IROQUOIS PIPELINE OPERATING COMPANY AND

                         TENNESSEE GAS PIPELINE COMPANY

                            AGREEMENT WITH RESPECT TO

                     IROQUOIS GAS TRANSMISSION SYSTEM, L.P.


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         This Agreement dated this 15th day of March 1991, by and between
Tennessee Gas Pipeline Company, a Delaware corporation ("Tennessee") and
Iroquois Pipeline Operating Company, a Delaware corporation ("Operator").

                                   WITNESSETH:

         WHEREAS, Iroquois Gas Transmission System was formed pursuant to a
General Partnership Agreement effective as of January 10, 1989, to construct and
operate an interstate natural gas pipeline from a point on the international
border near Iroquois, Ontario through the states of New York and Connecticut
across Long Island Sound to a point near South Commack, Long Island, New York to
transport natural gas on behalf of various Shippers;

         WHEREAS, Iroquois Gas Transmission System, L.P. was formed pursuant to
a Limited Partnership Agreement effective as of November 30, 1989 ("Partnership
Agreement") and all rights, liabilities, duties and obligations of Iroquois Gas
Transmission System have been assigned to and assumed by Iroquois Gas
Transmission System, L.P.;

         WHEREAS, pursuant to Section 9.5 of the General Partnership Agreement,
the Partnership and TransCanada Iroquois Ltd. ("TCIL") have executed an
Operating Agreement effective as of January 10, 1989 ("Operating Agreement") and
the Partnership initially designated TCIL to manage the design, construction,
operation, maintenance, and administration of the Iroquois Gas Transmission
System; and

         WHEREAS, the rights and obligations of TCIL under the Operating
Agreement have been assigned to the Operator; and


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         WHEREAS, Operator desires that Tennessee perform for Operator certain
of the functions and responsibilities which have been delegated to the Operator
under the Operating Agreement; and

         WHEREAS, Tennessee is willing and able to assume such functions and
responsibilities on the terms and conditions set forth below:

         NOW THEREFORE, in consideration of the representations, covenants and
premises hereinafter set forth, the Parties agree as follows:

1.       Definitions.
         ------------

         As used in this Agreement, the definitions used in the Partnership and
         Operating Agreements shall, except as specifically provided herein,
         have the same meanings in this Agreement. In addition, the following
         words and terms shall have the meanings set forth herein:

         1.1.  Accounting Procedure. The accounting procedure set forth in
               Exhibit "A" hereto.

         1.2.  Completion Date. The date on which the construction and testing
               of the Facilities authorized under Section 4.10 of the
               Partnership Agreement are substantially completed and the
               Facilities are available for service.

         1.3.  Day. A period of twenty-four (24) consecutive hours commencing at
               8:00 a.m. Eastern Standard Time.

         1.4.  Month. A period of time beginning on the first Day of a calendar
               month and ending at the same time on the first Day of the next
               succeeding calendar month.


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         1.5.  Year. Each twelve (12) Month period beginning on the first Day of
               a calendar year and ending on the first Day of the next calendar
               year, provided that the first year hereunder shall begin on the
               earlier of the Completion Date and the date upon which Tennessee
               is first requested to undertake services pursuant to Section
               2.1.2, and shall end on the first Day of the following calendar
               year and further provided that the last contract year shall end
               at the end of the term provided in Section 9.1 of this Agreement,
               unless extended by mutual agreement between Tennessee and
               Operator.

         1.6.  Party. Tennessee or Operator and "Parties" shall mean both
               Tennessee and Operator.

         1.7.  Partnership. The Iroquois Gas Transmission System, L.P. and any
               successor entities thereto.

2.       Relationship of the Parties.

         2.1.  Scope of Agreement.
               -------------------

               2.1.1.  Upon and subject to the terms and conditions of this
                       Agreement and commencing with the Completion Date,
                       Operator and Tennessee hereby agree that Tennessee shall
                       undertake the obligations and perform the services
                       specified in Section 3 of this Agreement.

               2.1.2.  Prior to the Completion Date, Tennessee shall perform
                       such services as Tennessee and the Operator may mutually
                       agree upon as necessary and


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                       appropriate to ensure a smooth transition from
                       construction to operation of the Facilities. During such
                       period, the Operator will endeavor in good faith to
                       utilize Tennessee employees as construction inspectors
                       and supervisors where feasible. Prior to construction by
                       the Operator of any Incremental Expansion, the Operator
                       and Tennessee shall negotiate an agreement with respect
                       to coordination of their respective construction and
                       operation responsibilities.

         2.2.  Tennessee's Authority to Execute Contracts. Subject to any
               procedures established by the Operator with the consent of
               Tennessee, which consent shall not unreasonably be withheld,
               Tennessee may, on its own behalf, execute contracts relating to
               performance of Tennessee's duties under this Agreement. Tennessee
               shall nor be authorized to execute any contract on behalf of the
               Operator without the prior express written consent of the
               Operator and shall not be authorized to execute any contract on
               behalf of the Partnership without the prior express written
               consent of the Management Committee. Consistent with the
               foregoing, Tennessee may enter into contracts (including
               contracts for the purchase of property) in the name of the
               Partnership for which Tennessee has budget authority to incur
               expenditures pursuant to Section 5.2 of this Agreement.

3.       Tennessee's Operation and Maintenance Responsibilities.

         3.1.  Tennessee's Responsibilities. Subject to (i) the prior approval
               of the Operator with respect to those matters enumerated in
               Sections 9.2.6 and 9.2.7 of the


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               Partnership Agreement, and (ii) prior budget authorizations by
               the Operator pursuant to Section 5.2 of this Agreement,
               Tennessee, commencing with the Completion Date, shall have the
               general responsibility for the day-to-day operation and
               maintenance of the Facilities as set forth herein:

               3.1.1.  Tennessee shall provide all field operating and
                       maintenance services with respect to the Facilities,
                       including but not limited to routine and emergency
                       repairs, right-of-way upkeep and surveillance, gas
                       measurement servicing, calibration and volume
                       determination, operational planning and related
                       budgeting, engineering and technical services, and minor
                       capital projects not otherwise budgeted as directed by
                       Operator. The Operator shall provide Tennessee with
                       reasonable access to, and upon request by Tennessee
                       copies of, records necessary for Tennessee to perform its
                       operation and maintenance responsibilities under this
                       Agreement, including without limitation as built
                       construction drawings of the Facilities, right-of-way
                       records, and design studies. Landowner contacts shall be
                       the responsibility of the Operator, which shall employ
                       right-of-way agents for that purpose.

               3.1.2.  Tennessee shall maintain accurate and itemized accounting
                       records in accordance with Required Accounting Practice
                       for operation and maintenance of the Facilities, together
                       with any information reasonably required by the Operator
                       relating to such records. Unless otherwise directed by
                       the Operator, Tennessee shall be deemed to be in
                       compliance


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                       with its record keeping responsibilities under this
                       Section 3.1.2 if it maintains such records in a manner
                       that is consistent with Tennessee's own reports to FERC.

               3.1.3.  Tennessee shall prepare proposed operating and
                       maintenance budgets and schedules for the review and
                       approval of the Operator pursuant to Section 5.2 of this
                       Agreement.

               3.1.4.  Tennessee shall perform gas control and dispatch
                       responsibilities for the Facilities for a period of time
                       ending the earlier of April 30, 1997 or such time as
                       Operator has elected to begin performing these functions.
                       Tennessee shall cooperate with Operator in the transition
                       of such functions. With the consent of Tennessee, the
                       time period during which Tennessee performs such
                       functions may be extended by Operator. Upon completion of
                       the transition, Tennessee shall cease to allocate costs
                       to the performance of such functions, and Operator shall
                       not be responsible for any such costs after Operator
                       begins performing these functions. Gas control and
                       dispatch responsibilities include

                       (a)  control of all Iroquois Gas Transmission System,
                            L.P.'s valves, flow regulators and measurement
                            facilities at all points within the United States at
                            which gas enters of exits the Facilities;

                       (b)  dispatch of gas in accordance with nomination
                            schedules submitted to it by the Operator;


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                       (c)  measurement of volumes actually received and
                            delivered;

                       (d)  response (relating to valves, flow regulators and
                            measurement) to emergency conditions as necessary to
                            assure safe operation of the Facilities.

                            Until the transition of such gas control and
                            dispatch responsibilities to Operator is complete,
                            (a) Tennessee shall arrange to make operating data
                            with respect to gas entering or exiting the
                            Facilities, including pressures, Btu content,
                            volumes and quantities in dekatherms, and such other
                            data as agreed by Tennessee and Operator, available
                            on a real time electronic basis where feasible to
                            the Operator and/or TransCanada PipeLines Limited
                            ("TCPL") at the same time such data is available to
                            Tennessee; (b) the Operator shall cause to be
                            provided to Tennessee, on a real time electronic
                            basis, where feasible the following data (and such
                            other data as agreed by Tennessee and Operator) with
                            respect to the operation of TCPL's system: volume,
                            Btu content, operating pressure and volume
                            allocations at the interconnection between TCPL and
                            the Facilities, at the same time such data is
                            available to the Operator; (c) the Operator shall
                            have responsibility for receiving and accepting
                            nominations from the Shippers and shall schedule
                            volumes on the Facilities in accordance with such
                            nominations for

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                            dispatch by Tennessee pursuant to the Partnership's
                            tariff and applicable federal regulations; and (d)
                            Tennessee shall advise the Operator promptly when
                            Tennessee becomes aware that allocations and
                            nominations received from the Operator are
                            inconsistent with scheduled transportation volumes
                            for downstream or upstream transportation or with
                            actual receipts and deliveries, and Operator shall
                            act promptly to assure to the extent practicable
                            that resulting imbalances do not exceed any limits
                            in the Partnership's tariff.


                            The Operator shall coordinate all scheduled
                            transportation volumes with upstream and downstream
                            systems.

               3.1.5.  [RESERVED FOR FUTURE USE].



               3.1.6.  Tennessee shall make reports to and consult with the
                       Operator and/or the Management Committee regarding all
                       duties, responsibilities and actions of Tennessee under
                       this Agreement in the form and at the times reasonably
                       requested by the Operator. The Operator and Tennessee
                       shall meet regularly during construction of the
                       Facilities, and quarterly thereafter, to discuss
                       Tennessee's performance of its obligations hereunder.
                       Such meetings shall be attended by at least one
                       representative each of Operator and Tennessee


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               3.1.7.  Except as otherwise provided by applicable laws or
                       governmental regulations or as otherwise directed by the
                       Operator, Tennessee shall retain all charts, records,
                       books of account, plans, designs, studies and reports and
                       other documents related to the operation and maintenance
                       of the Facilities for a period of three (3) years from
                       the date of completion of the activity to which such
                       records relate. Tennessee shall provide the Operator with
                       copies of all changes to the as-built construction
                       drawings for the Facilities which result from the
                       performance of Tennessee's services and responsibilities
                       under this Agreement. All charts, records, books of
                       account, plans, designs, studies and reports and other
                       documents related to the operation and maintenance of the
                       Facilities will be transferred to the Operator at the end
                       of the term as defined in Section 9 or upon termination
                       as defined in Section 10.

               3.1.8.  Tennessee shall make immediate reports to the Operator of
                       all nonroutine occurrences that Tennessee determines may
                       have a significant adverse impact upon the operation
                       and/or maintenance of the Facilities and make a follow-up
                       report at an appropriate time on the response to each
                       nonroutine occurrence.

               3.1.9.  Tennessee shall perform, and shall be reimbursed for
                       notwithstanding any budgetary limitations, such other
                       duties as are reasonably requested by the Operator or as
                       are necessary or appropriate to discharge Tennessee's
                       responsibilities under this Agreement.


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               3.1.10. While the Operator and Tennessee recognize that the
                       Operator is ultimately responsible for securing necessary
                       permits and authorizations, and filing necessary reports
                       with appropriate federal, state, or local agencies,
                       Tennessee is responsible for ensuring that the Facilities
                       are operated in accordance with all such permits and
                       authorizations and shall promptly provide the Operator
                       with all reports which are requested by the Operator,
                       including information demonstrating such compliance with
                       permits and authorizations.

               3.1.11. In performing its duties under the Agreement, Tennessee
                       shall conform to the procedures and directives of the
                       Operator.

               3.1.12. Tennessee will consult with the Operator with respect to
                       any changes in assignments of responsibilities of
                       employees of Tennessee providing services under this
                       Agreement.

         3.2.  Tennessee's Authority to Perform Unbudgeted Maintenance and
               Repairs. Tennessee is authorized to perform maintenance and
               repairs to the Facilities which have not been included in the
               most recent budget approved by the Operator pursuant to Section
               5.2 of this Agreement, provided that the total cost of all such
               unbudgeted maintenance and repairs in any of the Partnership's
               fiscal years shall not exceed the amount permitted under Section
               5.2 of this Agreement. Tennessee is authorized to make emergency
               maintenance and repairs to the facilities at any time
               irrespective of budget authorization. The authority under this
               Section 3.2

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               shall not extend to non-emergency modifications to any high
               pressure components of the Facilities without the approval of the
               Operator.

         3.3.  Tennessee's Right to Request Instructions From Operator.
               Tennessee may at any time, if it reasonably deems it to be
               necessary or appropriate, request instructions from the Operator
               with respect to any matter contemplated by this Agreement and may
               defer action thereon pending the receipt of such instructions.
               Tennessee shall be fully protected in acting in accordance with
               the instructions of the Operator or in omitting to act pending
               the receipt of such instructions, and shall have no liability
               pursuant to Section 6.1 hereof for any act in good faith in
               compliance therewith, or for its good faith failure to act
               pending receipt thereof.

         3.4.  Design and Construction Procedures Proposed by Operator.
               Responsibility for the design and construction of the Facilities
               (which term includes all initial Facilities and all Incremental
               Expansions) has been delegated to and shall be performed by the
               Operator under the Operating Agreement. Tennessee will have, for
               a reasonable time prior to completion of the design process, full
               access and input to the final design and construction plans for
               the Facilities proposed by the Operator to the Partnership.

         3.5.  Operating Agreement. Tennessee acknowledges that the functions
               and responsibilities which it is to perform under this Agreement
               are to fulfill certain of the Operator's functions and
               responsibilities to the Partnership under the Operating
               Agreement. Section 3.1 of the Operating Agreement permits the


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               Partnership, acting in accordance with Section 9.2.6(k) of the
               Partnership Agreement, to change the authority and responsibility
               delegated to the Operator under Section 3 of the Operating
               Agreement. It is understood and agreed that if the Partnership so
               changes any authority and/or responsibility delegated to the
               Operator under the Operating Agreement, which the Operator, in
               turn, has contracted for Tennessee to perform in this Agreement,
               then the Operator may modify the authority and responsibility of
               Tennessee under Section 3 of this Agreement solely to conform to
               such change. Operator will inform Tennessee within five (5) days
               of any change so made by the Management Committee. Any change so
               made by the Operator shall be effective and binding on Tennessee
               under this Agreement twenty-five (25) days after notice of such
               change is given to Tennessee, provided, however, that all costs,
               expenses and liabilities incurred by Tennessee in implementing,
               or as a result of, such change shall be reimbursable costs under
               Section 5 of this Agreement and such change in and of itself
               shall not give rise to liability under Section .8.1 hereof.

               Notwithstanding the foregoing, if Tennessee notifies Operator
               during the twenty-five day period following notice of any such
               change that such change is unacceptable to Tennessee, Tennessee
               shall have the right to terminate this Agreement, effective upon
               one year's notice to Operator. In that case, Tennessee be bound
               by the change so made but will remain fully obligated to continue
               to perform all of its obligations hereunder during such one-year
               period as if such change had not been made; provided, however,
               that Operator may terminate this


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               Agreement upon thirty (30) days written notice to Tennessee at
               any time during such one-year period.

               Tennessee further acknowledges that the Operator's performance of
               its obligations under this Agreement is dependent upon the
               performance of the Partnership under the Operating Agreement.
               Therefore, Tennessee agrees that the Operator shall not be liable
               in any manner for any default under this Agreement which results
               in whole or in part, directly or indirectly from a default by the
               Partnership under the Operating Agreement. In the event of a
               default by the Operator under this Agreement which results in
               whole or in part, directly or indirectly from a default by the
               Partnership under the Operating Agreement, the Operator hereby
               assigns to Tennessee any rights which the Operator may have under
               the Operating Agreement to seek and receive damages from the
               Partnership to the extent that the Partnership's default has
               caused or contributed to the Operator's default hereunder.

               Tennessee further acknowledges and consents to the assignment by
               the Operator to the Partnership under Section 3.4 of the
               Operating Agreement of certain of the Operator's rights to seek
               and receive damages from Tennessee under this Agreement in the
               event of a default by the Operator to the Partnership under the
               Operating Agreement which results in whole or in part, directly
               or indirectly from a default by Tennessee under this Agreement.


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4.       Tennessee's Employees, Consultants and Subcontractors.
         ------------------------------------------------------

         4.1.  Tennessee's Employees, Consultants and Subcontractors. Tennessee
               shall employ or retain and have supervision over the Persons
               (including consultants and professional service or other
               organizations) required by Tennessee to perform its duties and
               responsibilities hereunder in an efficient and economically
               prudent manner. Tennessee shall pay all reasonable expenses in
               connection therewith, including compensation, salaries and wages,
               overhead and administrative expense incurred by Tennessee and its
               Affiliates, and, if applicable, social security taxes, workers'
               compensation insurance, retirement and insurance benefits and
               other such expenses. All authorized expenses pursuant to this
               Section shall be reimbursed to Tennessee by the Operator as
               provided in the Accounting Procedure.

         4.2.  Affiliates of Tennessee or Partners. Tennessee shall be
               authorized to utilize, as it deems necessary, the services of its
               corporate Affiliates, provided that such services are utilized on
               terms materially no less favorable to the Operator than those
               prevailing at the time for comparable services of unaffiliated
               independent parties. Tennessee shall also be authorized to
               utilize, as it deems necessary, the services of independent
               contractors, including the services of any Partner's corporate
               Affiliates, provided that the services of any such corporate
               Affiliate are utilized on terms materially no less favorable to
               the Operator than those prevailing at the time for comparable
               services of unaffiliated independent parties, and Tennessee shall
               negotiate contracts for such services and execute the same.


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               In performing under this Agreement, Tennessee may utilize
               facilities, including structures, equipment, aircraft, supplies,
               and personnel in common with facilities and personnel used in the
               operation of Tennessee's system. The cost (including overhead) of
               such shared facilities and personnel shall be allocated in
               accordance with the Accounting Procedure.

         4.3.  Standards for Tennessee and its Employees. Tennessee shall
               perform its services and carry out its responsibilities hereunder
               and shall require all of its employees, contractors,
               subcontractors and materialmen furnishing labor, material or
               services for performance of Tennessee's services and
               responsibilities under this Agreement to carry out their
               responsibilities, in accordance with sound, workmanlike and
               prudent practices of the gas pipeline industry and in compliance
               with all relevant laws, statutes, ordinances, safety codes,
               regulations and rules of governmental authorities having
               jurisdiction applicable to the Facilities and applicable
               standards and specifications established by the Partnership and
               the Operator subject to the consent of Tennessee, which consent
               shall not unreasonably be withheld.

         4.4.  Non-Discrimination. In performing under this Agreement, Tennessee
               will not discriminate against any employee or applicant for
               employment because of race, creed, color, religion, sex, national
               origin, age or handicap, and will comply with all provisions of
               Executive Order 11246 of September 24, 1965 and any successor
               order thereto, to the extent that such provisions are applicable
               to Tennessee, the Operator and/or the Partnership. The provisions
               of this Section 4.4 shall be

<PAGE>

               applicable to any contractors, consultants and/or subcontractors
               retained in connection herewith.

         4.5.  Alcohol and Drug Testing Warranty and Certification. Where either
               Party is responsible for the construction, operation, maintenance
               and/or emergency response associated with any facilities under
               this Agreement, such Party shall be in compliance with the terms
               of the United States Department of Transportation Federal
               Pipeline Safety Drug Testing and Alcohol Misuse Prevention
               Program regulations as provided in 49 C.F.R., Part 199.

               Each Party certifies and warrants to the other Party that:

                   (a)  It has a Drug Testing Policy in written form; and it is
                        in current compliance with that policy; and

                   (b)  It will require each contractor and/or subcontractor it
                        hires to also have a written Drug Testing Policy and to
                        be in compliance with that policy if applicable to the
                        work the contractor and/or subcontractor is to perform;
                        and

                   (c)  It and its contractors and/or subcontractors will remain
                        in compliance with those policies during the term or any
                        extension thereof of this Agreement;


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                   (d)  It and its contractor's and/or subcontractors' Drug
                        Testing Policy is in compliance with U.S. Department of
                        Transportation Research and Special Programs
                        Administration Regulations and Rules for the Control of
                        Drug Use in Natural Gas, Liquefied Natural Gas, and
                        Hazardous Liquid Pipeline Operations for Transportation
                        Workplace Drug Testing Programs, Final Rule (49 CFR,
                        Part 199), Procedures for Transportation Workplace Drug
                        Testing Programs, Final Rule (49 CFR, Part 40) and U.S.
                        Department of Transportation Federal Highway
                        Administration's Controlled Substances Testing, Final
                        Rule (49 CFR, Parts 391 and 394) where applicable to the
                        work to be performed by such Party, its contractors or
                        subcontractors under this Agreement; and

                   (e)  It maintains and follows a written alcohol misuse plan
                        that conforms to the requirements of 49 CFR Parts 40 and
                        199.

5.       Financial and Accounting.
         -------------------------

         5.1.  Accounting and Compensation.
               ----------------------------

               5.1.1.  Tennessee shall keep a full and complete account of all
                       costs, expenses and expenditures incurred by it in
                       connection with its obligations hereunder in the manner
                       set forth in the Accounting Procedure.


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               5.1.2.  Tennessee shall be reimbursed by the Operator for all
                       reasonable and proper costs, expenses and expenditures
                       paid by it in connection with its obligations hereunder
                       at the rate and in the manner set forth in the Accounting
                       Procedure; provided, however, that costs incurred by
                       Tennessee under Section 8.1 of this Agreement shall not
                       be reimbursed by the Operator. It is the intent of the
                       Parties that Tennessee shall carry out its services
                       hereunder on a fully reimbursed basis, pursuant to the
                       provisions of this Agreement without profit or loss. To
                       the extent that Tennessee incurs such profit or loss
                       appropriate adjustments will promptly be made to
                       eliminate such profit or loss.

         5.2.  Budgets. As soon as practicable, Tennessee shall prepare and
               submit for approval of the Operator an initial estimate of
               capital, operating and maintenance expenditures and expenses
               which Tennessee anticipates for the first Year. Annually
               thereafter, on or before each October 1, Tennessee shall prepare
               and submit for approval of the Operator an estimate of capital,
               operating and maintenance expenditures and expenses which
               Tennessee anticipates for the ensuing Year broken down into such
               individual line items and including such supporting documentation
               and data as the Operator may reasonably require. Except as the
               Operator may otherwise direct, the budget approved by the
               Operator and then in effect shall constitute authorization of
               Tennessee to incur the expenditures contained in such budget and
               to incur expenditures up to ten percent (10%) in excess of the
               amount set forth for any line item in such budget, provided


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               that the total of all such expenditures in excess of budgeted
               line item amounts shall not exceed five percent (5%) of the total
               amount of such budget. Tennessee shall immediately inform the
               Operator of any facts which Tennessee believes may increase or
               decrease any line item in the most recent budget approved by the
               Operator by ten percent (10%) or more or increase or decrease the
               total amount of such budget by five percent (5%) or more.

               Tennessee acknowledges that the estimates of capital, operating
               and maintenance expenditures and expenses which it provides to
               the Operator each Year pursuant to this Section 5.2 shall,
               following review and preliminary concurrence by the Operator, be
               utilized by the Operator in preparing the budget estimates which
               the Operator submits to the Partnership each Year pursuant to
               Section 5.2 of the Operating Agreement. Tennessee further
               acknowledges that the budget for Tennessee's activities approved
               by the Operator each Year will reflect the budget for these
               expenses and expenditures approved by the Partnership for such
               Year pursuant to Section 5.2 of the Operating Agreement.

               The Operator shall notify Tennessee of its approval or
               disapproval of Tennessee's budget no later than thirty (30) days
               after Management Committee approval of Operator's budget. If
               Operator fails to notify Tennessee in writing of the approval or
               disapproval of any budget within thirty (30) days of Management
               Committee approval of Operator's budget, then Operator shall be
               deemed to have approved such budget. If Operator timely notifies
               Tennessee of its disapproval of all or part of a budget but then
               fails to approve a revised budget before the time that such


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               budget is to take effect, then Tennessee shall perform under the
               last budget as approved by the Operator until such time as the
               Operator issues its approval, provided, however, that if the
               Operator's partial budget disapproval relates to Tennessee's
               first full Year budget, then Tennessee is nonetheless authorized
               to incur costs set forth in any approved line item in such budget
               but may not incur costs in connection with any disapproved line
               items in a total amount exceeding fifteen percent (15%) of the
               total of all disapproved amounts, until Operator has approved a
               revised budget. If during the period covered by approved budget,
               Tennessee determines that an adjustment to the estimated costs
               set forth in the approved budget is necessary or appropriate,
               then Tennessee shall submit to the Operator for approval an
               adjusted budget. Subject to Operator's consent to the adjustment
               (which shall not be unreasonably withheld), Operator shall
               promptly submit such adjusted budget to the Management Committee
               for approval. Operator shall notify Tennessee no later than
               thirty (30) days after Management Committee approval of the
               adjusted budget. If Operator fails to notify Tennessee in writing
               of its approval or disapproval of the adjusted budget within
               thirty (30) days of Management Committee action on such adjusted
               budget, then Operator shall be deemed to have approved such
               adjusted budget. If Operator timely notifies Tennessee of its
               disapproval of such adjusted budget, Tennessee shall continue to
               perform under the approved budget without the adjustment(s).

         5.3.  Disputed Charges. The Operator may, within the time provided in
               the Accounting Procedure, take written exception to any bill or
               statement rendered by Tennessee


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               for any expenditure or any part thereof, on the ground that the
               same was not a reasonable, authorized, and proper cost incurred
               by Tennessee in connection with its obligations under this
               Agreement. The Operator shall be entitled to withhold payment of
               any amount of the bill or the statement which it disputes. If the
               Operator nevertheless pays the amount in full, such payment shall
               not be deemed a waiver of the right of the Operator to recoup any
               contested portion of any bill or statement. However, if the
               amount as to which such written exception is taken or any part
               thereof is ultimately determined in accordance with Section 12 of
               this Agreement not to be a reasonable, authorized, and proper
               expense incurred by Tennessee in connection with its obligations
               under this Agreement, such amount or portion thereof (as the case
               may be) which has been paid by the Operator shall be refunded by
               Tennessee to the Operator together with interest thereon during
               the period from the date of payment by the Operator to the date
               of refund by Tennessee at a rate (which in no event shall be
               higher than the maximum rate permitted by applicable law) equal
               to the rate designated by Morgan Guaranty Trust Company from time
               to time as its prime rate, plus one percent. If the Operator has
               withheld payment in accordance with this section, and the amount
               or portion thereof in dispute is ultimately determined to be a
               reasonable, authorized, and proper expense in accordance with
               Section 12 of the Agreement, such amount or portion thereof shall
               be remitted to Tennessee, with interest as calculated in the
               foregoing sentence.


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         5.4.  Audit and Examination. Upon fifteen (15) Days' notice in writing
               to Tennessee, the Operator shall have the right during normal
               business hours to audit or examine, at its expense, all books and
               records of Tennessee relating to its performance of its
               obligations under this Agreement, provided, however, that the
               total number of full audits commenced in any Year shall not
               exceed two. Such rights shall include the right to meet with
               Tennessee's internal and independent auditors to discuss matters
               relevant to the audit or examination.

               The Operator shall have twenty-five (25) Months after the close
               of a Year in which to make an audit of Tennessee's records for
               such Year. Absent fraud or intentional concealment or
               misrepresentation by Tennessee or its employees, and except for
               any adjustments which may arise from FERC compliance audits,
               Tennessee shall neither be required nor permitted to adjust any
               item unless a claim therefor is presented or adjustment is
               initiated within twenty-five (25) Months after the close of the
               Year in which the statement therefor is rendered, and in the
               absence of such timely claims or adjustments, the bills and
               statements rendered shall be conclusively established as correct;
               provided, however, this shall not prevent adjustment resulting
               from physical inventory of the Facilities and other property. Any
               audit requested by Operator under this Section 5.4 may be
               conducted by representatives of the Partnership or of any
               Partner. Representatives of the Partnership or of any Partner may
               accompany the Operator during any audit under this Section 5.4
<PAGE>


6.       Independent Contractor.

         6.1.  Independent Contractor. In performing services pursuant to this
               Agreement, Tennessee shall be an independent contractor and not
               an employee, agent or servant of the Operator and this Agreement
               does not create any partnership or joint venture between
               Tennessee and the Operator.

7.       Intellectual Property.

         7.1.  Inventions and Copyrights. Any (i) inventions, whether patentable
               or not, developed or invented, or (ii) copyrightable material,
               developed by Tennessee or its employees while engaged exclusively
               in the performance of services under this Agreement shall, unless
               otherwise directed, be assigned to Partnership, which shall have
               the exclusive right to the exploitation thereof.

         7.2.  Confidentiality. The Operator and Tennessee shall comply with the
               provisions applicable to confidential information set out in
               Section 13.12 of the Partnership Agreement, which provisions are
               incorporated herein by reference as if set out in full.

         7.3.  License to Tennessee. The Operator hereby grants to Tennessee an
               irrevocable, royalty-free, non-exclusive and non-assignable
               license to use, during the term of this Agreement, any
               confidential information provided to the Operator or Tennessee
               and designated as such by the Operator, or generated by the
               Partnership, the Operator or Tennessee during the term of this
               Agreement. For


<PAGE>


               purposes of this Section 7.3, confidential information shall
               include, but shall not be limited to, inventions (whether
               patented or not) and copyrighted or copyrightable material. As a
               condition precedent to the effectiveness of the aforesaid license
               to use, Tennessee hereby expressly agrees that it will utilize
               such confidential information solely in connection with the
               performance of its duties hereunder and further expressly agrees
               that it will be subject to and bound by the provisions set forth
               in Section 13.12 of the Partnership Agreement as if it were a
               Partner. Upon termination of this Agreement, Tennessee shall
               return all confidential information which has been provided to
               it, together with all reproductions thereof in Tennessee's
               possession, pursuant to the aforesaid license to use, to the
               Person from which it obtained such confidential information.

8.       Indemnification, Litigation, Insurance and Liability.
         -----------------------------------------------------

         8.1.  Tennessee's Indemnity. Tennessee shall indemnify and hold the
               Operator, its employees or agents harmless from and against:

               8.1.1.   all actions or failures to act by Tennessee which are
                        not within the scope of Tennessee's authority under this
                        Agreement or any express direction of the Operator;

               8.1.2.   claims for non-payment of any and all contributions,
                        withholding deductions or taxes measured by the wages,
                        salaries or compensation paid to Persons employed by
                        Tennessee in connection herewith except for


<PAGE>


                        claims associated with or resulting from good faith
                        efforts to contest such taxes.

         8.2.  Operator's Indemnity.
               ---------------------

               8.2.1.   Inasmuch as the services to be provided by Tennessee
                        hereunder are to be furnished and performed for only the
                        reimbursements provided in the Accounting Procedure, the
                        Operator, subject to the limitations set forth in this
                        Section 8.2.1, shall indemnify and save harmless
                        Tennessee and its officers, agents and employees against
                        all actions, claims, demands, costs and liabilities (to
                        the extent only that such actions, claims, demands,
                        costs and liabilities are not satisfied by insurance
                        carried pursuant to Section 8.3.1 below) arising out of
                        the acts (or failure to act) of Tennessee, its officers,
                        agents and employees acting in good faith within the
                        scope of Tennessee's authority under this Agreement,
                        including actions, claims, demands, costs and
                        liabilities resulting from the negligence of Tennessee,
                        its officers, agents and employees, and Tennessee, its
                        officers, agents, and employees shall not be liable for
                        any obligations, liabilities, or commitments incurred by
                        or on behalf of the Operator as a result of any such
                        acts (or failure to act). Notwithstanding any other
                        provision of this Agreement, the Operator's obligation
                        to indemnify Tennessee shall be limited to that portion
                        of any claim for indemnification by Tennessee for which
                        the Operator is reimbursed by the Partnership pursuant
                        to the Operating Agreement, provided, however, that if
                        the Partnership fails to


<PAGE>

                        reimburse the Operator for any portion of a claim for
                        indemnification by Tennessee, the Operator hereby
                        assigns to Tennessee the Operator's rights and
                        obligations pursuant to Sections 5.3 and 8.2 of the
                        Operating Agreement with respect to such indemnification
                        amount and the Operator shall have no further liability
                        to Tennessee with respect to such indemnification.
                        Tennessee, its officers, agents and employees shall not
                        be indemnified for any actions, claims, demands, costs
                        and liabilities resulting from their gross negligence or
                        willful misconduct.

               8.2.2.   Any and all claims, damages or causes of action against
                        Tennessee in favor of anyone other than the Partnership
                        or the Operator arising out of Tennessee's performance
                        of obligations under this Agreement which are not
                        covered by insurance in accordance with Section 8.3 of
                        this Agreement shall be settled or litigated and
                        defended by Tennessee in accordance with its best
                        judgment and discretion when either (A) (i) the amount
                        involved is less than a ceiling amount to be established
                        by the Operator, (ii) no injunctive or similar relief is
                        sought, and (iii) no criminal sanction is sought; or (b)
                        the action is one for which Tennessee is required to
                        provide indemnification pursuant to Section 8.1 of this
                        Agreement; otherwise, such decision shall be made by the
                        Operator, and any settlement or defense thereof by
                        Tennessee shall be controlled by the Operator.

         8.3.  Insurance.
               ----------


<PAGE>

               8.3.1.   The Partnership shall carry and maintain insurance to
                        protect Tennessee, its officers, agents and employees
                        against all actions, claims, demands, costs and
                        liabilities arising out of the negligence of Tennessee,
                        its officers, agents and employees in connection with
                        their good faith acts (or failure to act) under this
                        agreement. Such insurance shall name Tennessee as an
                        additional named insured. The Partnership shall provide
                        Tennessee with at least ninety (90) days prior written
                        notice of any cancellation, termination or material
                        alteration of such insurance.

               8.3.2.   Tennessee shall require its contractors, subcontractors
                        or consultants, to carry and maintain at a minimum the
                        following insurance for the benefit of the Partnership,
                        the Operator and Tennessee: $1,000,000 Combined Single
                        Limit with $2,000,000 Aggregate; and Worker's
                        Compensation Insurance in accordance with statutory
                        limits.

               8.3.3.   Tennessee may carry and maintain such other insurance
                        for its own account as it may deem necessary, but in the
                        event other insurance is carried, unless otherwise
                        directed by the Operator, Tennessee agrees to waive, and
                        agrees to undertake in good faith to have its insurers
                        waive, any rights of subrogation they may have against
                        the Operator, the Partnership and the individual
                        Partners thereof, or the Affiliates of any of them,
                        and/or their directors, officers, employees, servants or
                        agents.


<PAGE>


               8.3.4.   With respect to claims and losses for damage, injury or
                        destruction of property which is a part of the
                        Facilities, which property is covered by insurance other
                        than insurance provided for in Section 8.3.1 of this
                        Agreement, it is agreed that: (i) neither the Operator
                        nor Tennessee shall have any rights of recovery against
                        one another, nor against the Affiliates of each, nor the
                        insurers of any of them, and their rights of recovery
                        are mutually waived, and (ii) that Tennessee shall not
                        have any rights of recovery against the Partnership or
                        any of the Partners thereof, or against the Affiliates
                        of any of them, or the insurers of any of them, and its
                        rights of recovery are waived. All such policies of
                        insurance purchased to cover the Facilities or any part
                        thereof, or the operation (in any respect) or
                        maintenance of the Facilities or any part thereof, or
                        any gas transported or handled therein, shall be
                        endorsed properly to effectuate this waiver of recovery,
                        provided, however, that if Tennessee or the Operator is
                        unable, despite its best efforts, to obtain such an
                        endorsement, then the other Party may waive or
                        appropriately modify this requirement.

         8.4.  Limitation of Liability. Tennessee and the Operator hereby agree
               that any claim against the Partnership which may arise hereunder
               shall be made only against the assets of the Partnership and that
               all rights to proceed against the Partners and the assets of the
               Partnership, as a result of any such claim or any obligations
               arising therefrom, are hereby expressly waived.


9.       Term.
         -----


<PAGE>

         9.1.  Term. This Agreement shall be effective as of (Date of Execution)
               and shall continue until December 31, 2000, and thereafter on a
               year-to-year basis subject to termination by the Operator or
               Tennessee upon one-year's written notice to the other Party,
               unless sooner terminated pursuant to Section 10 of this
               Agreement. Prior to the expiration or termination of this
               Agreement, Tennessee shall cooperate with the Operator to
               facilitate an orderly transition to either the Operator or its
               designee of the performance of services being provided by
               Tennessee. The Parties recognize that the Operator or its
               designee may solicit for employment Tennessee employees
               previously dedicated to the performance of services under this
               Agreement upon the expiration or termination of this Agreement.

10.      Termination.

         10.1. Removal of Tennessee.
               ---------------------

               10.1.1.  The Operator may terminate this Agreement with or
                        without cause, upon one year's notice to Tennessee. If
                        the Operator terminates this Agreement in accordance
                        with this section, then the Operator shall reimburse
                        Tennessee for any unreimbursed costs incurred by
                        Tennessee pursuant to Section 5.1 of this Agreement.

               10.1.2.  In the event of a material default by Tennessee in the
                        performance of its obligations under this Agreement
                        which shall have continued for a period of fifty-five
                        (55) Days after written notice thereof by the Operator
                        to


<PAGE>


                        Tennessee, the Operator may terminate this Agreement by
                        written notice to Tennessee, provided, however, that no
                        termination shall occur if: (a) Tennessee has initiated
                        action to cure such material default but, despite its
                        best efforts, has been unable to complete cure within
                        such fifty-five (55) Day period and Tennessee's actions
                        to complete cure are continuing in good faith beyond the
                        end of the fifty-five (55) Day period or (b) such
                        default results in whole or in part, directly or
                        indirectly, from a default by the Partnership under the
                        Operating Agreement or as a result of actions of the
                        Partnership or from a material default by the Operator
                        under this Agreement.

         10.2. Continuing Default by Operator. In the event of a material
               default by the Operator in the performance of its obligations
               under this Agreement and the continuance of such material default
               for a period of sixty (60) days after written notice thereof by
               Tennessee to Operator, Tennessee may, by written notice to the
               Operator, terminate this Agreement; provided, however, that no
               termination as set forth above shall occur if: (a) the Operator
               has initiated action to cure such material default but, despite
               its best efforts, has been unable to complete such cure within
               such sixty (60) day period, and the Operator's actions to
               complete cure are continuing in good faith beyond the end of the
               sixty (60) day period or (b) such default results in whole on
               part, directly or indirectly, from a default by the Partnership
               under the Operating Agreement or as a result of actions of the
               Partnership.


<PAGE>

         10.3. [[RESERVED FOR FUTURE USE].
               ---------------------------

         10.4. Additional Events of Termination. In addition to termination in
               accordance with Sections 10.1 and 10.2, this Agreement shall
               terminate:

               10.4.1.  Upon termination of the Operating Agreement, whether
                        terminated with or without cause; provided, however,
                        that if the Operating Agreement is terminated with cause
                        and such cause is unrelated to any default by Tennessee
                        under this Agreement, then Tennessee shall have the
                        opportunity to negotiate with the Partnership with
                        respect to designation of Tennessee as Operator or
                        continuation of this Agreement.

               10.4.2.  [RESERVED FOR FUTURE USE].

               10.4.3.  [RESERVED FOR FUTURE USE].

               10.4.4.  If Tennessee and the Operator mutually agree to
                        terminate this Agreement.

               10.4.5.  If Tennessee, upon one year's prior notice to the
                        Operator, terminates this Agreement.

         10.5. Tennessee's Costs, Expenses and Actions Upon Termination Or
               Expiration. In addition to any costs for which the Operator may
               be obliged to reimburse Tennessee pursuant to Section 5 of this
               Agreement upon the expiration or termination of this Agreement,
               Operator shall not be obliged to reimburse Tennessee for any
               costs and expenses incurred by Tennessee in connection with the
               winding up of Tennessee's duties under this Agreement except as
               follows:

<PAGE>

               In the event of a termination of the Agreement by the Operator
               prior to December 31, 2000, the severance of employees fully
               dedicated to the performance of service under this agreement
               shall be funded by the Operator; severance benefits shall equal
               the then applicable severance packages for employees of El Paso
               Energy Corporation; provided, however, that the Operator shall
               not be required t fund such severance in the event the Operator
               or its designee tenders employment that is substantially similar
               in duties and compensation to such employees (whether or not
               those employees accept such offer of employment).

11.      Survival of Obligations.
         ------------------------

         11.1. Survival of Obligations. The termination of this Agreement shall
               not discharge either Party from any obligation which it owes to
               the other Party by reason of any transaction, commitment or
               agreement entered into, or any loss, cost, damage, expense or
               liability which shall occur or arise (or the circumstances,
               events or basis of which shall occur or arise) prior to such
               termination. It is the intent of the Parties that any obligation
               owed by a Party to the other Party (whether the same shall be
               known or unknown at the termination hereof, or whether the
               circumstances, events or basis of the same shall be known or
               unknown at the termination hereof) shall survive the termination
               of this Agreement.

12.      Law of the Contract and Arbitration.
         ------------------------------------

         12.1. Law of the Contract. This Agreement shall be construed and
               interpreted under the laws of the State of Delaware, without
               regard to the principles of conflicts of laws.


<PAGE>

         12.2. Arbitration.
               ------------

               12.2.1. In the event that the Partners are unable to agree on any
                       of the matters set forth herein, either Tennessee or the
                       Operator may upon written notice prior to the
                       commencement of legal proceedings related to such dispute
                       call for submission of such matter to arbitration. The
                       Party requesting arbitration shall set forth in such
                       notice in adequate detail the issues to be arbitrated,
                       and within ten (10) Days from the receipt of such notice
                       the other Party may set forth in adequate detail
                       additional related issues requesting arbitration shall
                       set forth in such notice in adequate detail the issues to
                       be arbitrated and within ten (10) Days from the receipt
                       of such notice the other Party may set forth in adequate
                       detail additional related issues to be arbitrated. If
                       arbitration is invoked by either Party, the decision of
                       the arbitrators shall be final and binding upon all
                       parties.

               12.2.2. It is the intent of the Parties that, to the extent
                       practicable, such binding arbitration shall be conducted
                       by a person knowledgeable and experienced in the type of
                       matter that is the subject of the dispute. In the event
                       the Parties are unable to agree upon such person, then
                       each Party shall select a person that it believes has the
                       qualifications set forth above as its designated
                       arbitrator, and such arbitrators so designated shall
                       mutually agree upon a similarly qualified third person to
                       complete the arbitration panel, provided, however, that
                       if one of the Parties fails to select its designated
                       arbitrator as specified herein within thirty (30) Days of


<PAGE>


                       receiving written notice from the other Party that such
                       other Party has selected its designated arbitrator, then
                       the arbitration provided for herein shall be conducted by
                       the one arbitrator so designated. In the event that the
                       persons selected by the Parties are unable to agree on a
                       third member of the panel within sixty (60) Days after
                       their selection, such person shall be designated by the
                       American Arbitration Association. Upon final selection of
                       the entire panel, such panel shall, as expeditiously as
                       possible, render a decision on the matter submitted for
                       arbitration. The arbitration shall be conducted in
                       accordance with the commercial arbitration rules of the
                       American Arbitration Association. The substantive law
                       governing any arbitration shall be the law of the State
                       of Delaware.

               12.2.3. Upon the determination of any such dispute, the
                       arbitrators shall bill the costs attributable to such
                       binding arbitration to the Party whose petition they
                       determine is farthest away from the actual decision
                       rendered; provided, however, that the arbitrators shall
                       be empowered to apportion such costs between the Parties
                       if they deem it appropriate.

               12.2.4. It is the intent of the Parties that once arbitration is
                       invoked by either Party pursuant to the provisions of
                       this Section 12 that the matters set for arbitration be
                       decided as set forth herein and the Parties shall not
                       seek to have this Section 12 rendered unenforceable or to
                       have such matter decided in any other way, provided,
                       however, that nothing herein shall prevent the Parties
                       from negotiating a settlement of any issue at any time.


<PAGE>


13.      Force Majeure.
         --------------

         13.1. Effect of Force Majeure. In the event that either Tennessee or
               the Operator is rendered unable, by reason of an event of force
               majeure, as defined herein, to perform, wholly or in part, any
               obligation or commitment set forth in this contract, then upon
               such Party's giving notice and full particulars of such event as
               soon as practicable after the occurrence thereof, the obligations
               of both Parties, except for unpaid financial obligations arising
               prior to such event of force majeure, shall be suspended to the
               extent and for the period of such force majeure condition.

         13.2. Nature of Force Majeure. The term "force majeure" as employed in
               this Agreement shall mean acts of God, strikes, lockouts or
               industrial disputes or disturbances, civil disturbances, arrests
               and restraint from rulers of people, interruptions by government
               or court orders, present and future valid orders, decisions or
               rulings of any government or regulatory entity having proper
               jurisdiction, acts of the public enemy, wars, riots, blockades,
               insurrections, inability to secure labor or inability to secure
               materials, including inability to secure materials by reason of
               allocations promulgated by authorized governmental agencies,
               epidemics, landslides, lightning, earthquakes, fire, storms,
               floods, washouts, inclement weather which necessitates
               extraordinary measures and expense to construct facilities and/or
               maintain operations, explosions, breakage or accident to
               machinery or lines of pipe, freezing of pipelines, inability to
               obtain or delays in obtaining easements or rights-of-way, the
               making of repairs or


<PAGE>


               alterations to pipelines or plants, suspension of the obligations
               of the Operator and the Partnership under the Operating Agreement
               due to an event of force majeure as defined in the Operating
               Agreement, or any other cause, whether of the kind herein
               enumerated or otherwise, not reasonably within the control of the
               Party claiming force majeure.

         13.3. Non-Force Majeure Situations. Neither the Operator nor Tennessee
               shall be entitled to the benefit of the provisions of Section
               13.1 of this Agreement under the following circumstances:

               13.3.1. To the extent that the failure was caused by the Party
                       claiming suspension having failed to remedy the condition
                       by taking all reasonable acts, short of litigation, if
                       such remedy requires litigation, and having failed to
                       resume performance of such commitments or obligations
                       with reasonable dispatch;

               13.3.2. If the failure was caused by failure of the Party
                       claiming suspension to request or pay necessary funds in
                       a timely manner, or with respect to the payment of any
                       amounts then due hereunder;

               13.3.3. To the extent that the failure was caused or contributed
                       to by the gross negligence or willful misconduct of the
                       Party claiming suspension.

         13.4. Resumption of Normal Performance. Should there be an event of
               force majeure affecting performance hereunder, the Parties shall
               cooperate to take all reasonable


<PAGE>

               steps to remedy such event with all reasonable dispatch to ensure
               resumption of normal performance.

         13.5. Strikes and Lockouts. Settlements of strikes and lockouts shall
               be entirely within the discretion of the party affected, and the
               requirement in Sections 13.1.1 and 13.4 of this Agreement that
               any event of force majeure shall be remedied with all reasonable
               dispatch shall not require the settlement of strikes or lockouts
               by acceding to the demands of the parties directly or indirectly
               involved in such strikes or lockouts when such course is
               inadvisable in the discretion of the party having such
               difficulty.

14.      General.
         --------

         14.1. Effect of Agreement. This Agreement and the Accounting Procedure
               reflect the whole and entire agreement among the Parties with
               respect to the subject matter hereof and supersedes all prior
               agreements and understandings, oral and written, among the
               Parties with respect to the subject matter hereof. Except as
               provided in Section 3.5, this Agreement and the Accounting
               Procedure can be amended, restated or supplemented only by the
               written agreement of Tennessee and the Operator.

         14.2. Notices. Unless otherwise specifically provided in this
               Agreement, any written notice or other communication shall be
               sufficiently given or shall be deemed given upon receipt if sent
               by telecopy and, if mailed, on the fifth (5th) business



<PAGE>

               day following the date on which the same is mailed by registered
               or certified mail, postage prepaid, or by other mutually
               acceptable means, addressed:

               14.2.1. If to the Operator, to Craig Frew,, President, Iroquois
                       Pipeline Operating Company, One Corporate Drive, Suite
                       600, Shelton, CT 06484, or such other person and/or
                       address as may be designated from time to time by written
                       notice to Tennessee.

               14.2.2. If to Tennessee, to Robert G. Hall, Jr., Northern
                       Division Director, Tennessee Gas Pipeline Co., 8 Anngina
                       Dr., Enfield, CT 06082, or such other person and/or
                       address as may be designated from time to time by written
                       notice to the Operator.

         14.3. Counterparts. This Agreement may be executed in counterparts,
               each of which shall be deemed an original, but all of which
               together shall constitute one and the same instrument.

         14.4. Headings. The headings contained in this Agreement are for
               reference purposes only and shall not affect the meaning or
               interpretation of this Agreement.

         14.5. Waiver. No waiver by any Party of any default by any other Party
               in the performance of any provision, condition or requirement
               herein shall be deemed to be a waiver of, or in any manner
               release the other Party from, performance of any other provision,
               condition or requirement herein, nor shall such waiver be deemed
               to be a waiver of, or in any manner a release of the other party
               from


<PAGE>


               future performance of the same provision, condition or
               requirement. Any delay or omission of any Party to exercise any
               right hereunder shall not impair the exercise of any such right,
               or any like right, accruing to it thereafter. No waiver of a
               right created by this Agreement by one Party shall constitute a
               waiver of such right by the other Party except as may otherwise
               be required by law with respect to Persons not parties hereto.
               The failure of one Party to perform its obligations hereunder
               shall not release the other Party from the performance of such
               obligations.

         14.6. Assignability. This Agreement shall not be assigned by either
               Tennessee or the Operator, without the written consent of the
               other, which consent shall not be unreasonably withheld by either
               Party, provided, however, that either Party may assign this
               Agreement to a corporation which is an Affiliate of the
               transferrer on the same terms and conditions specified in Section
               11.3.1 of the Partnership Agreement for a transfer by a Partner
               of its interest in the Partnership Agreement, which provisions
               are incorporated herein by reference as if set out in full (the
               Party which is not seeking to transfer its interest in this
               Agreement shall determine whether the conditions set forth in
               Section 11.3.1(a) have been satisfied and whether to grant the
               approval set forth in Section 11.3.1(b)). Any assignment
               hereunder shall be effective on the first Day of the Month
               following the Month during which the assignment is completed.
               This Agreement and all of the obligations and rights herein
               established shall adhere to and be binding upon and


<PAGE>

                shall inure to the benefit of the respective successors and
                assigns of the respective Parties hereto.

         14.7.  References to Money. All references in this Agreement to, and
                transactions hereunder in, money shall be to or in Dollars of
                the United States of America.

         14.8.  Severability. Should any provision of this Agreement be deemed
                in contradiction with the laws of any jurisdiction in which it
                is to be performed or unenforceable for any reason, such
                provision shall be deemed null and void, but this Agreement
                shall remain in force in all other respects. Should any
                provision of this Agreement be or become ineffective because of
                changes in applicable laws or interpretations thereof or should
                this Agreement fail to include a provision that is required as a
                matter of law, the validity of the other provisions of this
                Agreement shall not be affected thereby. If such circumstances
                arise, the Parties hereto shall negotiate in good faith
                appropriate modifications to this Agreement to reflect those
                changes that are required by law.

         14.9.  Third Persons. Except as contemplated herein, nothing herein
                expressed or implied is intended or shall be construed to confer
                upon or to give any Person not a Party hereto any rights or
                remedies under or by reason of this Agreement.

         14.10. Laws and Regulatory Bodies. This Agreement and the obligations
                of the Parties hereunder are subject to all applicable laws,
                rules, orders and regulations of governmental authorities having
                jurisdiction and, in the event of conflict, such


<PAGE>

                laws, rules, orders and regulations of governmental authorities
                having jurisdiction shall control.

         14.11. Remedies Cumulative. Remedies provided under the provisions of
                this Agreement shall be cumulative and, except as to the
                agreement for binding arbitration contained in Section 12 hereof
                or as otherwise explicitly stated herein, shall be in addition
                to the remedies provided by law or in equity.

         14.12. Approval of Partnership of Management Committee. Unless
                otherwise specified, when the approval or other action of the
                Partnership or its Management Committee is required under this
                Agreement such requirement shall be deemed to require approval
                of 65% of the Percentage Interests of the Partners entitled to
                vote on the matter (voting individually and not as members of
                any bloc.

         14.13. Tennessee's Office. Tennessee will consult with, and obtain the
                approval of, the Operator prior to changing the location of
                those offices directly involved in the performance of its
                obligations hereunder.

         14.14. Section Numbers. Unless otherwise indicated, references to
                Section numbers are to Sections of this Agreement.


<PAGE>


         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as of this 15th day of March,
1991.

ATTEST:                                     OPERATOR

                                            IROQUOIS PIPELINE OPERATING COMPANY

                                            By:
-----------------------------                       ----------------------------

                                            Title:  ----------------------------


                                            By:
-----------------------------                       ----------------------------

                                            Title:  ----------------------------



                                            TENNESSEE GAS PIPELINE COMPANY

                                            By:
                                               ---------------------------------
                                                   Agent and Attorney-in-Fact


<PAGE>


                                    EXHIBIT A

                    ACCOUNTING PROCEDURE TO AGREEMENT BETWEEN
                     IROQUOIS PIPELINE OPERATING COMPANY AND
                         TENNESSEE GAS PIPELINE COMPANY
                WITH RESPECT TO IROQUOIS GAS TRANSMISSION SYSTEM

                                    ARTICLE I

                                General Provision

         1.01 Statements and Billings. Tennessee shall bill the Operator, on or
before the twenty-fifth day of each month (or as soon as possible thereafter)
for the actual costs and expenses for the previous month and any adjustments
which may be necessary to correct prior estimated billings to actual. Such bills
submitted by Tennessee will be summarized by appropriate classifications
indicative of the nature thereof.

         1.02 Payment by Operator. The Operator shall pay to Tennessee all bills
presented as provided in the Iroquois Pipeline Operating Company and Tennessee
Gas Pipeline Company Agreement with Respect to Iroquois Gas Transmission System
("IPOC/Tennessee Agreement") on or before thirty (30) days from the date such
invoice is rendered. If payment is not made within such time, the unpaid balance
shall bear interest until paid at a rate (which in no event shall be higher than
the maximum rate or rates permitted by applicable law) equal to the rate
designated by the Morgan Guaranty Trust Company from time to time as its prime
rate plus one percent. Payment by or on behalf of the Operator shall not be
deemed a waiver of the right to recoup any amount in question.

         1.03 Adjustments. Except for any adjustments which may arise from FERC
Compliance Audits, payment of any such bills shall not prejudice the right of
the Operator to protest or question the correctness thereof; provided, however,
that, absent fraud or intentional concealment


<PAGE>

or misrepresentation by Tennessee or its employees, all bills and statements
rendered to the Operator by Tennessee during any calendar year shall
conclusively be presumed to be true and correct after 25 months following the
end of any such calendar year, unless prior to the end of said 25-month period
the Operator takes written exception thereto and makes claim on Tennessee for
adjustment; provided, however this shall not prevent adjustment resulting from
physical inventory of the Facilities and other Partnership property. No
adjustment to any bill or statement favorable to Tennessee shall be made unless
it is made within 23 months following the end of the calendar year in which such
bill or statement was rendered by Tennessee.

         1.04 Financial Records. Tennessee shall maintain accurate books and
records in accordance with the Required Accounting Practice covering all of
Tennessee's actions under this IPOC/Tennessee Agreement.

                                   ARTICLE II

                                  Capital Items

         2.01 Operator shall be responsible for the purchase of capital items,
which responsibility may be delegated to Tennessee. Except for items included in
a previously approved budget that remains in effect, prior to the acquisition of
any capital item in the name or on behalf of the Partnership, Tennessee shall
prepare and submit to the Operator a forecast of the cost of such capital item.
Upon approval of such forecast or of the proposed purchase by the Operator,
Tennessee shall have authority to purchase such capital item in Partnership's
name without further approval or action by the Operator or the Partnership. To
the extent Tennessee owns property necessary or desirable for the operation and
maintenance of the Facilities which (i) under the accounting rules and
regulations, if any, at the time in effect, might be capitalized, (ii)

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Tennessee in its sole discretion is willing to transfer for consideration to
Partnership, and (iii) can be transferred by Tennessee to Partnership free and
clear of all prior liens and encumbrances, Tennessee, if approved by the
Operator, may so transfer such property to Partnership and charge the Operator
the net book value thereof as reflected on the books of Tennessee on the date of
transfer, and any applicable warehousing fees.

         2.02 For purposes of this Article II, "capital item" means any
property, real or personal, costing more than a ceiling amount to be established
by mutual agreement of the Operator and Tennessee which might be capitalized
under the accounting rules and regulations, if any, at the time prescribed by
the regulatory body or bodies under the jurisdiction of which the Partnership is
at the time operating. Currently the ceiling amount under this section is five
hundred dollars ($500).

         2.03 Tennessee shall be responsible for the maintenance of all
Operator-owned capital items used for the operation and maintenance of the
Facilities. The Operator shall reimburse Tennessee for expenses involved in the
maintenance of such capital items.

                                   ARTICLE III

                        Costs, Expenses and Expenditures

         Subject to the limitations hereinafter prescribed and the provisions of
the IPOC/Tennessee Agreement to which this Accounting Procedure is an exhibit,
Tennessee shall charge the Operator for all costs and expenses incurred by
Tennessee (except those costs incurred under Section 8.1 of the IPOC/Tennessee
Agreement in connection with the performance of its duties and responsibilities
under the IPOC/Tennessee Agreement (hereinafter collectively


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referred to as "Performance of Tennessee's Responsibilities"), including but not
limited to the following items:

         3.01 Rentals. All rentals paid by Tennessee, except that the Operator
shall not be responsible for any rentals of warehouse space by Tennessee except
upon prior consent by the Operator. Tennessee will bill a flat fee of
$2,500/month for use of its properties, tools and furniture that it uses in
providing services to the Operator.

         3.02 General Office Operating Costs. General office operating costs,
which shall include but not be limited to the cost of printing, reproduction,
office supplies, telephone, telegraph, telecopy, telefax, computer services and
similar electronic services, rents and other supplies and expenses, but shall
exclude the administrative and general expenses described in Section 3.14
hereof. General office operating costs shall be calculated for each department
of Tennessee or its Affiliates that incurs costs in connection with the
provision of services under the IPOC/Tennessee Agreement and shall be computed
by taking the product of (i) the ratio of the amount of time worked in
connection with the provision of such services by the employees of Tennessee or
its Affiliates in the applicable department to the total amount of time worked
by the employees of Tennessee or its Affiliates in such department, and (ii) the
total amount of general office operating costs in such department.

         3.03 Labor Costs.

              (a) Salaries and wages of employees of Tennessee directly engaged
in connection with the Performance of Tennessee's Responsibilities and, in
addition, amounts paid as salaries and wages of others employed from time to
time in connection therewith. Such salaries and wages shall be loaded to include
Tennessee's actual cost of holiday, vacation, sickness and jury


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service benefits and other customary allowances for time not worked paid to
persons whose salaries and wages are chargeable under this subsection 3.03(a).

              (b) Expenditures or contributions made pursuant to assessments
imposed by governmental authority which are applicable to salaries, wages and
costs chargeable under subsection 3.03(a) above, including but not limited to
FICA taxes and federal and state unemployment taxes.

              (c) Expenditures made by Tennessee for the cost of plans for
employers' group life insurance, hospitalization, disability, pension,
retirement, savings and other benefit plans, which are applicable to salaries
and wages chargeable under subsection 3.03(a) above.

              (d) The costs set forth in Sections 3.03(a), (b) and (c) above
shall be reviewed annually and adjusted as necessary to ensure that all such
factors charged to the Operator will be consistent with this agreement and in
line with what Tennessee has historically charged to the Operator.

              (e) In calculating such labor costs, the following terms and
conditions shall apply:

                  (1)  Tennessee classifies its Northern Division headquarters
                       personnel expenses as FERC account 850 "Operation
                       Supervision and Engineering" and not FERC account 920
                       "Administrative and General Salaries".

                  (2)  The determination of the A&G billed to the Operator
                       reflects the provisions of paragraph 1.

                  (3)  Tennessee charges the Operator a 25% labor allocation for
                       select Northern Division headquarters personnel who have
                       consistent management or


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                       administrative responsibility for field operations
                       relating to the Facilities. Subject to the provisions of
                       paragraph 4, those select positions include:

                                    Northern Division Director
                                    Division Operations Manager
                                    Principle Administrative Specialist
                                    Administrative Specialist

                   (4) Tennessee charges the Operator a 50% labor allocation
                       for the Nassau Area Manager who has direct management
                       responsibility for the Tennessee Field employees
                       dedicated to the Operator.

                   (5) Tennessee and the Operator agree that the individuals in
                       the select positions may, from time to time, be assigned
                       to special projects which may not involve responsibility
                       for the Facilities. In these circumstances, the labor
                       allocation otherwise applicable for such individual as
                       set forth above shall not apply.

         3.04 Reimbursable Expenses of Employees. Reasonable personal expenses
of employees whose salaries and wages are chargeable under subsection 3.03(a)
hereof. As used herein, the term "personal expenses" shall mean the usual
out-of-pocket expenditures incurred by employees in the performance of their
duties and for which such employees are reimbursed. Tennessee shall maintain
documentation for such expenses in accordance with the standards of the Internal
Revenue Service.


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         3.05 Exclusive Stations and Offices. The cost of acquiring,
constructing and operating any stations or offices devoted to Tennessee's
operation and maintenance of the Facilities, less any consideration received by
Tennessee upon transfer of capital items to the Partnership under Article II.

         3.06 Material, Equipment and Supplies. So far as is reasonably
practical and consistent with efficient and economical operation: (1) it is
contemplated that material, equipment and supplies will be owned by the
Partnership and purchased or furnished for its account; and (2) only such
material shall be obtained for the Facilities as may be required for immediate
use, and the accumulation of surplus stock shall be avoided. To the extent
reasonably possible, Tennessee shall take advantage of discounts available by
early payments and pass such benefits on to the Operator and the Partnership.
Material, equipment and supplies furnished by Tennessee shall be priced at cost
plus Tennessee's actual carrying costs as approved by the Operator in its most
recent budget.

         3.07 Transportation. Transportation of employees, equipment and
material and supplies necessary for the Performance of Tennessee's
Responsibilities. It is anticipated that all transportation equipment utilized
by Tennessee for performing Tennessee's Responsibilities will be owned by
Tennessee and will be billed to the Operator at reasonable rates based on
Tennessee's actual costs.

         3.08 Services.

              (a)  The cost of contract services and utilities procured from
                   outside sources.

              (b)  Use and service of vehicles, equipment and facilities
                   furnished by Tennessee.

         3.09 Legal Expenses and Claims. All costs and expenses of handling,
investigating and settling litigation or claims arising by reasons of the
Performance of Tennessee's


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Responsibilities, including, but not limited to, attorney's fees, court costs,
costs of investigation or procuring evidence and any judgments paid or amounts
paid in settlement or satisfaction of any such litigation or claims. Tennessee
shall credit the Operator and/or Partnership for judgments received or amounts
received in settlement of litigation, with respect to any claim asserted on
behalf of the Operator or Partnership.

         3.10 Taxes. All taxes (except those measured by income) of every kind
and nature assessed or levied upon or incurred by Tennessee in connection with
the Performance of Tennessee's Responsibilities, including charges for late
payments arising from extensions of the time for filing which is caused by
Partnership or Operator, or which result from Tennessee's good faith efforts to
contest the amount of application of any tax.

         3.11 Insurance. Net of any returns, refunds, or dividends, all premiums
paid and expenses incurred for insurance allowable under or required to be
carried under the IPOC/Tennessee Agreement for the benefit of Tennessee, the
Operator and/or Partnership.

         3.12 Permits, License and Bond. Costs of permits, licenses and bond
premiums necessary in the performance of Tennessee's Responsibilities.

         3.13 Audit Expenses. All cost and expenses incurred by Tennessee in
connection with audits requested by Operator pursuant to Section 5.4.

         3.14 Administrative and General Expense. All administrative and general
expenses including and not limited to outside services, materials, rents,
equipment maintenance, office supplies, as well as salaries and related benefits
of personnel other than those referred to in Section 3.03, who render service to
Tennessee, including but not limited to Accounting, Administrative, Audit,
Public Relations, Personnel, Purchasing, Legal and Treasury, shall be charged at
a rate computed according to the rate formula specified in Exhibit B. The rate
shall be


<PAGE>

applied monthly to the total direct expenses (defined as the sum of the expenses
listed in 3.01 to 3.12 herein) incurred and charged by Tennessee to perform
Tennessee's responsibilities. The charge under this formula allocates
administrative and general overhead costs incurred in connection with effective
and efficient discharge of Tennessee's obligations.


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                                    EXHIBIT B

                                A&G RATE FORMULA

Labor
-----
The combined salary plus benefits amount will be multiplied by 1.25 to account
for a 25 percent A&G rate.

Remaining Components
--------------------
The remaining components of Tennessee's budget will be multiplied by 1.07 per
line item to account for a 7 percent A&G rate.