Exhibit 10.27


                                                               Execution Version





                               PURCHASE AGREEMENT

                         dated as of December 12, 2002,

                                  by and among

                    DUKE ENERGY GAS TRANSMISSION CORPORATION,

                             ALGONQUIN ENERGY, INC.,

                               KEYSPAN LNG GP, LLC

                                       and

                               KEYSPAN LNG LP, LLC








<PAGE>


<TABLE>
<CAPTION>

<S>                    <C>                                                                                              <C>
ARTICLE I DEFINITIONS.....................................................................................................2
    Section 1.1.        Certain Definitions...............................................................................2
ARTICLE II CLOSING, DELIVERIES AT CLOSING AND ADDITIONAL AGREEMENTS.......................................................9
    Section 2.1.        Closing...........................................................................................9
    Section 2.2.        Deliveries by Seller to Buyer.....................................................................9
    Section 2.3.        Deliveries by Buyer to Seller....................................................................10
    Section 2.4.        Intercompany Debt................................................................................11
    Section 2.5.        Certain Agreements...............................................................................11
ARTICLE III CONSIDERATION; POST-CLOSING ADJUSTMENT.......................................................................11
    Section 3.1.        Amount and Form of Consideration.................................................................11
    Section 3.2.        Payment of Consideration and Delivery of Partnership Interests at Closing........................12
    Section 3.3.        Post-Closing Adjustment..........................................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER......................................................................14
    Section 4.1.        Organization; Power and Authority................................................................14
    Section 4.2.        Authorizations; Execution and Validity...........................................................15
    Section 4.3.        No Conflict; Consents............................................................................15
    Section 4.4.        Subsidiaries.....................................................................................16
    Section 4.5.        Capitalization...................................................................................16
    Section 4.6.        Financial Statements.............................................................................16
    Section 4.7.        Legal Proceedings; Orders........................................................................17
    Section 4.8.        Environmental Matters............................................................................17
    Section 4.9.        Employees........................................................................................18
    Section 4.10.           Taxes........................................................................................19
    Section 4.11.           Title to Partnership Interests...............................................................20
    Section 4.12.           Material Contracts...........................................................................20
    Section 4.13.           Bank Accounts; Directors and Officers........................................................20
    Section 4.14.           Title to and Condition of Properties.........................................................20
    Section 4.15.           Insurance....................................................................................22
    Section 4.16.           Absence of Certain Changes...................................................................22
    Section 4.17.           Fees.........................................................................................23
    Section 4.18.           Accounts Receivable and Accounts Payable.....................................................23
    Section 4.19.           Intellectual Property Rights; Computer Programs and Software.................................24
    Section 4.20.           Governmental Authorizations..................................................................24
    Section 4.21.           FERC Form No. 2-A............................................................................24
    Section 4.22.           Compliance with Law..........................................................................25
    Section 4.23.           Customers and Vendors........................................................................25
    Section 4.24.           Disclaimer...................................................................................25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................................................................25
    Section 5.1.        Organization; Power and Authority................................................................25
    Section 5.2.        Authorizations; Execution and Validity...........................................................26
    Section 5.3.        No Conflicts; Consents...........................................................................26
    Section 5.4.        Litigation.......................................................................................26
    Section 5.5.        Access to Documents; Opportunity to Ask Questions................................................26
    Section 5.6.        Investment Intent; Sophisticated Buyer...........................................................27
    Section 5.7.        Fees.............................................................................................27
    Section 5.8.        Disclaimer.......................................................................................27

                                      i

<PAGE>

ARTICLE VI COVENANTS.....................................................................................................27
    Section 6.1.        Covenants........................................................................................27
ARTICLE VII TAX MATTERS..................................................................................................32
    Section 7.1.        Preparation and Filing of Tax Returns............................................................32
    Section 7.2.        Access to Information............................................................................34
    Section 7.3.        Indemnification by Seller........................................................................34
    Section 7.4.        Buyer Tax Indemnification........................................................................35
    Section 7.5.        Tax Indemnification Procedures...................................................................35
    Section 7.6.        Conflict.........................................................................................37
    Section 7.7.        Tax Sharing Agreements...........................................................................37
ARTICLE VIII INDEMNIFICATION.............................................................................................37
    Section 8.1.        Seller Indemnification...........................................................................37
    Section 8.2.        Buyer Indemnification............................................................................37
    Section 8.3.        Indemnification Procedures.......................................................................38
    Section 8.4.        Limits on Indemnification........................................................................40
    Section 8.5.        Remedies Exclusive...............................................................................41
    Section 8.6.        Certain Damages..................................................................................41
    Section 8.7.        Miscellaneous....................................................................................42
ARTICLE IX GENERAL.......................................................................................................42
    Section 9.1.        Amendments.......................................................................................42
    Section 9.2.        Waivers..........................................................................................42
    Section 9.3.        Notices..........................................................................................42
    Section 9.4.        Successors and Assigns; Parties in Interest......................................................43
    Section 9.5.        Severability.....................................................................................44
    Section 9.6.        Entire Agreement.................................................................................44
    Section 9.7.        Governing Law....................................................................................44
    Section 9.8.        Expenses.........................................................................................44
    Section 9.9.        Release of Information...........................................................................45
    Section 9.10.           Specific Performance.........................................................................45
    Section 9.11.           Confidentiality..............................................................................45
    Section 9.12.           Certain Construction Rules...................................................................46
    Section 9.13.           Counterparts.................................................................................46
    Section 9.14.           Further Assurances...........................................................................46
</TABLE>

                                       ii


<PAGE>


Schedules
---------

Schedule 1.1(a)      -  Buyer's Knowledge
Schedule 1.1(b)      -  Seller's Knowledge
Schedule 3.3         -  Net Working Capital; Principles and Procedures
Schedule 4.3         -  Conflicts and Consents (Seller's Representations)
Schedule 4.6(a)      -  FERC Forms 2-A; Interim Financial Statements
Schedule 4.6(b)      -  Undisclosed Liabilities
Schedule 4.7         -  Legal Proceedings
Schedule 4.8         -  Environmental Matters
Schedule 4.10        -  Taxes
Schedule 4.12        -  Material Contracts
Schedule 4.13        -  Bank Accounts
Schedule 4.14(a)     -  Real Property
Schedule 4.15        -  Insurance
Schedule 4.16        -  Certain Changes
Schedule 4.19(a)     -  Intellectual Property
Schedule 4.19(b)     -  Computer Programs Software
Schedule 4.20        -  Permits
Schedule 4.2         -  Customers and Vendors
Schedule 5.3         -  Conflicts and Consents (Buyer's Representations)
Schedule 6.1(g)      -  Excluded Personal Property
Schedule 8.1(d)      -  Seller Indemnification

Exhibit A               Form of Opinion of Seller's Counsel
Exhibit B               Form of Transition Agreement
Exhibit C-1             Form of Seller Release Agreement
Exhibit C-2             Form of ALNG Release Agreement
Exhibit D               Form of Con Ed Letter Agreement
Exhibit E               Form of Balancing Agreement
Exhibit F               Form of Opinion of Buyer's Counsel
Exhibit G               Form of Assignment of Seller's Marks, Certain Accounts
                        Receivable and Bank Accounts

                                      iii

<PAGE>



                               PURCHASE AGREEMENT


     This PURCHASE AGREEMENT,  dated as of December 12, 2002 (this "Agreement"),
is entered into by and among DUKE ENERGY GAS TRANSMISSION  CORPORATION  ("DEGT")
and ALGONQUIN ENERGY, INC. ("AEI"),  each a Delaware  corporation  (individually
and collectively,  "Seller") and KEYSPAN LNG GP, LLC ("KLNG GP") and KEYSPAN LNG
LP, LLC ("KLNG LP"), each a Delaware limited liability company (individually and
collectively,  "Buyer"). Buyer and Seller may be referred to herein individually
as a "Party" or collectively as the "Parties."


                                    RECITALS

     Seller  collectively  owns 100% of the general  partnership  interests  and
limited partnership  interests  (collectively,  the "Partnership  Interests") in
Algonquin LNG, LP, a Delaware limited partnership ("ALNG Partnership").


     ALNG Partnership owns and operates a 600,000-barrel  liquefied  natural gas
storage tank, located in Providence,  Rhode Island,  together with facilities to
receive and deliver  liquefied  natural gas in gaseous and liquid  states ("ALNG
Facility").


     ALNG  Partnership  is the successor by conversion to Algonquin LNG, Inc., a
Delaware  corporation  ("ALNGI" and,  together with ALNG  Partnership,  "ALNG"),
99.5%  of the  common  stock of  which  was  owned  by Duke  Energy  GT  Funding
Corporation  and 0.5% of the common stock of which was owned by AEI  immediately
prior to such  conversion.  Following  the  Conversion,  Duke  Energy GT Funding
Corporation transferred its partnership interest in ALNG to DEGT.


     Buyer  desires to purchase  from  Seller,  and Seller is willing to sell to
Buyer, the Partnership Interests.  Buyer and Seller desire that the 0.5% general
partnership  interest in the ALNG Partnership held by AEI be transferred to KLNG
GP and that the 99.5% limited  partnership  interest in ALNG Partnership held by
DEGT be transferred to KLNG LP.


     NOW, THEREFORE,  in consideration of the premises, the terms and provisions
set forth herein,  the mutual benefits to be gained by the  performance  thereof
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the Parties agree as follows:


                                       1
<PAGE>


                                   ARTICLE I
                                   DEFINITIONS

Section 1.1.         Certain Definitions

     (a) As used in this  Agreement,  the terms set forth  below  shall have the
following respective meanings:


     "Adverse  Claim"  means,  with respect to any  security or other  financial
instrument,  an "adverse claim" as defined in Section 8-102(a)(1) of the Uniform
Commercial Code as in effect in the State of New York.


     "Affiliate"  means, with respect to any Person,  (a) any Subsidiary of such
Person or (b) any other  Person  that,  directly  or  indirectly,  controls,  is
controlled by, or is under common control with, such Person. For the purposes of
this definition,  "control" means the possession of the power to direct or cause
the direction of  management  and policies of such Person,  whether  through the
ownership of voting securities, by contract, or otherwise.


     "Business Day" means any day other than a Saturday, Sunday, or day on which
commercial  banks in Houston,  Texas and/or New York, New York are authorized or
required by Law to remain closed.


     "Buyer  Confidentiality   Agreement"  means  that  certain  confidentiality
agreement, dated as of the 11th day of May, 2001, between Seller and Buyer.


     "Capital  Stock"  means,  with  respect  to any  corporation,  all  shares,
interests,  participations  or  other  equivalents  of  capital  stock  of  such
corporation, however designated.


     "Code" means the Internal Revenue Code of 1986, as amended.


     "Contract"  means any contract,  agreement,  indenture,  note,  bond, loan,
instrument, lease, conditional sale contract, mortgage, or insurance policy.


     "DEOC" means Duke Energy Operating Company.


     "Derivative  Instrument"  means a financial  instrument  or other  contract
which (i) has one or more of the following:  a specified interest rate, security
price,  commodity  price,  foreign  exchange rate,  index of prices or rates, or
other  variables,  and one or more of the following:  number of currency  units,
shares,  bushels,  pounds or other units  specified in the contract,  or payment
provisions  or both;  (ii)  requires  no initial  investment  or an initial  net
investment  that is smaller  than would be required for other types of contracts
that would be expected to have a similar  response to change in market  factors;
and (iii) its terms  require or permit net  settlement,  it can  readily  net by
means  outside the  contract,  or it provides for delivery of an asset that puts


                                       2
<PAGE>

the recipient in a position not substantially different from net settlement, all
as more fully  described in FAS 133,  Accounting for Derivative  Instruments and
Hedging Activities.


     "Employee  Benefit  Plan"  means any  "employee  benefit  plan"  within the
meaning of Section 3(3) of ERISA.


     "Environmental  Laws" means any Law,  directive,  Permit,  authorization or
Order relating to (i) protection of the environment,  human health, or workplace
safety,  (ii)  damages  to  natural  resources,  (iii) the  actual or  potential
exposure  (or the  effects  of  exposure)  to any actual or  potential  release,
discharge,  spill or emission of Hazardous  Materials,  or (iv) the manufacture,
generation, handling, processing,  production, gathering,  transportation,  use,
treatment, storage or disposal of, any Hazardous Materials.


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


     "Estimated  Indebtedness"  means the estimated  Indebtedness as of November
30, 2002, based on the September 30, 2002 balance sheet of ALNG, as set forth in
the Estimated Closing Report.


     "Estimated Net Working  Capital" means the estimated Net Working Capital as
of November 30, 2002,  based on the September 30, 2002 balance sheet of ALNG, as
set forth in the Estimated Closing Report.


     "Estimated Net Working Capital  Adjustment"  means the positive or negative
number, as the case may be, which is determined in the following manner:  (i) if
$552,407 is greater than the Estimated Net Working  Capital,  then the Estimated
Net Working  Capital  Adjustment  is a positive  number equal to such excess (in
which  event the  Purchase  Price  would be  reduced  by such  amount);  (ii) if
$552,407 is equal to the Estimated Net Working  Capital,  then the Estimated Net
Working Capital  Adjustment is equal to zero; and (iii) if $552,407 is less than
the  Estimated  Net Working  Capital,  then the  Estimated  Net Working  Capital
Adjustment  is a  negative  number  equal to such  deficit  (in which  event the
Purchase Price would be increased by such amount).


     "Estimated  Other Purchase  Price  Adjustments"  means the estimated  Other
Purchase  Price  Adjustments  as of November 30, 2002 based on the September 30,
2002 balance sheet of ALNG as set forth in the Estimated Closing Report.


     "FERC" means the Federal Energy Regulatory Commission.


     "GAAP" means generally accepted accounting  principles of the United States
applied on a consistent basis.


     "Governmental  Authority" means any federal,  state, or local government or
governmental regulatory body and any of their respective subdivisions, agencies,
instrumentalities, authorities or tribunals.


                                       3
<PAGE>

     "Hazardous Materials" means any substance,  whether solid, liquid, gaseous,
or any combination of the foregoing:  (a) that is listed,  defined, or regulated
as  a  "hazardous   material,"  "hazardous  waste,"  "solid  waste,"  "hazardous
substance,"  "toxic  substance,"  "contaminant,"  or  "pollutant"  or  otherwise
classified  as hazardous or toxic,  in or pursuant to any  Environmental  Law or
otherwise  prohibited,  limited or regulated under any Environmental Law; or (b)
that  is  or  contains   asbestos,   polychlorinated   biphenyls,   radon,  urea
formaldehyde  foam insulation,  or explosive or radioactive  material,  or waste
petroleum hydrocarbons.


     "Indebtedness"  means  without  duplication  the sum of (1)  the  principal
amount of any  indebtedness  of ALNG for borrowed  money  outstanding  as of the
Closing  Date,  (2)  any  unpaid  interest  and  bank  fees  owing  on any  such
indebtedness  of ALNG as of the Closing Date, (3)  obligations  for the deferred
purchase price of goods or services  (other than trade payables  incurred in the
ordinary  course of business) of ALNG as of the Closing Date, (4) obligations in
respect of banker's  acceptances  or letters of credit  (other  than  letters of
credit in respect of accounts  payable  reflected in Net Working Capital) issued
or created for the account of ALNG as of the Closing Date, (5) all  indebtedness
or obligations of the types referred to in the preceding clauses (1) through (4)
of any other Person secured by any Lien on any assets of ALNG,  even though ALNG
has not  assumed  or  otherwise  become  liable  for the  payment  thereof,  but
excluding  customer deposits and interest payable thereon in the ordinary course
of business,  (6) obligations in the nature of guarantees of obligations entered
into by ALNG of the type described in clauses (1) through (5) above of any other
Person,  and (7) any  payment  obligation  in respect  of,  including  any costs
associated with the termination of, any Derivative Instrument.


     "Intellectual  Property"  means  any  and  all  ideas,  inventions,   marks
(including  trademarks,  service marks,  certification marks,  collective marks,
domain names and collective membership marks, whether word, logo, or other forms
of  designations  of origin,  all of the foregoing  collectively  referred to as
"Marks"), trade names, designs, expressions and works of authorship, copyrights,
moral  rights,  database  rights,  mask works,  applications  therefor,  patents
thereon, registrations thereof and licenses thereof, royalty rights, any and all
goodwill  of  ALNG,  proprietary  and/or  confidential   information  (including
technical information relating to development, design, manufacture,  scheduling,
installation,   assembly  or  testing,  trade  secrets,   secret  processes  and
procedures,  know-how, business and financial information,  and all confidential
information   of  any  nature,   collectively   referred   to  as   "Proprietary
Information"),  and any other  similar  property,  whether  or not  embodied  in
tangible   form   (including   but  not  limited  to   technical   drawings  and
specifications,  shop drawings,  manuals, forms, working notes and memos, market
studies, consultants' reports, technical and laboratory data, notebooks, samples
and  engineering  prototypes),  including  all  property  listed or described on
Schedule 4.19(a).


     "Knowledge" means (a) with respect to Buyer, the actual knowledge of any of
the individuals  specified on Schedule  1.1(a),  and (b) with respect to Seller,
the actual knowledge of any of the individuals specified on Schedule 1.1(b).


     "Law"  means any  federal,  state,  or local law  (including  common  law),
statute, rule, ordinance, code, directive, decree, treaty or regulation.


                                       4
<PAGE>

     "Legal  Proceeding"  means  any  judicial,  administrative,  regulatory  or
arbitral   action,   suit  or  proceeding   (public  or  private),   inquiry  or
investigation by or before any court or other Governmental Authority.


     "Lien" means any lien, pledge,  mortgage, deed of trust, security interest,
attachment,   levy,   restriction,   claim,  option,  charge  or  other  similar
encumbrance affecting title.


     "Losses"   means  claims,   judgments,   causes  of  action,   liabilities,
obligations,  damages  (including  diminution in value),  losses,  deficiencies,
costs, penalties, fines and expenses (including, without limitation,  reasonable
professional fees and costs of settlement, judgment and interest).


     "Material  Adverse  Effect"  means any  condition,  circumstance,  event or
effect  that is  material  and  adverse  to the  business,  assets,  results  of
operations or financial condition of ALNG.


     "Material  Contract"  means any  Contract to which ALNG is a party that (a)
can  reasonably be expected to result in (i) aggregate  payments by ALNG of more
than  $25,000  during any year  (based  solely on the terms  thereof and without
regard to any  expected  increase  in volumes  or  revenues)  or (ii)  aggregate
revenues to ALNG of more than $25,000 during any year (based solely on the terms
thereof and without regard to any expected increase in volumes or revenues); (b)
imposes a non-competition or non-solicitation obligation on ALNG; (c) has a term
of twelve (12) months or more;  (d) is a collective  bargaining or similar labor
agreement; (e) is an employment, consulting or similar agreement or arrangement;
(f) is an  indenture,  credit  agreement,  note,  mortgage,  security  or  other
commitment or arrangement  pursuant to which ALNG has made or will make loans or
advances,  or has or will have incurred  Indebtedness  or becomes a guarantor or
surety or pledge its credit on or otherwise  become  responsible with respect to
any  undertaking  of  another;  (g) is a Contract  (including  purchase  orders,
blanket   purchase   orders  and  agreements  and  delivery   orders)  with  any
Governmental  Authority;  (h) is a Contract  between  ALNG and any Seller or any
officer,  director, key employee or Affiliate of any Seller,  including any such
Contract providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise  requiring  payments to or
from, ALNG, or to or from any corporation, partnership, trust or other entity in
which any such  Person,  or group of such  Persons,  owns in excess of 5% of the
outstanding  equity  interest;  (i) is an  agreement  or  arrangement  with  any
customer of ALNG which  provides  that such  customer  shall be sold products or
services at the lowest price ALNG charges its customers for any such products or
services or which  contains any other "most favored  nation" or similar  clause;
(j) is a Derivative  Instrument;  (k) is a performance,  bid or completion bond,
surety or  indemnification  agreement  or power of  attorney;  (l) is a material
secrecy or confidentiality  agreement imposing confidentiality  obligations upon
ALNG;  (m) is a partnership or joint venture  agreement;  or (n) is an agreement
related to the  acquisition  or  divestiture  of  Capital  Stock,  other  equity
interest or assets by or of ALNG entered into other than in the ordinary  course
of business.


     "Net Working Capital" means the excess of the aggregate current assets over
the  current  liabilities  of ALNG,  determined  as of  November  30,  2002,  as


                                       5
<PAGE>

calculated in accordance with and in a manner  consistent with the  illustration
set forth in Schedule 3.3,  including  the  statement of  accounting  principles
attached to and made a part of such Schedule 3.3.


     "Other Purchase Price  Adjustments"  means the (i) the sum of the values of
accounts  receivable  of ALNG  assigned  to Seller  pursuant  to the  assignment
attached  as Exhibit  G,  working  funds of ALNG and  prepayments  of ALNG,  and
accrued ad valorem and sales taxes minus (ii) the sum of the values of overdrawn
cash amounts  contained in the bank accounts of ALNG assigned to Seller pursuant
to the assignment attached as Exhibit G,  employee-related  liabilities included
in the accounts payable of ALNG and the amount reflected on ALNG's balance sheet
described as "Investment  Plan Loan"; in each case determined as of November 30,
2002,  as  calculated in  accordance  with and in a manner  consistent  with the
illustration set forth in Schedule 3.3.


     "Order" means any order,  judgment,  injunction,  ruling,  or decree of any
court or other Governmental Authority.


     "Partnership Agreement" means that certain Limited Partnership Agreement of
Algonquin LNG, LP, dated October 17, 2002, by and between DEGT and AEI.


     "Permit"  means  any  permit,  license,  authorization,   consent,  waiver,
variance,   extension,   filing,  franchise,   certificate,   Order,  exemption,
registration or approval issued by a Governmental Authority.


     "Person"  means  any  natural  person,  corporation,  partnership,  limited
liability company, trust, unincorporated  organization,  Governmental Authority,
or other entity.


     "Prime  Rate" means the rate of interest  publicly  announced  from time to
time by Citibank, N.A., New York branch, as its "prime" or "base" lending rate.


     "Securities Act" means the Securities Act of 1933, as amended.


     "Seller Group" means the  affiliated  group of  corporations  of which Duke
Energy  Corporation  is  the  common  parent,  which  join  in the  filing  of a
consolidated federal income Tax return (and any similar group under state Law).


     "Subsidiary"   means,   with  respect  to  any  Person,   any  corporation,
partnership,  limited liability company,  or other entity of which a majority of
the shares of Capital Stock or other ownership  interests having ordinary voting
power to elect a majority of the board of  directors or other  similar  managing
body of such  corporation,  partnership,  limited  liability  company,  or other
entity are owned by such Person.


     "Tax" or "Taxes" means any federal,  state, local, or foreign income, gross
receipts, ad valorem,  sales and use, employment,  social security,  disability,
occupation,   withholding,  payroll,  unemployment,   property  (both  real  and


                                       6
<PAGE>

personal),  severance,  value added, transfer, Capital Stock, excise, estimated,
custom duties or any other taxes of any kind whatsoever  including any interest,
penalty, or addition thereto whether or not disputed.


     "Taxing  Authority" means, with respect to any Tax, the domestic,  foreign,
federal, national, state, county or municipal or other local governmental entity
or  political  subdivision  thereof  that  imposes  such Tax,  and the agency or
commission  (if any) charged with the  collection of such Tax for such entity or
subdivision.


     "Tax Return" means any return,  declaration,  report,  claim for refund, or
information  return or  statement or other  document  relating to Taxes filed or
required  to be filed with any  Taxing  Authority,  including  any  schedule  or
attachment thereto and including any amendment thereof.


     "Third  Party  Claim" means any claim that (i) is brought by a Person other
than Buyer,  Seller or their respective  Affiliates,  or (ii) is brought against
ALNG by any  Affiliate of Buyer and that relates to matters  occurring  prior to
the Closing Date.

     (b) Each of the  terms set forth  below  has the  meaning  set forth in the
provision set forth opposite such term in the following table:

      Term                                         Provision
      ----                                         ---------

      Agreement                                    Preamble
      AEI                                          Preamble
      ALNG                                         Recitals
      ALNG Employees                               Section 6.1(b)(i)
      ALNG Facility                                Recitals
      ALNG GP                                      Preamble
      ALNG                                         Recitals
      ALNG LP                                      Preamble
      ALNG Partnership                             Recitals
      Basket Amount                                Section 8.4(a)
      Books and Records                            Section 6.1(a)
      Buyer                                        Preamble
      Buyer Tax Indemnitees                        Section 7.3(a)
      Claim Notice                                 Section 8.3(a)
      Closing                                      Section 2.1
      Closing Date                                 Section 2.1
      Closing  Balance Sheet                       Section 3.3(b)
      Closing Report                               Section 3.3(b)
      COBRA                                        Section 6.1(d)(ii)
      Conversion                                   Section 4.1(b)
      DEGT                                         Preamble
      FERC Forms 2-A                               Section 4.6(a)
      Election Period                              Section 8.3(b)
      Estimated Closing Balance Sheet              Section 3.1(b)


                                       7
<PAGE>

      Term                                         Provision
      ----                                         ---------

      Estimated Closing Report                     Section 3.1(b)
      Estimated Purchase Price                     Section 3.1(b)
      Fee Property                                 Section 4.14(a)
      FERC Forms 2-A                               Section 4.6(a)
      Final Arbiter                                Section 3.3(e)
      Financial Statements                         Section 4.6(a)
      Indebtedness Adjustment Amount               Section 3.3(a)
      Indemnified Party                            Section 8.3(a)
      Indemnifying Party                           Section 8.3(a)
      Indemnity Notice                             Section 8.3(e)
      Interim Financial Statements                 Section 4.6(a)
      Leased Property                              Section 4.14(a)
      Liability Cap                                Section 8.4(a)
      Marked Materials                             Section 6.1(e)(ii)
      Marks                                        Section 1.1 - Definition of
                                                   Intellectual Property
      Net Working Capital Adjustment Amount        Section 3.3(a)
      Objection Notification Date                  Section 3.3(c)
      Partnership Interests                        Recitals
      Party(ies)                                   Preamble
      PCBs                                         Section 4.8(d)
      Permitted Liens                              Section 4.14(a)
      Pre-Closing Tax Period                       Section 7.1(a)
      Proprietary Information                      Section 1.1 - Definition of
                                                   Intellectual Property
      Purchase Price                               Section 3.1(a)
      RAP                                          Section 4.6(a)
      Seller                                       Preamble
      Seller Marks                                 Section 6.1(e)(i)
      Straddle Period                              Section 7.1(e)
      Tax Claim                                    Section 7.5(a)
      Tax Indemnified Party                        Section 7.5(a)
      Tax Indemnifying Party                       Section 7.5(a)
      Tax Items                                    Section 7.1(a)
      Termination Date                             Section 6.1(b)(i)
      Transferred Employees                        Section 6.1(b)(i)
      Transition Agreement                         Section 2.2(d)
      USTs                                         Section 4.8(c)


                                       8
<PAGE>

                                   ARTICLE II
            CLOSING, DELIVERIES AT CLOSING AND ADDITIONAL AGREEMENTS

Section 2.1.         Closing


     The closing of the transactions  contemplated  hereby (the "Closing") shall
take  place at a time and  place on the date  hereof  ("Closing  Date")  that is
mutually acceptable to the Parties.

Section 2.2.         Deliveries by Seller to Buyer


     At the Closing,  Seller shall deliver,  or shall cause to be delivered,  to
Buyer the following:

     (a) one or more  assignments  of  partnership  interests  and bills of sale
evidencing  the  assignment  and transfer of the  Partnership  Interests and all
rights of Seller under the Partnership  Agreement to Buyer free and clear of any
Liens or Adverse Claims;

     (b) a  certificate  of the  Secretary  or an  Assistant  Secretary  of each
Seller,  dated as of the date of this Agreement,  setting forth and attesting to
(i) the  resolutions  of the board of directors of such Seller  authorizing  the
execution,  delivery and  performance of this Agreement and the  consummation of
the transactions  contemplated hereby; (ii) the incumbency and signature of each
officer of such Seller  executing this Agreement;  and (iii) the  organizational
documents of such Seller;

     (c) A written  opinion dated as of the Closing Date from Seller's  counsel,
in the form attached hereto as Exhibit A;

     (d) a transition  agreement in the form  attached  hereto as Exhibit B (the
"Transition Agreement");

     (e) an amendment to or an amendment and  restatement of the  Certificate of
Limited  Partnership  of ALNG as necessary to reflect the  withdrawal  of Seller
from ALNG and the admission of Buyer to ALNG;

     (f) a copy of the certificate of limited partnership for ALNG, certified by
the Delaware  Secretary of State, and a copy of the ALNG  partnership  agreement
certified by an officer of its general partner;

     (g)  certificates  from  appropriate  authorities,  dated no  earlier  than
December 3, 2002, as to the good standing and legal existence of each Seller and
ALNG  and  qualification  to do  business  by  each  Seller  and  ALNG  in  each
jurisdiction where they are so qualified;


                                       9
<PAGE>

     (h) (i) the minute books and partnership  records of ALNG and any books and
records  necessary for the operation of ALNG's business  (including the property
insurance  certificates  provided by customers of ALNG pursuant to Section 21 of
the General Terms and  Conditions  of its tariff),  and (ii) any other books and
records  maintained with respect to ALNG or its business  operations;  provided,
however,  that with respect to the books and records described in (ii) that also
contain  information  relating  to Seller or any of its  Affiliates  (other than
ALNG),  Seller  shall  deliver  such  books and  records  as soon as  reasonably
practicable,  but in any event within 6 months,  following  the Closing Date and
shall be entitled to redact  from such books and  records all  information  that
does not directly relate to ALNG or its business operations;  provided, further,
that in no event shall Seller be obligated pursuant to this Agreement to provide
to Buyer any records  relating to the offering and  negotiation of the terms and
conditions of the sale of the Partnership Interests to Buyer;

     (i) a release in the form attached hereto as Exhibit C-1, pursuant to which
each Seller agrees on behalf of itself and its  Affiliates to release any claims
it may have against ALNG with respect to matters arising prior to Closing;

     (j) an  agreement  in the form  attached  hereto as  Exhibit  D among  each
Seller, each Buyer and ALNG;

     (k) an agreement in the form attached hereto as Exhibit E among each Seller
and each Buyer;

     (l)  affidavits,  in a form  reasonably  acceptable to Buyer,  that neither
Seller is a foreign Person within the meaning of Section 1445 of the Code;

     (m) evidence  satisfactory  to Buyer of the  termination  of the agreements
referred to in Section 2.5 and Section 7.7 hereof; and

     (n) all other  previously  undelivered  items  required to be  delivered by
Seller  to Buyer  at or  prior to the  Closing  pursuant  to this  Agreement  or
otherwise required in connection herewith unless waived in writing by Buyer.

Section 2.3.         Deliveries by Buyer to Seller


     At the Closing, Buyer shall deliver to Seller the following:

     (a) a wire  transfer of  immediately  available  funds (to such  account as
Seller  shall have  specified  to Buyer within 24 hours prior to the Closing) in
the amount equal to the Estimated Purchase Price;

     (b) the  certificate  of the Secretary or an Assistant  Secretary of Buyer,
dated as of the date of this  Agreement,  setting forth and attesting to (i) the
resolutions  of the  Board of  Directors  of Buyer  authorizing  the  execution,


                                       10
<PAGE>

delivery  and  performance  of  this  Agreement  and  the  consummation  of  the
transactions  contemplated  hereby,  (ii) the  incumbency  and signature of each
officer of Buyer executing this Agreement and (iii) the organizational documents
of Buyer;

     (c) the Transition Agreement ; and

     (d) a written opinion dated as of the Closing Date from Buyer's counsel, in
the form attached hereto as Exhibit F; and

     (e) a release in the form attached hereto as Exhibit C-2, pursuant to which
ALNG  agrees to release  any  claims it may have  against  either  Seller or its
Affiliates with respect to matters arising prior to Closing.

Section 2.4.         Intercompany Debt


     At or prior to Closing,  Seller shall have caused all intercompany accounts
between ALNG, on the one hand, and Seller and its  Affiliates,  on the other, to
have been  eliminated  without the  transfer of cash from ALNG and without  ALNG
incurring or retaining any liability with respect thereto.

Section 2.5.         Certain Agreements


     Seller  shall  cause all  agreements,  whether  written or oral,  direct or
indirect,  between ALNG and Seller or any Affiliate of ALNG or Seller, including
that  certain   Assignment  of  Maintenance   Services  Agreement  and  Pipeline
Interconnection Agreement between DEOC and ALNG dated effective as of January 1,
1998, and any guaranties of any obligations of Seller or such Affiliate to third
parties (but excluding those agreements to be executed and delivered to Buyer on
the Closing Date as  contemplated  by Sections 2.2 (a),  (d),  (e), (i), (j) and
(k),  the  agreement  referenced  under  item 3 of  Schedule  4.14(a),  and  the
assignment  attached  as Exhibit  G), to be  terminated  at or prior to Closing,
including the Operating and Maintenance  Services  Agreement by and between ALNG
Partnership and DEOC dated effective as of January 1, 1998.

                                  ARTICLE III
                     CONSIDERATION; POST-CLOSING ADJUSTMENT

Section 3.1.         Amount and Form of Consideration

     (a) Subject to adjustment  pursuant to Section 3.3, the aggregate  purchase
price  to be paid  by  Buyer  to  Seller  in  consideration  of the  Partnership
Interests shall be $28,400,000 minus the  Indebtedness,  minus the Estimated Net
Working   Capital   Adjustment,   minus  the  Estimated   Other  Purchase  Price
Adjustments, plus or minus the Net Working Capital Adjustment Amount pursuant to
Section  3.3(a) and plus or minus the Other Purchase  Price  Adjustments  Amount
pursuant to Section 3.3(a) (the "Purchase Price").


                                       11
<PAGE>

     (b) Seller, at its expense, shall prepare, in accordance with the statement
of accounting  principles and procedures  attached to Schedule 3.3, an estimated
balance  sheet of ALNG as of the close of  business  on  November  30, 2002 (the
"Estimated  Closing  Balance  Sheet") and a report as of November  30, 2002 (the
"Estimated Closing Report") setting forth the Estimated Net Working Capital, the
Estimated Indebtedness and the Estimated Other Purchase Price Adjustments,  each
based on ALNG's  September  30, 2002 balance  sheet.  Buyer and its  accountants
shall have the  opportunity  to review with  Seller the drafts of the  Estimated
Closing Balance Sheet and the Estimated  Closing Report (each of which Seller is
to prepare and deliver to Buyer not later than three (3) Business  Days prior to
the issuance of the Estimated  Closing  Balance Sheet and the Estimated  Closing
Report).  Not later than two (2) Business Days prior to the Closing Date, Seller
shall deliver to Buyer (i) the Estimated Closing Balance Sheet and the Estimated
Closing Report and (ii) an estimate of the amount of the Purchase  Price,  which
shall be equal to $28,400,000  minus the sum of (i) the Estimated  Indebtedness,
(ii) the Estimated Net Working Capital  Adjustment and (iii) the Estimated Other
Purchase  Price  Adjustments  (such  estimate  is  referred  to  herein  as  the
"Estimated Purchase Price").

     (c)  Seller  and  Buyer  will  each  bear  one  half  of  the  cost  of any
documentary,  stamp,  sales,  use, and excise or other  transfer Taxes (if any),
payable in respect of the transfer of the Partnership Interests.

Section 3.2.   Payment of Consideration and Delivery of Partnership Interests at
               Closing


     At the Closing,  Buyer shall pay the Estimated Purchase Price to Seller, by
wire transfer of immediately  available funds, and Seller shall deliver to Buyer
one or more  assignments of partnership  interests and bills of sale  evidencing
the  assignment  and  transfer of the  Partnership  Interests  and all rights of
Seller under the Partnership Agreement to Buyer.

Section 3.3.         Post-Closing Adjustment

     (a) In accordance  with the terms and provisions of this Section 3.3, Buyer
shall  pay to  Seller,  or Seller  shall  pay to Buyer (as the case may be),  an
amount (the "Net  Working  Capital  Adjustment  Amount")  equal to the amount by
which Net Working  Capital is greater (in which case the Purchase Price shall be
increased by such amount and Buyer shall pay the Net Working Capital  Adjustment
Amount to Seller) or is less (in which case the Purchase  Price shall be reduced
by such amount and Seller shall pay the Net Working Capital Adjustment Amount to
Buyer) than Estimated Net Working Capital, together with interest thereon at the
Prime Rate plus 2% per annum from the Closing  Date until the date such  payment
is made. In accordance with the terms and provisions of this Section 3.3, Seller
shall pay to Buyer an amount,  if any (the  "Indebtedness  Adjustment  Amount"),
equal to the amount by which the Indebtedness  exceeds  Estimated  Indebtedness,
together  with  interest  thereon  at the Prime  Rate plus 2% per annum from the
Closing Date until the date such payment is made. In  accordance  with the terms
and provisions of this Section 3.3,  Buyer shall pay to Seller,  or Seller shall
pay to Buyer (as the case may be) an amount,  if any (the "Other  Purchase Price
Adjustments  Amount"),  equal  to the  amount  by  which  Other  Purchase  Price
Adjustments is less (in which case the Purchase Price shall be increased by such


                                       12
<PAGE>

amount  and Buyer  shall  pay the Other  Purchase  Price  Adjustments  Amount to
Seller) or is greater (in which case the Purchase Price shall be reduced by such
amount and  Seller  shall pay the Other  Purchase  Price  Adjustments  Amount to
Buyer) than the  Estimated  Other  Purchase  Price  Adjustments,  together  with
interest thereon at the Prime Rate plus 2% per annum from the Closing Date until
the date such payment is made.

     (b) Within ninety (90) days after the Closing Date,  Buyer shall deliver to
Seller the balance sheet of ALNG as of November 30, 2002 (the  "Closing  Balance
Sheet"). The Closing Balance Sheet shall be prepared in accordance with Schedule
3.3. In addition,  no later than the date upon which Buyer  delivers the Closing
Balance Sheet to Seller,  Buyer shall  deliver to Seller a report  setting forth
its proposed calculation of Net Working Capital, Indebtedness and Other Purchase
Price  Adjustments,  which  shall  be made in  accordance  with  and in a manner
consistent  with the  illustration  set forth in  Schedule  3.3,  including  the
statement of accounting  principles attached to and made a part of such Schedule
3.3 (the "Closing Report"). The calculation of Net Working Capital, Indebtedness
and Other  Purchase Price  Adjustments  set forth in the Closing Report shall be
binding upon both Parties,  unless Seller objects,  at Seller's expense, to such
calculation in accordance with Section 3.3(c).

     (c) If,  within thirty (30) days after Buyer  delivers the Closing  Balance
Sheet and the Closing Report to Seller,  Seller notifies Buyer of any objections
to the  calculation  by Buyer of Net  Working  Capital,  Indebtedness  and Other
Purchase  Price  Adjustments  (the date upon which Seller  notifies Buyer of any
such  objections  shall be  referred  to herein as the  "Objection  Notification
Date"),  Buyer and  Seller  will  attempt  in good  faith to agree  upon the Net
Working Capital Adjustment  Amount,  the Indebtedness  Adjustment Amount and the
Other  Purchase  Price  Adjustments  Amount  prior  to or on the  date  that  is
forty-five (45) days after the Objection Notification Date.

     (d) If Buyer and Seller  agree  prior to or on the date that is  forty-five
(45)  days  after  the  Objection  Notification  Date to a Net  Working  Capital
Adjustment  Amount,  the  Indebtedness  Adjustment  Amount and/or Other Purchase
Price  Adjustments  Amount  that is  different  from the  amount  that  would be
calculated  based upon the  Closing  Report,  the payment  described  in Section
3.3(a) shall be the agreed upon amount.

     (e) If Buyer  and  Seller  do not  agree  prior  to or on the date  that is
forty-five  (45) days after the  Objection  Notification  Date to a Net  Working
Capital  Adjustment  Amount,  the  Indebtedness  Adjustment  Amount and/or Other
Purchase Price Adjustments  Amount, as the case may be, payment shall be made by
Buyer or Seller,  as  appropriate,  with respect to all "agreed  upon" issues on
said forty-fifth (45th) day and either Party may submit the remaining matters in
dispute  (but no other  matters)  to  PriceWaterhouse  Coopers  or, if that firm
declines to act as  provided  in this  paragraph,  another  firm of  independent
public accountants  mutually acceptable to Buyer and Seller (in either case, the
"Final Arbiter"),  which firm shall make a final and binding determination as to
all  matters  in dispute  with  respect to the  calculation  of the Net  Working
Capital  Adjustment  Amount,  the  Indebtedness  Adjustment  Amount and/or Other
Purchase Price Adjustments  Amount,,  as the case may be, within forty-five (45)
days  after  its   appointment.   The  Final  Arbiter  shall  send  its  written


                                       13
<PAGE>

determination  of Net Working  Capital,  Indebtedness  and Other  Purchase Price
Adjustments to Buyer and Seller,  together with a calculation of the Net Working
Capital  Adjustment  Amount,  the  Indebtedness  Adjustment  Amount and/or Other
Purchase Price  Adjustments  Amount,  as the case may be, that results from that
determination,  at which point the  determination of the Final Arbiter,  and the
resulting  calculation  of  the  Net  Working  Capital  Adjustment  Amount,  the
Indebtedness  Adjustment Amount and/or Other Purchase Price Adjustments  Amount,
as the case may be,  shall be  binding  on Buyer  and  Seller,  absent  fraud or
manifest error.

     (f) The fees and expenses of the Final Arbiter  shall be allocated  between
Seller and Buyer so that the amount of fees and expenses  paid by Buyer shall be
equal to the product of (A) and (B),  where (A) is the aggregate  amount of such
fees and  expenses,  and where (B) is a fraction,  the numerator of which is the
amount in  dispute  that is  ultimately  successfully  disputed  by  Seller  (as
determined  by the Final  Arbiter),  and the  denominator  of which is the total
value in dispute,  and the remainder of such fees and expenses  shall be paid by
Seller.

     (g)  The  payment  of  the  Net  Working  Capital  Adjustment  Amount,  the
Indebtedness  Adjustment  Amount  and/or the Other  Purchase  Price  Adjustments
Amount,  as contemplated by paragraph (a) above (together with interest  thereon
as  provided  in such  paragraph  (a))  will be made on the day that is five (5)
Business Days after the date upon which such amount has been finally  determined
in accordance with the provisions of this Section 3.3. Such payment will be made
to  Buyer  or  Seller,  as the  case may be,  by wire  transfer  of  immediately
available  funds to an account  specified  by the Party  that is to receive  the
payment.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES
                                    OF SELLER


     Seller hereby, jointly and severally, represents and warrants to Buyer, and
Buyer in agreeing to consummate the transactions  contemplated by this Agreement
has relied upon such representations and warranties, that:

Section 4.1.         Organization; Power and Authority

     (a) Each Seller is a corporation  duly organized,  validly  existing and in
good  standing  under  the Laws of the  State  of  Delaware.  ALNG is a  limited
partnership duly organized, validly existing and in good standing under the Laws
of the  State  of  Delaware  and is  qualified  to  transact  business  in  each
jurisdiction  in which such  qualification  is required by Law, except where the
failure to be so qualified  would not  reasonably be expected to have a Material
Adverse  Effect.  ALNG has all requisite  power and authority to own,  lease and
operate its assets and  properties  and conduct its businesses and operations as
presently being conducted.

     (b) ALNG was duly converted (the "Conversion") from a Delaware  corporation
to a Delaware limited  partnership in accordance with the applicable  provisions
of the  Delaware  General  Corporation  Law and  the  Delaware  Revised  Limited
Partnership Act.


                                       14
<PAGE>

Section 4.2.         Authorizations; Execution and Validity


     Seller has all  requisite  power and  authority  to execute and deliver and
perform its obligations  under this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Seller, the
performance by Seller of its  obligations  hereunder,  and the  consummation  by
Seller of the transactions  contemplated hereby have been duly authorized by all
necessary action on the part of Seller. This Agreement has been duly and validly
executed and delivered by Seller and constitutes a valid and binding  obligation
of Seller,  enforceable  against Seller in accordance with its terms,  except to
the  extent  that  enforceability  may be  limited  by  bankruptcy,  insolvency,
reorganization, moratorium, or similar Laws now or hereafter in effect affecting
creditors' rights generally or general principles of equity.

Section 4.3.         No Conflict; Consents

     (a) Except as set forth on Schedule 4.3, neither the execution and delivery
by Seller of this  Agreement nor the  performance  by Seller of its  obligations
under  this  Agreement  nor  the  consummation  by  Seller  of the  transactions
contemplated  hereby  will  (i)  violate  any Law or  Order,  (ii)  violate  the
certificate  of limited  partnership  or  Partnership  Agreement of ALNG,  (iii)
violate  or  conflict  with,  or  result  in a breach  in any  provision  of, or
constitute a default (or any event which, with or without due notice or lapse of
time,  or both,  would  constitute  such a  default)  under,  or  result  in the
termination  of,  accelerate  the  performance  required  by,  or  result in the
creation of any Lien upon the Partnership  Interests or any of the properties or
assets of ALNG under any of the terms,  conditions or provisions of any material
note, bond, mortgage,  indenture,  deed of trust, license,  lease,  agreement or
other  instrument  or obligation of which any of Seller or ALNG is a party or by
which any of Seller,  ALNG or any of their respective  assets are bound, or (iv)
require  any  consent  or  authorization  from or  filing  with or notice to any
Governmental  Authority or any consent or authorization from or filing or notice
to any other Person.

     (b) Except as set forth on Schedule  4.3 or, in the case of (ii) below,  as
would  not  reasonably  be  expected  to have a  Material  Adverse  Effect,  the
Conversion  did not (i) violate any Law or Order in any material  respect,  (ii)
violate  or  conflict  with,  or  result  in a breach  in any  provision  of, or
constitute a default (or any event which, with or without due notice or lapse of
time,  or both,  would  constitute  such a  default)  under,  or  result  in the
termination  of,  accelerate  the  performance  required  by,  or  result in the
creation of any Lien upon the Partnership  Interests or any of the properties or
assets of ALNG under any of the terms,  conditions  or  provisions  of any note,
bond, mortgage,  indenture,  deed of trust, license,  lease,  agreement or other
instrument  or  obligation of which any of Seller or ALNG is a party or by which
any of  Seller,  ALNG or any of their  respective  assets  are  bound,  or (iii)
require  any  consent  or  authorization  from or  filing  with or notice to any
Governmental  Authority or any consent or authorization from or filing or notice
to any other Person,  in each case which consent or  authorization  has not been
obtained or which notice has not been duly provided.


                                       15
<PAGE>


Section 4.4.         Subsidiaries


     ALNG does not own any securities or any other equity or ownership  interest
in any Person.  ALNG has no obligation nor is subject to any requirement to make
any  investment  (whether  in the form of a loan,  capital or  guaranty)  in any
Person.

Section 4.5.         Capitalization


     The  Partnership  Interests  represent  100%  of the  general  and  limited
partnership  interests in ALNG and such  Partnership  Interests  are owned 99.5%
beneficially  and of record by DEGT as a limited  partner and 0.5%  beneficially
and of record by AEI as a  general  partner,  in each case free and clear of all
Liens and other Adverse  Claims.  There are no  outstanding  warrants,  options,
calls, rights, agreements, subscriptions, convertible or exchangeable securities
or other commitments pursuant to which ALNG is or may become obligated to issue,
sell,  purchase,  return or redeem  any  interest  in ALNG.  There are no voting
trusts,  proxies,  registration rights agreements,  or other agreements to which
Seller  or ALNG  is a party  with  respect  to the  voting  or  transfer  of any
interests in ALNG.

Section 4.6.         Financial Statements

     (a)  Attached  as  Schedule  4.6(a) are (i) copies of the FERC Form No. 2-A
(Annual Report of Nonmajor  Natural Gas Companies) for the years ending December
31, 2001 and  December  31,  2000  audited by Deloitte & Touche LLP and filed by
ALNG with the Federal Energy  Regulatory  Commission  (the "FERC Forms 2-A") and
(ii) the unaudited balance sheet of ALNG as of September 30, 2002, together with
the related statements of income, cash flow and stockholder's equity of ALNG for
the  nine-month  period  ended  September  30,  2002  (the  "Interim   Financial
Statements" and, together with the FERC Forms 2-A, the "Financial  Statements").
Except as described on Schedule  4.6(a),  (i) the FERC Forms 2-A present fairly,
in all material respects,  the consolidated financial position of ALNG as of the
dates  indicated,  and  the  results  of  operations  of ALNG  for  the  periods
presented,  in accordance with the financial  requirements of the Federal Energy
Regulatory Commission, as set forth in the applicable Uniform System of Accounts
and published accounting releases,  which is a comprehensive basis of accounting
other  than GAAP  (such  financial  requirements,  "RAP")  and (ii) the  Interim
Financial  Statements  present fairly, in all material  respects,  the financial
position of ALNG as of the dates  indicated,  and the results of  operations  of
ALNG for the periods  presented in  accordance  with GAAP  consistently  applied
throughout  and among the dates  indicated  (except for the absence of notes and
subject to normal year-end adjustments made in accordance with GAAP).

     (b) Since  December  31,  2001,  ALNG has not  incurred  any  liability  or
obligation  (whether direct,  indirect,  inchoate or contingent)  except for (i)
liabilities  or  obligations  incurred in the  ordinary  course of business  and
consistent  with past  practice,  (ii)  liabilities  or  obligations  accrued or
reserved against or disclosed in the Financial Statements,  (iii) liabilities or


                                       16
<PAGE>

obligations  disclosed in the Schedules hereto,  (iv) liabilities or obligations
disclosed in Schedule  4.6(b) hereto,  or (v)  liabilities  or obligations  that
would not reasonably be expected to have a Material Adverse Effect.

Section 4.7.         Legal Proceedings; Orders


     Schedule 4.7 lists all Legal Proceedings pending or, to Seller's Knowledge,
threatened  against  ALNG,  and all Orders,  arbitration  awards (or  agreements
entered into in any  administrative,  judicial or arbitration  proceeding),  and
settlement agreements binding upon ALNG. Schedule 4.7 also lists all demands and
claims  pending  or, to  Seller's  Knowledge,  threatened  against  ALNG or each
Seller,  in each case  indicating  whether such claim or demand arises out of an
act or  occurrence  for which  coverage is provided  under any of the  insurance
policies  referred to in Schedule 4.15. There are no Legal  Proceedings  pending
against Seller or, to Seller's Knowledge,  threatened that question the validity
of this  Agreement  or any action  taken or to be taken by Seller in  connection
with,  or which seek to enjoin or obtain  monetary  damages in respect  of, this
Agreement or the consummation by Seller of the transactions contemplated hereby.

Section 4.8.         Environmental Matters

     (a) Except as set forth in Schedule 4.8: (i) the  operations and activities
of ALNG are currently and, for the time period beginning five years prior to the
Closing Date and ending on the Closing Date, have been in substantial compliance
with all applicable  Environmental  Laws;  (ii) to the Knowledge of Seller,  the
operations  and  activities  of ALNG prior to the time period  referenced in (i)
above, were in substantial  compliance with all applicable  Environmental  Laws;
(iii) ALNG is not subject to any  existing,  pending or, to Seller's  Knowledge,
threatened Legal  Proceedings or Orders under any  Environmental Law and neither
ALNG nor its Affiliates  have received any notices of  non-compliance,  requests
for  information,  claims,  demands  or  any  other  communications  related  to
compliance with or liability under any Environmental  Law; (iv) all Permits,  if
any,  required to be obtained  or filed by ALNG under any  Environmental  Law in
connection  with its business or properties  have been obtained or filed and are
valid and  currently in full force and effect;  (v) there has been no release of
any Hazardous Material, pollutant or contaminant into the environment by ALNG or
in  connection  with its  properties  or  operations  that could  reasonably  be
expected to give rise to  obligations  arising  under any  Environmental  Law in
excess of $25,000  individually  or $100,000 in the aggregate other than routine
compliance obligations incurred in the ordinary course of business;  (vi) except
as would not have a Material Adverse Effect,  there are no conditions on, about,
beneath or arising from any real property  currently or formerly owned,  used or
leased by ALNG which might give rise to liability, the imposition of a statutory
lien or which may require any  investigation,  removal or remedial  action under
any  Environmental  Law;  and (vii) no capital  expenditures  or other  costs in
excess of $25,000  individually  or  $100,000  in the  aggregate  are  currently
anticipated to maintain or achieve compliance with existing Environmental Law or
Environmental Law which has been enacted but is not yet in effect.

     (b) Schedule 4.8 contains a complete list of all (i) Permits  necessary for
operation of the ALNG  Facility as it is currently  operating  and (ii) material
documents  in the  possession,  custody  or  control  of ALNG or its  Affiliates


                                       17
<PAGE>

relating to environmental  matters or compliance with Environmental Laws, copies
of which have been provided to Buyer.  To the best of ALNG's and its Affiliates'
information  and  belief,  ALNG and its  Affiliates  have  responded  fully  and
accurately to Buyer's  (including its consultants'  and attorneys')  written and
oral requests for information relating to Environmental Laws or Permits.

     (c)  Except  as set  forth on  Schedule  4.8,  neither  ALNG nor any of its
predecessors  in interest  has at any time within the five (5) year period prior
to the Closing Date owned or operated any  underground  storage  tanks  ("USTs")
subject to regulation or permitting requirements under Environmental Laws at the
property currently owned or leased by ALNG. All active USTs owned or operated by
ALNG are in compliance  with  Environmental  Laws.  All USTs located on property
currently  owned or leased by ALNG that are no  longer  active,  and which  were
closed  by Seller  or its  Affiliates,  have  been  closed  in  compliance  with
Environmental  Laws.  To the  Knowledge of Seller,  all USTs located on property
currently owned or leased by ALNG that are no longer active, and which have been
closed by  parties  other than  Seller or its  Affiliates,  have been  closed in
compliance with Environmental Laws.

     (d) To the  Knowledge  of Seller,  there are no  polychlorinated  biphenyls
("PCBs")  present in  concentrations  exceeding those permitted by Environmental
Laws in or at the property currently owned or leased by ALNG, and all prior use,
handling, storage, transport or disposal of PCBs by ALNG and its predecessors in
interest has been in compliance with Environmental Laws.

     (e) Except as set forth in Schedule  4.8, to the  Knowledge of Seller,  the
property  currently  owned or  leased  by ALNG (i) has no  friable  asbestos  or
asbestos  containing  material  on or in such  property;  (ii) has never had any
asbestos-containing  product  manufactured at such property;  and (iii) complies
with Environmental Laws relating to ambient air exposures to asbestos.

     (f) Neither ALNG nor, to the Knowledge of Seller,  any of its  predecessors
in interest  has  assumed  the  liability  of any other  person or entity  under
Environmental Laws by or in connection with any contract or agreement.

     (g) Notwithstanding  anything to the contrary set forth in this Article IV,
Seller makes no  representation  or warranty to Buyer relating to  Environmental
Laws,  Permits  under  Environmental  Laws,  or Hazardous  Materials  other than
pursuant  to this  Section  4.8,  which  is  intended  to  contain  the sole and
exclusive  representations  and warranties of Seller  relating to  Environmental
Laws, Permits under Environmental Laws, and Hazardous Materials.

Section 4.9.         Employees


     ALNG does not currently have any employees. ALNG is not the sponsor of, nor
does it currently provide participation in, nor does it have any obligation with
respect to, any Employee Benefit Plan. ALNG has not incurred: (a) any withdrawal


                                       18
<PAGE>

liability,  within  the  meaning  of  Section  4201 of ERISA,  which  withdrawal
liability  has not been  satisfied,  (b) any  liability  to the Pension  Benefit
Guaranty  Corporation,   which  liability  has  not  been  satisfied,   (c)  any
accumulated  funding  deficiency,  whether or not waived,  within the meaning of
Section 302 of ERISA or Section 412 of the Code, or (d) any fiduciary  liability
under Section 409 of ERISA.

Section 4.10.        Taxes


                Except as set forth on Schedule 4.10:

     (a) All Tax Returns  that are required to be filed on or before the Closing
Date by ALNG  have  been or will  be  duly  and  timely  filed.  ALNG is not the
beneficiary  of any  extension  of time  within  which to file any income Tax or
other material Tax Return. All Taxes due and owing by ALNG (whether or not shown
on any Tax Return) have been timely paid in full. ALNG has withheld and paid all
amounts  required to be withheld  and paid in  connection  with  amounts paid or
owing to any employee, independent contractor,  creditor, equity holder or other
third  party as  required by  applicable  Laws.  ALNG does not have in force any
waiver of any statute of  limitations  in respect of Taxes or any  extension  of
time with  respect  to a Tax  assessment  or  deficiency.  There are no  pending
written  proposed  deficiencies or other written claims for any Tax liability of
ALNG.  There are no Liens for Taxes  (other than Taxes not yet due and  payable)
upon ALNG or any of the assets of ALNG.

     (b)  Schedule  4.10 (i) lists all  income  Tax or other  material  federal,
state,  local,  and foreign Tax Returns  filed with  respect to ALNG for taxable
periods ending on or after December 31, 1998,  (ii) indicates  those Tax Returns
that  have  been  the  subject  of an  audit or  examination  in which  material
adjustments have been made or proposed with respect to ALNG, and (iii) indicates
those Tax Returns which are currently the subject of an audit or  examination in
which  adjustments  have been made or proposed with respect to ALNG.  Seller has
delivered to Buyer  complete and correct  copies of all federal and state income
Tax Returns  (determined on an individual company pro forma basis in the case of
any Tax Returns filed on a consolidated or combined basis),  examination reports
and  statements  of  deficiencies  assessed  against  or agreed to by ALNG since
December 31, 1998. No claim has ever been made by an authority in a jurisdiction
where  ALNG does not file Tax  Returns  that ALNG may be  subject to Tax in that
jurisdiction.

     (c) ALNG will not be  required to include any item of income in, or exclude
any item of  deduction  from,  taxable  income as a result of any (i)  change in
method of accounting  for a taxable period ending on or before the Closing Date;
(ii) "closing agreement" as described in Code Section 7121 (or any corresponding
provision of state,  local or foreign Tax Law) executed on or before the Closing
Date; (iii) installment sale or open transaction disposition made on or prior to
the Closing  Date;  or (iv) prepaid  amount  received on or prior to the Closing
Date.

     (d) ALNG has not elected to be taxed as an association  pursuant to Section
301.7701-3(c)  of the Treasury  Regulations (or any  corresponding  provision of
state, local or foreign Tax Law), and ALNG has been treated as a partnership for


                                       19
<PAGE>

federal, state and local income Tax purposes since October 17, 2002, the date of
the Conversion,  and will continue to be treated as such up to and including the
Closing Date.

Section 4.11.        Title to Partnership Interests


     The  delivery by Seller to Buyer at the Closing of one or more  assignments
of partnership  interests and bills of sale in accordance with the terms of this
Agreement will vest Buyer  immediately with good title to all of the Partnership
Interests,  free and clear of all Liens and other Adverse Claims, other than any
Liens or other Adverse Claims imposed by or arising as a result of any action on
the part of Buyer.

Section 4.12.        Material Contracts


     Schedule 4.12 lists each Material Contract to which ALNG is a party. Seller
has provided or made available to Buyer true and correct copies of each Material
Contract  identified on Schedule 4.12 and each amendment thereto,  and a written
description of the material terms of any oral Material  Contract.  Each Material
Contract  is in full force and effect and is a valid and binding  obligation  of
ALNG, and to Seller's Knowledge, the other party or parties thereto, enforceable
in accordance with its terms in all material respects.  ALNG is not in breach or
default in any material respect in the performance of its duties and obligations
under any Material Contract. To Seller's Knowledge, none of the other parties to
any  Material  Contract is in breach or default in any  material  respect in the
performance of its duties and obligations under any Material Contract.  No party
to any Material  Contract has given notice to ALNG or made a claim  against ALNG
with respect to a breach or default  thereunder  and there exists no  condition,
event or  occurrence  that,  after  notice  or lapse  of  time,  or both,  would
constitute  such a breach or default by ALNG or, to the Knowledge of Seller,  by
any  party  to any  such  Material  Contract.  No  Material  Contract  has  been
terminated,  canceled or revoked and no material term thereof has been waived or
modified  in any  material  respect.  To the  Knowledge  of Seller,  no Material
Contract has been threatened to be terminated, cancelled or revoked by any other
party to such Material Contract.

Section 4.13.        Bank Accounts; Directors and Officers


     Schedule 4.13 lists all accounts (and all signatories  thereto)  maintained
by ALNG  with  any  bank,  brokerage  firm or  other  financial  institution  or
depository. ALNG has no officers or directors.

Section 4.14.        Title to and Condition of Properties

     (a) Seller has provided  Buyer with a complete and correct list of all real
property  formerly  owned,  leased,  operated  or  controlled  by  ALNG  or  its
predecessors  in interest by virtue of merger or  conversion.  Schedule  4.14(a)
lists all of the real property (i) to which ALNG has fee title;  provided, as to
the real property  referenced in item 2 of Schedule 4.14(a),  ALNG owns whatever


                                       20
<PAGE>

right,  title and interest  that was  conveyed to ALNG  pursuant to the document
referenced in such item 2 of Schedule 4.14(a) (the "Fee Property"), (ii) that is
leased or  subleased  by ALNG (the  "Leased  Property")  or (iii)  that ALNG has
agreed (or has an option) to lease or sublease,  or may be obligated to lease or
sublease.  ALNG is the sole legal and equitable owner of the leasehold interests
in the Leased Property  (including,  without limitation,  the leasehold interest
pursuant to the Ground Lease from Providence Gas Company to ALNG dated March 31,
1999).  The Fee  Property  is free and  clear of all Liens  (including,  without
limitation, rights-of-way, easements, exceptions, encumbrances and other matters
affecting  title)  arising by,  through or under ALNG or any of its  Affiliates,
except for (a) Liens listed on Schedule 4.14(a), (b) Liens for Taxes not yet due
or being  contested in good faith by appropriate  proceedings,  and (c) Liens of
mechanics,  materialmen,  carriers,  warehousemen,  and similar Liens arising by
operation  of Law  that in  each  case  secure  payments  not  yet due or  being
contested in good faith by  appropriate  proceedings  ("Permitted  Liens").  The
leasehold estates of ALNG in the Leased Property are free and clear of all Liens
(including,   without   limitation,   rights-of-way,    easements,   exceptions,
encumbrances and other matters affecting title), except for Permitted Liens.

     (b) Other than ALNG,  there are no other  parties in  possession of the Fee
Property,  the Leased Property,  or any portion or portions thereof,  and on the
Closing Date the fee estate in the Fee Property and the leasehold estates in the
Leased  Property  will be free  and  clear  of any and all  lessees,  licensees,
occupants  or  tenants  except as set forth on  Schedule  4.14(a).  There are no
pending or, to Seller's Knowledge,  threatened  condemnation,  eminent domain or
other Legal  Proceedings  affecting the Fee Property,  the Leased Property,  the
Leased Improvements or any portion or portions thereof.  Neither ALNG nor any of
its  Affiliates  has  received  notice of any  pending or  threatened  requests,
applications  or  proceedings  to alter or  restrict  any  zoning  or other  use
restrictions  applicable to the Leased Property or the Leased  Improvements that
would  interfere  with the conduct of the business of ALNG or the ALNG Facility,
in any material respect. Neither ALNG nor any of its Affiliates has received any
notice  from  any  Governmental  Authority  or  other  Person  that  the use and
occupancy of the Leased Property as currently used and occupied, violates in any
material respect any deed or easement  restrictions or covenants,  or applicable
Law, including building codes, zoning,  subdivision or other land use or similar
Laws. Except as set forth on Schedule 4.14(a),  to the Knowledge of Seller,  all
water,  sewer, gas, electric,  telephone,  drainage and other utility equipment,
facilities  and services  required by Law or necessary  for the operation of the
ALNG  Facility (as  historically  operated by ALNG) are  installed and connected
pursuant to valid Permits (to the extent  Permits are required  therefor) and no
notice  has  been  received  by  ALNG  or any of its  Affiliates  regarding  the
termination  or material  impairment of any such  service.  Access to the Leased
Property is  governed  by that  certain  Agreement  dated June 30, 1972  between
Marquette  Cement  Manufacturing  Company and Algonquin LNG, Inc., and Algonquin
Gas Transmission Company.

     (c) The ALNG Facility is in operating  condition and repair  (ordinary wear
and tear excepted) and has been reasonably maintained, except for any failure to
maintain  that would not  reasonably  be  expected  to have a  Material  Adverse
Effect.  The assets of ALNG,  including  the ALNG  Facility,  are  sufficient to
operate the business of ALNG as it is  presently  operated  consistent  with the
historical practice of ALNG.

     (d) ALNG has good  title to all of its  tangible  and  intangible  personal
property  (including the tangible and intangible  personal property reflected on
the FERC Forms 2-A or acquired since December 31, 2001,  except property sold or


                                       21
<PAGE>

otherwise  disposed of in the  ordinary  course of business  since  December 31,
2001),  free and clear of all Liens,  except for Permitted  Liens. The foregoing
shall not apply with  respect  to any item of  Intellectual  Property,  which is
governed exclusively by Section 4.19.

Section 4.15.        Insurance


     Schedule 4.15 lists all insurance  policies that are  maintained by ALNG or
by any of its Affiliates on its behalf,  showing for each policy the deductibles
or self-insured retentions, policy limits, coverage and expiration dates. All of
the policies listed on Schedule 4.15 are in full force and effect,  all premiums
due thereon have been paid, and ALNG has complied in all material  respects with
the provisions of such policies.  No pending claims made by or on behalf of ALNG
against  any of the  insurance  policies  listed  or  required  to be  listed on
Schedule  4.15 have been denied or are being  defended  against by third parties
under a reservation  of rights by the  applicable  insurer.  Since  December 31,
2001, no insurance policy  maintained by ALNG or by any of its Affiliates on its
behalf has been cancelled or terminated.

Section 4.16.        Absence of Certain Changes


     Except as set forth on Schedule 4.16,  since  September 30, 2002,  ALNG has
conducted its business in the ordinary course and consistent with past practice,
and there has not been any:

     (a) damage to or  destruction  or loss of any material asset or property of
ALNG;

     (b) sale,  lease, or disposition of any material asset or property of ALNG,
other than the  disposition  of obsolete  inventory  in the  ordinary  course of
business;

     (c)  cancellation or waiver of any claims or rights with a value to ALNG in
excess of $25,000 in the aggregate;

     (d) write off as uncollectible of any notes or accounts  receivable of ALNG
having a value in excess of $25,000 in the aggregate;

     (e)  material  change in the  accounting  methods  used by ALNG,  except as
required by Law, Order, or changes in RAP;

     (f) capital  expenditures by ALNG prior to Closing in excess of $250,000 in
the  aggregate  or (except as  otherwise  provided by the  express  terms of the
Material Contracts)  commitments by ALNG for capital expenditures which would be
payable after Closing in excess of $5,000 in the aggregate;


                                       22
<PAGE>

     (g) change in its financial condition,  assets,  liabilities or business or
any other event or  condition  of any  character  which  individually  or in the
aggregate  had or has a Material  Adverse  Effect,  excluding  matters  that are
industry-wide or economy-wide or result from general market conditions;

     (h) sale, assignment,  encumbrance,  license, pledge,  abandonment or other
transfer of any Intellectual Property or other intangible assets;

     (i)  payment  of cash or  transfer  of any  assets  to any  partner  or any
Affiliate of any partner or former partner,  other than (i) the transfer of cash
to Seller as part of the ordinary course of business cash management  procedures
of Seller and its Affiliates  and (ii) the transfer  described in Section 6.1(g)
and the transfers contemplated by Exhibit G;

     (j) loans or guarantee of any loans to any customer or vendor of ALNG;

     (k) except in the ordinary course of business,  reduction in the amounts of
any liabilities or reserves, except by reason of corresponding cash payments;

     (l) failure to maintain  accounts  receivable,  accounts  payable,  accrued
liabilities,  income taxes  payable,  or other  tangible or capital  accounts at
levels consistent with normal business practice; or

     (m) legal commitment by ALNG to any of the foregoing.

Section 4.17.        Fees


     Neither of Seller nor ALNG have paid or become  obligated to pay any fee or
commission  to any  broker,  finder  or  intermediary  in  connection  with  the
transactions contemplated hereby.

Section 4.18.        Accounts Receivable and Accounts Payable


     All  accounts  receivable  of  ALNG in  existence  as of the  Closing  Date
(whether  reflected on the  Financial  Statements  or  otherwise)  (i) represent
services  actually  rendered or sales  actually  made in the ordinary  course of
business or valid claims as to which full performance has been rendered and (ii)
are less than sixty (60) days old. The reserves against the accounts  receivable
are  commercially  reasonable and have been  determined in accordance  with RAP,
consistently  applied.  Except  to the  extent  reserved  against  the  accounts
receivable or as reflected by prepayments or unused credits, no counterclaims or
offsetting claims with respect to the accounts receivable are pending or, to the
Knowledge of Seller,  threatened.  The accounts payable of ALNG reflected on the
Interim  Financial  Statements arose from bona fide transactions in the ordinary
course of business, and all such accounts payable have been paid, or are not yet
due and payable  under  ALNG's  payment  policies and  procedures,  or are being


                                       23
<PAGE>

contested by ALNG in good faith. The accounts payable and accrued liabilities of
ALNG  have  been  incurred  by ALNG  in the  ordinary  course  of  business  and
consistent with past practice.

Section 4.19.     Intellectual Property Rights; Computer Programs and Software

     (a) Schedule  4.19(a) contains a complete and correct list of the following
assets and related matters:  (i) all patents and  applications for patents,  all
Marks and  registration of Marks and applications for registration of Marks, all
copyright  registrations  and applications for copyright  registration,  and all
trade names,  owned or used in the business  conducted  with respect to the ALNG
Facility as such business is currently  conducted by ALNG and the  jurisdictions
in or by which such assets or any of them have been registered,  filed or issued
and (ii) to the extent not listed on Schedule 4.12, all contracts, agreements or
understandings  pursuant to which ALNG has  authorized  any Person to use any of
such Intellectual  Property.  Except as set forth on Schedule 4.19(a):  (i) ALNG
owns or has the  right  to use the  items  of  Intellectual  Property  that  are
required to conduct the business of ALNG as now conducted  without conflict with
the rights of others;  (ii) the  consummation of the  transactions  contemplated
hereby will not alter or impair any such rights; (iii) ALNG has not received any
written notice or claim of infringement or any claim  challenging or questioning
the validity or effectiveness of any of the items of Intellectual Property, and,
to the Knowledge of Seller, there is no valid basis for any such claim; and (iv)
except as may be provided in the Material Contracts, ALNG is not liable, nor has
it made any contract or arrangement  whereby it may become liable, to any Person
for  any  royalty  or  other  compensation  for  use  of any  of  the  items  of
Intellectual Property.

     (b) Schedule  4.19(b)  contains a complete and correct list and description
of all  computer  programs  and  software  owned or licensed by ALNG,  excluding
off-the-shelf  commercially  available  systems  owned or  licensed  to ALNG and
computer programs included in purchased or leased equipment.

Section 4.20.        Governmental Authorizations


     ALNG has all material Permits from  Governmental  Authorities  required for
the ownership of its  properties and assets and operation of its business in the
manner  presently  conducted,  and such  Permits  are in full force and  effect.
Except as specified on Schedule 4.20, no registrations,  filings,  applications,
notices, transfers,  consents,  approvals,  Orders,  qualifications,  waivers or
other  actions of any kind are required by virtue of the  execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby to
enable ALNG to continue  the  possession  and  operation of its  properties  and
assets as presently conducted in all material respects.

Section 4.21.        FERC Form No. 2-A


     Each FERC Form No. 2-A (Annual  Report of Nonmajor  Natural Gas  Companies)
filed by or on behalf of ALNG with  respect to the years 2000 and 2001  complied


                                       24
<PAGE>

in all  material  respects  with  the  requirements  of FERC and any  rules  and
regulations promulgated by FERC applicable to such filing.

Section 4.22.        Compliance with Law


     ALNG  has  been,  is  and on the  Closing  Date  will  continue  to be,  in
compliance in all material  respects with all applicable Laws (including  duties
imposed by common Law) and Permits of all Governmental Authorities.

Section 4.23.        Customers and Vendors


     Schedule  4.23 sets  forth a  complete  and  correct  list of the three (3)
largest (by dollar  volume)  customers  and ten (10) largest (by dollar  volume)
vendors of ALNG during  fiscal 2001 and to date in fiscal 2002,  indicating  the
existing contractual arrangements, if any, with each such customer or vendor. No
customer  or vendor  listed  on  Schedule  4.23 has given  notice to ALNG of its
intention to terminate or materially curtail its business relationship with ALNG
or otherwise  materially and adversely alter the terms of its relationship  with
ALNG, and there are no  outstanding  disputes with any customer or vendor listed
on Schedule  4.23 that may  reasonably be expected to result in such customer or
vendor not  continuing  to do business  with ALNG or  otherwise  materially  and
adversely altering the terms of its relationship with ALNG.

Section 4.24.        Disclaimer


     Except to the extent expressly set forth in this Agreement, Seller makes no
representations or warranties whatsoever (whether express,  implied, by statute,
common Law, or  otherwise).  Without  limiting the  generality of the foregoing,
SELLER  EXPRESSLY  DISCLAIMS  AND  NEGATES  ANY  IMPLIED OR EXPRESS  WARRANTY OF
MERCHANTABILITY,  OF FITNESS FOR A  PARTICULAR  PURPOSE,  AND OF  CONFORMITY  TO
MODELS OR SAMPLES OF MATERIALS.

                                   ARTICLE V
                         REPRESENTATIONS AND WARRANTIES
                                    OF BUYER


     Buyer hereby represents and warrants to Seller,  and the Seller in agreeing
to consummate the  transactions  contemplated  by this Agreement has relied upon
such representations and warranties, that:

Section 5.1.         Organization; Power and Authority


     Each Buyer is a limited liability company duly organized,  validly existing
and in good  standing  under  the Laws of the State of  Delaware.  Buyer has all
requisite corporate power and authority to own, lease and operate its assets and
properties and conduct its business and operations as presently being conducted.


                                       25
<PAGE>

Section 5.2.         Authorizations; Execution and Validity


     The execution and delivery of this Agreement by Buyer,  the  performance by
Buyer of its obligations  under this Agreement and the  consummation by Buyer of
the transactions  contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer,  constitutes a valid and binding  obligation of Buyer and is
enforceable  against  Buyer in accordance  with its terms,  except to the extent
that  enforceability may be limited by bankruptcy,  insolvency,  reorganization,
moratorium  or similar  Laws now or  hereafter  in effect  affecting  creditors'
rights generally or general principles of equity.

Section 5.3.         No Conflicts; Consents


     Except as set forth in Schedule 5.3,  neither the execution and delivery by
Buyer of this Agreement nor the  performance by Buyer of its  obligations  under
this Agreement nor the  consummation by Buyer of the  transactions  contemplated
hereby  will (a)  violate  any Law or  Order,  except  as would  not  materially
adversely  affect  the  ability of Buyer to perform  its  obligations  under and
consummate the  transactions  contemplated  by this  Agreement,  (b) violate the
certificates  of  formation or operating  agreements  of Buyer,  (c) require any
consent  or  authorization  from,  filing  with or  notice  to any  Governmental
Authority,  or any consent or authorization  from,  filing with or notice to any
other  Person,  except as would not  adversely  affect  the  ability of Buyer to
perform its obligations  under and consummate the  transactions  contemplated by
this Agreement,  or (d) violate or breach any material Contract of Buyer, except
as would not  adversely  affect the ability of Buyer to perform its  obligations
under and consummate the transactions contemplated by this Agreement.

Section 5.4.         Litigation


     There  are no Legal  Proceedings  pending  against  Buyer  or,  to  Buyer's
Knowledge, threatened that question the validity of this Agreement or any action
taken or to be taken by Buyer in  connection  with,  or which  seek to enjoin or
obtain  monetary  damages in respect of, this Agreement or the  consummation  by
Buyer of the transactions  contemplated hereby or that, if adversely determined,
would adversely  affect in any material  respect the ability of Buyer to perform
its  obligations  under and consummate  the  transactions  contemplated  by this
Agreement.

Section 5.5.         Access to Documents; Opportunity to Ask Questions


     Seller  and ALNG  have  made  available  for  inspection  by Buyer  and its
representatives  the  corporate  and  partnership  records,  books  of  account,
Contracts and other documents  relating to the business,  operations and affairs
of ALNG requested by Buyer.  All access and information was provided subject to,
and remains  until  Closing  subject to, the terms and  conditions  of the Buyer
Confidentiality Agreement.


                                       26
<PAGE>

Section 5.6.         Investment Intent; Sophisticated Buyer


     Buyer (a) is an informed sophisticated entity with sufficient knowledge and
experience in investment and financial matters so as to be capable of evaluating
the  risks  and  merits  of its  purchase  of  the  Partnership  Interests,  (b)
acknowledges  that the purchase of the Partnership  Interests is consistent with
its general  investment  objectives,  (c)  understands  that the purchase of the
Partnership Interests involves a high degree of risk, (d) is financially able to
bear  the  risks  of  purchasing  the  Partnership  Interests,  (e)  has  had an
opportunity to discuss the business,  management  and financial  affairs of ALNG
with  Seller  and,  in  entering  into  this  Agreement,  is  relying  upon  the
representations, warranties and other terms and provisions of this Agreement and
on its informed conclusions of its own investigations of such businesses, (f) is
acquiring  the  Partnership  Interests  for its own  account  for the purpose of
investment  and  not  with  a  view  to or  for  sale  in  connection  with  any
distribution  thereof,  (g) understands that the Partnership  Interests have not
been  registered  under the Securities Act or the applicable  securities or blue
sky Laws of any  state  and,  accordingly,  must be held  indefinitely  unless a
subsequent  disposition  thereof is registered  under the  Securities  Act or is
exempt from such  registration,  (h) is an  "accredited  investor" as defined in
Rule 501(a) under the Securities Act, (i)  understands  that the exemptions from
registration under the Securities Act relied upon by Seller are based in part on
the fact that Buyer is an "accredited  investor" as defined in Rule 501(a) under
the Securities Act, and (j) has no present need for liquidity in connection with
its purchase of the Partnership Interests.

Section 5.7.         Fees


     Buyer has not paid or become  obligated to pay any fee or commission to any
broker, finder or intermediary in connection with the transactions  contemplated
hereby.

Section 5.8.         Disclaimer


     Except to the extent expressly set forth in this Agreement,  Buyer makes no
representations or warranties whatsoever (whether express,  implied, by statute,
common Law, or otherwise).

                                   ARTICLE VI
                                    COVENANTS

Section 6.1.         Covenants

     (a) Seller's Access to Documents; Preservation of Books and Records.

          (i) For a period of five (5)  years  from the date  hereof,  (A) Buyer
     shall cause ALNG not to dispose of or destroy any of the material books and
     records  of ALNG  relating  to periods  prior to the  Closing  ("Books  and
     Records") without first offering to turn over possession  thereof to Seller


                                       27
<PAGE>

     by written notice to Seller at least thirty (30) days prior to the proposed
     date of such  disposition  or  destruction,  (B) Buyer  shall cause ALNG to
     allow Seller and its agents  reasonable  access,  at Seller's  expense,  to
     Books and Records at reasonable times and upon reasonable advance notice in
     connection  with a claim,  investigation,  audit or proceeding by or before
     any  Governmental  Authority with respect to the conduct of the business of
     ALNG prior to Closing (provided,  however,  that any such access or copying
     shall be had or done in such a manner  so as not to unduly  interfere  with
     the normal conduct of ALNG's businesses and the  representatives  of Seller
     who are  agents  inspecting  the  Books  and  Records  shall be  reasonably
     satisfactory to Buyer).

          (ii) The five-year  period  referred to in Section  6.1(a)(i) shall be
     extended  with respect to the relevant  Books and Records in the event that
     Seller advises Buyer in writing that any Legal  Proceeding or investigation
     is pending or threatened at the  termination of such  five-year  period and
     such  extension  shall  continue  with  respect to the  relevant  Books and
     Records until any such Legal Proceeding or  investigation  has been settled
     through judgment or otherwise and/or is no longer pending or threatened.

     (b) Certain Employees.

          (i) Offers and Severance.  Schedule  6.1(b) sets forth those employees
     of DEOC who spend a majority of their time providing field-related services
     with  respect to the ALNG  Facility  ("ALNG  Employees").  The current base
     salary paid to each such ALNG  Employee is set forth  opposite  the name of
     such ALNG  Employee on the schedule  provided by Seller to Buyer via e-mail
     dated December 10, 2002. On or after the date hereof, Buyer or its designee
     shall  interview each of the ALNG  Employees and shall offer  employment to
     those  individuals  as  Buyer  shall  determine  in  its  sole  discretion;
     provided,  however,  that Buyer or its  designee  shall  complete  all such
     interviews  and make offers of  employment,  if any, to the ALNG  Employees
     prior to  termination  of the  field-related  services under the Transition
     Services  Agreement  (the  "Termination  Date").  With respect to each ALNG
     Employee, if any, who does not receive an offer of employment from Buyer or
     its designee prior to or on the  Termination  Date, if DEOC  terminates the
     employment  of such ALNG  Employee no later than thirty (30) days after the
     Termination Date, then Buyer shall reimburse Seller for one hundred percent
     (100%) of the amount of the severance  benefits to which such ALNG Employee
     is  entitled  under  the  2001-2002  Duke  Energy  Corporation   Transition
     Severance  Benefit Plan, as such plan exists on the date hereof,  up to the
     maximum  amount set forth  opposite  the name of such ALNG  Employee on the
     schedule provided by Seller to Buyer by email dated November 1, 2002. Buyer
     and ALNG shall have no other obligations with respect to ALNG Employees who
     do not receive an offer of employment  from Buyer or its designee and shall
     have no obligations at all with respect to ALNG Employees who do not accept
     an offer of employment  from Buyer or its  designee.  Buyer or its designee
     shall employ each such  individual  accepting  Buyer's (or its  designee's)
     offer of  employment  (collectively,  the  "Transferred  Employees")  as of
     January 1, 2003 or such later date as Buyer and Seller may agree,  provided


                                       28
<PAGE>

     that any such  later  date  shall in any  event be the first day of a month
     (the "Employment  Commencement  Date") at the same rate of base pay paid to
     them  by  Seller  on  the  Closing  Date;  provided,   however,  that  such
     Transferred  Employees shall in all events be employees at will of Buyer or
     its designee.

          (ii)  Benefits  for  Transferred   Employees.   Effective  as  of  the
     Employment  Commencement  Date , except as  specifically  provided  herein,
     Buyer  shall  cause  each  such  Transferred  Employee  to be  eligible  to
     participate in all of Buyer's  Employee  Benefit Plans,  and other employee
     plans, programs, policies, and practices, including severance, vacation and
     sick leave, on substantially the same basis as similarly situated employees
     of Buyer.

          (iii) Past Service Credit.

               (A)  Except for  employee  pension  benefit  plans (as defined in
                    ERISA),  Buyer shall cause all of its Employee Benefit Plans
                    and other employee plans, programs, policies, and practices,
                    including  but not limited to  severance,  vacation and sick
                    leave, in which the Transferred  Employees  participate,  to
                    recognize past service as recognized by the employee  plans,
                    programs, policies and practices of DEOC on the date hereof,
                    for purposes of eligibility to participate,  eligibility for
                    enrollment,  eligibility  for, or for the  commencement  of,
                    benefits,  and  eligibility for the levels of benefits where
                    there are  service-related  benefit  schedules in effect and
                    for any other purpose for which service is considered  under
                    such plans, programs, policies and practices.

               (B)  Buyer shall cause all of its Employee Benefit Plans that are
                    employee  pension  benefit  plans (as  defined  in ERISA) in
                    which the  Transferred  Employees  participate  to recognize
                    past service as recognized by the employee  pension  benefit
                    plans of DEOC for purposes of  eligibility  to  participate,
                    eligibility   for   enrollment,   eligibility  for  vesting,
                    eligibility for  commencement  of benefits,  and eligibility
                    for benefit  accrual  credits under the Buyer's cash balance
                    plan and for the forms of benefits  where such  credits,  or
                    the amount of such credits, or payments from the plan depend
                    in whole or in part on service.

               (C)  Upon the date each Transferred Employee commences employment
                    with Buyer, Buyer shall provide coverage to such Transferred
                    Employee under Buyer's group health  insurance plans and, as
                    may be necessary to effect such  coverage,  shall waive,  or
                    caused to be waived, any pre-existing condition restrictions
                    relating to Buyer's group health insurance plans.


                                       29
<PAGE>

     (c) Vacation and Sick Leave.


     From and after the year in which the Closing  occurs,  Buyer shall  provide
vacation and sick leave to the Transferred  Employees in accordance with Buyer's
then current practices and policies for similarly situated employees.

     (d) Liabilities.

          (i) Any  obligation  or liability  under any Employee  Benefit Plan or
     other employee benefit plan, program, policy or practice, including but not
     limited to severance, vacation, sick leave and bonus/incentive compensation
     ("Other Employee Plans") of DEOC or its Affiliates to pay claims or provide
     benefits,  including, without limitation,  claims for health, dental, life,
     accidental  death,   disability,   pension,   retirement,   bonus/incentive
     compensation and related benefits,  for covered services rendered,  covered
     Losses  sustained or benefits  earned prior to the Employment  Commencement
     Date with respect to a Transferred  Employee,  his or her spouse, or his or
     her dependents or beneficiaries, shall remain the responsibility of DEOC or
     its  Affiliates,  or of the carrier or carriers under the Employee  Benefit
     Plans or Other  Employee  Plans of DEOC or its  Affiliates.  Any obligation
     under  an  Employee  Benefit  Plan or Other  Employee  Plan of Buyer to pay
     claims,  including,  without limitation,  claims for health,  dental, life,
     accidental death,  disability,  and related benefits, for services rendered
     on or after the Employment  Commencement Date with respect to a Transferred
     Employee,  his or her spouse,  or his or her  dependents or  beneficiaries,
     shall be the  responsibility  of  Buyer  and its  employee  plans or of the
     carrier or carriers under the Employee Benefit Plans of Buyer.

          (ii) DEOC shall have no  liability  under Title X of the  Consolidated
     Omnibus  Budget  Reconciliation  Act of 1985,  as  amended  ("COBRA")  with
     respect to any  continuation  coverage  under any medical or health plan of
     Buyer for  Transferred  Employees,  their  spouses,  their  dependents  and
     beneficiaries.  Buyer shall have no  liability  under Title X of COBRA with
     respect to any  continuation  coverage under any medical or health plans of
     DEOC for those individuals who do not become Transferred  Employees,  their
     spouses, their dependents and beneficiaries.

     (e) Seller's Marks.

          (i) Buyer shall not acquire, nor shall ALNG retain,  reserve, or hold,
     any rights or licenses to the names,  servicemarks,  and trademarks "Duke,"
     "Duke Energy," "Algonquin" or any derivatives or variations thereof as well
     as any designs,  trade dress,  or logos used by Seller or any  Affiliate in
     association   with  the  foregoing  names,   servicemarks,   or  trademarks
     (collectively  "Seller  Marks")  or any  names,  servicemarks,  trademarks,
     designs,  trade dress,  or logos  similar  thereto.  As soon as  reasonably
     practicable  after the Closing (and in any event, not later than forty-five


                                       30
<PAGE>

     (45) days  thereafter),  Buyer will cause ALNG to amend its  organizational
     documents to the extent  necessary  to remove the  Seller's  Marks from the
     name of ALNG and to remove all trademarks,  trade names and symbols related
     to the Seller Marks from the properties and assets (including all signs) of
     ALNG,  and otherwise to cease all use of or right to use the Seller's Marks
     or any other terms that are confusingly  similar  thereto.  Contemporaneous
     with the Closing, ALNG shall execute an assignment of all right, title, and
     interest in the form of Exhibit G in and to the Mark "Algonquin," including
     all goodwill associated therewith,  subject to ALNG's rights to temporarily
     use such Mark during the forty-five  day period  described in the preceding
     sentence.

          (ii) To the extent that any Seller Marks are used by ALNG in operating
     its business on stationery,  signage, equipment, invoices, receipts, forms,
     packaging,  advertising and promotional  materials,  product,  training and
     service literature and materials, software or like materials (collectively,
     "Marked  Materials")  or appear on any  inventory of ALNG,  Seller grants a
     non-exclusive,  limited  license to ALNG to use any such  remaining  Marked
     Materials or to sell such  inventory for a period not to exceed  forty-five
     (45) days after the Closing, provided that (1) ALNG shall not without prior
     written  consent of Seller use such Seller Marks in any other manner during
     such  time;  and (2) Buyer  shall  within  forty-five  (45) days  after the
     Closing Date cause ALNG not to use any Marked Materials (other than signage
     on equipment  and on training  materials or software for internal use only)
     without  first  crossing out or marking over such Seller Marks or otherwise
     clearly  indicating  on such  Marked  Materials  that  ALNG is no longer an
     Affiliate  of or  affiliated  with Seller.  After the Closing,  Buyer shall
     cause ALNG not to reorder any Marked Materials. Within forty-five (45) days
     following  the  Closing,  Buyer  shall  cause  ALNG to replace or alter any
     signage to remove any  reference  to any Seller  Marks and shall remove any
     Seller Marks from any equipment, training materials or software.

     (f) Insurance.  From and after the Closing Date, Buyer shall not, and shall
cause ALNG not to,  make any claim  under any  policy or  program  of  insurance
maintained by Seller or any of its Affiliates  regardless of whether ALNG may be
a named  insured  or  additional  insured  under  any such  policy  or  program;
provided,  the preceding  provision  shall not apply with respect to any demand,
claim or Legal Proceeding  described or required to be described in Schedule 4.7
and which is covered by any of the insurance referred to in Schedule 4.15.

     (g) Seller  shall have the right to cause the  tangible  personal  property
described in Schedule 6.1(g) to be removed from the ALNG Facility and, following
such removal,  ALNG will have no further use of such items of personal property;
provided,  prior to the  termination  of the  Transition  Agreement  those items
described in Schedule  6.1(g) that are  necessary  for the operation of the ALNG
Facility as it has  historically  been operated  shall not be removed;  provided
further,  the  foregoing  shall not require  Seller or any of its  Affiliates to
renew or extend any lease of any such item.


                                       31
<PAGE>


     (h) From and after  December 1, 2002,  Seller  shall not permit ALNG (i) to
distribute  to Seller or any partner of Seller by way of dividend,  distribution
or otherwise any cash,  accounts receivable or other assets of Seller other than
the bank accounts (and cash contained therein) and accounts receivable described
in Exhibit G or (ii) to incur any Indebtedness.  In connection with the Closing,
Seller shall cause the applicable parties to execute the assignment  attached as
Exhibit G and a copy of the same shall be provided to Buyer.

                                  ARTICLE VII
                                   TAX MATTERS

Section 7.1.         Preparation and Filing of Tax Returns

     (a) Seller shall  prepare or cause to be prepared all income Tax Returns of
ALNG for all  periods  ending  on or prior to the  Closing  Date and cause to be
included in such income Tax Returns or in the  consolidated  federal  income Tax
Returns   (and  the  state   income  Tax  Returns  of  any  state  that  permits
consolidated,  combined  or unitary  income Tax  Returns,  if any) of the Seller
Group, all items of ALNG's income, gain, loss, deduction or credit ("Tax Items")
that are  required  to be included  therein for all periods  through the Closing
Date (the  "Pre-Closing Tax Period"),  shall cause such income Tax Returns to be
timely filed with the appropriate Taxing  Authorities,  and shall be responsible
for the timely payment (and entitled to any refund) of all income Taxes due with
respect to the periods covered by such income Tax Returns.

     (b) Seller  shall  prepare or cause to be prepared  all Tax Returns of ALNG
for all periods  ending on or prior to the Closing Date that are filed after the
Closing Date and are not income Tax Returns  described  in paragraph  (a) above.
Seller  shall  deliver a copy of each such Tax  Return to Buyer at least  thirty
(30) days  prior to the due date  (including  extensions)  for  filing  such Tax
Return.  Seller shall permit Buyer to review and comment on any such Tax Returns
and shall make such revisions to such Tax Return as are reasonably  requested by
Buyer.  Buyer shall cause ALNG to timely file such Tax Returns  and,  subject to
this Section 7.1(b) and Section  7.3(a),  pay all Taxes due with respect to such
Tax Returns. Seller shall promptly pay to Buyer the amount, if any, by which the
unpaid Taxes on any such Tax Return  exceeds the sum of (x) the amounts  accrued
for such Taxes on the Closing Balance Sheet and (y) any amounts  previously paid
by Seller to Buyer in respect of accrued ad valorem  and sales  taxes of ALNG as
part of Other Purchase Price Adjustments,  or Buyer shall promptly pay to Seller
the amount,  if any, by which the unpaid Taxes  reflected on any such Tax Return
are less than the sum of (x) the  amounts  accrued for such Taxes on the Closing
Balance Sheet, and (y) any amounts previously paid by Seller to Buyer in respect
of accrued ad valorem  and sales taxes of ALNG as part of Other  Purchase  Price
Adjustments.

     (c) With respect to any Tax Return  covering a taxable period  beginning on
or before  the  Closing  Date and  ending on or after the  Closing  Date that is
required to be filed after the Closing  Date with  respect to ALNG,  Buyer shall
cause such Tax  Return to be  prepared  in a manner  consistent  with  practices
followed in prior years,  except as otherwise  required by Law or fact (or where
such inconsistency  would not result in any additional Tax liability to Seller),
shall  cause to be  included  in such Tax  Return all Tax Items  required  to be
included therein, and at least thirty (30) days prior to the due date (including


                                       32
<PAGE>

extensions)  of such Tax  Return  shall  furnish  a copy of such Tax  Return  to
Seller.  Buyer shall permit  Seller to review and comment on such Tax Return and
shall make such revisions to such Tax Return as reasonably  requested by Seller.
Buyer shall cause ALNG to timely file each such Tax Return with the  appropriate
Taxing Authority,  and, subject to this Section 7.1(c) and Section 7.3(a), shall
be  responsible  for the  timely  payment  of all Taxes due with  respect to the
period  covered  by such Tax  Return.  Seller  shall  promptly  pay to Buyer the
amount,  if any, by which the unpaid Taxes  attributable  to the Pre-Closing Tax
Period  exceed the amount  accrued  for such Taxes on the Closing  Date  Balance
Sheet or Buyer shall  promptly  pay to Seller the  amount,  if any, by which the
unpaid Taxes attributable to the Pre-Closing Tax Period are less than the amount
accrued for such Taxes on the Closing Date Balance Sheet.

     (d) To the extent  permitted  by Law or  administrative  practice,  (i) the
taxable  year of ALNG that  includes the date hereof shall be treated as closing
on (and including) the Closing Date, and (ii) all transactions occurring outside
the ordinary course of business on the Closing Date after the Closing shall have
occurred shall be reported on Buyer's  consolidated United States federal income
tax return and shall be similarly  reported on other Tax Returns of Buyer or its
Affiliates.

     (e) The portion of the Taxes for any period that includes, but does not end
on,  the  Closing  Date (the  "Straddle  Period")  that is  attributable  to the
Pre-Closing  Tax  Period  shall be: (i) in the case of Taxes that are either (x)
based upon or related to income or receipts,  or (y) imposed in connection  with
any sale or other transfer or assignment of property (real or personal, tangible
or intangible), deemed equal to the amount which would be payable if the taxable
period  ended on and included  the Closing  Date;  and (ii) in the case of Taxes
imposed  on a periodic  basis or  otherwise  measured  by the level of any item,
deemed to be the amount of such Taxes for the entire  period (or, in the case of
such  Taxes  determined  on an arrears  basis,  the amount of such Taxes for the
immediately  preceding period),  multiplied by a fraction the numerator of which
is the number of days in the Pre-Closing Tax Period and the denominator of which
is the number of days in the entire taxable period.

     (f) If after the Closing Date Buyer or ALNG receives a refund or utilizes a
credit of any Tax  attributable to a Pre-Closing Tax Period that is in excess of
the amount, if any,  reflected as a Tax asset on the Closing Date Balance Sheet,
Buyer shall pay to Seller  within ten (10)  Business  Days after such receipt an
amount equal to such refund  received or credit  utilized  (or, in the case of a
Straddle  Period,  so much of such refund or credit as relates to the portion of
the taxable  period  ending on or before the Closing  Date),  together  with any
interest  received  or  credited  thereon,  less the costs  incurred by Buyer in
obtaining such refund on Seller's behalf and the amount of any Taxes,  including
federal income Taxes,  imposed on the receipt of such refund.  Buyer shall,  and
shall cause ALNG to, at Seller's expense, take such action to obtain a refund or
credit  attributable  to a  Pre-Closing  Tax  Period or to  mitigate,  reduce or
eliminate  any  Taxes  that  could  be  imposed  for a  Pre-Closing  Tax  Period
(including  with  respect  to  the  transactions   contemplated  hereby)  as  is
reasonably requested by Seller.


                                       33
<PAGE>

Section 7.2.         Access to Information

     (a) After  the  Closing,  Seller  shall  grant to Buyer (or its  designees)
access at all  reasonable  times to all of the  information,  books and  records
relating  to ALNG  within  the  possession  of  Seller  or  Seller's  Affiliates
(including work papers and correspondence  with Taxing  Authorities),  and shall
afford Buyer (or its designees) the right (at Buyer's  expense) to take extracts
therefrom  and to make copies  thereof,  to the extent  reasonably  necessary to
permit Buyer (or its designees) to prepare Tax Returns, to conduct  negotiations
with Taxing  Authorities,  and to implement the provisions of, or to investigate
or defend any claims between Buyer and any other Buyer Tax  Indemnitees,  on the
one hand, or Seller on the other hand, arising under this Agreement.

     (b) After the  Closing,  Buyer shall grant or cause ALNG to grant to Seller
(or its  designees)  access at all reasonable  times to all of the  information,
books and  records  relating  to ALNG  within  the  possession  of Buyer or ALNG
(including work papers and correspondence  with Taxing  Authorities),  and shall
afford  Seller  (or its  designees)  the right  (at  Seller's  expense)  to take
extracts  therefrom  and  to  make  copies  thereof,  to the  extent  reasonably
necessary to permit Seller (or its designees) to prepare Tax Returns, to conduct
negotiations  with Tax  authorities,  and to implement the  provisions of, or to
investigate  or  defend  any  claims  between  Buyer  or  any  other  Buyer  Tax
Indemnitees,  on the one hand,  or Seller on the other hand,  arising under this
Agreement.

     (c) Each of Buyer and Seller will preserve and retain all  schedules,  work
papers and other  documents  relating to any Tax  Returns of or with  respect to
ALNG or to any  claims,  audits  or  other  proceedings,  or other  Tax  matters
affecting  ALNG until the  expiration of the statute of  limitations  (including
extensions)  applicable to the taxable period to which such documents  relate or
until the final  determination  of any controversy  with respect to such taxable
period,  and until the final  determination of any payments that may be required
with respect to such taxable  period under this  Agreement.  Each of the Parties
will give the other  Party  reasonable  written  notice  prior to  transferring,
destroying  or  discarding  any such  material and, if so requested by the other
Party,  allow  the other  Party  (at its  expense)  to take  possession  of such
materials.

     (d) Nothing in this Section 7.2 is intended to limit the obligations of the
Parties with respect to the delivery of, or the  provision of access to,  books,
records and other information under any other Section of this Agreement.

Section 7.3.         Indemnification by Seller

     (a)  Seller,  jointly  and  severally,  shall  indemnify,  defend  and hold
harmless Buyer, ALNG and any members of any group filing consolidated,  combined
or unitary, federal, state or local income Tax Returns with Buyer (collectively,
the "Buyer Tax  Indemnitees")  from and against all Losses  attributable  to (i)
Taxes of ALNG for any  Pre-Closing  Tax  Period,  (ii) Taxes of any member of an
affiliated,  consolidated,  combined or unitary  group that ALNG was a member of
prior to the Closing Date,  including  pursuant to Treasury  Regulation  Section
1.1502-6 or any analogous or similar state,  local or foreign Law or regulation,
(iii) Taxes of any other Person imposed on ALNG as a transferee or successor, by


                                       34
<PAGE>

contract or otherwise,  which Taxes relate to an event or transaction  occurring
before the Closing, or (iv) any breach of any representation or warranty made in
Section  4.10or any covenants or agreements  made by Seller in this Article VII;
provided, however, that Seller shall be liable for and shall indemnify the Buyer
Tax Indemnitees with respect to Losses described in clauses (i)-(iii) above only
to the extent that the amount of such Losses  exceeds the sum of (x) the amounts
accrued  as a  liability  for  Taxes on the  Closing  Balance  Sheet and (y) any
amounts  previously paid by Seller to Buyer in respect of accrued ad valorem and
sales taxes of ALNG as part of Other  Purchase Price  Adjustments.  Seller shall
reimburse  the  appropriate  Buyer Tax  Indemnitee  for any Losses which are the
responsibility  of  Seller  pursuant  to this  Section  7.3(a)  within  five (5)
Business  Days  after the  payment  of such  Taxes by the Buyer Tax  Indemnitee;
provided,  however,  that in the case of any such Losses  attributable  to Taxes
shown on any Tax Return  described in Section 7.1 (b) or Section 7.1(c),  Seller
shall  reimburse the  appropriate Tax Indemnitee for such Taxes prior to the due
date for the filing of such Tax Return.

     (b)  Notwithstanding  anything to the contrary in this Agreement,  no claim
for Taxes shall be  permitted  under this Section 7.3 unless such claim is first
made not later  than  sixty (60) days  after the  expiration  of the  applicable
statute of limitations (including extensions) with respect to such Taxes.

Section 7.4.         Buyer Tax Indemnification


     Buyer agrees to protect,  defend,  indemnify and hold harmless  Seller from
and against,  and agrees to pay all Losses attributable to (a) any Taxes of ALNG
that are not  attributable  to a Pre-Closing  Tax Period,  and (b) any liability
arising from a breach by Buyer of its covenants set forth in this Article VII.

Section 7.5.         Tax Indemnification Procedures

     (a) If a claim, audit,  examination or other proceeding ("Tax Claim") shall
be made by any  Taxing  Authority  that,  if  successful,  would  result  in the
indemnification  of a Party (or other Buyer Tax Indemnitee) under this Agreement
(referred to herein as the "Tax Indemnified  Party"),  the Tax Indemnified Party
shall promptly  notify the party  obligated under this Agreement to so indemnify
(referred  to herein as the "Tax  Indemnifying  Party") in writing of such fact;
provided,  however,  that the failure of the Tax Indemnified  Party to so notify
the Tax Indemnifying Party shall not release the Tax Indemnifying Party from its
obligations  hereunder  except  to  the  extent  that  such  failure  materially
prejudices the Tax Indemnifying Party's position.

     (b) The Tax  Indemnified  Party  shall,  at its sole cost,  be  entitled to
contest  all Tax Claims  except that the Tax  Indemnifying  Party shall have the
right,  at its sole cost,  to control the defense,  prosecution,  settlement  or
compromise  of any Tax contest that is related  exclusively  to the liability of
any Taxes , the entire amount of which the Tax Indemnifying  Party  acknowledges
in advance in writing is recoverable from the Tax Indemnifying  Party hereunder.
If the Tax Indemnifying  Party provides such written  acknowledgement to the Tax
Indemnified  Party,  the  Tax  Indemnified  Party  shall  take  such  action  in
connection  with  contesting  a Tax Claim as the Tax  Indemnifying  Party  shall


                                       35
<PAGE>

reasonably  request in writing  from time to time,  including  the  selection of
counsel and experts and the  execution of powers of attorney,  provided that the
Tax Indemnifying Party shall have agreed to pay to the Tax Indemnified Party all
costs and expenses  that the Tax  Indemnified  Party incurs in  connection  with
contesting such Tax Claim, including, without limitation,  reasonable attorneys'
and accountants' fees and disbursements.  The Tax Indemnified Party may elect to
participate,  at its  sole  cost,  in any  Tax  contest  controlled  by the  Tax
Indemnifying  Party with counsel of its choice.  The Tax Indemnified Party shall
not make any payment of such claim for at least 30 days (or such shorter  period
as may be required by applicable Law) after the giving of the notice required by
Section  7.5(a),  shall  give  to the Tax  Indemnifying  Party  any  information
reasonably  requested relating to such claim, and otherwise shall cooperate with
the Tax  Indemnifying  Party in good faith in order to contest  effectively  any
such claim. With respect to any Tax Claims for which a Tax Indemnifying Party is
partially liable,  the Tax Indemnifying  Party may elect to participate,  at its
sole cost,  in any Tax  contest  controlled  by the Tax  Indemnified  Party with
counsel  of its  choice  and the Tax  Indemnified  Party  may not  enter  into a
settlement  of  such a Tax  Claim,  without  the  written  consent  of  the  Tax
Indemnifying Party, which consent will not be unreasonably  withheld;  provided,
however,  that if the Tax Indemnified Party notifies the Tax Indemnifying  Party
that it  wishes  to  settle  such a Tax  Claim  and the Tax  Indemnifying  Party
reasonably  refuses to consent to such settlement,  the Tax  Indemnifying  Party
shall be  required to continue  such Tax  contest at its sole  expense,  and the
indemnification  obligation of the Tax  Indemnifying  Party shall be expanded to
include any Taxes incurred by the Tax Indemnified  Party in excess of the amount
computed  as though the  settlement  for which such  consent was sought had been
implemented.

     (c) Subject to the provisions of Section 7.5(b),  the Tax Indemnified Party
shall  only  enter  into a  settlement  of a contest of a Tax Claim that the Tax
Indemnifying Party has the right to control with the applicable Taxing Authority
or prosecute  such contest to a  determination  in a court or other  tribunal of
initial or appellate  jurisdiction as instructed by the Tax Indemnifying  Party;
provided,  however,  that  if  the  Tax  Indemnifying  Party  notifies  the  Tax
Indemnified  Party that it wishes to settle a Tax contest,  the Tax  Indemnified
Party  may elect to  continue  such Tax  contest  at its sole  expense,  and the
indemnification obligation of the Tax Indemnifying Party shall be limited to the
amount of such indemnification  obligation computed as though the settlement for
which such consent was sought had been implemented.

     (d) If,  after  actual  receipt by the Tax  Indemnified  Party of an amount
advanced by the Tax Indemnifying  Party pursuant to this Section 7.5, the extent
of the liability of the Tax Indemnified Party with respect to the claim shall be
established  by the final  judgment or decree of a court or other  tribunal or a
final and binding settlement with an administrative  agency having  jurisdiction
thereof,  the Tax Indemnified Party shall promptly repay to the Tax Indemnifying
Party the  amount  advanced  to the  extent of any  refund  received  by the Tax
Indemnified  Party with respect to the claim together with any interest received
thereon from the applicable Taxing Authority and any recovery of legal fees from
such Taxing  Authority,  net of any Taxes as are  required to be paid by the Tax
Indemnified  Party  with  respect  to  such  refund,   interest  or  legal  fees
(calculated  at the  maximum  applicable  statutory  rate of Tax in the  year of
recovery without regard to any other Tax Items).


                                       36
<PAGE>


Section 7.6.                        Conflict


     In the event of a conflict  between the  provisions of this Article VII and
any other provisions of this Agreement (other than Section 3.1(c), which Section
shall  control  as to the Taxes  referenced  therein),  this  Article  VII shall
control.

Section 7.7.         Tax Sharing Agreements


     All Tax sharing or similar  agreements  with respect to or  involving  ALNG
shall be  terminated as of the Closing Date and,  after the Closing  Date,  ALNG
shall not be bound thereby or have any liability thereunder.

                                  ARTICLE VIII
                                 INDEMNIFICATION

Section 8.1.         Seller Indemnification


     Subject to the  limitations  set forth in this Article VIII, from and after
the date hereof,  Seller  jointly and  severally  hereby agrees to indemnify and
hold Buyer and each of its officers,  directors,  partners,  members,  managers,
employees,  and agents  thereof,  harmless  from and  against any and all Losses
arising out of, based upon,  attributable to or resulting from (a) any breach of
any  representation or warranty of Seller contained in Article IV (other than in
Section 4.1,  Section 4.2,  Section  4.3(a)(i)  and (ii),  Section 4.5,  Section
4.11and  Section 4.17) or any inaccuracy in any  certificate  delivered to Buyer
pursuant to this Agreement,  (b) any breach of any representation or warranty of
Seller in Section 4.1,  Section 4.2,  Section  4.3(a)(i) and (ii),  Section 4.5,
Section 4.11and Section 4.17, (c) any breach of any agreement or covenant on the
part of Seller  contained  in this  Agreement,  (d) any  Losses  relating  to or
arising  under the matters set forth on Schedule  8.1(d),  (e) any and all costs
and  expenses  (including,   without  limitation,   reasonable  legal  fees  and
accounting  fees) incident to the  enforcement of the provisions of this Section
8.1,  (f) any  obligation  or  liability  of ALNG with  respect to any  Employee
Benefit Plan subject to Title IV of ERISA, sponsored,  maintained or contributed
to within six years  prior to the Closing  Date by any entity  (other than ALNG)
that is or was  considered one employer with ALNG under Section 4001 of ERISA or
Section 414 of the Code,  and (g) any obligation or liability of ALNG to or with
respect to any person  employed by ALNG  (including  obligations  or liabilities
under Employee  Benefit Plans and Other Employee Plans) and that is attributable
to such person's employment by ALNG prior to the Closing Date. This Article VIII
shall not apply to any breach of Seller's  representations  and  warranties  set
forth in Section  4.10,  or to any  breach of  Seller's  covenants  set forth in
Article VII, it being  agreed and  understood  that  Buyer's sole and  exclusive
remedies for any matters relating to Taxes shall be as provided in Article VII.

Section 8.2.         Buyer Indemnification


     Subject to the  limitations  set forth in this Article VIII, from and after
the date hereof,  Buyer hereby agrees to indemnify and hold each Seller and each
of its officers, directors, employees, and agents, harmless from and against any


                                       37
<PAGE>

and all Losses arising out of, based upon, attributable to or resulting from (a)
any breach of any  representation  or warranty of Buyer  contained  in Article V
(other than  Section  5.1,  Section  5.2,  Section  5.3, and Section 5.8) or any
inaccuracy in the certificate delivered to Buyer pursuant to this Agreement, (b)
any breach of any  representation  or warranty of Buyer in Section 5.1,  Section
5.2, Section 5.3, or Section 5.8, (c) any breach of any agreement or covenant on
the part of Buyer  contained  in this  Agreement,  and (d) any and all costs and
expenses  (including,  without limitation,  reasonable legal fees and accounting
fees)  incident to the  enforcement  of the  provisions of this Section 8.2. The
foregoing  shall  not  apply to any  breach of  Buyer's  covenants  set forth in
Article VII, it being agreed and  understood  that  Seller's  sole and exclusive
remedies for matters relating to Taxes shall be as provided in Article VII.

Section 8.3.         Indemnification Procedures


     All claims for indemnification under this Article VIII shall be resolved as
follows:

     (a) A party claiming  indemnification under this Agreement (an "Indemnified
Party") shall promptly (i) notify the party from whom  indemnification is sought
(the  "Indemnifying  Party")  of any Third  Party  Claim  asserted  against  the
Indemnified Party which could give rise to a right of indemnification under this
Agreement and (ii) transmit to the Indemnifying  Party, a written notice ("Claim
Notice")  describing  the nature of the Third Party Claim,  a copy of all papers
served  with  respect to such claim (if any),  and the basis of the  Indemnified
Party's request for indemnification under this Agreement.

     (b)  Within  thirty  (30)  days  after  receipt  of any Claim  Notice  (the
"Election  Period"),  the Indemnifying  Party shall notify the Indemnified Party
(i) whether the  Indemnifying  Party  disputes  its  potential  liability to the
Indemnified  Party under this  Agreement  with respect to such Third Party Claim
and (ii) whether the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against such Third Party
Claim.

     (c) If the  Indemnifying  Party notifies the  Indemnified  Party within the
Election  Period that the  Indemnifying  Party does not  dispute  its  potential
liability  to  the   Indemnified   Party  under  this  Agreement  and  that  the
Indemnifying  Party elects to assume the defense of the Third Party Claim,  then
the  Indemnifying  Party  shall have the right to  defend,  at its sole cost and
expense,  such  Third  Party  Claim  by  all  appropriate   proceedings,   which
proceedings shall be prosecuted  diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying  Party in accordance
with this Section 8.3.  The  Indemnifying  Party shall have full control of such
defense  and  proceedings   including  any  compromise  or  settlement  thereof;
provided, however, that any such compromise or settlement involving non-monetary
obligations of the Indemnified  Party, or otherwise  having a direct effect upon
its continuing  operations,  shall be subject to the consent of the  Indemnified
Party. The Indemnified Party is hereby authorized,  at the sole cost and expense
of the  Indemnifying  Party, to file,  during the Election  Period,  any motion,
answer or other pleadings  which the  Indemnified  Party shall deem necessary or
appropriate  to protect its  interests  or those of the  Indemnifying  Party and
which are not unnecessarily  prejudicial to the Indemnifying Party. If requested


                                       38
<PAGE>

by the  Indemnifying  Party,  the Indemnified  Party shall, at the sole cost and
expense of the Indemnifying Party, cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim which the Indemnifying  Party elects
to  contest,   including,   without  limitation,   the  making  of  any  related
counterclaim  against  the  Person  asserting  the  Third  Party  Claim  or  any
cross-complaint  against any Person.  The Indemnified  Party may participate in,
but not control,  any defense or settlement of any Third Party Claim  controlled
by the Indemnifying  Party pursuant to this Section 8.3 and, except as permitted
above or pursuant to this  Section  8.3,  shall bear its own costs and  expenses
with respect to such participation.

     (d) If the Indemnifying  Party fails to notify the Indemnified Party within
the Election Period that the Indemnifying Party elects to defend the Indemnified
Party  pursuant to this  Section  8.3, or if the  Indemnifying  Party  elects to
defend the Indemnified Party pursuant to Section 8.3 but fails to diligently and
promptly  defend or settle the Third Party  Claim,  then the  Indemnified  Party
shall have the right to defend, at the sole cost and expense of the Indemnifying
Party, the Third Party Claim.  The Indemnified  Party shall have full control of
such defense and proceedings;  provided, however, that the Indemnified Party may
not enter into,  without the Indemnifying  Party's  consent,  which shall not be
unreasonably  withheld,  conditioned or delayed, any compromise or settlement of
such Third Party  Claim.  The  Indemnifying  Party may  participate  in, but not
control, any defense or settlement  controlled by the Indemnified Party pursuant
to this  Section 8.3,  and the  Indemnifying  Party shall bear its own costs and
expenses with respect to such participation.

     (e) In the  event an  Indemnified  Party  should  have a claim  against  an
Indemnifying  Party  hereunder  which does not involve a Third Party Claim,  the
Indemnified  Party shall  transmit to the  Indemnifying  Party, a written notice
(the "Indemnity Notice") describing the nature of the claim and the basis of the
Indemnified  Party's request for  indemnification  under this Agreement.  If the
Indemnifying Party does not notify the Indemnified Party within thirty (30) days
from its receipt of the Indemnity  Notice that the  Indemnifying  Party disputes
such claim, the claim specified by the Indemnified Party in the Indemnity Notice
shall  be  deemed  a  liability  of the  Indemnifying  Party  hereunder.  If the
Indemnifying  Party has timely  disputed  such claim,  as provided  above,  such
dispute  shall be resolved by litigation  in an  appropriate  court of competent
jurisdiction.

     (f) Payments of all amounts  owing by the  Indemnifying  Party  pursuant to
Section  8.3(c) and Section 8.3(d) shall be made not later than thirty (30) days
after  the  latest  of (A) the  settlement  of the Third  Party  Claim,  (B) the
expiration of the period for appeal of a final  adjudication of such Third Party
Claim or (C) the expiration of the period for appeal of a final  adjudication of
the  Indemnifying   Party's  liability  to  the  Indemnified  Party  under  this
Agreement.  Payments of all amounts owing by the Indemnifying  Party pursuant to
Section  8.3(e)  shall be made  not  later  than  thirty  (30)  days  after  the
expiration of the  thirty-day  Indemnity  Notice period or, if the  Indemnifying
Party has timely disputed such claim, the expiration of the period for appeal of
a final  adjudication of the Indemnifying  Party's  liability to the Indemnified
Party under this Agreement.


                                       39
<PAGE>


     (g) The failure to provide notice as provided in this Section 8.3 shall not
excuse any party from its continuing obligations  hereunder;  however, any claim
shall be reduced by the damages  resulting from such party's delay or failure to
provide notice as provided in this Section 8.3.

     (h)  Notwithstanding  anything to the contrary in this Section 8.3,  should
any Third Party Claim hereunder  involve a situation where the Indemnified Party
reasonably  anticipates  that part of the claim  will be borne by it and part of
the claim will be borne by the  Indemnifying  Party due to the  existence of the
limitations in Section 8.4, the parties shall jointly  consult and proceed as to
any such Third Party Claim.

Section 8.4.         Limits on Indemnification


     Notwithstanding anything to the contrary contained in this Agreement:

     (a) Seller shall not have any  obligation  to provide  indemnification  for
Losses  pursuant to Section 8.1(a) or Section 8.1(e) (to the extent  incurred in
connection with Section  8.1(a)) except to the extent that the aggregate  amount
of all such Losses pursuant to such subsections exceeds $250,000.00 (the "Basket
Amount"),  in which case Seller shall be liable to Buyer only for such Losses in
excess of the Basket Amount; provided, however, that the Basket Amount shall not
apply with respect to any breach of Section  4.3(a)(iii) or Section  4.3(a)(iv).
The  maximum  obligation  of Seller to  provide  indemnification  for all Losses
pursuant  to  Section  8.1(a) or  Section  8.1(e)  (to the  extent  incurred  in
connection with Section 8.1(a)) shall be limited to an aggregate amount equal to
$10,000,000.00  (the  "Liability  Cap").  Without  prejudice  to  the  foregoing
limitations, Seller shall not have any obligation to provide indemnification for
Losses to the extent such Losses are accrued or reserved  for in the Net Working
Capital Adjustment Amount determined pursuant to Section 3.3.

     (b) Buyer  shall not have any  obligation  to provide  indemnification  for
Losses  pursuant to Section 8.2(a) or Section 8.2(d) (to the extent  incurred in
connection with Section  8.2(a)) except to the extent that the aggregate  amount
of all such Losses pursuant to such  subsections  exceeds the Basket Amount,  in
which case Buyer shall be liable to Seller only for such Losses in excess of the
Basket Amount.  The maximum obligation of Buyer to provide  indemnification  for
Losses  pursuant to Section 8.2(a) or Section 8.2(d) (to the extent  incurred in
connection with Section 8.2(a)) shall be limited to the Liability Cap.

     (c) Neither  Party  shall have any  obligation  to provide  indemnification
hereunder for any Losses pursuant to Section 8.1(a), Section 8.1(b) (solely with
respect to  breaches  of the  representations  and  warranties  in Section  4.1,
Section 4.2 and Section 4.3(a)),  Section 8.2(a) and Section 8.2(b) (solely with
respect to  breaches  of the  representations  and  warranties  in Section  5.1,
Section  5.2,  and  Section  5.3)  hereof  for which a  written  notice of claim
specifying in reasonable  detail the specific nature and basis of the Losses and
the estimated amount of such Losses is not delivered to the  Indemnifying  Party
prior to 5:00 p.m.,  Eastern Time, on the eighteen (18) month anniversary of the
date hereof; provided, however, that such indemnities shall survive with respect
only to the specific matter that is the subject of any notice  delivered in good


                                       40
<PAGE>

faith in compliance  with the  requirements of this Section 8.4(c) prior to 5:00
p.m.,  Eastern  Time on such  eighteen  (18)  month  anniversary  date until the
earlier to occur of (i) the date on which a final  nonappealable  resolution  of
the matter described in such notice has been reached,  or (ii) the date on which
the matter described in such notice has otherwise reached final resolution;  and
provided  further  that (x) the  representations  and  warranties  set  forth in
Section 4.5,  Section 4.11,  Section 4.17,  and Section 5.8 hereof shall survive
until ninety (90) days after the end of the  applicable  statute of  limitations
period, (y) the  representations and warranties set forth in Section 4.14(a) and
4.14(d)  hereof shall survive until the second  anniversary  of the Closing Date
and (z) the  representations  and  warranties  set  forth in  Section  4.8 shall
survive until the second anniversary of the date hereof.

     (d) The obligation of either Party to provide indemnification hereunder for
any Losses for breaches of representations and warranties hereunder shall be net
of (a) any insurance  proceeds  received by an  Indemnified  Party or any of its
Affiliates  with  respect  to such Loss  (except to the  extent  such  insurance
proceeds  must be  repaid  by the  Indemnified  Party or its  Affiliates  to the
insurer through  adjustments to past,  present or future  insurance  premiums or
other similar  mechanisms),  and (b) any Tax benefit received by the Indemnified
Party or any of its  Affiliates  with respect to such Losses  (determined  after
taking  into  account  the  Tax  consequences  of  any  related  indemnification
payment).

     (e) The Parties agree that any payment made pursuant to Article VIII or the
indemnification  provisions  of Article VII are intended to be an  adjustment to
the Purchase Price.

Section 8.5.         Remedies Exclusive


     THE PARTIES  ACKNOWLEDGE  AND AGREE THAT THE  REMEDIES SET FORTH IN ARTICLE
VII AND THIS ARTICLE VIII, INCLUDING THE BASKET AMOUNT,  LIABILITY CAP, SURVIVAL
PERIODS,  DISCLAIMERS AND LIMITATIONS ON SUCH REMEDIES,  ARE INTENDED TO BE, AND
SHALL BE, THE SOLE AND EXCLUSIVE REMEDIES UNDER THIS AGREEMENT.

Section 8.6.         Certain Damages


     NEITHER PARTY NOR ANY OF THEIR  RESPECTIVE  AFFILIATES  OR  REPRESENTATIVES
SHALL  BE  LIABLE  TO  THE  OTHER  PARTY  OR  TO  ANY  OF  ITS   AFFILIATES   OR
REPRESENTATIVES  FOR  PUNITIVE  OR  EXEMPLARY  DAMAGES  (OTHER  THAN THIRD PARTY
PUNITIVE  OR  EXEMPLARY  DAMAGES)  IN  CONNECTION  WITH THIS  AGREEMENT  AND THE
TRANSACTIONS  CONTEMPLATED HEREBY,  REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED
ON CONTRACT,  TORT,  STRICT  LIABILITY,  VIOLATION OF LAW, OR ANY OTHER LEGAL OR
EQUITABLE PRINCIPLE.


                                       41
<PAGE>

Section 8.7.         Miscellaneous


     The  indemnification  obligations  set  forth in this  Article  VIII and in
Article VII are made  notwithstanding  any investigation made by or on behalf of
any of the  Parties  hereto  or  the  results  of  any  such  investigation  and
notwithstanding the participation of any Party in the Closing.

ARTICLE IX
                                     GENERAL

Section 9.1.         Amendments


     This Agreement may only be amended by an instrument in writing  executed by
Buyer and Seller.

Section 9.2.         Waivers


     The  observance  of any  term  of  this  Agreement  may be  waived  (either
generally or in a particular instance and either retroactively or prospectively)
by the Party  entitled to enforce such term,  but such waiver shall be effective
only if it is in a writing signed by the Party entitled to enforce such term and
against which such waiver is to be asserted. Unless otherwise expressly provided
in this  Agreement,  no delay or omission on the part of any Party in exercising
any right or privilege  under this Agreement  shall operate as a waiver thereof,
nor shall any  waiver on the part of any Party of any right or  privilege  under
this  Agreement  operate as a waiver of any other right or privilege  under this
Agreement,  nor shall any single or partial  exercise of any right or  privilege
preclude  any other or further  exercise  thereof or the  exercise  of any other
right or privilege under this Agreement.

Section 9.3.         Notices


     Any notices or other  communications  required or permitted hereunder shall
be in writing and shall be sufficiently  given (and shall be deemed to have been
duly given upon  receipt) if sent by fax (with machine  confirmation)  overnight
mail,  registered mail or certified mail,  postage  prepaid,  or by hand, to the
Parties at the  following  addresses  (or at such other  address  for a Party as
shall be specified by like notice):

(a) If to Seller, to:

                       Duke Energy Gas Transmission Corporation
                       5400 Westheimer Court
                       Houston, Texas  77056
                       Attention:  Rodney E. Gerik
                       Telephone No.:     (713) 627-5511
                       Fax No.:           (713) 989-3190



                                       42
<PAGE>

                       With a copy (which shall not constitute effective notice)
to:

                       Vinson & Elkins LLP
                       2300 First City Tower
                       1001 Fannin Street
                       Houston, Texas  77002
                       Attention:  Rell Tipton
                       Telephone No.:     (713) 758-4506
                       Fax No.:           (713) 615-5553
(b) If to Buyer, to:

                       KeySpan LNG GP, LLC
                       One Metro Tech Center
                       Brooklyn, New York 11201-3850
                       Attention: Joseph A. Vaszily
                       Telephone No.:  (718) 403-2690
                       Fax No.:        (718) 222-1217

                       With a copy (which shall not constitute effective notice)
to:

                       Dickstein Shapiro Morin & Oshinsky LLP
                       2101 L Street, N.W.
                       Washington, DC  20037-1526
                       Attn:  Beth Webb
                       Telephone:         (202) 775-4782
                       Fax No.:           (202) 887-0689
Section 9.4.         Successors and Assigns; Parties in Interest


     This Agreement  shall be binding upon and shall inure solely to the benefit
of the  Parties  and their  respective  successors,  legal  representatives  and
permitted  assigns.  Neither  this  Agreement  nor  any  rights  or  obligations
hereunder may be assigned  without the written  consent of the other Party,  and
any  purported  assignment  made  without such  written  consent  shall be void;
provided,  however,  that Buyer may assign its rights and obligations  hereunder
(a) in whole or in part to one or more  Affiliates of Buyer in  connection  with
the  transfer of the  Partnership  Interests  and/or  interests  in ALNG to such
Affiliate and (b) to one or more lending  institutions or trustees in connection
with a pledge or granting of a security  interest in the Partnership  Interests,
in interests in ALNG,  in assets of ALNG and/or in this  Agreement.  In no event
shall the assignment by any Party of its respective  rights or obligations under
this Agreement release such Party for its respective liabilities and obligations
hereunder.  Nothing in this  Agreement,  express or  implied,  is intended to or
shall  confer  upon any  Person,  other than the  Parties  and their  respective
successors,  legal representatives,  and permitted assigns, any rights, benefits
or remedies of any nature  whatsoever under or by reason of this Agreement,  and
no Person shall be deemed a third party  beneficiary  under or by reason of this
Agreement.


                                       43
<PAGE>

Section 9.5.         Severability


     If any provision of this Agreement or the application of any such provision
to any  Person or  circumstance  shall be  declared  judicially  to be  invalid,
unenforceable,  or void, such decision shall not have the effect of invalidating
or voiding the remainder of this Agreement, it being the intent and agreement of
the  Parties  that this  Agreement  shall be deemed  amended by  modifying  such
provision  to the extent  necessary  to render it valid,  legal and  enforceable
while  preserving  its  intent  or, if such  modification  is not  possible,  by
substituting  therefor another  provision that is valid,  legal, and enforceable
and that achieves the same objective.

Section 9.6.         Entire Agreement


     This  Agreement  (including  the  Schedules  hereto and the  documents  and
instruments  executed and  delivered in  connection  herewith)  constitutes  the
entire  agreement  between the Parties with respect to the subject matter hereof
and supersedes  all prior and  contemporaneous  agreements  and  understandings,
whether written or oral,  between the Parties with respect to the subject matter
hereof, and there are no representations,  understandings or agreements relating
to the subject matter hereof that are not fully  expressed in this Agreement and
the documents and instruments executed and delivered in connection herewith. All
Schedules  attached  to  this  Agreement  are  expressly  made  a part  of,  and
incorporated  by  reference  into,  this  Agreement.  If and to the  extent  any
information  required to be  furnished in any Schedule is contained in any other
Schedule attached hereto, such information shall be deemed to be included in all
Schedules in which the information is required to be included to the extent such
disclosure  is reasonably  apparent on its face and provided such  disclosure is
reasonably related to the Schedule in which it is included.

Section 9.7.         Governing Law


     THIS  AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO SUCH JURISDICTION'S CONFLICT OF
LAWS PROVISIONS. THE PARTIES AGREE THAT VENUE OR ANY SUIT, ACTION, PROCEEDING OR
LITIGATION  ARISING OUT OF OR IN RELATION TO THIS AGREEMENT  SHALL BE IN FEDERAL
OR STATE COURT IN THE STATE OF DELAWARE HAVING SUBJECT MATTER JURISDICTION.

Section 9.8.         Expenses


     Except as otherwise provided herein, each of the Parties shall bear its own
expenses (including,  without limitation, fees and disbursements of its counsel,
accountants   and  other  experts)   incurred  by  it  in  connection  with  the
preparation,   negotiation,   execution,   delivery,  and  performance  of  this
Agreement,  each of the other documents and  instruments  executed in connection
with or contemplated by this Agreement and the  consummation of the transactions
contemplated hereby.


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<PAGE>

Section 9.9.         Release of Information


     The  Parties  shall  cooperate  with each  other in  releasing  information
concerning this Agreement and the  transactions  contemplated  hereby.  No press
releases or other public announcements concerning the transactions  contemplated
by this Agreement  shall be made by any Party without prior  consultation  with,
and agreement of, the other Party, except for any legally required communication
by any Party and then only with prior consultation and as much advance notice as
is practicable under the circumstances requiring any announcement, together with
copies of all drafts of the proposed text.

Section 9.10.        Specific Performance


     Each of the Parties hereto  acknowledges  and agrees that the other Parties
hereto would be  irreparably  damaged in the event any of the provisions of this
Agreement  were not performed in accordance  with their  specific  terms or were
otherwise  breached.  Accordingly,  each of the Parties  hereto  agrees that, in
addition  to any other  remedy to which such Party may be  entitled at Law or in
equity,  they each shall be entitled to an injunction or  injunctions to prevent
breaches of the  provisions of this Agreement and to enforce  specifically  this
Agreement and the terms and provisions hereof.

Section 9.11.        Confidentiality


     Seller  agrees on behalf of itself and its  Affiliates  that,  at all times
from and after the Closing  Date,  it shall keep secret and retain in  strictest
confidence,  and shall not use for its  benefit  or for the  benefit  of others,
confidential   information   with   respect  to  ALNG,   including   Proprietary
Information,  customer lists, details of client or consultant contracts, pricing
policies,   operational   methods,   marketing  plans  or  strategies,   product
development  techniques  or plans,  other than any of the  foregoing  are in the
public  domain  (except  such  materials  that enter the public  domain  through
conduct of Seller or its  Affiliates  which  violates this Section 9.11 prior to
any disclosure by Buyer), and provided that the foregoing shall not restrict any
disclosure of information that,  pursuant to the advice of counsel,  is required
by Law,  legal  process,  or stock  exchange  regulation  and is  implemented in
accordance  with the  following  provisions  of this Section  9.11. In the event
Seller or any of its  Affiliates  receives a request or  becomes  compelled  (by
deposition,  interrogatory, request for documents, subpoena, civil investigative
demand,  order  or  similar  process)  to  disclose  any  of  such  confidential
information,  Seller  agrees to cause the  following  to occur prior to any such
disclosure:

     (a) provide Buyer with prompt written notice of such  requirements  so that
Buyer may seek a  protective  order or other  appropriate  remedy  and/or  waive
compliance with the terms of this Section;

     (b) consult  with Buyer on the  advisability  of taking  steps to resist or
narrow such request; and


                                       45
<PAGE>

     (c) cooperate  with Buyer in any attempt it may make to obtain a protective
order or other appropriate remedy or assurance that confidential  treatment will
be afforded such information.


     In the event such  protective  order or other  remedy is not  obtained,  or
Buyer waives compliance with the provisions hereof, Seller agrees to cause to be
furnished only that portion of such confidential information which Seller or its
Affiliates is advised by written opinion of counsel that it is legally  required
to  furnish,  and to  exercise  reasonable  efforts  to  obtain  assurance  that
confidential treatment will be accorded such information.

Section 9.12.        Certain Construction Rules


     The article and section  headings  and the table of contents  contained  in
this Agreement are for convenience of reference only and shall in no way define,
limit,  extend,  or  describe  the  scope or intent  of any  provisions  of this
Agreement.  Whenever the context may require, any pronoun used in this Agreement
shall include the  corresponding  masculine,  feminine or neuter forms,  and the
singular  form of nouns,  pronouns,  and verbs shall include the plural and vice
versa. In addition, as used in this Agreement,  unless otherwise provided to the
contrary, (a) all references to days, months or years shall be deemed references
to  calendar  days,  months  or years,  and (b) any  reference  to a  "Section,"
"Article,"  or  "Schedule"  shall be deemed to refer to a section  or article of
this Agreement or a schedule  attached to this  Agreement.  The words  "hereof,"
"herein,"  "hereunder,"  and words of similar import referring to this Agreement
refer to this Agreement as a whole and not to any  particular  provision of this
Agreement.  Unless  otherwise  specifically  provided for herein,  the term "or"
shall not be deemed to be exclusive.  The term "including" shall mean "including
without limitation."

Section 9.13.        Counterparts


     This  Agreement  may be executed in  multiple  counterparts,  each of which
shall be deemed an original and all of which taken together shall constitute one
instrument  binding on both Parties,  notwithstanding  that both Parties are not
signatories to the original or the same counterpart.

Section 9.14.        Further Assurances


     Subject to the terms and conditions of this Agreement, at any time, or from
time to time,  after the  Closing,  at any Party's  request and without  further
consideration,  the other  Parties  shall execute and deliver to such Party such
other instruments of sale,  transfer,  conveyance,  assignment and confirmation,
provide such materials and information and take such other actions as such Party
may reasonably  request in order to consummate the transactions  contemplated by
this Agreement.



                            [SIGNATURE PAGE FOLLOWS]


                                       46
<PAGE>

     IN WITNESS  WHEREOF,  this  Agreement has been duly executed as of the date
first above written.


                                     SELLER:

                                     DUKE ENERGY GAS  TRANSMISSION CORPORATION


                                     By:         /s/
                                     --------------------------------
                                     Name:      Alan N. Harris
                                     Title:     Senior Vice President

                                     ALGONQUIN ENERGY, INC.


                                     By:        /s/
                                     --------------------------------
                                     Name:      Alan N. Harris
                                     Title:     Senior Vice President


                                     BUYER:

                                     KEYSPAN LNG GP, LLC


                                     By:        /s/
                                     ------------------------------------
                                     Name:      Joseph A. Vaszily
                                     Title:     Vice President-Operations


                                     KEYSPAN LNG LP, LLC

                                     By:        /s/
                                     ------------------------------------
                                     Name:      Joseph A. Vaszily
                                     Title:     Vice President-Operations


                      Signature Page to Purchase Agreement