its subsidiaries hold all
     required, necessary or applicable permits, licenses, variances, exemptions,
     orders, franchises and approvals of all Governmental Entities, except where
     the failure to so hold would not have, or be reasonably likely to have, a
     material adverse effect on the Company (the "Company Permits"). The Company
     and its subsidiaries are in compliance with the terms of the Company
     Permits except where the failure to so comply would not have, or be
     reasonably likely to have, a material adverse effect on the Company.
     Neither the Company nor any of its subsidiaries has violated or failed to
     comply with any statute, law, ordinance, regulation, rule, permit or order
     of any Federal, state or local government, domestic or foreign, or any
     Governmental Entity, any arbitration award or any judgment, decree or order
     of any court or other Governmental Entity, applicable to the Company or any
     of its subsidiaries or their respective business, assets or operations,
     except for violations and failures to comply that have not had,
     individually or in the aggregate, or could not individually or in the
     aggregate, reasonably be expected to have a material adverse effect on the
     Company.

        (p) Material Contracts and Agreements. All material contracts of the
     Company or its subsidiaries have been included in the SEC Documents, except
     for those contracts not required to be filed pursuant to the rules and
     regulations of the SEC. Set forth on Section 3.1(p) of the Company
     Disclosure Document is a complete and accurate listing of all hedging and
     forward sale arrangements (i) to which the Company or any of its
     subsidiaries is party or (ii) by which any of the Company's or any of its
     subsidiaries' assets are bound.

                                       10
<PAGE>   17

        (q) Title to Properties.

           (i) Each of the Company and each of its subsidiaries has good and
        defensible title to, or valid leasehold interests in, all its material
        assets and properties purported to be owned by it in the SEC Documents,
        except for such assets and properties as are no longer used or useful in
        the conduct of its businesses or as have been disposed of in the
        ordinary course of business and except for defects in title, easements,
        restrictive covenants and similar encumbrances or impediments that, in
        the aggregate, do not and will not materially interfere with its ability
        to conduct its business as currently conducted or as reasonably expected
        to be conducted. All such assets and properties, other than assets and
        properties in which the Company or any of the subsidiaries has leasehold
        interests, are free and clear of all Liens, other than those set forth
        in the SEC Documents and except for Liens, that, in the aggregate, do
        not and will not materially interfere with the ability of the Company or
        any of its subsidiaries to conduct business as currently conducted or as
        reasonably expected to be conducted.

           (ii) Except as would not have, or be reasonably likely to have, a
        material adverse effect on the Company, each of the Company and each of
        its subsidiaries has complied in all material respects with the terms of
        all leases to which it is a party and under which it is in occupancy,
        and all such leases are in full force and effect. Each of the Company
        and each of its subsidiaries enjoys peaceful and undisturbed possession
        under all such leases.

        (r) Intellectual Property. The Company and its subsidiaries own, or are
     licensed or otherwise have the right to use, all patents, patent rights,
     trademarks, trademark rights, trade names, trade name rights, service
     marks, service mark rights, copyrights, technology, know-how, processes and
     other proprietary intellectual property rights and computer programs which
     are material to the condition (financial or otherwise) or conduct of the
     business and operations of the Company and its subsidiaries taken as a
     whole. To the Company's knowledge, (i) the use of such patents, patent
     rights, trademarks, trademark rights, service marks, service mark rights,
     trade names, copyrights, technology, know-how, processes and other
     proprietary intellectual property rights and computer programs by the
     Company and its subsidiaries does not infringe on the rights of any person,
     subject to such claims and infringements as do not, in the aggregate, give
     rise to any liability on the part of the Company and its subsidiaries which
     has had or could have a material adverse effect on the Company, and (ii) no
     person is, in any manner that has had or could have a material adverse
     effect on the Company, infringing on any right of the Company or any of its
     subsidiaries with respect to any such patents, patent rights, trademarks,
     trademark rights, service marks, service mark rights, trade names,
     copyrights, technology, know-how, processes and other proprietary
     intellectual property rights and computer programs. No claims are pending
     or, to the Company's knowledge, threatened that the Company or any of its
     subsidiaries is infringing or otherwise adversely affecting the rights of
     any person with regard to any patent, license, trademark, trade name,
     service mark, copyright or other intellectual property right.

        (s) Labor Matters. There are no collective bargaining agreements or
     other labor union agreements or understandings to which the Company or any
     of its U.S. subsidiaries is a party or by which any of them is bound, nor
     is it or any of its subsidiaries the subject of any proceeding asserting
     that it or any subsidiary has committed an unfair labor practice or seeking
     to compel it to bargain with any labor organization as to wages or
     conditions. To the Company's knowledge, during the five-year period ending
     on the date of this Agreement, neither the Company nor any of its
     subsidiaries has encountered any labor union organizing activity, or had
     any actual or threatened employee strikes, work stoppages, slowdowns or
     lockouts.

        (t) Undisclosed Liabilities. Except as set forth in the SEC Documents,
     at the date of the most recent audited financial statements of the Company
     included in the SEC Documents, neither the Company nor any of its
     subsidiaries had, and since such date neither the Company nor any of such
     subsidiaries has incurred (except in the ordinary course of business), any
     liabilities or obligations of any nature (whether accrued, absolute,
     contingent or otherwise), which, individually or in the aggregate, have had
     or could reasonably be expected to have a material adverse effect on the
     Company.

                                       11
<PAGE>   18

        (u) Pipeline Imbalances. There are no physical natural gas cumulative
     imbalances with respect to the Company's or any of its subsidiaries'
     properties.

        (v) Year 2000. The systems operated or used by the Company or any of its
     Subsidiaries are capable of providing uninterrupted millennium
     functionality on or after January 1, 2000 to share, record, process and
     present data in substantially the same manner and with the same
     functionality as such systems share, record, process and present such data
     on or before December 31, 1999, except, in the aggregate, as would not
     have, or be reasonably likely to have, a material adverse effect on the
     Company.

        (w) Opinion of Financial Advisor. The Company's financial advisor,
     Goldman, Sachs & Co. (the "Company Financial Advisor"), has delivered to
     the Board of Directors of the Company an oral opinion, to be confirmed in
     writing (the "Fairness Opinion") to the effect that, as of the date of this
     Agreement, the consideration to be received by the holders of Shares in the
     Merger is fair to such holders from a financial point of view. Subject to
     the prior review by the Company Financial Advisor, the Fairness Opinion
     shall be included in the Proxy Statement.

        (x) Board Recommendation. The Board of Directors of the Company, at a
     meeting duly called and held, has by unanimous vote (i) determined that
     this Agreement and the transactions contemplated hereby, including the
     Merger and the transactions contemplated thereby, are fair to and in the
     best interests of the stockholders of the Company, and (ii) resolved to
     recommend to the holders of the Shares that they approve the Merger and the
     transactions contemplated thereby.

     SECTION 3.2. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to, and agree with, the Company as follows:

        (a) Organization; Standing and Power. Parent and Sub are corporations
     duly organized, validly existing and in good standing under laws of their
     states of incorporation and have the requisite corporate power and
     authority to carry on their business as now being conducted. Parent and Sub
     are duly qualified to do business and in good standing in each jurisdiction
     in which the nature of their business or the ownership or leasing of their
     properties makes such qualification necessary, other than in such
     jurisdictions where the failure to be so qualified to do business
     (individually or in the aggregate) would not have, or be reasonably likely
     to have, a material adverse effect on Parent.

        (b) Authority; Non-contravention. Parent and Sub have the requisite
     corporate power and authority to enter into this Agreement and to
     consummate the transactions contemplated hereby. The execution and delivery
     of this Agreement by Parent and Sub and the consummation by Parent and Sub
     of the transactions contemplated hereby have been duly authorized by all
     necessary corporate action on the part of Parent and Sub. This Agreement
     has been duly executed and delivered by Parent and Sub and constitutes a
     valid and binding obligation of Parent and Sub, enforceable against Parent
     and Sub in accordance with its terms, except that (i) such enforcement may
     be subject to bankruptcy, insolvency, reorganization, moratorium or other
     similar laws or judicial decisions now or hereafter in effect relating to
     creditors' rights generally and (ii) the remedy of specific performance and
     injunctive relief may be subject to equitable defenses and to the
     discretion of the court before which any proceeding therefor may be
     brought. The execution and delivery of this Agreement by Parent and Sub do
     not, and the consummation of the transactions contemplated hereby and
     compliance with the provisions hereof will not, conflict with, or result in
     any violation of, or default (with or without notice or lapse of time, or
     both) under, or give rise to a right of termination, cancellation or
     acceleration of or "put" right with respect to any obligation or to loss of
     a material benefit under, or result in the creation of any lien, security
     interest, charge or encumbrance upon any of the properties or assets of
     Parent or Sub or any of their subsidiaries under, any provision of (i) the
     Certificate of Incorporation or By-laws of Sub or of Parent or any
     comparable organizational documents of their subsidiaries, (ii) any loan or
     credit agreement, note, bond, mortgage, indenture, lease or other
     agreement, instrument, permit, concession, franchise or license applicable
     to Parent or Sub or any of their subsidiaries or their respective
     properties or assets or (iii) subject to the governmental filings and other
     matters referred to in the following sentence, any judgment, order, decree,
     statute, law, ordinance, rule or regulation or arbitration award applicable
     to Parent or Sub or any of their subsidiaries or their respective
     properties or assets, other than,
                                       12
<PAGE>   19

     in the case of clause (ii), any such conflicts, violations or defaults that
     individually or in the aggregate would not materially impair the ability of
     Parent and Sub to perform their respective obligations hereunder or prevent
     the consummation of any of the transactions contemplated hereby. No
     consent, approval, order or authorization of, or registration, declaration
     or filing with, any Governmental Entity is required by or with respect to
     Parent or Sub or any of their subsidiaries in connection with the execution
     and delivery of this Agreement by Parent and Sub or the consummation by
     Parent and Sub of the transactions contemplated hereby, except for (i) the
     filing by Parent of a premerger notification and report form under the HSR
     Act, (ii) the filing with the SEC of such reports under Sections 13 of the
     Exchange Act as may be required in connection with this Agreement and the
     transactions contemplated hereby and (iii) filings in Delaware by Sub in
     connection with the Merger.

        (c) Information Supplied. None of the information supplied or to be
     supplied by Parent for inclusion or incorporation by reference in the Proxy
     Statement will at the date the Proxy Statement is first mailed to the
     Company's stockholders and at the time of the Company's stockholder meeting
     at which Company Stockholder Approval is sought, contain any untrue
     statement of a material fact or omit to state any material fact required to
     be stated therein or necessary in order to make the statements therein, in
     light of the circumstances under which they are made, not misleading.

        (d) Brokers. Except for Donaldson, Lufkin & Jenrette Securities
     Corporation, whose fees are to be paid by Parent, no broker, investment
     banker or other person, is entitled to any broker's, finder's or other
     similar fee or commission in connection with the transactions contemplated
     by this Agreement based upon arrangements made by or on behalf of Parent or
     Sub, including any fee for any opinion rendered by any investment banker.

        (e) Litigation. There is no suit, action, proceeding or investigation
     pending or, to the knowledge of Parent, threatened against or affecting
     Parent or any of its subsidiaries that could reasonably be expected to
     prevent, hinder or materially delay the ability of Parent to consummate the
     transactions contemplated by this Agreement, nor is there any judgment,
     decree, injunction, rule or order of any Governmental Entity or arbitrator
     outstanding against Parent or any of its subsidiaries having, or which,
     insofar as reasonably can be foreseen, in the future could have, any such
     effect.

                                   ARTICLE IV

                   COVENANTS RELATING TO CONDUCT OF BUSINESS

     SECTION 4.1. Conduct of Business of the Company.

        (a) Ordinary Course. During the period from the date of this Agreement
     to the Effective Time of the Merger (except as otherwise specifically
     contemplated by the terms of this Agreement), the Company shall and shall
     cause its subsidiaries to carry on their respective businesses in the
     usual, regular and ordinary course in substantially the same manner as
     conducted at the date hereof (including the on-going expansion project at
     the Company's Mississippi gas storage operations (the "Gas Storage
     Expansion Project"), which is being undertaken in the ordinary course of
     business) and, to the extent consistent therewith, use all reasonable
     efforts to preserve intact their current business organizations, keep
     available the services of their current officers and employees and preserve
     their relationships with customers, suppliers, licensors, licensees,
     distributors and others having business dealings with them, in each case
     consistent with past practice, to the end that their goodwill and ongoing
     businesses shall be unimpaired to the fullest extent possible at the
     Effective Time of the Merger. Without limiting the generality of the
     foregoing, and except as otherwise expressly contemplated by this
     Agreement, the Company shall not, and shall not permit any of its
     subsidiaries to:

           (i) (A) declare, set aside or pay any dividends on, or make any other
        distributions in respect of, any of its capital stock, other than
        dividends and distributions by any direct or indirect wholly-owned
        subsidiary of the Company to the Company or a wholly-owned subsidiary of
        the Company, (B) split, combine or reclassify any of its capital stock
        or issue or authorize the issuance of any other securities in respect
        of, in lieu of or in substitution for shares of its capital stock or (C)
        other than in
                                       13
<PAGE>   20

        connection with the Senior Preferred Stock Redemption, purchase, redeem
        or otherwise acquire any shares of capital stock of the Company or any
        of its subsidiaries or any other securities thereof or any rights,
        warrants or options to acquire any such shares or other securities;

           (ii) issue, deliver, sell, pledge or otherwise encumber any shares of
        its capital stock, any other voting securities or any securities
        convertible into, or any rights, warrants or options to acquire, any
        such shares, voting securities or convertible securities (other than, in
        the case of the Company, the issuance of Shares upon the exercise of
        options or conversion of Senior Preferred Stock outstanding on the date
        of this Agreement (as identified and described in Section 3.1(c)) in
        accordance with their current terms);

           (iii) amend the Company Charter, By-laws or other comparable charter
        or organizational document;

           (iv) acquire or agree to acquire (A) by merging or consolidating
        with, or by purchasing a substantial portion of the stock or assets of,
        or by any other manner, any business or any corporation, partnership,
        association, joint venture, limited liability company or other entity or
        division thereof or (B) any assets that would be material, individually
        or in the aggregate, to the Company and its subsidiaries taken as a
        whole, except purchases of supplies and inventory in the ordinary course
        of business consistent with past practice;

           (v) sell, lease, mortgage, pledge, grant a Lien on or otherwise
        encumber or dispose of any of its properties or assets, except (A) sales
        of inventory in the ordinary course of business consistent with past
        practice, (B) other transactions involving not in excess of $500,000 in
        the aggregate and (C) the creation of Liens in connection with working
        capital borrowings under revolving credit facilities incurred in
        accordance with Section 4.1(a)(vi);

           (vi) (A) incur any indebtedness for borrowed money or guarantee any
        such indebtedness of another person, issue or sell any debt securities
        or warrants or other rights to acquire any debt securities of the
        Company or any of its subsidiaries, guarantee any debt securities of
        another person, enter into any "keep well" or other agreement to
        maintain any financial statement condition of another person or enter
        into any arrangement with respect to any of the foregoing, except for
        working capital borrowings under revolving credit facilities that are
        (1) incurred in the ordinary course of business, (2) on terms customary
        for facilities of this type and (3) prepayable without premium or
        penalty; provided the Company notifies Parent of the entering into of
        any such facilities and of any drawdowns made thereunder; or (B) make
        any loans, advances or capital contributions to, or investments in, any
        other person, other than to the Company or any direct or indirect wholly
        owned subsidiary of the Company;

           (vii) make or incur any new capital expenditure not included in the
        Company's approved capital expenditure budget for 1999 set forth as on
        Section 4.1(a)(vii) of the Company Disclosure Document or not in
        conjunction with the Gas Storage Expansion Project as contemplated by
        Section 4.1(a)(vii) of the Company Disclosure Document with respect to
        1999, which, singly or in the aggregate with all other expenditures,
        would exceed $500,000 or enter into any material agreements or
        commitments with respect to capital expenditures without the prior
        written consent of Parent (which consent shall not be unreasonably
        withheld);

           (viii) make any material election relating to Taxes or settle or
        compromise any material Tax liability;

           (ix) pay, discharge or satisfy any claims, liabilities or obligations
        (absolute, accrued, asserted or unasserted, contingent or otherwise),
        other than the payment, discharge or satisfaction, in the ordinary
        course of business consistent with past practice or in accordance with
        their terms, of liabilities reflected or reserved against in, or
        contemplated by, the most recent consolidated financial statements (or
        the notes thereto) of the Company included in the SEC Documents or
        incurred in the ordinary course of business consistent with past
        practice;

                                       14
<PAGE>   21

           (x) release any party from or waive the benefits of, or agree to
        modify in any manner, any confidentiality, standstill or similar
        agreement to which the Company or any of its subsidiaries is a party;

           (xi) adopt a plan of complete or partial liquidation or resolutions
        providing for or authorizing such a liquidation or a dissolution,
        merger, consolidation, restructuring, recapitalization or
        reorganization;

           (xii) enter into any new collective bargaining agreement;

           (xiii) change any material accounting principle used by it, except as
        required by regulations promulgated by the SEC or the Financial
        Accounting Standards Board;

           (xiv) settle or compromise any litigation (whether or not commenced
        prior to the date of this Agreement) other than settlements or
        compromises in consultation and cooperation with Parent, and, with
        respect to any such settlement, with the prior written consent of
        Parent, such consent not to be unreasonably withheld;

           (xv) enter into any forward sale or hedging arrangements with respect
        to natural gas transportation or storage or any other products; or

           (xvi) authorize any of, or commit or agree to take any of, the
        foregoing actions.

        (b) Changes in Employment Arrangements. Neither the Company nor any of
     its subsidiaries shall adopt or amend (except as may be required by law)
     any bonus, profit sharing, compensation, stock option, pension, retirement,
     deferred compensation, employment or other employee benefit plan,
     agreement, trust, fund or other arrangement (including any Company Benefit
     Plan) for the benefit of any employee, director or former director or
     employee, increase the compensation or benefits of any officer of the
     Company or any of its subsidiaries, or, except as provided in an existing
     Company Benefit Plan or in the ordinary course of business consistent with
     past practice, increase the compensation or benefits of any employee or
     former employee or pay any benefit not required by any existing plan,
     arrangement or agreement.

        (c) Severance. Neither the Company nor any of its subsidiaries shall
     grant any new or modified severance or termination arrangement or increase
     or, except as required under the existing terms of a Company Benefit Plan,
     accelerate any benefits payable under its severance or termination pay
     policies in effect on the date hereof.

        (d) Other Actions. The Company shall not, and shall not permit any of
     its subsidiaries to, take any action that would, or that could reasonably
     be expected to, result in any of the representations and warranties of the
     Company set forth in this Agreement becoming untrue.

        (e) Internal Restructuring and Hattiesburg Owner Trust
     Matters. Notwithstanding any provision of this Section 4.1 to the contrary,
     the Company shall be permitted to take the actions necessary to achieve the
     internal restructuring of its subsidiaries, to the extent described in
     Exhibit A hereto (the "Internal Restructuring"), so that immediately prior
     to the Effective Time of the Merger each and every subsidiary of the
     Company, other than any subsidiary which is at present a general
     partnership or limited liability company, shall have been converted into,
     or otherwise become by merger or otherwise (collectively "conversion"), a
     new single member limited liability company organized under the Delaware
     Limited Liability Company Act. Further, if requested by Parent, the Company
     shall use its reasonable efforts to own or acquire ownership of, or cause a
     subsidiary to own or acquire ownership of, all Investor Certificates issued
     under the Hattiesburg Owner Trust Agreement. If Parent makes such request,
     Sub shall timely advance to the Company any funds necessary to effectuate
     the acquisition of all Investor Certificates issued under the Hattiesburg
     Owner Trust not owned by the Company or any subsidiary as of the date
     hereof, which advance shall be evidenced by an unsecured promissory note of
     the Company, in a form reasonably acceptable to the Company and Sub, which
     shall be payable by the Company to Sub on the date six months from the date
     of such advance and which shall bear simple interest at 8 1/2% per annum,
     payable in arrears. The Company shall, upon the occasion of it and its
     subsidiaries owning all
                                       15
<PAGE>   22

     such Investor Certificates, take all reasonable efforts to terminate the
     trust created by the Hattiesburg Owner Trust Agreement and the other
     agreements benefitting such trust, including that certain Collateral
     Sharing and Security Agreement dated November 21, 1995, that certain
     Guarantee dated November 21, 1995 and that certain Sales and Servicing
     Agreement dated November 21, 1995, as amended by the First Amendment
     thereto dated January 31, 1996.

        (f) Base Gas. Subject to changes in fuel gas and gas used to settle
     operational balancing accounts, the Company will maintain its current base
     gas levels at its gas storage facilities, which levels the Company believes
     are adequate to meet current contractual needs and to avoid damage to the
     storage facilities.

                                   ARTICLE V

                             ADDITIONAL AGREEMENTS

     SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement.

        (a) The Company will, as soon as practicable following the execution of
     this Agreement, duly call, give notice of, convene and hold a meeting of
     its stockholders for the purpose of approving and adopting this Agreement
     and approving related matters. The Company will, through its Board of
     Directors, recommend to its stockholders approval and adoption of this
     Agreement, except to the extent that the Board of Directors of the Company
     shall have withdrawn its approval or recommendation of this Agreement or
     the Merger solely to the extent permitted by Section 8.2(b).

        (b) The Company will, as soon as practicable following the execution of
     this Agreement, prepare and file a preliminary Proxy Statement with the SEC
     and will use its best efforts to respond to any comments of the SEC or its
     staff and to cause the Proxy Statement to be mailed to the Company's
     stockholders. The Company will notify Parent promptly of the receipt of any
     comments from the SEC or its staff and of any request by the SEC or its
     staff for amendments or supplements to the Proxy Statement or for
     additional information and will supply Parent with copies of all
     correspondence between the Company or any of its representatives, on the
     one hand, and the SEC or its staff, on the other hand, with respect to the
     Proxy Statement or the Merger. If at any time prior to the approval of this
     Agreement by the Company's stockholders there shall occur any event that
     should be set forth in an amendment or supplement to the Proxy Statement,
     the Company will promptly prepare and mail to its stockholders such an
     amendment or supplement. The Company will not mail any Proxy Statement, or
     any amendment or supplement thereto, to which Parent reasonably and timely
     objects.

        (c) The Company shall cooperate with Parent with respect to setting a
     record date for any necessary vote of stockholders regarding the Merger and
     will set such date as and when requested by Parent.

     SECTION 5.2. Access to Information.

        (a) During the period from the date hereof to the Effective Time of the
     Merger, except to the extent otherwise required by United States regulatory
     considerations:

           (i) The Company shall, and shall cause each of its subsidiaries,
        officers, employees, counsel, financial advisors and other
        representatives to, afford to Parent, and to Parent's accountants,
        counsel, financial advisors and other representatives, reasonable access
        to the Company's and its subsidiaries' respective properties, books,
        contracts, commitments and records and, during such period, the Company
        shall, and shall cause each of its subsidiaries, officers, employees,
        counsel, financial advisors and other representatives to, furnish
        promptly to Parent,

               (A) a copy of each report, schedule, registration statement and
           other document filed by the Company during such period pursuant to
           the requirements of Federal or state securities laws and

                                       16
<PAGE>   23

               (B) all other information concerning its business, properties,
           financial condition, operations and personnel as Parent may from time
           to time reasonably request so as to afford Parent a reasonable
           opportunity to make at its sole cost and expense such review,
           examination and investigation of the Company and its subsidiaries as
           Parent may reasonably desire to make. The Company agrees to advise
           Parent of all material developments with respect to the Company, its
           subsidiaries and their respective assets and liabilities.

           (ii) The Company agrees to request KPMG LLP to permit
        PricewaterhouseCoopers LLP to review and examine the work papers of KPMG
        LLP with respect to the Company and its subsidiaries, and the officers
        of the Company will furnish to Parent such financial and operating data
        and other information with respect to the business and properties of the
        Company and its subsidiaries as Parent shall from time to time
        reasonably request.

           (iii) The Company shall promptly notify Parent of any notices from or
        investigations by Governmental Entities that could materially affect the
        Company's business or assets or the consummation of the Merger. Parent
        will promptly notify the Company of any notices from or investigations
        by Governmental Entities that could materially affect Parent's
        consummation of the Merger.

        (b) Except as required by law and without limiting in any way the
     continued efficacy of the Confidentiality and Standstill Agreement referred
     to in Section 8.1, each of the Company and Parent shall, and shall cause
     its respective directors, officers, employees, accountants, counsel,
     financial advisors and representatives and affiliates to, (i) hold in
     confidence, unless compelled to disclose by judicial or administrative
     process, or, in the opinion of its counsel, by other requirements of law,
     all nonpublic information concerning the other party furnished in
     connection with the transactions contemplated by this Agreement until such
     time as such information becomes publicly available (otherwise than through
     the wrongful act of such person), (ii) not release or disclose such
     information to any other person, except in connection with this Agreement
     to its auditors, attorneys, financial advisors, other consultants and
     advisors, and (iii) not use such information for any competitive or other
     purpose other than with respect to its consideration and evaluation of the
     transactions contemplated by this Agreement. Any investigation by any party
     of the assets and business of the other party and its subsidiaries shall
     not affect any representations and warranties hereunder or either party's
     right to terminate this Agreement as provided in Article VII.

        (c) In the event of the termination of this Agreement, each party
     promptly will deliver to the other party (and destroy all electronic data
     reflecting the same) all documents, work papers and other material (and any
     reproductions or extracts thereof and any notes or summaries thereto)
     obtained by such party or on its behalf from such other party or its
     subsidiaries as a result of this Agreement or in connection therewith so
     obtained before or after the execution hereof.

     SECTION 5.3. Reasonable Efforts; Notification.

        (a) Upon the terms and subject to the conditions set forth in this
     Agreement, except to the extent otherwise required by United States
     regulatory considerations and otherwise provided in this Section 5.3, each
     of the parties agrees to use reasonable efforts to take, or cause to be
     taken, all actions, and to do, or cause to be done, and to assist and
     cooperate with the other parties in doing, all things necessary, proper or
     advisable to consummate and make effective, in the most expeditious manner
     practicable, the Merger, and the other transactions contemplated by this
     Agreement, including (i) the obtaining of all necessary actions or
     nonactions, waivers, consents and approvals from Governmental Entities and
     the making of all necessary registrations and filings (including filings
     with Governmental Entities, if any) and the taking of all reasonable steps
     as may be necessary to obtain an approval or waiver from, or to avoid an
     action or proceeding by, any Governmental Entity, (ii) the obtaining of all
     necessary consents, approvals or waivers from third parties, (iii) the
     defending of any lawsuits or other legal proceedings, whether judicial or
     administrative, challenging this Agreement or the consummation of the
     transactions contemplated hereby, including seeking to have any stay or
     temporary restraining order entered by any court or other Governmental
     Entity vacated or reversed and (iv) the execution and delivery of any
                                       17
<PAGE>   24

     additional instruments necessary to consummate the transactions
     contemplated by this Agreement. In connection with and without limiting the
     foregoing, each of the Company and Parent and its respective Board of
     Directors shall (i) take all action necessary to ensure that no state
     takeover statute or similar statute or regulation is or becomes applicable
     to the Merger, (ii) if any state takeover statute or similar statute or
     regulation becomes applicable to the Merger, take all action necessary to
     ensure that the Merger may be consummated as promptly as practicable on the
     terms contemplated by this Agreement and otherwise to minimize the effect
     of such statute or regulation on the Merger and (iii) cooperate with each
     other in the arrangements for refinancing any indebtedness of, or obtaining
     any necessary new financing for, the Company and the Surviving Corporation.

        (b) The Company shall give prompt notice to Parent, and Parent or Sub
     shall give prompt notice to the Company, of (i) any representation or
     warranty made by it contained in this Agreement becoming untrue or
     inaccurate in any respect or (ii) the failure by it to comply with or
     satisfy in any material respect any covenant, condition or agreement to be
     complied with or satisfied by it under this Agreement; provided, however,
     that no such notification shall affect the representations or warranties or
     covenants or agreements of the parties or the conditions to the obligations
     of the parties hereunder.

        (c) (i) Each of the parties hereto (and, in the case of the Company, its
     ultimate controlling person, as necessary) shall file a premerger
     notification and report form under the HSR Act with respect to the Merger
     as promptly as reasonably possible following execution and delivery of this
     Agreement. Each of the parties (and, in the case of the Company, its
     ultimate controlling person, as necessary) agrees to use reasonable efforts
     to promptly respond to any request for additional information pursuant to
     Section (e)(1) of the HSR Act.

           (ii) Except as otherwise required by United States regulatory
        considerations, the Company will furnish to Fried, Frank, Harris,
        Shriver & Jacobson, counsel to Parent and Sub, copies of all
        correspondence, filings or communications (or memoranda setting forth
        the substance thereof (collectively, "Company HSR Documents")) between
        the Company, or any of its respective representatives, on the one hand,
        and any Governmental Entity, or members of the staff of such agency or
        authority, on the other hand, with respect to this Agreement or the
        Merger; provided, however, that (x) with respect to documents and other
        materials filed by or on behalf of the Company with the Antitrust
        Division of the Department of Justice, the Federal Trade Commission, or
        any state attorneys general that are available for review by Parent and
        Sub, copies will not be required to be provided to Fried, Frank, Harris,
        Shriver & Jacobson and (y) with respect to any Company HSR Documents (1)
        that contain any information which, in the reasonable judgment of
        Fulbright & Jaworski L.L.P., should not be furnished to Parent or Sub
        because of antitrust considerations or (2) relating to a request for
        additional information pursuant to Section (e)(1) of the HSR Act, the
        obligation of the Company to furnish any such Company HSR Documents to
        Fried, Frank, Harris, Shriver & Jacobson shall be satisfied by the
        delivery of such Company HSR Documents on a confidential basis to Fried,
        Frank, Harris, Shriver & Jacobson pursuant to a confidentiality
        agreement in form and substance reasonably satisfactory to Parent.
        Except as otherwise required by United States regulatory considerations,
        Parent and Sub will furnish to Fulbright & Jaworski L.L.P., counsel to
        the Company, copies of all correspondence, filings or communications (or
        memoranda setting forth the substance thereof (collectively, "Parent HSR
        Documents")) between Parent, Sub or any of their respective
        representatives, on the one hand, and any Governmental Entity, or member
        of the staff of such agency or authority, on the other hand, with
        respect to this Agreement or the Merger; provided, however, that (x)
        with respect to documents and other materials filed by or on behalf of
        Parent or Sub with the Antitrust Division of the Department of Justice,
        the Federal Trade Commission, or any state attorneys general that are
        available for review by the Company, copies will not be required to be
        provided to Fulbright & Jaworski L.L.P. and (y) with respect to any
        Parent HSR Documents (1) that contain information which, in the
        reasonable judgment of Fried, Frank, Harris, Shriver & Jacobson, should
        not be furnished to the Company because of antitrust considerations or
        (2) relating to a request for additional information pursuant to Section
        (e)(1) of the HSR Act, the obligation of Parent and Sub

                                       18
<PAGE>   25

        to furnish any such Parent HSR Documents to Fulbright & Jaworski L.L.P.
        shall be satisfied by the delivery of such Parent HSR Documents on a
        confidential basis to Fulbright & Jaworski L.L.P. pursuant to a
        confidentiality agreement in form and substance reasonably satisfactory
        to the Company.

           (iii) At the election of Parent, the Company and Parent shall use
        reasonable efforts to defend all litigation under the Federal or state
        antitrust laws of the United States which if adversely determined would,
        in the reasonable opinion of Parent (based on the advice of outside
        counsel), be likely to result in the failure of the condition set forth
        in Section 6.1(c) not being satisfied, and to appeal any order, judgment
        or decree, which if not reversed, would result in the failure of such
        condition. Notwithstanding the foregoing, nothing contained in this
        Agreement shall be construed so as to require Parent, Sub or the
        Company, or any of their respective subsidiaries or affiliates, to sell,
        license, dispose of, or hold separate, or to operate in any specified
        manner, any assets or businesses of Parent, Sub, the Company or the
        Surviving Corporation (or to require Parent, Sub, the Company or any of
        their respective subsidiaries or affiliates to agree to any of the
        foregoing). The obligations of each party under Section 5.3(a) to use
        reasonable efforts with respect to antitrust matters shall be limited to
        compliance with the reporting provisions of the HSR Act and with its
        obligations under this Section 5.3(c).

     SECTION 5.4. Employee Benefit Matters.

        (a) Parent may cause any Company Benefit Plan, other than the Severance
     Agreements, to be terminated or discontinued at or after the Effective Time
     of the Merger, provided that, to the extent Parent or its affiliates
     maintain a benefit plan of the same type for employees of Parent or any of
     its affiliates ("Parent Benefit Plan"), Parent shall take all actions
     necessary or appropriate to permit the Company employees participating in
     such Company Benefit Plan to immediately thereafter participate in such
     Parent Benefit Plan of the same type maintained by Parent or any of its
     affiliates for their employees generally (a "Replacement Plan"); provided,
     however, that if the Company Benefit Plan that is so terminated or
     discontinued is a group health plan, then Parent shall permit each Company
     employee participating in such group health plan and his or her eligible
     dependents to be covered under a Replacement Plan under the terms and
     conditions of the Replacement Plan as modified to the extent necessary to
     (i) provide medical and dental benefits to each such Company employee and
     such eligible dependents effective immediately upon the cessation of
     coverage of such individuals under such group health plan, (ii) credit to
     such Company employee, for the year during which such coverage under such
     Replacement Plan begins, with any deductibles and copayments already
     incurred during such year under such group health plan, and (iii) waive any
     preexisting condition restrictions to the extent that the preexisting
     condition restrictions were satisfied under such group health plan. Parent,
     the Surviving Corporation, their affiliates, and the Parent Benefit Plans
     (including, without limitation, the Replacement Plans) shall recognize each
     Company employee's years of service and level of seniority with the Company
     and its subsidiaries for purposes of terms of employment and eligibility,
     vesting and benefit determination under the Parent Benefit Plans (other
     than benefit accruals under any defined benefit pension plan). Nothing in
     this Agreement shall be construed to require Parent to provide any
     particular type or amount of benefits for any person under any Parent
     Benefit Plan.

        (b) At the Effective Time of the Merger, each outstanding option to
     purchase Shares shall be canceled and the holder thereof shall be entitled
     to receive at the Effective Time of the Merger from the Company in
     consideration for such cancellation a cash payment of an amount equal to
     (i) the excess, if any, of (A) the Merger Consideration over (B) the
     exercise price per Share subject to such option, multiplied by (ii) the
     number of Shares subject to such option. All amounts payable pursuant to
     this Section 5.4(b) shall be subject to any required withholding of taxes.
     Prior to the Effective Time of the Merger, the Board of Directors of the
     Company will take any corporate action necessary with respect to
     outstanding options to effectuate the provisions of this Section 5.4(b).

                                       19
<PAGE>   26

     SECTION 5.5. Indemnification.

        (a) The Company shall, and from and after the Effective Time of the
     Merger, Parent and the Surviving Corporation shall, indemnify, defend and
     hold harmless each person who is now, or has been at any time prior to the
     date hereof or who becomes prior to the Effective Time of the Merger, an
     officer or director of the Company or any of its Subsidiaries or an
     employee of the Company or any of its Subsidiaries who acts as a fiduciary
     under any Company Benefit Plans (but, with respect to such employees, only
     to the extent (if any) indemnified by the Company as of the date hereof)
     (the "Indemnified Parties") against all losses, claims, damages, costs,
     expenses (including attorneys' fees), liabilities or judgments or amounts
     that are paid in settlement with the approval of the indemnifying party
     (which approval shall not be unreasonably withheld) of or in connection
     with any threatened or actual claim, action, suit, proceeding or
     investigation based in whole or in part on or arising in whole or in part
     out of the fact that such person is or was a director, officer or such
     employee of the Company or any subsidiary whether pertaining to any matter
     existing or occurring at or prior to the Effective Time of the Merger and
     whether asserted or claimed prior to, or at or after, the Effective Time of
     the Merger (including arising out of or relating to the Merger, the
     consummation of the transactions contemplated herein, and any action taken
     in connection therewith). Any Indemnified Party wishing to claim
     indemnification under this Section 5.5, upon learning of any such claim,
     action, suit, proceeding or investigation, shall promptly notify the
     Company (or after the Effective Time of the Merger, Parent and the
     Surviving Corporation), but the failure so to notify shall not relieve a
     party from any liability that it may have under this Section 5.5, except to
     the extent such failure materially prejudices such party. Parent or the
     Surviving Corporation shall have the right to assume the defense thereof.
     If Parent of the Surviving Corporation does not assume the defense, the
     Indemnified Parties as a group may retain only one law firm to represent
     them with respect to each such matter unless there is, under applicable
     standards of professional conduct, a conflict between the positions of any
     two or more Indemnified Parties. The Indemnified Party will cooperate in
     the defense of any such matter. Parent shall not be liable for any
     settlement effected without its prior written consent.

        (b) Parent shall purchase and maintain in effect for the benefit of the
     Indemnified Parties for a period of six years after the Effective Time of
     the Merger, directors' and officers' liability insurance of at least the
     same coverage and amounts containing terms and conditions that are no less
     advantageous in any material respect to the Indemnified Parties than that
     maintained by the Company and its Subsidiaries as of the date of this
     Merger Agreement with respect to matters arising before the Effective Time
     of the Merger, provided that Parent shall not be required to pay an annual
     premium of such insurance in excess of three times the last annual premium
     paid by the Company prior to the date hereof, but in such case shall
     purchase as much coverage as possible for such amount.

        (c) All rights to indemnification for acts or omissions occurring prior
     to the Effective Time of the Merger now existing in favor of the
     Indemnified Parties as provided in the charter documents or by-laws of the
     Company or its subsidiaries and in any indemnification agreements to which
     they are parties shall survive the Merger, and the Surviving Corporation
     shall continue such indemnification rights for acts or omissions prior to
     the Effective Time of the Merger in full force and effect in accordance
     with their terms and Parent shall be financially responsible therefor.

        (d) If the Surviving Corporation or any of its successors or assigns (i)
     consolidates with or merges into any other person and shall not be the
     continuing or surviving corporation or entity of such consolidation or
     merger or (ii) transfers all or substantially all of its properties and
     assets to any person, then and in each such case, proper provisions shall
     be made, and Parent shall cause them to be so made, so that the successors
     and assigns of the Surviving Corporation, which, in the reasonable good
     faith opinion of the Surviving Corporation, shall be financially
     responsible persons or entities, assume the obligations set forth in this
     Section 5.5.

        (e) The provisions of this Section 5.5 are intended to be for the
     benefit of, and shall be enforceable by, the parties hereto and each
     Indemnified Party, his heirs and representatives.

                                       20
<PAGE>   27

     SECTION 5.6. Fees and Expenses. Except as provided in Article VIII, all
fees and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated.

     SECTION 5.7. Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except
that each party may respond to questions from stockholders and Parent may
respond to inquiries from financial analysts and media representatives in a
manner consistent with its past practice and each party may make such disclosure
as may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange without prior consultation to
the extent such consultation is not reasonably practicable. The parties agree
that the initial press release or releases to be issued in connection with the
execution of this Agreement shall be mutually agreed upon prior to the issuance
thereof.

     SECTION 5.8. Internal Restructuring. Parent, Sub and the Company will each
use their reasonable efforts to aid and permit the Company to achieve the
Internal Restructuring, and in such regards Parent and Sub specifically agree
that no representation, warranty, covenant or other agreement herein contained
shall be breached to the extent the Internal Restructuring results in the
acceleration of the payment of any indebtedness of the Company or any subsidiary
thereof listed on Section 5.8 of the Company Disclosure Document (whether on
account of the Internal Restructuring causing a default under any agreement or
instrument relating to such indebtedness or otherwise) and that Sub shall, as
the Surviving Corporation, be responsible for any such accelerated payment,
including any penalty, premium or "make-whole" payment associated therewith
listed on Section 5.8 of the Company Disclosure Document.

     SECTION 5.9. Redemption of Senior Preferred Stock. Parent shall no later
than three business days prior to the date scheduled for the meeting to be held
in respect of the Company Stockholder Approval instruct the Company to take all
steps necessary to mail a notice of redemption of the Senior Preferred Stock at
such time as specified by Parent (including at any time not later than the date
one business day before the date scheduled for such meeting). When so instructed
by Parent, the Company shall take all steps necessary to mail such notice of
redemption in accordance with the Company Charter and to satisfy the provisions
of Louisiana Revised Statute 12:75 regarding the deposit of funds necessary so
that the Senior Preferred Stock shall no longer have any voting rights and shall
no longer be outstanding. When Parent so instructs, Sub shall timely advance to
the Company any funds necessary to effectuate such deposit, which advance shall
be evidenced by an unsecured promissory note of the Company, in a form
reasonably acceptable to the Company and Sub, which shall be payable by the
Company to Sub on the date six months from the date of such advance and which
shall bear simple interest at 8 1/2% per annum, payable quarterly in arrears.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction prior to the Effective Time of the Merger of the following
conditions:

        (a) Stockholder Approval. Company Stockholder Approval shall have been
     obtained upon a vote at a duly held meeting of stockholders of the Company
     or at any adjournment thereof.

        (b) Other Approvals. All authorizations, consents, orders or approvals
     of, or declarations or filings with, or terminations or expirations of
     waiting periods imposed by, any Governmental Entity necessary for the
     consummation of the transactions contemplated by this Agreement shall have
     been filed, shall have occurred or shall have been obtained.

        (c) No Injunctions or Restraints. No temporary restraining order,
     preliminary or permanent injunction or other order issued by any court of
     competent jurisdiction or other legal restraint or

                                       21
<PAGE>   28

     prohibition preventing the consummation of the Merger shall be in effect;
     provided, however, that each of the parties shall have used reasonable
     efforts, subject to the limitations set forth in Section 5.3 hereof, to
     prevent the entry of any such injunction or other order and to appeal as
     promptly as possible any injunction or other order that may be entered.

     SECTION 6.2. Conditions to Obligations of Parent and Sub. The obligations
of Parent and Sub to effect the Merger are subject to the following conditions:

        (a) that Company shall have performed in all material respects all
     obligations to be performed by it under this Agreement prior to the
     Effective Time of the Merger;

        (b) each of the representations and warranties of the Company contained
     in Section 3.1 and shall be true and correct in all material respects
     (disregarding for these purposes any materiality qualifications contained
     therein) when made and as of the Effective Time of the Merger as if made on
     and as of such date (provided that such representations and warranties
     which are by their express provisions made as of a specific date need be
     true and correct only as of such specific date);

        (c) the Company's case under Chapter 11 of the Bankruptcy Code shall
     have been closed under Section 350 of the Bankruptcy Code in a manner
     satisfactory to Parent.

        (d) the Internal Restructuring shall have been completed, no later than
     immediately prior to the Effective Time of the Merger, in accordance with
     Exhibit A to the reasonable satisfaction of Parent and Sub.

     SECTION 6.3. Condition to Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the conditions that (a) Parent and
Sub shall have performed in all material respects all obligations to be
performed by them under this Agreement prior to the Effective Time of the
Merger, and (b) each of the representations and warranties of Parent and Sub
contained in Section 3.2 shall be true and correct in all material respects
(disregarding for these purposes any materiality qualifications contained
therein) when made and as of the Effective Time of the Merger as if made on and
as of such date (provided that such representations and warranties which are by
their express provisions made as of a specific date need be true and correct
only as of such specific date).

                                  ARTICLE VII

                       TERMINATION, AMENDMENT AND WAIVER

     SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company:

        (a) by mutual written consent of Parent and the Company;

        (b) by either Parent or the Company:

           (i) if Company Stockholder Approval shall not have been obtained upon
        a vote at a duly held meeting of stockholders of the Company or at any
        adjournment thereof;

           (ii) if the Merger shall not have been consummated on or before March
        31, 2000, unless the failure to consummate the Merger is the result of a
        material breach of this Agreement by the party seeking to terminate this
        Agreement; provided, however, that the passage of such period shall be
        tolled for any part thereof during which any party shall be subject to a
        nonfinal order, decree or ruling or action restraining, enjoining or
        otherwise prohibiting the consummation of the Merger or the calling or
        holding of a meeting of the stockholders of the Company called to
        approve the Merger and the other matters contemplated hereby; or

           (iii) if any court of competent jurisdiction or any governmental,
        administrative or regulatory authority, agency or body shall have issued
        an order, decree or ruling or shall have taken any other action
        permanently enjoining, restraining or otherwise prohibiting the purchase
        of Shares pursuant to
                                       22
<PAGE>   29

        the Merger and such order, decree, ruling or other action shall have
        become final and nonappealable;

        (c) by the Company or Parent in accordance with the provisions of
     Section 8.2;

        (d) by Parent, if the Company breaches any of its representations or
     warranties herein or fails to perform in any material respect any of its
     covenants, agreements or obligations under this Agreement which breach or
     failure (x) would give rise to the failure of a condition set forth in
     Section 6.2(a) or 6.2(b) and (y) cannot be or has not been cured within 30
     days following receipt of written notice of such breach; or

        (e) by the Company, if Parent or Sub breaches any of its representations
     or warranties herein or fails to perform in any material respect any of its
     covenants, agreements or obligations under this Agreement which breach or
     failure (x) would give rise to the failure of a condition set forth in
     Section 6.3(a) or 6.3(b) and (y) cannot be or has not been cured within 30
     days following receipt of written notice of such breach.

     SECTION 7.2. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.4 or an extension or waiver pursuant to Section
7.5 shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.

     SECTION 7.3. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any further
liability or obligation on the part of Parent, Sub or the Company, or any
director, officer, employee or stockholder thereof, other than the
confidentiality provisions of Sections 5.2(b) and (c) and the provisions of
Sections 3.1(i), 3.2(d), 5.6, 7.3, 8.2, 8.3, the proviso of the last sentence of
Section 8.1 and Article IX.

     SECTION 7.4. Amendment. This Agreement may be amended by the parties at any
time before or after Company Stockholder Approval is obtained; provided,
however, that after such Approval, there shall be made no amendment that by law
requires further approval by such stockholders without the further approval of
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.

     SECTION 7.5. Extension; Waiver. At any time prior to the Effective Time of
the Merger, the parties may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or the other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.

                                  ARTICLE VIII

                    SPECIAL PROVISIONS AS TO CERTAIN MATTERS

     SECTION 8.1. Takeover Defenses of the Company and Standstill
Agreements. The Company shall take such action with respect to any anti-takeover
provisions in its charter or afforded it by statute to the extent necessary to
consummate the Merger on the terms set forth in this Agreement. The Company
hereby waives the provisions of the letter agreements dated July 30, 1999, and
July 30, 1999, between the Company and Parent and the Company and El Paso Energy
Marketing Company, respectively (such letter agreements being herein referred to
collectively as the "Confidentiality and Standstill Agreements"), prohibiting
the purchase of Shares or acting to influence or control the Company, solely in
connection with the transactions contemplated hereby; provided, however, that
upon termination of this Agreement, such waiver shall no longer be effective.

                                       23
<PAGE>   30

     SECTION 8.2. No Solicitation.

        (a) The Company shall not, nor shall it permit any of its subsidiaries
     to, nor shall it authorize or permit any officer, director or employee of,
     or any investment banker, attorney or other advisor, agent or
     representative of, the Company or any of its subsidiaries to, directly or
     indirectly, (i) solicit or initiate the submission of any takeover
     proposal, (ii) enter into any agreement (other than confidentiality and
     standstill agreements in accordance with the immediately following proviso)
     with respect to any takeover proposal, or (iii) participate in any
     discussions or negotiations regarding, or furnish to any person any
     information with respect to, or take any other action to facilitate any
     inquiries or the making of any proposal that constitutes, or may reasonably
     be expected to lead to, any takeover proposal; provided, however, in the
     case of this clause (iii), that to the extent required by the fiduciary
     obligations of the Board of Directors of the Company, determined in good
     faith by the members thereof based on the advice of outside counsel, the
     Company may at any point prior to Company Stockholder Approval (the
     "Applicable Period"), and subject to the Company's providing written notice
     to Parent of its decision to take such action and compliance with Section
     8.2(f), in response to an unsolicited request therefor received other than
     in contravention of this Section 8.2(a), furnish information to any person
     or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
     pursuant to a confidentiality agreement on substantially the same terms as
     provided in the Confidentiality and Standstill Agreements referred to in
     Section 8.1 hereof and otherwise enter into discussions and negotiations
     with such person or group as to any superior proposal such person or group
     has made. Without limiting the foregoing, it is understood that any
     violation of the restrictions set forth in the preceding sentence by any
     officer, director or employee of the Company or any of its subsidiaries or
     any investment banker, attorney or other advisor, agent or representative
     of the Company, whether or not such person is purporting to act on behalf
     of the Company or otherwise, shall be deemed to be a material breach of
     this Agreement by the Company. For purposes of this Agreement, "takeover
     proposal" means (i) any proposal, other than a proposal by Parent or any of
     its affiliates, for a merger or other business combination involving the
     Company, (ii) any proposal or offer, other than a proposal or offer by
     Parent or any of its affiliates, to acquire from the Company or any of its
     affiliates in any manner, directly or indirectly, an equity interest in the
     Company or any subsidiary, any voting securities of the Company or any
     subsidiary or a material amount of the assets of the Company and its
     subsidiaries, taken as a whole, or (iii) any proposal or offer, other than
     a proposal or offer by Parent or any of its affiliates, to acquire from the
     stockholders of the Company by tender offer, exchange offer or otherwise
     more than 20% of the outstanding Shares. Each of the transactions referred
     to in clauses (i) -- (iii) of the foregoing definition of takeover
     proposal, other than the transactions contemplated by this Agreement, is
     referred to herein as an "Acquisition Transaction".

        (b) Neither the Board of Directors of the Company nor any committee
     thereof shall, except in connection with the termination of this Agreement
     pursuant to Sections 7.1 (a), (b) or (e), (i) withdraw or modify, or
     propose to withdraw or modify, in a manner adverse to Parent or Sub, the
     approval or recommendation by the Board of Directors of the Company or any
     such committee of this Agreement or the Merger or take any action having
     such effect or (ii) approve or recommend, or propose to approve or
     recommend, any takeover proposal. Notwithstanding the foregoing, in the
     event the Board of Directors of the Company receives (other than in
     contravention of Section 8.2(a)) a takeover proposal that, in the exercise
     of its fiduciary obligations (as determined in good faith by a majority of
     the disinterested members thereof based on the advice of outside counsel),
     it determines to be a superior proposal, the Board of Directors may, during
     the Applicable Period only, withdraw or modify its approval or
     recommendation of this Agreement or the Merger and may, during the
     Applicable Period only and subject to compliance with the provisions of
     this sentence terminate this Agreement, in each case at any time after
     midnight on the third business day following Parent's receipt of written
     notice (a "Notice of Superior Proposal") advising Parent that the Board of
     Directors has received a takeover proposal which it has determined to be a
     superior proposal and that the Board of Directors of the Company has
     resolved to accept the superior proposal (subject to such termination),
     specifying the material terms and conditions of such superior proposal,
     identifying the person or group making such superior proposal and providing
     Parent with a copy of all written materials submitted with respect to such
     superior proposal, but only if Parent does not make, within three business
     days of receipt of the Notice of Superior Proposal,
                                       24
<PAGE>   31

     a written offer that is at least as favorable, in the good faith reasonable
     judgment of a majority of the members of the Board of Directors of the
     Company (based on the advice of a financial advisor of nationally
     recognized reputation), as the superior proposal. The Company (x) will not
     enter into a binding agreement for a superior proposal referred to in the
     previous sentence until at least the first calendar day following the third
     business day after it has provided the written notice to Parent required
     thereby, (y) will notify Parent promptly if its intention to enter into a
     written agreement referred to in such notice shall change at any time after
     giving such notification and (z) will not terminate this Agreement or enter
     into a binding agreement for a superior proposal referred to in the
     previous sentence if Parent has within the period referred to in clause (x)
     of this sentence, made a written offer that is at least as favorable, in
     the good faith reasonable judgment of a majority of the members of the
     Board of Directors of the Company (based on the advice of a financial
     advisor of nationally recognized reputation), as the superior proposal. Any
     of the foregoing to the contrary notwithstanding, the Company may engage in
     discussions with any person or group that has made an unsolicited takeover
     proposal for the purpose of determining whether such proposal is a superior
     proposal. Nothing contained herein shall prohibit the Company from taking
     and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
     under the Exchange Act.

        (c) In the event that the Board of Directors of the Company or any
     committee thereof shall (i) withdraw or modify, or propose to withdraw or
     modify, in a manner adverse to Parent or Sub the approval or recommendation
     by the Board of Directors of the Company or any such committee of this
     Agreement or the Merger or take any action having such effect, or (ii)
     approve or recommend, or propose to approve or recommend, any takeover
     proposal, or (iii) fail to reaffirm its approval or recommendation of this
     Agreement and the Merger within two days after a request by Parent, Parent
     may terminate this Agreement.

        (d) For purposes of this Agreement, a "superior proposal" means any bona
     fide takeover proposal to acquire, directly or indirectly, for
     consideration consisting of cash, securities or a combination thereof, at
     least a majority of the Shares then outstanding or at least 50% of the
     assets of the Company and its subsidiaries taken as a whole, and (x)
     otherwise on terms which a majority of the members of the Board of
     Directors of the Company determines in its good faith reasonable judgment
     (based on the written advice of a financial advisor of nationally
     recognized reputation, a copy of which shall be provided to Parent) to be
     more favorable to the Company's stockholders than the Merger and that
     financing thereof is reasonably likely to be available, and (y) which such
     Board of Directors, after considering such matters as such Board of
     Directors deems relevant (including the written opinion of outside
     counsel), determines in good faith that, in the case of the Company,
     furnishing information to the third party, participating in discussions or
     negotiations with respect to the superior proposal or withdrawing or
     modifying its recommendation or recommending a superior proposal, as
     applicable, or terminating this Agreement, is required for the Board of
     Directors of the Company to comply with its fiduciary duties to the Company
     and its stockholders under applicable law.

        (e) For purposes of this Agreement, "Acquisition Agreement" means any
     letter of intent, agreement in principle, acquisition agreement or similar
     agreement (other than a confidentiality agreement in connection with a
     superior proposal which is entered into by the Company in accordance with
     Section 8.2(a)).

        (f) The Company promptly shall advise Parent orally and in writing of
     any takeover proposal or any inquiry with respect to or that could
     reasonably be expected to lead to any takeover proposal, the identity of
     the person making any such takeover proposal or inquiry and the material
     terms of any such takeover proposal or inquiry. The Company shall provide
     Parent with copies of all written materials received in connection with any
     such takeover proposal and shall keep Parent fully informed of the status
     and material terms of any such takeover proposal or inquiry.

        (g) The Company shall each immediately cease and cause to be terminated
     all existing discussions and negotiations, if any, with any other persons
     conducted heretofore with respect to any takeover proposal.

                                       25
<PAGE>   32

     SECTION 8.3. Fee and Expense Reimbursements.

        (a) The Company agrees to pay Parent a fee in immediately available
     funds (in recognition of the fees and expenses incurred to date by Parent
     in connection with the matters contemplated hereby) of $7,500,000 (i)
     promptly upon the termination of the Agreement in the event this Agreement
     is terminated by Parent or the Company as permitted by Section 8.2 or (ii)
     if any Person shall have made a takeover proposal after the date hereof or
     announced its intention to make a takeover proposal and thereafter this
     Agreement is terminated by Parent or the Company pursuant to Section
     7.1(b)(i) or 7.1(b)(ii), and within 18 months after the termination of this
     Agreement any Acquisition Transaction involving the Company shall have been
     consummated or an Acquisition Agreement with respect to an Acquisition
     Transaction involving the Company shall have been entered into, then such
     fee shall be paid upon the date the Acquisition Agreement is entered into,
     or if no Acquisition Agreement is entered into, then upon the date the
     Acquisition Transaction is consummated.

        (b) In the event that (i) this Agreement is terminated by Parent or the
     Company pursuant to Sections 7.1(b)(i) or (d) or (ii) if Parent is entitled
     to a fee pursuant to Section 8.3(a), then in either case the Company shall
     assume and pay, or reimburse Parent for, all reasonable and documented fees
     and expenses incurred by Parent or Sub (including the reasonable and
     documented fees and expenses of its counsel, accountants and financial
     advisors) through the date of termination and which are specifically
     related to the Merger, this Agreement and the matters contemplated by this
     Agreement, but not to exceed $1,000,000 in the aggregate (or $500,000 in
     the aggregate in the event a fee is paid pursuant to Section 8.3(a)),
     promptly, but in no event later than five business days after submission of
     a request for payment of the same.

                                   ARTICLE IX

                               GENERAL PROVISIONS

     SECTION 9.1. Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective Time
of the Merger. This Section 9.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.

     SECTION 9.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by facsimile
or sent by overnight courier to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

     (a) if to Parent or Sub, to

     El Paso Energy Corporation
     1001 Louisiana Street
     Houston, Texas 77002
     Telephone: (713) 420-2131
     Facsimile: (713) 420-6969
     Confirm:   (713) 420-2131
     Attention: President

     with a copy to

     Fried, Frank, Harris, Shriver & Jacobson
     1 New York Plaza
     New York, New York 10004
     Telephone: (212) 859-8000
     Facsimile: (212) 859-4000
     Confirm:   (212) 859-8362
     Attention: Gary P. Cooperstein, Esq.

                                       26
<PAGE>   33

     (b) if to the Company, to

     Crystal Gas Storage, Inc.
     400 Crystal Building
     229 Milam Street
     Shreveport, Louisiana 71120
     Telephone: (318) 222-7791
     Facsimile: (318) 677-5504
     Confirm:   (318) 677-5500
     Attention: Joe N. Averett, Jr.

     with a copy to:

     Fulbright & Jaworski L.L.P.
     1301 McKinney, Suite 5100
     Houston, Texas 77010-3095
     Telephone: (713) 651-5151
     Facsimile: (713) 651-5246
     Confirm:   (713) 651-5496
     Attention: Charles H. Still, Esq.

     SECTION 9.3. Definitions. For purposes of this Agreement:

        (a) an "affiliate" of any person means another person that directly or
     indirectly, through one or more intermediaries, controls, is controlled by,
     or is under common control with, such first person;

        (b) "environmental laws" means, as applicable, the Comprehensive
     Environmental Response, Compensation and Liability Act, 42 U.S.C. sec.sec.
     9601 et seq. ("CERCLA"), the Emergency Planning and Community Right-to-Know
     Act of 1986, 42 U.S.C. sec.sec. 11001 et seq., the Resource Conservation
     and Recovery Act, 42 U.S.C. sec.sec. 6901 et seq., the Toxic Substances
     Control Act, 15 U.S.C. sec.sec. 2601 et seq., the Federal Insecticide,
     Fungicide, and Rodenticide Act, 7 U.S.C. sec.sec. 136 et seq., the Clean
     Air Act, 42 U.S.C. sec.sec. 7401 et. seq., the Clean Water Act (Federal
     Water Pollution Control Act), 33 U.S.C. sec.sec. 1251 et seq., the Safe
     Drinking Water Act, 42 U.S.C. sec.sec. 300f et seq., the Occupational
     Safety and Health Act, 29 U.S.C. sec.sec. 641 et seq., the Hazardous
     Materials Transportation Act, 49 U.S.C. sec.sec. 1801 et seq., and the Oil
     Pollution Act of 1990, 33 U.S.C. sec.sec. 2701 et seq., all rules and
     regulations promulgated pursuant to any of the above statutes, and any
     other foreign, federal, state or local law, statute, ordinance, rule or
     regulation in effect as of the date of this Agreement, or any common law
     cause of action, contractual obligation, or judicial or administrative
     decision, order or decree (all as have been amended from time to time)
     regulating, governing or relating to pollution, contamination and/or
     protection of the environment or human health.

        (c) "knowledge" means, with respect to any matter stated herein to be
     "to the Company's knowledge," or similar language, the actual knowledge of
     the Chairman of the Board, the Chief Executive Officer, President, Chief
     Financial Officer any Vice President of the Company or any person that has
     responsibility for managing a functional area of the Company, and with
     respect to any matter stated herein to be "to Parent's knowledge," or
     similar language, the actual knowledge of the Chairman of the Board, the
     Chief Executive Officer, President, any Vice President, Chief Financial
     Officer or General Counsel of Parent.

        (d) "material adverse effect" or "material adverse change" means, when
     used in connection with the Company, any change or effect (or any
     development that, insofar as can reasonably be foreseen, is likely to
     result in any change or effect) that is materially adverse to the business,
     properties, assets, liabilities, condition (financial or otherwise),
     financial performance or results of operations of the Company and its
     subsidiaries, taken as a whole, provided, however, that no such change or
     effect shall be deemed to have occurred to the extent such change or effect
     arises from conditions generally affecting the oil and gas or electric
     power generation industries or from the United States or global economies.

                                       27
<PAGE>   34

     The term "material adverse effect" means, when used in respect of Parent or
     Sub, any material adverse effect on the ability of Parent or Sub to
     consummate the transactions contemplated by this Agreement.

        (e) "person" means an individual, corporation, partnership, association,
     trust, unincorporated organization or other entity; and

        (f) a "subsidiary" of any person means any corporation, partnership,
     association, joint venture, limited liability company or other entity in
     which such person owns over 50% of the stock or other equity interests, the
     holders of which are generally entitled to vote for the election of
     directors or other governing body of such other legal entity.

     SECTION 9.4. Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".

     SECTION 9.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

     SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein and the schedules
attached hereto) and the Confidentiality and Standstill Agreements (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) except for the provisions of Sections 5.4(b) and
5.5, are not intended to confer upon any person other than the parties any
rights or remedies hereunder.

     SECTION 9.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except that matters pertaining to the merger of the Company into
Sub shall be governed by the DGCL and the LBCL to the extent of their
applicability to the Merger.

     SECTION 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Parent
and/or Sub may assign all or any of their respective rights and obligations
hereunder to any affiliate, provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.

     SECTION 9.9. Enforcement of the Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any district court of
the United States located in the States of Texas (Southern District only),
Louisiana or Delaware or in any Delaware state court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal district court sitting in the Southern District of
Texas or in Louisiana or any Federal or state court sitting in the State of
Delaware in the event any dispute between the parties hereto arises out of this
Agreement solely in connection with such a suit between the parties, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement in any court other than such a
Federal or state court.

                                       28
<PAGE>   35

     SECTION 9.10. Performance by Sub. Parent hereby agrees to cause Sub to
comply with its obligations under this Agreement.

     SECTION 9.11. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

                                       29
<PAGE>   36

     IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.

                                      EL PASO ENERGY CORPORATION

                                      By         /s/ H. BRENT AUSTIN
                                        ----------------------------------------
                                      Name:            H. Brent Austin
                                           -------------------------------------
                                      Title:  Executive Vice President and Chief
                                             Financial Officer
                                          --------------------------------------

                                      EL PASO ENERGY ACQUISITION CO.

                                      By           /s/ RALPH EADS
                                        ----------------------------------------
                                      Name:              Ralph Eads
                                           -------------------------------------
                                      Title:       Executive Vice President
                                          --------------------------------------

                                      CRYSTAL GAS STORAGE, INC.

                                      By        /s/ J.N. AVERETT, JR.
                                        ----------------------------------------
                                      Name:           J.N. Averett, Jr.
                                           -------------------------------------
                                      Title:          President & C.E.O.
                                          --------------------------------------

                                       30