Document:

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                                                                     EXHIBIT 4.3

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                          REGISTRATION RIGHTS AGREEMENT

                              Dated March 19, 2002

                                      among

                          The Williams Companies, Inc.

                                       and

                              Lehman Brothers Inc.
                           J.P. Morgan Securities Inc.
                         Banc of America Securities LLC
               Merrill Lynch, Pierce, Fenner & Smith Incorporated
                            Salomon Smith Barney Inc.
                              ABN AMRO Incorporated
                              Barclays Capital Inc.
                             BMO Nesbitt Burns Corp.
                          BNP Paribas Securities Corp.
                            BNY Capital Markets, Inc.
                            CIBC World Markets Corp.
                             Fleet Securities, Inc.
                            Mizuho International plc
                       RBC Dominion Securities Corporation
                         The Royal Bank of Scotland plc
                            Scotia Capital (USA) Inc.
                            TD Securities (USA) Inc.
                                UBS Warburg LLC.

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                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of March 19, 2002 between THE WILLIAMS COMPANIES, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(the "COMPANY"), and Lehman Brothers Inc., J.P. Morgan Securities Inc., Banc of
America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., ABN AMRO Incorporated, Barclays Capital Inc., BMO
Nesbitt Burns Corp., BNP Paribas Securities Corp., BNY Capital Markets, Inc.,
CIBC World Markets Corp., Fleet Securities, Inc., Mizuho International plc, RBC
Dominion Securities Corporation, The Royal Bank of Scotland plc, Scotia Capital
(USA) Inc., TD Securities (USA) Inc. and UBS Warburg LLC (the "INITIAL
PURCHASERS").

         This Agreement is made pursuant to the Purchase Agreement dated March
14, 2002, among the Company and the Initial Purchasers (the "PURCHASE
AGREEMENT"), which provides for the purchase by the Initial Purchasers of an
aggregate of $650,000,000 principal amount of the Company's 8.125% Notes due
March 15, 2012 and $850,000,000 principal amount of the Company's 8.75% Notes
due March 15, 2032 (collectively, the "SECURITIES"). The Company hereby agrees
to provide to the Initial Purchasers and its direct and indirect transferees the
registration rights set forth in this Agreement.

         In consideration of the foregoing, the parties hereto agree as follows:

         Section 1. Definitions.

         As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

         "1933 ACT" shall mean the Securities Act of 1933, as amended from time
to time.

         "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time.

         "CLOSING DATE" shall have the meaning set forth in the Purchase
Agreement.

         "COMPANY" shall have the meaning set forth in the preamble and shall
also include the Company's successors.

         "EXCHANGE DATES" shall have the meaning set forth in Section 2(a)
hereof.

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         "EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.

         "EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.

         "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean a registration
statement on Form S-4 (or, if applicable, on another appropriate form) relating
to an offering of Exchange Securities pursuant to an Exchange Offer and all
amendments and supplements to such registration statement, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

         "EXCHANGE SECURITIES" shall mean securities issued by the Company under
the Indenture containing terms identical to the Securities (except that the
Exchange Securities will not contain restrictions on transfer or terms regarding
the payment of additional interest as provided in Section 2(d) hereof) and to be
offered to Holders of Securities in exchange for Securities pursuant to the
Exchange Offer.

         "HOLDER" shall mean each Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Holder" shall include Participating Broker-Dealers (as
defined in Section 4(a).

         "INDENTURE" shall mean the Indenture relating to the Securities dated
as of November 10, 1997, as supplemented by a First Supplemental Indenture dated
as of September 8, 2000, a Second Supplemental Indenture dated as of December 7,
2000, a Third Supplemental Indenture, dated as of December 20, 2000, a Fourth
Supplemental Indenture dated as of January 17, 2001, a Fifth Supplemental
Indenture dated as of January 17, 2001, a Sixth Supplemental Indenture dated as
of January 14, 2002 and a Seventh Supplemental Indenture dated as of March 19,
2002, each between the Company and Bank One Trust Company, N.A., as trustee, as
the same may be amended from time to time in accordance with the terms thereof.

         "INITIAL PURCHASERS" shall have the meaning set forth in the preamble.

         "MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or any of its affiliates (as such term is defined in Rule 405 under the
1933 Act)

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(other than the Initial Purchasers or subsequent Holders of Registrable
Securities if such subsequent Holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage or amount.

         "PERSON" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.

         "PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, and in each case including
all material incorporated by reference therein.

         "PURCHASE AGREEMENT" shall have the meaning set forth in the preamble.

         "REGISTRABLE SECURITIES" shall mean the Securities; provided, however,
that the Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Securities shall have been declared
effective under the 1933 Act and such Securities shall have been exchanged for
Exchange Securities pursuant to an Exchange Offer Registration Statement or
disposed of pursuant to a Shelf Registration Statement, as applicable, (ii) when
such Securities have been sold to the public pursuant to Rule 144 under the 1933
Act or are saleable pursuant to Rule 144(k) under the 1933 Act (or any similar
provisions then in force, but not Rule 144A) or (iii) when such Securities shall
have ceased to be outstanding.

         "REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus (including any
amendments or supplements thereto), any underwriting agreements, securities
sales agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, (v) all fees and
disbursements relating to the qualification of the Indenture under applicable
securities laws, (vi) the fees

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and disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of counsel for the Company and, in the case of a Shelf
Registration Statement, the reasonable fees and disbursements of one counsel for
the Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Initial Purchasers) and (viii) the fees and
disbursements of the independent public accountants of the Company, including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, but excluding fees and expenses of
counsel to the underwriters (other than fees and expenses set forth in clause
(ii) above) or the Holders and underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.

         "REGISTRATION STATEMENT" shall mean any registration statement of the
Company that covers any of the Exchange Securities or Registrable Securities
pursuant to the provisions of this Agreement and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

         "SEC" shall mean the Securities and Exchange Commission.

         "SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.

         "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Securities (but no other
securities unless approved by the Holders of a majority of the aggregate
principal amount of outstanding Registrable Securities that are covered by such
Shelf Registration Statement) on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.

         "TRUSTEE" shall mean the trustee with respect to the Securities under
the Indenture.

         "UNDERWRITER" shall have the meaning set forth in Section 3 hereof.

         "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a
registration in which Registrable Securities are sold to an Underwriter for
reoffering to the public.

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         Section 2. Registration Under The 1933 Act.

         (a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company shall use its reasonable
best efforts (1) to cause to be filed an Exchange Offer Registration Statement
within 120 days following the Closing Date covering the offer by the Company to
the Holders to exchange all of the Registrable Securities for an equal aggregate
principal amount of Exchange Securities and (2) to cause such Exchange Offer
Registration Statement to become effective within 180 days following the Closing
Date. The Company shall use commercially reasonable efforts to have the Exchange
Offer Registration Statement remain effective until the closing of the Exchange
Offer. The Company shall commence the Exchange Offer promptly after the Exchange
Offer Registration Statement has been declared effective by the SEC and use its
commercially reasonable efforts to have the Exchange Offer consummated not later
than 60 days after such effective date. The Company shall commence the Exchange
Offer by mailing the related exchange offer Prospectus and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:

                  (i) that the Exchange Offer is being made pursuant to this
         Registration Rights Agreement and that all Registrable Securities
         validly tendered will be accepted for exchange;

                  (ii) the dates of acceptance for exchange (which shall be a
         period of at least 20 business days from the date such notice is
         mailed) (the "EXCHANGE DATES");

                  (iii) that any Registrable Security not tendered will remain
         outstanding and continue to accrue interest, but will not retain any
         rights under this Registration Rights Agreement;

                  (iv) that Holders electing to have a Registrable Security
         exchanged pursuant to the Exchange Offer will be required to surrender
         such Registrable Security, together with the enclosed letters of
         transmittal, to the institution and at the address (located in the
         Borough of Manhattan, The City of New York) specified in the notice
         prior to the close of business on the last Exchange Date; and

                  (v) that Holders will be entitled to withdraw their election,
         not later than the close of business on the last Exchange Date, by
         sending to the institution and at the address (located in the Borough
         of Manhattan, The City of New York) specified in the notice a telegram,
         telex, facsimile transmission or letter (to be received no later than
         the Exchange Date) setting forth the name of such Holder, the principal
         amount of Registrable Securities delivered for exchange and a statement
         that such Holder is withdrawing his election to have such Securities
         exchanged.

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         As soon as practicable after the last Exchange Date, the Company shall:

                  (i) accept for exchange Registrable Securities or portions
         thereof validly tendered and not validly withdrawn pursuant to the
         Exchange Offer; and

                  (ii) deliver, or cause to be delivered, to the Trustee for
         cancellation all Registrable Securities or portions thereof so accepted
         for exchange by the Company and issue, and cause the Trustee to
         promptly authenticate and mail to each Holder, an Exchange Security
         equal in principal amount to the principal amount of the Registrable
         Securities surrendered by such Holder.

         The Company shall use its commercially reasonable efforts to complete
the Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
The Company shall inform the Initial Purchasers of the names and addresses of
the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall
have the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.

         If, during the period the Exchange Offer Registration Statement is
effective, an event occurs which makes any statement made in such Exchange Offer
Registration Statement or the related Prospectus untrue in any material respect
or which requires the making of any changes in such Exchange Offer Registration
Statement or Prospectus in order to make the statements therein not misleading,
the Company shall use commercially reasonable efforts to prepare and file with
the SEC a supplement or post-effective amendment to the Exchange Offer
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company agrees to notify the
Holders to suspend the exchange of the Registrable Securities as promptly as
practicable after the occurrence of such an event, and the Holders hereby agree
to suspend such exchange until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission.

         (b) If (i) the Company determines that the Exchange Offer Registration
provided for in Section 2(a) above is not available or may not be consummated as
soon as practicable after the last Exchange Date because it would violate

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applicable law or the applicable interpretations of the Staff of the SEC, (ii)
the Exchange Offer is not for any other reason consummated within 240 days
following the Closing Date or (iii) in the written opinion of counsel for the
Holders a Shelf Registration Statement must be filed and a Prospectus must be
delivered by any Holder in connection with any reoffering or resale of
Registrable Securities, the Company shall use commercially reasonable efforts to
(x) file with the SEC within 120 days following such determination, date or
notice of such opinion of counsel is given to the Company a Shelf Registration
Statement providing for the resale by the Holders (other than those who fail to
comply with the paragraph immediately following clause (p) of Section 3) of all
of their Registrable Securities and (y) cause such Shelf Registration Statement
to become effective within 60 days thereafter. If the Company is required to
file a Shelf Registration Statement solely as a result of the matters referred
to in clause (iii) of the preceding sentence, the Company shall use commercially
reasonable efforts to file and have declared effective by the SEC both an
Exchange Offer Registration Statement pursuant to Section 2(a) with respect to
all Registrable Securities and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration Statement)
with respect to reoffers and resales of Registrable Securities held by the
Holders who must deliver the related Prospectus. The Company agrees to use
commercially reasonable efforts to keep the Shelf Registration Statement
continuously effective until the expiration of the period referred to in Rule
144(k) with respect to the Registrable Securities or such shorter period that
will terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be Registrable Securities within the meaning of this
Agreement. The Company further agrees to supplement or amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use commercially
reasonable efforts to cause any such amendment to become effective and such
Shelf Registration Statement to become usable as soon as thereafter practicable.
The Company agrees to furnish to the Holders of Registrable Securities copies of
any such supplement or amendment promptly after its being used or filed with the
SEC.

         (c) The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2(a) or Section 2(b). Each Holder shall pay
all underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of such Holder's Registrable Securities pursuant to
the Shelf Registration Statement.

         (d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not

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be deemed to have become effective unless it has been declared effective by the
SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. If:

                  (i) the Exchange Offer Registration Statement and, if a Shelf
         Registration Statement is required hereby, the Shelf Registration
         Statement is not filed with the SEC on or prior to the date specified
         for such filing in Section 2(a) and Section 2(b), respectively,

                  (ii) the Exchange Offer Registration Statement and, if a Shelf
         Registration Statement is required hereby, the Shelf Registration
         Statement is not declared effective on or prior to the date specified
         for such effectiveness in Section 2(a) and Section 2(b), respectively,

                  (iii) the Exchange Offer is not consummated on or prior to the
         date specified in Section 2(a), or

                  (iv) the Company has filed, and the SEC has declared
         effective, the Shelf Registration Statement and at any time prior to
         the expiration of the period referred to in Rule 144(k) with respect to
         the Registrable Securities, other than after all the Registrable
         Securities have been disposed of under the Shelf Registration Statement
         or cease to be Registrable Securities, the Shelf Registration Statement
         ceases to be effective, or fails to be usable for its intended purpose
         without being succeeded within two business days by a post-effective
         amendment which cures the failure and that is itself immediately
         declared effective,

then in the case of any failure set forth in (i) - (iv) above, the per annum
interest rate on the Securities will increase by 0.25% until the date that the
relevant failure is remedied; provided that during any period in which any such
failure has continued for more than 90 days, the per annum interest rate on the
Securities will increase by an additional 0.25%. In no event will the additional
interest on the Securities exceed 0.50% per annum.

         (e) Without limiting the remedies available to the Holders, the Company
acknowledges that any failure by the Company to comply with its obligations
under Section 2(a) and Section 2(b) hereof may result in material irreparable
injury to the Holders for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchasers or any Holder may

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obtain such relief as may be required to specifically enforce the Company's
obligations under Section 2(a) and Section 2(b) hereof.

         Section 3. Registration Procedures.

         In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company shall as expeditiously as possible (provided, however, that the Company
shall not be required to take actions more promptly than required by Section
2(a) and Section 2(b)):

         (a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall, in the case of a Shelf Registration, be available for the
resale of the Registrable Securities by the selling Holders thereof and (z)
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and use commercially reasonable efforts to cause such
Registration Statement to become effective and remain effective in accordance
with Section 2 hereof;

         (b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the period specified herein and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to keep each
Prospectus current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or dealers with
respect to the Registrable Securities or Exchange Securities;

         (c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Initial Purchasers, to counsel for
the Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities; and, subject to Section 3(i), the Company consents to the use of
such Prospectus and any amendment or supplement thereto in accordance with
applicable law by each of the selling Holders of Registrable Securities and any
such Underwriters in connection with the offering and sale of the Registrable
Securities covered by, and in the manner described in, such Prospectus or any
amendment or supplement thereto in accordance with applicable law;

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         (d) use commercially reasonable efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, to cooperate
with such Holders in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. and do any and all other acts
and things which may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the Company shall not
be required to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) file any general consent to service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject;

         (e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the Initial
Purchasers promptly and, if requested by any such Holder or counsel, confirm
such advice in writing (i) when a Registration Statement has become effective
and when any post-effective amendment thereto has been filed and becomes
effective, (ii) of any request by the SEC or any state securities authority for
amendments and supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of a Registration Statement or the initiation
of any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and correct in all
material respects or if the Company receives any notification with respect to
the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose, (v) of
the happening of any event during the period a Shelf Registration Statement is
effective which makes any statement made in such Shelf Registration Statement or
the related Prospectus untrue in any material respect or which requires the
making of any changes in such Shelf Registration Statement or Prospectus in
order to make the statements therein not misleading and (vi) of any
determination by the Company that a post-effective amendment to a Registration
Statement would be appropriate;

         (f) make every commercially reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of the
withdrawal of any such order;

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         (g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);

         (h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders may reasonably request at least
two business days prior to the closing of any sale of Registrable Securities;

         (i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use commercially reasonable
efforts to prepare and file with the SEC a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees to
notify the Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to suspend
use of the Prospectus until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission and have furnished copies of
the amended or supplemented Prospectus to the Holders or until the Company
notifies the Holders that the sale of the Registrable Securities may be resumed;

         (j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus, provide copies of such document to the
Initial Purchasers and their counsel (and, in the case of a Shelf Registration
Statement, the Holders and their counsel) and make such of the representatives
of the Company as shall be reasonably requested by the Initial Purchasers or
their counsel (and, in the case of a Shelf Registration Statement, the Holders
or their counsel) available for discussion of such document, and shall not at
any time file or make any amendment to the Shelf Registration Statement, any
Prospectus or any amendment of or supplement to a Shelf Registration Statement
or a Prospectus, of which the Initial Purchasers and their counsel (and, in the
case of a Shelf Registration Statement, the Holders and their counsel) shall not
have previously been advised and furnished a copy or to which the Initial
Purchasers or their counsel (and, in the case of a Shelf Registration Statement,
the Holders or their counsel) shall reasonably object;

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         (k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of the
applicable Registration Statement;

         (l) cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use commercially reasonable best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;

         (m) in the case of a Shelf Registration, make available for inspection
by a representative of the Holders of the Registrable Securities, any
Underwriter participating in any disposition pursuant to such Shelf Registration
Statement, and attorneys and accountants designated by the Holders, at
reasonable times and in a reasonable manner, all financial and other records,
pertinent documents and properties of the Company, and cause the respective
officers, directors and employees of the Company to supply all information
reasonably requested by any such representative, Underwriter, attorney or
accountant in connection with a Shelf Registration Statement;

         (n) use commercially reasonable efforts to cause the Exchange
Securities to continue to be rated by two nationally recognized statistical
rating organizations (as such term is defined in Rule 436(g)(2) under the 1933
Act), if the Registrable Securities have been rated;

         (o) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information with respect to such
Holder as such Holder reasonably requests to be included therein and (ii) make
all required filings of such Prospectus supplement or such post-effective
amendment as soon as the Company has received notification of the matters to be
incorporated in such filing; and

         (p) In the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those reasonably requested by the Holders of a majority of the Registrable
Securities being sold thereunder) in order to expedite or facilitate the
disposition of such Registrable Securities thereunder including, but not limited
to, pursuant to an Underwritten Offering and in such connection, (i) to the
extent possible, make such representations and warranties to the Holders and any
Underwriters of such Registrable Securities with respect to the business of the
Company and its

                                       12
<PAGE>

subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii) obtain
opinions of counsel to the Company (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the Holders of a majority in
principal amount of the Registrable Securities being sold under such Shelf
Registration Statement, such Underwriters and their respective counsel)
addressed to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in underwritten
offerings, (iii) obtain "cold comfort" letters from the independent certified
public accountants of the Company (and, if necessary, any other certified public
accountant of any subsidiary of the Company, or of any business acquired by the
Company for which financial statements and financial data are or are required to
be included in the Registration Statement) addressed to each selling Holder and
Underwriter of Registrable Securities, such letters to be in customary form and
covering matters the type customarily covered in "cold comfort" letters in
connection with underwritten offerings, and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority in
principal amount of the Registrable Securities being sold under such Shelf
Registration Statement or the Underwriters, and which are customarily delivered
in underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in an
underwriting agreement.

         In the case of a Shelf Registration Statement, the Company may require
each Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing. No Holder of Registrable Securities may include its Registrable
Securities in such Shelf Registration Statement unless and until such Holder
furnishes such information to the Company. Each Holder including Registrable
Securities in a Shelf Registration Statement shall agree to furnish promptly to
the Company all information regarding such Holder and the proposed distribution
by such Holder of such Registrable Securities required to make the information
previously furnished to the Company by such Holder not materially misleading.

         In connection with an Exchange Offer Registration, each Holder
exchanging Securities for Exchange Securities shall be required to represent
that (i) the Exchange Securities are being obtained in the ordinary course of
business of the Person receiving such Exchange Securities, whether or not such
Person is a Holder, (ii) neither such Holder nor any such other Person has an
arrangement or understanding with any Person to participate in the distribution
of Exchange Securities, (iii) other than as set forth in Section 4, if the
Holder is not a broker-dealer, or is a broker-dealer but will not receive
Exchange Securities for its own

                                       13
<PAGE>

account in exchange for Securities, neither the Holder nor any such other Person
is engaged in or intends to participate in a distribution of the Exchange
Securities and (iv) neither the Holder nor any such other Person is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or, if such Person is an "affiliate", that such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.

         In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at its expense) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. If the Company shall give any such notice to suspend the
disposition of Registrable Securities pursuant to a Registration Statement, the
Company shall extend the period during which the Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions. The Company may give
such notice so long as there are no more than 90 days during any 365 day period
in which such suspensions are in effect.

         The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "UNDERWRITERS") that will
administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering; provided that such
Underwriters shall be reasonably acceptable to the Company.

         Section 4. Participation Of Brokers-dealers In Exchange Offer.

         (a) The parties hereto understand that the Staff of the SEC has taken
the position that any broker-dealer that receives Exchange Securities for its
own account in the Exchange Offer in exchange for Securities that were acquired
by such broker-dealer as a result of market-making or other trading activities
(a "PARTICIPATING BROKER-DEALER"), may be deemed to be an "underwriter" within
the meaning of the 1933 Act and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such Exchange
Securities.

                                       14
<PAGE>

         The Company understands that it is currently the Staff's position that
if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange
Securities, without naming the Participating Broker-Dealers or specifying the
amount of Exchange Securities owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the 1933 Act in connection with resales of Exchange Securities for their
own accounts, so long as the Prospectus otherwise meets the requirements of the
1933 Act.

         (b) In light of the above, notwithstanding the other provisions of this
Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Initial Purchasers or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:

                  (i) the Company shall not be required to amend or supplement
         the Prospectus contained in the Exchange Offer Registration Statement,
         as would otherwise be contemplated by Section 3(i), for a period
         exceeding 180 days after the last Exchange Date (as such period may be
         extended pursuant to the penultimate paragraph of Section 3 of this
         Agreement) and Participating Broker-Dealers shall not be authorized by
         the Company to deliver and shall not deliver such Prospectus after such
         period in connection with the resales contemplated by this Section 4;
         and

                  (ii) the application of the Shelf Registration procedures set
         forth in Section 3 of this Agreement to an Exchange Offer Registration,
         to the extent not required by the positions of the Staff of the SEC or
         the 1933 Act and the rules and regulations thereunder, will be in
         conformity with the reasonable request in writing to the Company by the
         Initial Purchasers or with the reasonable request in writing to the
         Company by one or more broker-dealers who certify to the Initial
         Purchasers and the Company in writing that they anticipate that they
         will be Participating Broker-Dealers; and provided further that, in
         connection with such application of the Shelf Registration procedures
         set forth in Section 3 to an Exchange Offer Registration, the Company
         shall be obligated (x) to deal only with one entity representing the
         Participating Broker-Dealers, which shall be Lehman Brothers Inc.
         unless it elects not to act as such representative, (y) to pay the fees
         and expenses of only one counsel representing the Participating
         Broker-Dealers, which shall be counsel to the Initial Purchasers unless
         such counsel elects not to so act and (z) to cause to be

                                       15
<PAGE>

         delivered only one, if any, "cold comfort" letter with respect to the
         Prospectus in the form existing on the last Exchange Date and with
         respect to each subsequent amendment or supplement, if any, effected
         during the period specified in clause (i) above.

         (c) The Initial Purchasers shall have no liability to the Company,
other than as Holders in accordance with the terms hereof, or to any other
Holder with respect to any request that they may make pursuant to Section
4(b)above.

         Section 5. Indemnification And Contribution.

         (a) The Company agrees to indemnify and hold harmless the Initial
Purchasers, each Holder and each Person, if any, who controls the Initial
Purchasers or any Holder within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, or is under common control with, or is controlled
by, any Initial Purchaser or any Holder (each, a "PARTICIPANT"), from and
against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by a Participant in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) forming a part of such
Registration Statement, or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to the Initial Purchasers or any Holder furnished to the Company in
writing by the Initial Purchasers or any selling Holder expressly for use
therein; provided that the foregoing indemnity with respect to any Prospectus
shall not inure to the benefit of any Holder from whom the Person asserting any
such losses, claims, damages or liabilities purchased Securities, or any Person
controlling such Holder, if a copy of the final Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent by, or delivered on behalf of, such Holder to such Person
at or prior to the written confirmation of the sale of the Securities to such
Person, if the final Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability. In connection
with any Underwritten Offering permitted by Section 3, the Company will also
enter into an underwriting

                                       16
<PAGE>

agreement pursuant to which the Company will agree to indemnify the
Underwriters, if any, selling brokers, dealers and similar securities industry
professionals participating in such Underwritten Offering, their officers and
directors and each Person who controls such Persons (within the meaning of the
1933 Act and the 1934 Act) to substantially the same extent as provided above
with respect to the indemnification of the Holders, if requested in connection
with any Registration Statement for such Underwritten Offering.

         (b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Initial Purchasers and the other selling Holders,
and each of their respective directors, officers who sign the Registration
Statement and each Person, if any, who controls the Company, the Initial
Purchasers and any other selling Holder within the meaning of either Section 15
of the 1933 Act or Section 20 of the 1934 Act to the same extent as the
foregoing indemnity from the Company to the Initial Purchasers and the Holders
pursuant to Section Section 5(a), but only with reference to information
relating to such Holder furnished to the Company in writing by such Holder
expressly for use in any Registration Statement (or any amendment thereto) or
any Prospectus (or any amendment or supplement thereto).

         (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing, but the failure
to so promptly notify the indemnifying party shall not negate the obligation to
so indemnify such indemnified party unless the indemnifying party is materially
prejudiced by such delay, and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and, in the opinion of
counsel to the indemnifying party, representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Initial Purchasers and all Persons, if
any, who control the Initial Purchasers within the meaning of either Section 15
of the 1933 Act or Section 20 of the 1934 Act,

                                       17
<PAGE>

(b) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each Person, if any, who controls the Company within
the meaning of either such Section and (c) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Holders and all
Persons, if any, who control any Holders within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In any such case involving the Initial Purchasers and Persons who
control the Initial Purchasers, such firm shall be designated in writing by the
Initial Purchasers. In any such case involving the Holders and such Persons who
control any Holders, such firm shall be designated in writing by the Majority
Holders. In all other cases, such firm shall be designated by the Company. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which such indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

         (d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section 5(d) are several
in proportion to the respective principal amount of Registrable Securities of
the applicable Holder that were registered pursuant to a Registration Statement.

         (e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5(e) were determined by pro
rata

                                       18
<PAGE>

allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 5(d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in Section 5(d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Securities
were sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.

         The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchasers, any Holder or any Person controlling the Initial
Purchasers or any Holder, or by or on behalf of the Company, its officers or
directors or any Person controlling the Company, (iii) acceptance of any of the
Exchange Securities and (iv) any sale of Registrable Securities pursuant to a
Shelf Registration Statement.

         Section 6. Miscellaneous.

         (a) No Inconsistent Agreements. The Company has not entered into, and
on or after the date of this Agreement will not enter into, any agreement which
is inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.

         (b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Holders of at least
a majority in aggregate principal amount of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or
consent; provided, however, that no amendment, modification, supplement, waiver
or consent to any departure from the provisions of Section 5 hereof or this
paragraph (b) shall be effective as against any Holder of Registrable Securities
unless consented to in writing by such Holder.

                                       19
<PAGE>

         (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or any courier guaranteeing overnight delivery (i)
if to a Holder, at the most current address given by such Holder to the Company
by means of a notice given in accordance with the provisions of this Section
6(c), which address initially is, with respect to the Initial Purchasers, the
address set forth in the Purchase Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).

         All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged, if telecopied; and on the next business day if timely delivered
to an air courier guaranteeing overnight delivery.

         Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.

         (d) Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders of Registrable Securities; provided that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Securities in violation of the terms of the Securities. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Initial Purchasers shall have no liability or obligation to the Company with
respect to any failure by any other Holder to comply with, or any breach by any
other Holder of, any of the obligations of such Holder under this Agreement.

         (e) Purchases and Sales of Securities. The Company shall not, and shall
use its commercially reasonable efforts to cause its affiliates (as defined in
Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise
transfer any Securities.

         (f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, shall be bound by all of
the

                                       20
<PAGE>

terms and provisions of this Agreement and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.

         (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

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

         (i) Governing Law. This Agreement shall be governed by the laws of the
State of New York.

         (j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

                                       21
<PAGE>

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

                                        THE WILLIAMS COMPANIES, INC.

                                        By: /s/ STEVEN J. MALCOLM
                                           ------------------------------------
                                           Name: Steven J. Malcolm
                                           Title: President and Chief Executive
                                                  Officer

Confirmed and accepted as of
the date first above written:

LEHMAN BROTHERS INC.
J.P. MORGAN SECURITIES INC.

By: Lehman Brothers Inc.

Acting on behalf of itself and the several Initial Purchasers

By: /s/ MARTIN GOLDBERG
   -----------------------------------
   Name: Martin Goldberg
   Title:

                                       22<PAGE>
                                                                    EXHIBIT 10.1

                          THE WILLIAMS COMPANIES, INC.

                  $650,000,000 8.125% Notes due March 15, 2012
                   850,000,000 8.75% Notes due March 15, 2032

                               PURCHASE AGREEMENT

                                                                  March 14, 2002

LEHMAN BROTHERS INC.
J.P. MORGAN SECURITIES INC.
As representatives (the "REPRESENTATIVES")
of the several Initial Purchasers named herein
c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, NY 10019

Ladies and Gentlemen:

         The Williams Companies, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several initial purchasers (the "INITIAL
PURCHASERS" or "YOU") listed in Schedule I hereto (i) $650,000,000 aggregate
principal amount of its 8.125% Notes due March 15, 2012 (the "8.125% NOTES") and
(ii) $850,000,000 aggregate principal amount of its 8.75% Notes due March 15,
2032 (the "8.75% NOTES" and, together with the 8.125% Notes, the "NOTES") to be
issued pursuant to the provisions of a Seventh Supplemental Indenture dated as
of March 19, 2002 to the Indenture dated as of November 10, 1997, as amended
(together, the "INDENTURE") between the Company and Bank One Trust Company,
N.A., as Trustee (the "TRUSTEE").

         The Company hereby confirms its agreement with the Initial Purchasers
to issue and sell all of the Notes to the Initial Purchasers, on the terms and
conditions set forth herein.

         The Notes will be offered and sold to the Initial Purchasers, without
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in reliance upon an exemption

<PAGE>

from the registration requirements of the Securities Act. The Company has
prepared and delivered to the Initial Purchasers a preliminary confidential
offering memorandum dated March 14, 2002 (together with all documents
incorporated by reference therein, the "PRELIMINARY OFFERING MEMORANDUM") and
has prepared and will deliver to the Initial Purchasers on the date hereof or as
soon as practicable thereafter, copies of a final confidential offering
memorandum dated March 14, 2002 (together with all amendments and supplements
thereto, and together with all documents incorporated by reference therein, the
"FINAL OFFERING MEMORANDUM"), relating to the Notes. The Preliminary Offering
Memorandum and the Final Offering Memorandum are sometimes collectively referred
to herein as the "OFFERING MEMORANDUM." All references in this Agreement to the
Offering Memorandum include the documents incorporated by reference therein. The
Company hereby confirms that it has authorized the use of the Offering
Memorandum in connection with the offer and sale of the Notes.

         The Company understands that the Initial Purchasers propose to make
offerings ("EXEMPT RESALES") of the Notes only on the terms and in the manner
set forth in the Offering Memorandum and herein, as soon as the Initial
Purchasers deem advisable after this Agreement has been executed and delivered,
only to (i) persons in the United States whom the Initial Purchasers reasonably
believe to be "qualified institutional buyers" ("QIBS") as defined in Rule 144A
under the Securities Act, as such rule may be amended from time to time ("RULE
144A"), in transactions meeting the requirements of Rule 144A and (ii) non-U.S.
persons to whom offers and sales of the Notes may be made in reliance upon
Regulation S under the Securities Act ("REGULATION S"), in offshore transactions
meeting the requirements of Regulation S.

         The holders of the Notes will be entitled to the benefits of a
Registration Rights Agreement, in substantially the form attached as Exhibit A
hereto with such changes as shall be agreed to by the parties hereto (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company will file a
registration statement (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "COMMISSION") registering the Notes or the Exchange
Notes referred to in the Registration Rights Agreement under the Securities Act.

         1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with the Initial Purchasers that:

                  (a) each document filed or to be filed pursuant to the
         Securities Exchange Act of 1934 (the "EXCHANGE ACT") and incorporated
         by reference in the Offering Memorandum complied or will comply when so
         filed in all material respects with the Exchange Act and the applicable
         rules and regulations thereunder;

                                       2
<PAGE>

                  (b) the Offering Memorandum (as amended or supplemented if the
         Company shall have furnished any amendments or supplements thereto) as
         of its date did not, and as of the Closing Date (as defined in Section
         4) will not, contain any untrue statement of a material fact or omit to
         state any material fact required to be stated therein or necessary to
         make the statements therein, in the light of circumstances under which
         they were made, not misleading;

                  (c) Ernst & Young LLP, who have reported upon the audited
         financial statements and schedules included or incorporated by
         reference in the Offering Memorandum, are independent auditors within
         the meaning of the rules and regulations promulgated under the
         Securities Act;

                  (d) this Agreement has been duly authorized, executed and
         delivered by the Company;

                  (e) the Company and each of its significant subsidiaries (as
         defined in Rule 1-02 of Regulation S-X under the Securities Act) (each,
         a "Significant Subsidiary" and collectively, "Significant
         Subsidiaries") have been duly incorporated (in the case of each
         Significant Subsidiary which is a corporation) or otherwise validly
         formed and are validly existing in good standing under the laws of
         their respective jurisdictions of organization, are duly qualified to
         do business and are in good standing in each jurisdiction in which
         their respective ownership or lease of property or the conduct of their
         respective businesses requires such qualification, except where failure
         to have such qualifications would not, singly or in the aggregate, have
         a material adverse effect on the consolidated financial position,
         results of operation, business or prospects of the Company and its
         subsidiaries, taken as a whole, and have all power and authority
         necessary to own or hold their respective properties and to conduct the
         businesses in which they are engaged;

                  (f) the Company has an authorized capitalization as set forth
         in the Offering Memorandum and all of the issued shares of capital
         stock of the Company have been duly authorized and validly issued, are
         fully paid and non-assessable and conform to the description thereof
         contained in the Offering Memorandum; and all of the issued shares of
         capital stock of each Significant Subsidiary (in the case of each
         Significant Subsidiary which is a corporation) or membership interests
         (in the case of each Significant Subsidiary which is a limited
         liability corporation) have been duly authorized and validly issued and
         are fully paid and non-assessable and (except for directors' qualifying
         shares and as disclosed in the Offering Memorandum) are owned directly
         or indirectly by the Company, free and clear of all liens,
         encumbrances, equities or claims;

                                       3
<PAGE>

                  (g) the Indenture and each supplement or amendment thereto to
         the date hereof and any supplement thereto, officer's certificate or
         board resolution setting forth the terms of the Notes, have been duly
         authorized by the Company. The Indenture constitutes a valid and
         binding obligation of the Company, enforceable against the Company in
         accordance with its terms, except as enforcement thereof may be limited
         by bankruptcy, insolvency (including, without limitation, all laws
         relating to fraudulent transfers), reorganization, moratorium or
         similar laws affecting enforcement of creditors' rights generally and
         except as enforcement thereof is subject to general principles of
         equity (regardless of whether enforcement is considered in a proceeding
         in equity or at law); and the Indenture conforms in all material
         respects to the description thereof in the Offering Memorandum;

                  (h) the Notes have been duly authorized by the Company. When
         duly executed, authenticated, issued and delivered in the manner
         provided for in the Indenture and sold to and paid for by the Initial
         Purchasers as provided herein, the Notes will constitute valid and
         binding obligations of the Company entitled to the benefits of the
         Indenture and will be enforceable against the Company in accordance
         with their terms, except as enforcement thereof may be limited by
         bankruptcy, insolvency (including, without limitation, all laws
         relating to fraudulent transfers), reorganization, moratorium or
         similar laws affecting enforcement of creditors' rights generally and
         except as enforcement thereof is subject to general principles of
         equity (regardless of whether enforcement is considered in a proceeding
         in equity or at law); and the Notes conform in all material respects to
         the description thereof in the Offering Memorandum;

                  (i) the Registration Rights Agreement has been duly authorized
         by the Company. When duly executed and delivered by the Company, the
         Registration Rights Agreement will constitute a valid and binding
         obligation of the Company, enforceable against the Company in
         accordance with its terms, except as enforcement thereof may be limited
         by bankruptcy, insolvency (including, without limitation, all laws
         relating to fraudulent transfers), reorganization, moratorium or
         similar laws affecting enforcement of creditors' rights generally,
         except as enforcement thereof is subject to general principles of
         equity (regardless of whether enforcement is considered in a proceeding
         in equity or at law) and except as rights to indemnification and
         contribution thereunder may be limited by applicable law;

                  (j) since the date of the Offering Memorandum (or any
         amendment or supplement thereto), except as otherwise stated therein or
         contemplated thereby, there has not been (A) any material adverse
         change or any development involving a prospective material adverse
         change in the condition (financial or otherwise), earnings, business or
         operations of the Company and its subsidiaries, taken as a whole,
         whether

                                       4
<PAGE>

         or not arising in the ordinary course of business and (B) any
         transaction entered into by the Company or any of its subsidiaries,
         other than in the ordinary course of business, that is material to the
         Company and its subsidiaries, taken as a whole;

                  (k) the execution and delivery by the Company of this
         Agreement, the issuance and delivery of the Notes, the consummation by
         the Company of the transactions contemplated herein and compliance by
         the Company with the terms of this Agreement, the Registration Rights
         Agreement, the Notes and the Indenture have been duly authorized by all
         necessary corporate action on the part of the Company and do not and
         will not result in any violation of the charter or by-laws of the
         Company or any of its subsidiaries, and do not and will not conflict
         with, or result in a breach of any of the terms or provisions of, or
         constitute a default under, or result in the creation or imposition of
         any lien, charge or encumbrance upon any property or assets of the
         Company or any of its subsidiaries under (A) any contract, indenture,
         mortgage, loan agreement, note, lease or other agreement or instrument
         to which the Company or any of its subsidiaries is a party or by which
         it is bound or to which any of its properties is subject (except for
         such conflicts, breaches or defaults or liens, charges or encumbrances
         that could not reasonably be expected to have a material adverse effect
         on the condition (financial or otherwise), earnings, or business of the
         Company and its subsidiaries, taken as a whole) or (B) assuming the
         accuracy of the representations, warranties and agreements of the
         Initial Purchasers in Section 2 hereof and Section 7 hereof, any
         existing applicable law, rule, regulation, judgment, order or decree or
         determination of any government, governmental instrumentality or court,
         domestic or foreign, having jurisdiction over the Company or any of its
         subsidiaries or any of their respective properties;

                  (l) except as disclosed in the Offering Memorandum (or any
         amendment or supplement thereto), there is no action, suit or
         proceeding before or by any government, governmental instrumentality or
         court, domestic or foreign, now pending or, to the knowledge of the
         Company, threatened against or affecting the Company or any of its
         subsidiaries that is required to be disclosed in the Offering
         Memorandum or that could reasonably be expected to result in any
         material adverse change in the condition (financial or otherwise),
         earnings or business of the Company and its subsidiaries, taken as a
         whole, or that could reasonably be expected to materially and adversely
         affect the properties or assets of the Company and its subsidiaries,
         taken as a whole, or that could reasonably be expected to adversely
         affect the consummation of the transactions contemplated in this
         Agreement or the Registration Rights Agreement;

              (m) the Company and its subsidiaries each owns or possesses all
         governmental licenses, permits, certificates, consents, orders,
         approvals and other authorizations (collectively, "GOVERNMENTAL
         LICENSES") necessary to own or lease, as

                                       5
<PAGE>

         the case may be, and to operate its properties and to carry on its
         business as presently conducted, except where the failure to possess
         such Governmental Licenses could not reasonably be expected to have a
         material adverse effect on the condition (financial or otherwise),
         earnings or business of the Company and its subsidiaries, taken as a
         whole, and neither the Company nor any of its subsidiaries has received
         any notice of proceedings relating to revocation or modification of any
         such Governmental Licenses;

                   (n) there has been no storage, disposal, generation,
         manufacture, refinement, transportation, handling or treatment of toxic
         wastes, medical wastes, hazardous wastes or hazardous substances by the
         Company or any of its Significant Subsidiaries (or, to the knowledge of
         the Company, any of their predecessors in interest) at, upon or from
         any of the property now or previously owned or leased by the Company or
         its Significant Subsidiaries in violation of any applicable law,
         ordinance, rule, regulation, order, judgment, decree or permit or which
         would require remedial action under any applicable law, ordinance,
         rule, regulation, order, judgment, decree or permit, except for any
         violation or remedial action which would not have, or could not be
         reasonably likely to have, singularly or in the aggregate with all such
         violations and remedial actions, a material adverse effect on the
         consolidated financial position, results of operations, business or
         prospects of the Company and its subsidiaries, taken as a whole; there
         has been no material spill, discharge, leak, emission, injection,
         escape, dumping or release of any kind onto such property or into the
         environment surrounding such property of any toxic wastes, medical
         wastes, solid wastes, hazardous wastes or hazardous substances due to
         or caused by the Company or any of its Significant Subsidiaries or with
         respect to which the Company or any of its Significant Subsidiaries
         have knowledge, except for any such spill, discharge, leak, emission,
         injection, escape, dumping or release which would not have or would not
         be reasonably likely to have, singularly or in the aggregate with all
         such spills, discharges, leaks, emissions, injections, escapes,
         dumpings and releases, a material adverse effect on the consolidated
         financial position, results of operations, business or prospects of the
         Company and its subsidiaries, taken as a whole; and the terms
         "hazardous wastes", "toxic wastes", "hazardous substances" and "medical
         wastes" shall have the meanings specified in any applicable local,
         state, federal and foreign laws or regulations with respect to
         environmental protection.

                  (o) the Company is not, and after the consummation of the
         transactions contemplated herein will not be, an "investment company"
         under the Investment Company Act of 1940, as amended;

                  (p) the consolidated balance sheets of the Company as of
         December 31, 2001 and the related consolidated statements of
         operations, cash flows and capitalization for the fiscal year then
         ended, reported on by Ernst & Young LLP and

                                       6
<PAGE>

         incorporated by reference in the Offering Memorandum, fairly present,
         in all material respects, the financial position of the Company and its
         consolidated subsidiaries as of such date and its consolidated results
         of operations and cash flows for such fiscal year in conformity with
         generally accepted accounting principles;

                  (q) assuming the accuracy of the representations, warranties
         and agreements of the Initial Purchasers in Section 2 hereof and
         Section 7 hereof, no authorization, approval, consent or license of any
         government, governmental instrumentality or court, domestic or foreign
         (except such as have been obtained, or as may be required under the
         securities or blue sky laws of the various states in which the Notes
         will be offered or sold), is required for the valid authorization,
         issuance, sale and delivery of the Notes or for the execution, delivery
         or performance of this Agreement, the Registration Rights Agreement,
         the Indenture and the Notes by the Company;

                  (r) assuming the accuracy of the representations, warranties
         and agreements of the Initial Purchasers in Section 2 hereof and
         Section 7 hereof, compliance by the Initial Purchasers with the
         offering and transfer procedures and restrictions described in the
         Offering Memorandum and the accuracy of the representations and
         warranties deemed to be made in the Offering Memorandum by purchasers
         to whom the Initial Purchasers initially resell the Notes, it is not
         necessary in connection with the offer, sale and delivery of the Notes
         to the Initial Purchasers or in connection with the initial resale of
         the Notes by the Initial Purchasers in the manner contemplated by this
         Agreement and the Offering Memorandum to register the Notes under the
         Securities Act or to qualify the Indenture under the Trust Indenture
         Act of 1939, as amended;

                  (s) the Company, its affiliates and any person acting on its
         or their behalf have not, directly or indirectly:

                           (i) engaged in any directed selling efforts (within
                  the meaning of Regulation S under the Securities Act) with
                  respect to the Notes;

                          (ii) offered or sold the Notes in the United States by
                  any form of general solicitation or general advertising
                  (within the meaning of Regulation D under the Securities Act)
                  or in any manner involving a public offering within the
                  meaning of Section 4(2) of the Securities Act; or

                         (iii) sold, solicited any offers to buy or offered to
                  sell or otherwise negotiated in respect of any security in a
                  manner that would require registration of the Notes under the
                  Securities Act in accordance with the theory of "integration"
                  referred to in Regulation D under the Securities Act;

                                       7
<PAGE>

                  (t) the Notes satisfy the requirements of Rule 144A(d)(3)
         under the Securities Act; and

                  (u) the Offering Memorandum contains the information regarding
         the Company specified in, and which satisfies the requirements of, Rule
         144A(d)(4) under the Securities Act.

         2. REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASERS. Each
Initial Purchaser hereby severally, and not jointly, represents and warrants to,
and agrees with, the Company that: such Initial Purchaser (i) is an
institutional "accredited investor" (as defined in Regulation D) with such
knowledge and experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the Notes; (ii) is
not acquiring the Notes with a view to any distribution thereof that would
violate the Securities Act or the securities or blue sky laws of any state or
country, (iii) has received all information it considers necessary to evaluate
the merits and risks of an investment in the Notes, (iv) has not and will not
solicit offers for, or offer to sell, the Notes by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act, or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act; and (vi) will offer or sell the Notes
only: (x) in offshore transactions in accordance with Rule 903 of Regulation S;
provided that commencing on the date hereof and continuing through a 40-day
restricted period commencing on the Closing Date (as defined below): (1) no such
offer or sale will be made to a U.S. person or for the account or benefit of a
U.S. person (other than such Initial Purchaser); and (2) such Initial Purchaser,
if selling Securities to a dealer or a person receiving a selling concession,
fee or other remuneration in respect of the Securities, will send a confirmation
or other notice to the purchaser stating that the purchaser is subject to the
same restrictions on offers and sales as are set forth in this Section 2; the
terms used in this clause (x) are being used as used in Regulation S; or (y) to
persons whom it reasonably believes to be QIBs within the meaning of Rule 144A
under the Securities Act in transactions meeting the requirements of Rule 144A.

         Each Initial Purchaser hereby severally, and not jointly, represents
and warrants to and agrees with, the Company that (i) it has not offered or sold
and, before the expiration of the period of six months from the closing date for
the Notes, will not offer or sell any Notes to persons in the United Kingdom,
except to those persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (ii) it
has only communicated any invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the Financial Services and Markets
Act 2000 ("the FSMA")) received by it in connection with the issue or sale of
any Notes in circumstances in which Section 12(1) of the FSMA does not apply to
the Company

                                       8
<PAGE>

and (c) it has complied and will comply with all applicable provisions of the
FSMA, with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom.

         Each Initial Purchaser hereby severally, and not jointly, represents
and warrants to and agrees with, the Company that it has not offered or sold,
and will not offer or sell, directly or indirectly, any of the Notes in or to
residents of Japan or to any persons for reoffering or resale, directly or
indirectly in Japan or to any resident of Japan, except pursuant to an exemption
from the registration requirements of the Securities and Exchange Law available
thereunder and in compliance with the other relevant laws and regulations of
Japan.

         3. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell
to the Initial Purchasers, and each Initial Purchaser, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the aggregate principal amount of each series of Notes set forth
opposite such Initial Purchaser's name in Schedule I hereto at 98.452% of their
aggregate principal amount, in the case of the 8.125% Notes, and 97.751% of
their aggregate principal amount, in the case of 8.75% Notes, plus, in each
case, accrued interest, if any, from March 19, 2002 to the date of payment and
delivery.

         4. PAYMENT AND DELIVERY. Payment for the Notes shall be made by wire or
other immediately available funds to the order of the Company at 10:00 A.M., New
York time, on March 19, 2002, or at such other time on the same or such other
date, as shall be agreed by the parties and designated in writing by the
Representatives. The time and date of such payment are hereinafter referred to
as the "CLOSING DATE."

         Payment for the Notes shall be made against delivery to you of the one
or more global notes representing the Notes (each, a "GLOBAL NOTE") registered
in the name of Cede & Co. with any transfer taxes payable in connection with the
transfer of the Notes to the Initial Purchasers duly paid. Such Global Notes
shall be made available to the Representatives for inspection and packaging on
the business day in New York City preceding the Closing Date.

         5. CONDITIONS TO THE INITIAL PURCHASERS' OBLIGATIONS. The obligations
of the Initial Purchasers are subject to the following conditions:

                  (a) Subsequent to the execution and delivery of this Agreement
         and prior to the Closing Date:

                           (i) there shall not have occurred any downgrading,
                  nor shall any notice have been received of (A) any intended or
                  potential downgrading or (B) any review or possible change
                  that does not indicate the direction of a possible

                                       9
<PAGE>

                  change, in the rating accorded any of the Company's securities
                  by any "nationally recognized statistical rating
                  organization," as such term is defined for purposes of Rule
                  436(g)(2) under the Act; and

                          (ii) there shall not have occurred any material
                  adverse change, or any development which could reasonably be
                  expected to result in a prospective material adverse change,
                  in the financial condition, or in the earnings, business or
                  operations of the Company and its subsidiaries, taken as a
                  whole, from that set forth in the Offering Memorandum.

                  (b) The Representatives shall have received on the Closing
         Date a certificate, dated the Closing Date and signed by an executive
         officer of the Company, to the effect set forth in clauses (a)(i) and
         (ii) above and to the effect that the representations and warranties of
         the Company contained in this Agreement are true and correct as of the
         Closing Date and that the Company has complied with all of the
         agreements and satisfied all of the conditions on its part to be
         performed or satisfied hereunder on or before the Closing Date.

                         The officer signing and delivering such certificate may
         rely upon the best of his or her knowledge as to proceedings
         threatened.

                  (c) The Representatives shall have received on the Closing
         Date an opinion of William G. von Glahn, Esq., Senior Vice President
         and General Counsel of The Williams Companies, Inc., dated the Closing
         Date, to the effect that:

                           (i) the Company and each of its Significant
                  Subsidiaries have been duly incorporated (in the case of each
                  Significant Subsidiary that is a corporation) or otherwise
                  validly formed and are validly existing in good standing under
                  the laws of their respective jurisdictions of organization,
                  have the requisite power and authority to own their property
                  and to conduct their business as described in the Offering
                  Memorandum and are duly qualified to do business and are in
                  good standing in each jurisdiction in which their respective
                  ownership or lease of property or the conduct of their
                  respective businesses requires such qualification, except to
                  the extent such failure to be qualified or in good standing
                  would not have a material adverse effect on the consolidated
                  financial position, results of operations, business or
                  prospects of the Company and its subsidiaries, taken as a
                  whole, and have all power and authority necessary to own or
                  hold their respective properties and conduct the businesses in
                  which they are engaged as described in or contemplated by the
                  Offering Memorandum; and all of the issued shares of capital
                  stock of each Significant Subsidiary (in the case of each
                  Significant Subsidiary that is a

                                       10
<PAGE>

                  corporation) or membership interests (in the case of each
                  Significant Subsidiary that is a limited liability
                  corporation) have been duly and validly authorized and issued
                  and are fully paid, non-assessable and (except for directors'
                  qualifying shares and as disclosed in the Offering Memorandum)
                  are owned directly or indirectly by the Company, free and
                  clear of all liens, encumbrances, equities or claims;

                          (ii) the Company and its subsidiaries hold all
                  franchises, certificates of public convenience and necessity,
                  consents, authorizations, approvals, orders, permits, licenses
                  and easements necessary to own, operate and maintain its
                  properties as described in the Offering Memorandum, subject
                  only to such defects, irregularities, restrictions, conditions
                  and other matters as are described in the Offering Memorandum
                  or which do not materially affect the right of the Company or
                  its subsidiaries to own, operate and maintain its properties
                  and to conduct its business as described therein, and has made
                  all declarations and filings with, all federal, state, local
                  and other governmental authorities, and all courts or other
                  tribunals, necessary to conduct its business in the manner
                  described in the Offering Memorandum, except to the extent
                  that the lack of such consents, authorizations, approvals,
                  orders, certificates or permits would not have a material
                  adverse effect on the Company and its subsidiaries, taken as a
                  whole;

                         (iii) neither the Company nor any of its Significant
                  Subsidiaries (i) is in violation of its charter or by-laws,
                  (ii) is in default in any material respect, and no event has
                  occurred which, with notice or lapse of time or both, would
                  constitute such a default, in the due performance or
                  observance of any term, covenant or condition contained in any
                  material indenture, mortgage, deed of trust, loan agreement or
                  other agreement or instrument to which it is a party or by
                  which it is bound or to which any of its properties or assets
                  is subject or (iii) is in violation in any material respect of
                  any law, ordinance, governmental rule, regulation or court
                  decree to which it or its property or assets may be subject or
                  has failed to obtain any material license, permit,
                  certificate, franchise or other governmental authorization or
                  permit necessary to the ownership of its property or to the
                  conduct of its business except, in case of (ii) and (iii), for
                  such defaults, violations, or failures to obtain such
                  authorizations or permits that have not had or are not
                  reasonably expected to have, a material adverse effect on the
                  consolidated financial condition, results of operations,
                  business or prospects of the Company and its subsidiaries,
                  taken as a whole;

                          (iv) the Indenture has been duly authorized, executed
                  and delivered by the Company and, assuming due authorization,
                  execution and authentication

                                       11
<PAGE>

                  by the Trustee, is a valid and binding agreement of the
                  Company enforceable in accordance with its terms subject, as
                  to enforcement, to bankruptcy, insolvency, reorganization, and
                  other laws of general applicability relating to or affecting
                  creditors' rights and to general equity principles;

                           (v) the Notes have been duly authorized and, when
                  executed and authenticated in accordance with the provisions
                  of the Indenture, and delivered to and paid for by the Initial
                  Purchasers, will be valid and binding obligations of the
                  Company, enforceable in accordance with their terms, subject,
                  as to enforcement, to bankruptcy, insolvency, reorganization
                  and other laws of general applicability relating to or
                  affecting creditors' rights and to general equity principles,
                  and will be entitled to the benefits of the Indenture;

                           (vi) this Agreement has been duly authorized,
                  executed and delivered by the Company;

                           (vii) the Registration Rights Agreement has been duly
                  authorized, executed and delivered by the Company and
                  constitutes a valid and binding agreement of the Company,
                  enforceable in accordance with its terms, subject, as to
                  enforcement, to bankruptcy, insolvency, reorganization and
                  other laws of general applicability relating to or affecting
                  creditors' rights and to general equity principles, and except
                  as rights to indemnification and contribution thereunder may
                  be limited by applicable law;

                           (viii) assuming compliance by the Initial Purchasers
                  with the offering and transfer procedures and restrictions
                  described in the Offering Memorandum, the accuracy of the
                  representations and warranties deemed to be made in the
                  Offering Memorandum by purchasers to whom the Initial
                  Purchasers initially resell the Notes and that purchasers to
                  whom the Initial Purchasers initially resell the Notes receive
                  a copy of the Offering Memorandum prior to such sale, no
                  consent, approval, authorization or order of, or qualification
                  with, any governmental body or agency having jurisdiction over
                  the Company is required for the performance by the Company of
                  its obligations under this Agreement, the Registration Rights
                  Agreement, the Notes and the Indenture, except such as have
                  been obtained or as may be required by the securities or blue
                  sky laws of the various states in connection with the offer
                  and sale of the Notes;

                           (ix) The execution, delivery and performance by the
                  Company of its obligations under this Purchase Agreement, the
                  Registration Rights Agreement, the Notes and the Indenture
                  will not contravene any provision of applicable law

                                       12
<PAGE>

                  or the Certificate of Incorporation or the By-laws of the
                  Company or any material agreement or other material instrument
                  binding upon the Company;

                           (x) the statements in the Offering Memorandum under
                  the caption "Description of the Notes," insofar as such
                  statements constitute summaries of the legal matters,
                  documents or proceedings referred to therein, fairly summarize
                  in all material respects the matters referred to therein;

                          (xi) after due inquiry, such counsel does not know of
                  any legal or governmental proceedings pending or threatened to
                  which the Company is a party or to which any of the properties
                  of the Company is subject that are required to be described in
                  the documents incorporated by reference in the Offering
                  Memorandum and are not so described or of any statutes,
                  regulations, contracts or other documents that are required to
                  be described in the Offering Memorandum that are not described
                  as required;

                         (xii) the Company is not, and following the
                  consummation of the transactions contemplated herein will not
                  be, an "investment company", as such term is defined in the
                  Investment Company Act of 1940, as amended;

                        (xiii) such counsel has no reason to believe that
                  (except for financial statements and schedules and related
                  notes thereto, and the other financial, statistical and
                  accounting data as to which such counsel need not express any
                  belief) the Offering Memorandum as of its date or as of the
                  Closing Date contained or contains any untrue statement of a
                  material fact or omitted or omits to state a material fact
                  required to be stated therein or necessary to make the
                  statements therein, in the light of the circumstances under
                  which they were made, not misleading; and

                         (xiv) assuming the accuracy of the representations of
                  the Initial Purchasers contained in Section 2 hereof and
                  compliance by the Initial Purchasers with the covenants set
                  forth in Section 7 hereof, compliance by the Initial
                  Purchasers with the offering and transfer procedures and
                  restrictions described in the Offering Memorandum and the
                  accuracy of the representations and warranties deemed to be
                  made in the Offering Memorandum by purchasers to whom the
                  Initial Purchasers initially resell the Notes, it is not
                  necessary in connection with the offer, sale and delivery of
                  the Notes in the manner contemplated in this Agreement to
                  register the Notes under the Securities Act or to qualify the
                  Indenture under the Trust Indenture Act of 1939, as amended.

                                       13
<PAGE>

                      The opinion of William G. von Glahn, Esq. described in
         paragraph (c) above shall be rendered to the Initial Purchasers at the
         request of the Company and shall so state therein.

                  (d) The Representatives shall have received on the Closing
         Date an opinion of Davis Polk & Wardwell, counsel for the Initial
         Purchasers, dated the Closing Date, covering the matters referred to in
         subparagraphs (iv), (v), (vi), (vii), (xiii) and (xiv) of paragraph (c)
         above.

                      With respect to subparagraph (xiii) of paragraph (c)
         above, Davis Polk & Wardwell may state that their belief is based upon
         their participation in the preparation of the Offering Memorandum
         (excluding any documents incorporated by reference therein) and any
         amendments or supplements thereto and review and discussion of the
         contents thereof, but are without independent check or verification,
         except as specified. Davis Polk & Wardwell may also state that they
         have relied solely on the opinion of William G. von Glahn, Esq., as to
         matters relating to the regulation of the Company by the Federal Energy
         Regulatory Commission.

                      The opinion of William G. von Glahn, Esq. described in
         paragraph (c) above shall be rendered to the Initial Purchasers at the
         request of the Company and shall so state therein.

                  (e) The Representatives shall have received on the Closing
         Date a letter, in form and substance satisfactory to the
         Representatives, from Ernst & Young LLP, independent auditors,
         containing statements and information of the type ordinarily included
         in accountants' "comfort letters" to underwriters with respect to the
         financial statements and certain financial information contained or
         incorporated by reference in the Offering Memorandum.

           6. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Initial Purchasers herein contained, the Company, its
affiliates and any person acting on its or their behalf, covenants with the
Initial Purchasers as follows:

                  (a) The Company, its affiliates and any person acting on its
         or their behalf will not, directly or indirectly:

                           (i) offer or sell the Notes in the United States by
                  any form of general solicitation or general advertising
                  (within the meaning of Regulation D under the Securities Act)
                  or in any manner involving a public offering within the
                  meaning of Section 4(2) of the Securities Act;

                                       14
<PAGE>

                          (ii) sell, solicit any offers to buy or offer to sell
                  or otherwise negotiate in respect of any security in a manner
                  that would require registration of the Notes under the
                  Securities Act in accordance with the theory of "integration"
                  referred to in Regulation D under the Securities Act; or

                         (iii) engage in any directed selling efforts (within
                  the meaning of Regulation S) with respect to the Notes.

                  (b) While any Note remains outstanding, during any period in
         which the Company is not subject to Section 13 or Section 15(d) of the
         Securities Exchange Act of 1934, as amended, and its securities are not
         exempt from Section 12(g) thereof pursuant to Rule 12g3-2(b)
         thereunder, the Company will upon request make available to the Initial
         Purchaser, to any holder of Notes, and to any prospective purchaser
         designated by any holder of Notes, the information regarding the
         Company specified in, and satisfying the requirements of, Rule
         144A(d)(4) under the Securities Act.

                  (c) To prepare the Offering Memorandum in a form approved by
         the Representatives, and before amending or supplementing the Offering
         Memorandum, to furnish to the Representatives a copy of each such
         proposed amendment or supplement and not to prepare any such proposed
         amendment or supplement to which the Representatives reasonably object.

                  (d) To furnish the Initial Purchasers with copies of the
         Offering Memorandum and each amendment or supplement thereto, in such
         quantities as you may from time to time reasonably request, and if, at
         any time prior to the consummation of any Exempt Resale, any event
         shall have occurred as a result of which the Offering Memorandum as
         then amended or supplemented would include an untrue statement of a
         material fact or omit to state any material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made when such Offering Memorandum is delivered, not
         misleading, or, if for any other reason it shall be necessary or
         desirable, during such same period to amend or supplement the Offering
         Memorandum, to notify you and upon your request to prepare and furnish
         without charge to the Initial Purchasers as many copies as you may from
         time to time reasonably request of the amended Offering Memorandum or
         supplement to the Offering Memorandum which will correct such statement
         or omission or effect such compliance.

                  (e) During the period beginning on the date hereof and
         continuing to and including the Closing Date, not to offer, sell,
         contract to sell or otherwise dispose of any debt securities of the
         Company or warrants to purchase debt securities of the Company

                                       15
<PAGE>

         substantially similar to the Notes (other than the Notes), without the
         prior written consent of the Representatives.

                  (f) The Company will arrange for the qualification of the
         Notes for sale under the laws of such states in the United States as
         the Representatives designate and will continue such qualifications in
         effect so long as required for the resale of the Notes by the Initial
         Purchasers; provided that the Company will not be required to qualify
         as a foreign corporation or to file a general consent to service of
         process in any such state.

                  (g) Whether or not the transactions contemplated by this
         Agreement are consummated or this Agreement becomes effective or is
         terminated, to pay all costs, expenses, fees and taxes incident to and
         in connection with: (i) the preparation, printing, filing and
         distribution of the Offering Memorandum and all amendments and
         supplements thereto (but not, however, legal fees and expenses of your
         counsel incurred in connection therewith), (ii) the preparation,
         printing (including, without limitation, word processing and
         duplication costs) and delivery of this Agreement, the Registration
         Rights Agreement, the Indenture, any Blue Sky Memoranda and any other
         agreements, memoranda, correspondence and other documents printed and
         delivered in connection herewith and with the Exempt Resales (but not,
         however, legal fees and expenses of your counsel incurred in connection
         with the foregoing), (iii) the issuance and delivery by the Company of
         the Notes, (iv) the qualification of the Notes for offer and sales
         under the securities or Blue Sky laws of the several states (including,
         without limitation, the reasonable fees and disbursements of your
         counsel relating to such registration or qualification), (v) furnishing
         such copies of the Offering Memorandum, and all amendments and
         supplements thereto, as may be reasonably requested by the
         Representatives for use in connection with the initial Exempt Resales,
         (vi) the preparation of certificates for the Notes including, without
         limitation, printing and engraving, (vii) the fees, disbursements and
         expenses of the Company's counsel and accountants, (viii) all fees and
         expenses (including fees and expenses of counsel) of the Company in
         connection with the approval of the Notes by DTC for "book-entry"
         transfer, (ix) the fees, disbursements and expenses of the Trustee and
         the Trustee's counsel and (x) the performance by the Company of its
         other obligations under this Agreement to the extent not provided for
         above.

                  (h) To take all reasonable action necessary to enable Standard
         & Poor's Rating Service, a division of McGraw Hill, Inc. ("S&P"), and
         Moody's Investor Service, Inc. ("Moody's") to provide their respective
         ratings of the Notes.

                                       16
<PAGE>

                  (i) To cooperate with the Initial Purchasers and use its
         reasonable best efforts to permit the Notes to be eligible for
         clearance and settlement through the facilities of The Depository Trust
         Company.

         7. COVENANTS OF THE INITIAL PURCHASERS.

                  (a) Each of the Initial Purchasers severally acknowledges that
         the Notes have not been and will not be registered under the Securities
         Act and agrees that it, its affiliates and any person acting on its or
         their behalf:

                           (i) will not offer or sell the Notes in the United
                  States by any form of general solicitation or general
                  advertising (within the meaning of Regulation D under the
                  Securities Act) or in any manner involving a public offering
                  within the meaning of Section 4(2) of the Securities Act;

                          (ii) will not engage in any directed selling efforts
                  (within the meaning of Regulation S) with respect to the Notes
                  and will comply with the offering restrictions requirements of
                  Regulation S; and

                         (iii) will offer or sell the Notes only (1) in offshore
                  transactions in accordance with Rule 903 of Regulation S in
                  the manner described in Section 2 hereof or (2) to persons
                  whom it reasonably believes to be QIBs within the meaning of
                  Rule 144A under the Securities Act in transactions meeting the
                  requirements of Rule 144A.

         8. INDEMNITY AND CONTRIBUTION.

                  (a) The Company agrees to indemnify and hold harmless each
         Initial Purchaser and each person, if any, who controls any Initial
         Purchaser within the meaning of either Section 15 of the Securities Act
         or Section 20 of the Securities Exchange Act of 1934, as amended (the
         "Exchange Act"), from and against any and all losses, claims, damages
         and liabilities (including, without limitation, any legal or other
         expenses reasonably incurred by such Initial Purchaser or any such
         controlling person in connection with defending or investigating any
         such action or claim) caused by any untrue statement or alleged untrue
         statement of a material fact contained in the Offering Memorandum or
         any amendment thereof (as amended or supplemented if the Company shall
         have furnished any amendments or supplements thereto), or caused by any
         omission or alleged omission to state therein a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading, except insofar as such losses, claims, damages or
         liabilities are caused by any such untrue statement or omission or
         alleged untrue statement or omission based upon information relating to

                                       17
<PAGE>

         such Initial Purchaser furnished to the Company in writing by such
         Initial Purchaser through the Representatives expressly for use
         therein; provided however that the foregoing indemnity agreement with
         respect to the Preliminary Offering Memorandum shall not inure to the
         benefit of any Initial Purchaser, or any person controlling such
         Initial Purchaser, if the person asserting any such losses, claims,
         damages or liabilities purchased Notes, and a copy of the Final
         Offering Memorandum (as then amended or supplemented if the Company
         shall have furnished any amendments or supplements thereto) was not
         sent or given by or on behalf of such Initial Purchaser to such person,
         at or prior to the written confirmation of the sale of the Notes to
         such person, and if the Final Offering Memorandum (as so amended or
         supplemented) would have cured the defect giving rise to such losses,
         claims, damages or liabilities.

                  (b) Each Initial Purchaser agrees, severally and not jointly,
         to indemnify and hold harmless the Company, its directors, its
         officers, its employees, its agents and each person, if any, who
         controls the Company within the meaning of either Section 15 of the
         Securities Act or Section 20 of the Exchange Act to the same extent as
         the foregoing indemnity from the Company to the Initial Purchasers, but
         only with reference to information relating to such Initial Purchaser
         furnished to the Company in writing by such Initial Purchaser through
         the Representatives expressly for use in the Offering Memorandum or any
         amendments or supplements thereto.

                  (c) In case any proceeding (including any governmental
         investigation) shall be instituted involving any person in respect of
         which indemnity may be sought pursuant to either paragraph (a) or (b)
         of this Section 8, such person (the "indemnified party") shall promptly
         notify the person against whom such indemnity may be sought (the
         "indemnifying party") in writing and the indemnifying party, upon
         request of the indemnified party, shall retain counsel reasonably
         satisfactory to the indemnified party to represent the indemnified
         party and any others the indemnifying party may designate in such
         proceeding and shall pay the fees and disbursements of such counsel
         related to such proceeding. In any such proceeding, any indemnified
         party shall have the right to retain its own counsel, but the fees and
         expenses of such counsel shall be at the expense of such indemnified
         party unless (i) the indemnifying party and the indemnified party shall
         have mutually agreed to the retention of such counsel or (ii) the named
         parties to any such proceeding (including any impeded parties) include
         both the indemnifying party and the indemnified party and
         representation of both parties by the same counsel would be
         inappropriate due to actual or potential differing interests between
         them. It is understood that the indemnifying party shall not, in
         respect of the legal expenses of any indemnified party in connection
         with any proceeding or related proceedings in the same jurisdiction, be
         liable for the fees and expenses of more than one separate firm (in
         addition to any local counsel) for all such indemnified parties and
         that all such fees and expenses shall be reimbursed as they are
         incurred. The indemnifying party shall not be

                                       18
<PAGE>

         liable for any settlement of any proceeding effected without its
         written consent, but if settled with such consent or if there be a
         final judgment for the plaintiff, the indemnifying party agrees to
         indemnify the indemnified party from and against any loss or liability
         by reason of such settlement or judgment. Notwithstanding the foregoing
         sentence, if at any time an indemnified party shall have requested an
         indemnifying party to reimburse the indemnified party for fees and
         expenses of counsel as contemplated by the second and third sentences
         of this paragraph, the indemnifying party agrees that it shall be
         liable for any settlement of any proceeding effected without its
         written consent if (i) such settlement is entered into more than 30
         days after receipt by such indemnifying party of the aforesaid request
         and (ii) such indemnifying party shall not have reimbursed the
         indemnified party in accordance with such request prior to the date of
         such settlement. No indemnifying party shall, without the prior written
         consent of the indemnified party, effect any settlement of any pending
         or threatened proceeding in respect of which any indemnified party is
         or could have been a party and indemnity could have been sought
         hereunder by such indemnified party, unless such settlement includes an
         unconditional release of such indemnified party from all liability on
         claims that are the subject matter of such proceeding.

                  (d) To the extent the indemnification provided for in
         paragraph (a) or (b) of this Section 8 is unavailable to an indemnified
         party or insufficient in respect of any losses, claims, damages or
         liabilities referred to therein, then each indemnifying party under
         such paragraph, in lieu of indemnifying such indemnified party
         thereunder, shall contribute to the amount paid or payable by such
         indemnified party as a result of such losses, claims, damages or
         liabilities (i) in such proportion as is appropriate to reflect the
         relative benefits received by the Company on the one hand and the
         Initial Purchasers on the other hand from the offering and sale of the
         Notes or (ii) if the allocation provided by clause (i) above is not
         permitted by applicable law, in such proportion as is appropriate to
         reflect not only the relative benefits referred to in clause (i) above
         but also the relative fault of the Company on the one hand and of the
         Initial Purchasers on the other hand in connection with the statements
         or omissions that resulted in such losses, claims, damages or
         liabilities, as well as any other relevant equitable considerations.
         The relative benefits received by the Company on the one hand and the
         Initial Purchasers on the other hand in connection with the offering of
         the Notes shall be deemed to be in the same respective proportions as
         the net proceeds from the offering of the Notes (before deducting
         expenses) received by the Company and the total underwriting discounts
         and commissions received by the Initial Purchasers, in each case as set
         forth in the Offering Memorandum, bears to the aggregate initial
         offering price of the Notes. The relative fault of the Company on the
         one hand and the Initial Purchasers on the other hand shall be
         determined by reference to, among other things, whether the untrue or
         alleged untrue statement of a material fact or the omission or alleged
         omission to state a material fact relates to information supplied by
         the Company or by the Initial

                                       19
<PAGE>

         Purchasers and the parties' relative intent, knowledge, access to
         information and opportunity to correct or prevent such statement or
         omission.

                  (e) The Company and the Initial Purchasers agree that it would
         not be just or equitable if contribution pursuant to this Section 8
         were determined by pro rata allocation or by any other method of
         allocation that does not take account of the equitable considerations
         referred to in paragraph (d) of this Section 8. The amount paid or
         payable by an indemnified party as a result of the losses, claims,
         damages and liabilities referred to in the immediately preceding
         paragraph shall be deemed to include, subject to the limitations set
         forth above, any legal or other expenses reasonably incurred by such
         indemnified party in connection with investigating or defending or
         appearing as a third party witness in any such action or claim.
         Notwithstanding the provisions of this Section 8, no Initial Purchaser
         shall be required to contribute any amount in excess of the amount by
         which the total price at which the Notes purchased by it exceeds the
         amount of any damages that such Initial Purchaser has otherwise been
         required to pay by reason of such untrue or alleged untrue statement or
         omission or alleged omission and no person guilty of fraudulent
         misrepresentation within the meaning of Section 11(f) of the Securities
         Act shall be entitled to contribution from any person who was not
         guilty of such fraudulent misrepresentation. The remedies provided for
         in this Section 8 are not exclusive and shall not limit any rights or
         remedies which may otherwise be available to any indemnified party at
         law or in equity.

                  (f) The indemnity and contribution provisions contained in
         this Section 8 and the representations, warranties and other statements
         of the Company contained in this Agreement shall remain operative and
         in full force and effect regardless of (i) any termination of this
         Agreement, (ii) any investigation made by or on behalf of any Initial
         Purchaser or any person controlling an Initial Purchaser or by or on
         behalf of the Company, its officers or directors or any person
         controlling the Company and (iii) acceptance of and payment for any of
         the Notes.

         9. TERMINATION. This Agreement shall be subject to termination by
notice given by the Representatives to the Company, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date any of the events
described in Section 5(a) shall have occurred or (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade (or settlement in
the trading of securities thereon shall have been materially disrupted), (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or

                                       20
<PAGE>

escalation of hostilities (including, without limitation an act of terrorism) or
any change in financial markets or any calamity or crisis that, in the
Representatives' judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event, singly or
together with any other such event, makes it, in the Representatives' judgment,
impracticable to market the Notes on the terms and in the manner contemplated in
the Offering Memorandum. Notice of such cancellation shall be given to the
Company by telecopy or telephone but shall be subsequently confirmed by letter.

         10. DEFAULTING INITIAL PURCHASERS.

         If any Initial Purchaser or Initial Purchasers shall default in its or
their obligation to take up and pay for the Notes to be purchased by it or them
hereunder, the non-defaulting Initial Purchasers shall take up and pay for (in
addition to the principal amount of Notes they are obligated to purchase
hereunder) the principal amount of Notes agreed to be purchased by all such
defaulting Initial Purchasers as hereinafter set forth; provided, however, that
in the event that the principal amount of Notes which all Initial Purchasers so
defaulting shall have agreed but failed to take up and pay for shall exceed 10%
of the total principal amount of Notes, the Representatives may in their
discretion arrange for themselves or another party or parties to purchase such
Notes on the terms contained herein. If within thirty-six hours after such
default by any Initial Purchaser, the Representatives do not arrange for the
purchase of such Notes, then the Company will be entitled to a further period of
thirty-six hours within which to procure another party or parties satisfactory
to the Representatives to purchase such Notes on such terms. In the event that,
within the prescribed period, the Representatives notify the Company that they
have so arranged for the purchase of such Notes, or the Company notifies the
Representatives that it has so arranged for the purchase of such Notes, the
Representatives or the Company shall have the right to postpone the Closing Date
for such Notes for a period of not more than seven days in order to effect
whatever changes may thereby be made necessary in the Final Offering Memorandum,
or in any other documents or arrangements. If non-defaulting Initial Purchasers
take up and pay for all the Notes agreed to be purchased by all such defaulting
Initial Purchasers, such Notes shall be taken up and paid for by such
non-defaulting Initial Purchaser or Initial Purchasers in such amount or amounts
as the Representatives may designate with the consent of each Initial Purchaser
so designated or, in the event no such designation is made, such Notes shall be
taken up and paid for by all non-defaulting Initial Purchasers pro rata in
proportion to the aggregate principal amount of Notes set opposite the names of
such non-defaulting Initial Purchasers on Schedule I hereto. If after giving
effort to any arrangements for the purchase of the Notes of any defaulting
Initial Purchaser as provided in this Section 10, any Notes remain unpurchased,
then this Agreement will terminate without liability to any non-defaulting
Initial Purchaser or the Company.

                                       21
<PAGE>

         11. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES.

         If this Agreement shall be terminated by the Representatives because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Initial Purchasers for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
the Initial Purchasers in connection with this Agreement and the offering
contemplated hereunder.

          12. NOTICES. Except as otherwise provided notice given pursuant to any
of the provisions of this Agreement shall be in writing and shall be delivered
(a) if to the Company, at One Williams Center, Tulsa, Oklahoma 74172, Attention:
Treasurer, or (b) if to the Initial Purchasers, at the offices of Lehman
Brothers Inc., 745 Seventh Avenue, New York, NY 10019, Attention : Debt Capital
Markets, Power Group (with a copy to the General Counsel), or in any case to
such other address as the person to be notified may have requested in writing.

          13. SUCCESSORS. The Agreement is made solely for the benefit of the
Initial Purchasers, the Company, their directors and officers and other
controlling persons referred to in Section 8 hereof, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as used
in this Agreement shall not include a purchaser from any Initial Purchaser of
any of the Notes in his status as such purchaser.

         14. PARTIAL UNENFORCEABILITY. If any section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any other
section, paragraph or provision hereof.

         15. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         16. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York

         17. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.

                                       22
<PAGE>

          Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.

                                       Very truly yours,

                                       THE WILLIAMS COMPANIES, INC.

                                       By:      /s/ JAMES G. IVEY
                                          -------------------------------------
                                          Name: James G. Ivey
                                          Title: Treasurer

Accepted as of the date hereof:

LEHMAN BROTHERS INC.
J.P. MORGAN SECURITIES INC.

By: Lehman Brothers Inc.

By: /s/ MARTIN GOLDBERG
   -----------------------------------
   Name: Martin Goldberg
   Title:

On behalf of itself and the other several Initial Purchasers listed on Schedule
I hereto.

                                       23
<PAGE>

                                                                      Schedule I

<Table>
<Caption>
            Initial Purchaser                              Principal Amount of 8.125% Notes          Principal Amount of 8.75% Notes
            -----------------                              --------------------------------          -------------------------------
<S>                                                        <C>                                       <C>
Lehman Brothers Inc. .................................               $195,000,325                               $255,000,500

J.P. Morgan Securities Inc. ..........................                195,000,325                                255,000,500

Banc of America Securities LLC .......................                 45,500,000                                 59,500,000

Merrill Lynch, Pierce, Fenner & Smith Incorporated....                 45,500,000                                 59,500,000

Salomon Smith Barney Inc. ............................                 45,500,000                                 59,500,000

ABN AMRO Incorporated ................................                  9,499,950                                 12,423,000

Barclays Capital Inc. ................................                  9,499,950                                 12,423,000

BMO Nesbitt Burns Corp. ..............................                  9,499,950                                 12,423,000

BNP Paribas Securitites Corp. ........................                  9,499,950                                 12,423,000

BNY Capital Markets ..................................                  9,499,950                                 12,423,000

CIBC World Markets Corp. .............................                  9,499,950                                 12,423,000

Fleet Securities, Inc. ...............................                  9,499,950                                 12,423,000

Mizuho International plc .............................                  9,499,950                                 12,423,000

RBC Dominion Securities Corporation ..................                  9,499,950                                 12,423,000

The Royal Bank of Scotland plc .......................                  9,499,950                                 12,423,000

Scotia Capital (USA) Inc. ............................                  9,499,950                                 12,423,000

TD Securities (USA) Inc. .............................                  9,499,950                                 12,423,000

UBS Warburg LLC ......................................                  9,499,950                                 12,423,000
                                                                     ------------                               ------------

                  Total ..............................               $650,000,000                               $850,000,000
                                                                     ============                               ============
</Table>

                                       24
<PAGE>

                           CROSS-REFERENCE TARGET LIST

          NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT
                      APPEAR IN THE TARGET PULL-DOWN LIST.
       (This list is for the use of the wordprocessor only, is not a part
                    of this document and may be discarded.)

<Table>
<Caption>
   ARTICLE/SECTION TARGET NAME      ARTICLE/SECTION TARGET NAME   ARTICLE/SECTION TARGET NAME    ARTICLE/SECTION TARGET NAME
   ---------------------------      ---------------------------   ---------------------------    ---------------------------
<S>                                 <C>                           <C>                            <C>
?...........payment and delivery
?......amending or supplementing
?..preliminary offering circular
5(a)...............cndtns.sbsqnt
8.....indemnify and contribution
8(a)..........indemnify and hold
9....................termination
11...............reimburs.ip.exp
15..................counterparts
</Table>

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