Document:

SOUTHWESTERN ENERGY COMPANY

                                       AND

                     FIRST CHICAGO TRUST COMPANY OF NEW YORK

                                  Rights Agent

                            -------------------------

                      Amended and Restated Rights Agreement

                           Dated as of April 12, 1999

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

     Section                                                                                                   Page
     <S>                                                                                                         <C>
     Section l.   Certain Definitions.............................................................................1

     Section 2.   Appointment of Rights Agent.....................................................................6

     Section 3.   Issue of Right Certificates.....................................................................6

     Section 4.   Form of Right Certificates......................................................................7

     Section 5.   Countersignature and Registration...............................................................8

     Section 6.   Transfer, Split Up, Combination and Exchange of Right Certificates;
                  Mutilated, Destroyed, Lost or Stolen Right Certificates.........................................8

     Section 7.   Exercise of Rights; Purchase Price; Expiration Date of Rights...................................9

     Section 8.   Cancellation and Destruction of Right Certificates.............................................10

     Section 9.   Reservation and Availability of Capital Stock..................................................10

     Section 10.   Holders of Record.............................................................................12

     Section 11.   Adjustment of Purchase Price, Number of Shares or Number of Rights............................12

     Section 12.   Certification of Adjusted Purchase Price or Number of Shares..................................19

     Section 13.   Consolidation, Merger or Sale or Transfer of Assets or Earning Power..........................20

     Section 14.   Fractional Rights and Fractional Shares.......................................................23

     Section 15.   Rights of Action..............................................................................24

     Section 16.   Agreement of Right Holders....................................................................24

     Section 17.   Right Certificate Holder Not Deemed a Stockholder.............................................25

     Section 18.   Concerning the Rights Agent...................................................................25

     Section 19.   Merger or Consolidation or Change of Name of Rights Agent.....................................25

     Section 20.   Duties of Rights Agent........................................................................26

     Section 21.   Change of Rights Agent........................................................................28

                                        i
<PAGE>

     Section                                                                                                   Page

     Section 22.   Issuance of New Right Certificates............................................................28

     Section 23.   Redemption....................................................................................29

     Section 24.   Exchange......................................................................................30

     Section 25.   Notice of Certain Events......................................................................31

     Section 26.   Notices.......................................................................................32

     Section 27.   Supplements and Amendments....................................................................32

     Section 28.   Successors....................................................................................33

     Section 29.   Benefits of this Agreement....................................................................33

     Section 30.   Severability..................................................................................33

     Section 31.   Determinations and Actions by the Board of Directors, etc.....................................33

     Section 32.   Governing Law.................................................................................34

     Section 33.   Counterparts..................................................................................34

     Section 34.   Descriptive Headings..........................................................................34

     Exhibit A        Form of Right Certificate

     Exhibit B        Summary of Rights to Purchase Shares of Common Stock

</TABLE>

                                       ii
<PAGE>

                      AMENDED AND RESTATED RIGHTS AGREEMENT

                  This Amended and Restated Rights Agreement (this "Agreement or
"Amended and Restated Rights  Agreement"),  dated as of April 12, 1999,  between
Southwestern Energy Company, an Arkansas corporation (the "Company"),  and First
Chicago Trust Company of New York (the "Rights Agent").

                              W I T N E S S E T H:
                               - - - - - - - - - -

                  WHEREAS, on May 5, 1989 (the "Declaration Date"), the Board of
Directors  of the  Company  authorized  and  declared  a  dividend  of one right
representing  the right to purchase one share of Common Stock upon the terms and
subject to the  conditions set forth in a Rights  Agreement,  dated May 5, 1989,
between the Company and the Rights Agent (the "1989 Rights  Agreement") for each
outstanding share of common stock,  $2.50 par value, of the Company  outstanding
at the close of business on May 19, 1989 (the "Record Date"), and authorized the
issuance of one Right with respect to each share of Common Stock (as hereinafter
defined) that shall become  outstanding  between the Record Date and the earlier
of the Distribution  Date and the Expiration Date (as such terms are hereinafter
defined),  each Right initially  representing the right to purchase one share of
Common Stock upon the terms and subject to the conditions hereinafter set forth;

                  WHEREAS,  the Company declared a three-for-one  stock split in
1993 and,  in  connection  with such  split,  the number of Rights was  adjusted
pursuant to Section 11 of the 1989 Rights  Agreement such that each  certificate
for Common Stock  outstanding as of the date of this Amended and Restated Rights
Agreement also represents one Right under the 1989 Rights Agreement representing
the right to  purchase  one share of Common  Stock upon the terms and subject to
the conditions set forth in the 1989 Rights Agreement;

                  WHEREAS,  the Board of Directors have  authorized and approved
the amendment and  restatement  in its entirety of the 1989 Rights  Agreement in
order to extend  the  Expiration  Date  until  April 11,  2009 and to make other
changes and provisions  that they have determined are necessary or desirable and
do not adversely affect the interests of the holders of the Rights;

                  WHEREAS,  in  compliance  with the terms of  Section 26 of the
1989  Rights  Agreement,  the Company has (i)  delivered  to the Rights  Agent a
certificate  from an  appropriate  officer of the Company which states that this
Agreement  has been  approved  by the  Company's  Board of  Directors  and is in
compliance  with the terms of Section 26 of the 1989 Rights  Agreement  and (ii)
instructed the Rights Agent to execute this Agreement;

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual agreements herein set forth, the parties hereby agree as follows:

                  Section l.    Certain  Definitions.    For  purposes  of  this
Agreement, the following terms shall have the meanings indicated:

                  (a)  "Acquiring   Person"  shall  mean   (i)  any  Person  (as
hereinafter defined), together with all Affiliates and Associates (as such terms
are hereinafter  defined) of such Person,

<PAGE>

who or which shall,  subsequent to the Declaration  Date,  become the Beneficial
Owner (as hereinafter defined) of 15% or more of the shares of Common Stock then
outstanding  (other  than as a  result  of an  Approved  Offer  (as  hereinafter
defined),  or (ii) any Person who is an Adverse Person (as hereinafter  defined)
or (iii) any Person, together with all Affiliates and Associates of such Person,
who or which is, on the Declaration Date, the Beneficial Owner of 15% or more of
the shares of Common Stock then  outstanding  if,  subsequent to the Declaration
Date,  such Person,  together with all Affiliates and Associates of such Person,
shall  increase  its  Beneficial  Ownership  of  shares  of  Common  Stock by an
additional 1% or more of the shares of Common Stock then outstanding;  provided,
however,  that (x) a Person shall not become an Acquiring Person if such Person,
together with its Affiliates and Associates,  shall become the Beneficial  Owner
of 15% or more (in the case of clause (i) above) or an additional 1% or more (in
the case of clause (iii)  above) of the shares of Common Stock then  outstanding
solely  as a result of a  reduction  in the  number  of  shares of Common  Stock
outstanding  due to the  repurchase  of shares of Common  Stock by the  Company,
unless and until such time as such Person shall purchase or otherwise become (as
a result of actions taken by such Person or its  Affiliates or  Associates)  the
Beneficial Owner of additional shares of Common Stock constituting 1% or more of
the then outstanding  shares of Common Stock;  (y) "Acquiring  Person" shall not
include any Company Entity (as defined below);  and (z) "Acquiring Person" shall
not include any Person who  becomes the  Beneficial  Owner of 15% or more (or an
additional  1% or more),  of the  outstanding  shares  of  Common  Stock but who
acquired   beneficial   ownership  of  shares  of  Common  Stock   inadvertently
(including,  without  limitation,  because (i) such  Person was unaware  that it
Beneficially Owned 15% or more of the Common Stock or (ii) such Person was aware
of the extent of such beneficial  ownership but such Person acquired  beneficial
ownership of such shares of Common Stock without any plan or intention to change
or influence the control of the Company),  and such Person  promptly (and in any
event within ten Business  Days after being so requested by the Company)  enters
into an irrevocable commitment  satisfactory to the Company's Board of Directors
promptly (and in any event within twenty Business Days or such shorter period as
shall  be  determined  by the  Company's  Board of  Directors)  to  divest,  and
thereafter promptly divests as required by such commitment, sufficient shares of
Common  Stock so that  such  Person  (together  with all of its  Affiliates  and
Associates)  ceases to be a Beneficial  Owner of 15% or more of shares of Common
Stock.

                  (b)  "Adverse  Person" shall mean any Person declared to be an
Adverse  Person by the Board of Directors  of the Company  upon a  determination
that such Person, alone or together with its Affiliates and Associates,  has, at
any time after the Declaration  Date, become the Beneficial Owner of a number of
shares of Common Stock that the Board of Directors  determines to be substantial
(which  amount  shall in no event be less than 10% of the shares of Common Stock
then  outstanding)  and a determination  by a majority of the Board of Directors
after reasonable inquiry and an investigation,  including consultation with such
persons  as the Board of  Directors  shall  deem  appropriate,  that (a) as such
Beneficial  Ownership  by such  Person  is  intended  to cause  the  Company  to
repurchase  the shares of Common Stock  beneficially  owned by such Person or to
cause  pressure  on the Company to take  action or enter into a  transaction  or
series of transactions intended to provide such Person with short-term financial
gain under circumstances  where the Board of Directors  determines that the best
long-term  interest of the Company and its  shareholders  would not be served by
taking such action or entering into such

                                       2
<PAGE>

transaction  or  series  of  transactions  at that  time or (b) such  Beneficial
Ownership is causing or reasonably  likely to cause a material adverse impact on
the business or prospects of the Company.  The failure by the Board of Directors
of the Company to declare a Person to be an Adverse Person following such Person
becoming the Beneficial Owner of 10% or more of the outstanding shares of Common
Stock  shall not imply that such  Person is not an  Adverse  Person or limit the
Board's  right at any time in the future to declare such Person to be an Adverse
Person.

                  (c)  "Affiliate" shall have the meaning  ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange  Act"),  as in effect on the date of this
Amended and Restated Rights Agreement.

                  (d)  "Approved Offer"  shall mean a  tender or  exchange offer
for all  outstanding  shares  of  Common  Stock  that is at a price and on terms
approved,  prior to the  acceptance  for payment of shares  under such tender or
exchange  offer,  by the Board of Directors of the Company  based upon the prior
recommendation  of a majority of its  Independent  Directors  at a time at which
there are at least two Independent Directors.

                  (e)  "Associate"  shall include (x) any Person included in the
definition of  "Associate" in Rule 12b-2 under the Exchange Act, as in effect on
the date of this Amended and Restated Rights Agreement, and (y) any Affiliate of
any such Person.

                  (f)  A Person  shall be  deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:

                           (i)  which  such  Person  or  any  of  such  Person's
         Affiliates or Associates  beneficially owns, directly or indirectly (as
         determined pursuant to Rule 13d-3 or 13d-5 under the Exchange Act as in
         effect on the date of this Agreement);

                           (ii)  which  such  Person  or  any of  such  Person's
         Affiliates or Associates has, directly or indirectly:  (A) the right to
         acquire  (whether such right is  exercisable  immediately or only after
         the passage of time or the  satisfaction  of one or more  conditions or
         both) pursuant to any agreement  (other than customary  agreements with
         and between  underwriters  and selling  group members with respect to a
         bona fide public offering of securities),  arrangement or understanding
         (whether in writing or not), or upon the exercise of conversion rights,
         exchange  rights,  rights  (other  than the Rights  described  herein),
         warrants or options,  or otherwise  (provided,  however,  that a Person
         shall not be deemed to be the Beneficial  Owner of, or to  beneficially
         own,  any security  solely  because  such  security  has been  tendered
         pursuant  to a tender or  exchange  offer made by such Person or any of
         such Person's  Affiliates or Associates until such tendered security is
         accepted for payment or exchange);  or (B) the right to vote or dispose
         of, or to direct the vote or  disposition  of, alone or in concert with
         others,  pursuant  to  any  agreement,   arrangement  or  understanding
         (whether in writing or not); provided, however, that a Person shall not
         be deemed  pursuant to this clause (ii)(B) to be the  Beneficial  Owner
         of, or to beneficially own, any security if the agreement,  arrangement
         or  understanding  to vote,  or direct the vote of, such  security  (1)
         arises solely from a revocable proxy or consent given to such Person or
         any of such  Person's  Affiliates or Associates in response to a public
         proxy or

                                       3
<PAGE>

         consent  solicitation  made  pursuant to,  and in  accordance with, the
         applicable rules and regulations  under the Exchange Act and (2) is not
         also then reportable on Schedule 13D under the Exchange Act; or

                           (iii)  which  are  beneficially  owned,  directly  or
         indirectly,  by any other  Person with which such Person or any of such
         Person's  Affiliates  or  Associates  has  any  agreement  (other  than
         customary  agreements with and between  underwriters  and selling group
         members  with  respect to a bona fide public  offering of  securities),
         arrangement  or  understanding  (whether  or not in  writing)  for  the
         purpose of acquiring,  holding,  voting (except pursuant to a revocable
         proxy or consent as described in clause (ii) (B) of this paragraph (c))
         or disposing of any securities of the Company.

         If a  Person  shall  be  deemed  to be  the  Beneficial  Owner  of  any
         securities which are not  outstanding,  such securities shall be deemed
         to be outstanding  for purposes of determining the percentage of Common
         Stock  beneficially  owned  by such  Person  but all  other  securities
         (including securities of the same class) not actually outstanding shall
         not be deemed outstanding for such purposes.

                  (e)  "Board of Directors" shall mean the Board of Directors of
the Company.

                  (f)  "Business  Day" shall mean any day other than a Saturday,
Sunday,  or a day on  which  banking  institutions  in the  State of New York or
Illinois are authorized or obligated by law or executive order to close.

                  (g)  "Close of  business"  on any given  date  shall mean 5:00
P.M., New York City time, on such date; provided,  however, that if such date is
not a  Business  Day it shall mean 5:00  P.M.,  New York City time,  on the next
succeeding Business Day.

                  (h)  "Common  Stock"  shall  mean the common  stock  $0.10 par
value,  of the  Company (as it may be  constituted  from time to time during the
term of this Agreement),  except that "Common Stock" when used with reference to
any Person other than the Company (or, in the case of a transaction  referred to
in Section 13  hereof,  if the  Company  is the  successor  to the other  Person
referred  to in  clause  (a),  (b) or (c) of  Section  13,  or is the  surviving
corporation,  when thereafter used with reference to the Company) shall mean the
capital (or, in the case of a partnership or other  unincorporated  entity,  the
equivalent  equity  interest)  with the  greatest  voting  power of such Person,
together  with all rights and  benefits  (however  denominated  or  constituted)
relating to such capital stock  (including,  without  limitation,  any rights or
warrants to acquire  additional shares of such capital stock or other securities
or assets,  or to  participate  in any trust for the  benefit of holders of such
shares, or to share in the benefits of any agreements or other  arrangements for
the benefit of such  holders),  whether or not such rights are yet  exercisable,
and together with any other securities which are represented by the certificates
for such shares or are transferred in connection with transfers of such shares.

                  (i)  "Company Entity" shall mean the Company, any wholly owned
Subsidiary (as hereinafter defined) of the Company, any employee benefit plan or
employee  stock plan of the Company or of any of its wholly owned  Subsidiaries,
or any Person holding Common Stock

                                       4
<PAGE>

which was organized,  appointed or  established  by the  Company  or any  of its
wholly  owned  Subsidiaries  for or pursuant to the terms of any such plan

                  (j)  "Person" shall  mean any  individual, firm,  corporation,
partnership or other entity.

                  (k)  "Stock  Acquisition  Date" shall mean the time and day of
the first  public  announcement  (which for purposes of this  definition,  shall
include,  without  limitation,  the filing of a report  pursuant to the Exchange
Act) by the Company or an Acquiring  Person  containing  information  indicating
that an Acquiring Person has become such. For purposes hereof, in the event that
it is publicly  announced that any Person has acquired  beneficial  ownership of
sufficient  shares of Common  Stock to cause such Person to become an  Acquiring
Person under clause (i) or clause (iii) of the  definition of Acquiring  Person,
such Person shall not be deemed an Acquiring  Person for up to ten Business Days
(or such shorter  period as shall be  determined  by the Board of  Directors) if
such  Person  advises  the  Company  that  it  acquired   beneficial   ownership
inadvertently (within the meaning of clause (z) of the proviso to the definition
of an Acquiring  Person) and the Board of Directors is  continuing  to determine
whether such Person qualifies for the exclusion contained in such clause (z).

                  (l)  "Subsidiary"  shall mean, with respect to any Person, any
corporation or other entity as to which such Person beneficially owns sufficient
voting  securities or other  ownership  interests  having  ordinary voting power
sufficient, in the absence of contingencies, to elect at least a majority of its
directors (or individuals performing similar functions).

                  (m)  The terms  set forth  below are  defined in  the Sections
indicated below:

<TABLE>
<CAPTION>

           Term                                                 Section
<S>                                                          <C>
Act                                                          7 (c)
Common Stock Equivalent                                      11 (a) (iv) (B)
current market price                                         11 (d)
Current Value                                                11 (a) (iv) (A)
Declaration Date                                             Recitals
Distribution Date                                            3 (a)
Exchange Act                                                 1 (c)
Exchange Ratio                                               24
Expiration Date                                              7 (a)
Final Expiration Date                                        7 (a)
Independent Director                                         23
Principal Party                                              13(b)
Proposed Acquiror                                            23
Purchase Price                                               7 (b)
Record Date                                                  Recitals
Redemption Price                                             23
Right                                                        Recitals
Right Certificates                                           3 (a)

                                       5
<PAGE>

Rights Agent                                                 Recitals
Section 13 Event                                             13(a)
Security                                                     11 (d) (i)
Spread                                                       11 (a) (iv) (A)
Substitution Period                                          11 (a) (iv)
Summary of Rights                                            3 (b)
Trading Day                                                  11(d)(i)

</TABLE>

                  Section 2.  Appointment  of Rights Agent.  The Company  hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights in accordance with the terms and conditions  hereof, and the Rights Agent
hereby accepts such appointment.  The Company may from time to time appoint such
Co-Rights  Agents as it may deem  necessary or desirable.  In the event that the
Company  appoints one or more Co-Rights  Agents,  the  respective  duties of the
Rights Agent and any Co-Rights Agents shall be as the Company shall determine.

                  Section 3.  Issue of Right Certificates.  (a)  Until the close
of business on the  earlier of (i)  the  tenth  Business  Day  after  the  Stock
Acquisition  Date (including any such date which is after the  Declaration  Date
even if prior to the  Record  Date),  and (ii) the tenth  Business  Day (or such
later  day as may be  determined  by action  of the  Board of  Directors  of the
Company prior to such time as any Person becomes an Acquiring  Person) after the
date of the commencement  of, or the first public  announcement of the intent of
any  Person  (other  than a Company  Entity) to  commence  (which  intention  to
commence  remains in effect for five Business Days after such  announcement),  a
tender or exchange  offer the  consummation  of which would result in any person
becoming an Acquiring  Person (the  earlier of the dates  referred to in clauses
(i) and (ii) above being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced  (subject to the  provisions  of paragraph  (b) of this
Section 3) by the  certificates  for the Common Stock registered in the names of
the holders of the Common Stock (which  certificates for Common Stock shall also
be deemed  (other than for purposes of this Section 3 and any  provision of this
Agreement  referring  to  the  issuance  of  Rights  Certificates)  to be  Right
Certificates  (as such term is  hereinafter  defined)) and not by separate Right
Certificates,  and (y) the Rights (and the right to receive Right  Certificates)
will be transferable only  simultaneously  and together with the transfer of the
underlying shares of Common Stock. As soon as practicable after the Distribution
Date,  subject to Section  11(a)(iii)  hereof,  the  Company  shall  prepare and
execute and the Rights  Agent will  countersign,  and the  Company  will send or
cause to be sent, by first-class, postage-prepaid mail, to each record holder of
the Common Stock as of the close of business on the Distribution  Date, as shown
by the  records of the  Company,  at the  address of such  holder  shown on such
records, a right  certificate,  substantially in the form of Exhibit A hereto (a
"Right  Certificate"),  evidencing  one Right for each share of Common  Stock so
held,  subject to  adjustment as herein  provided.  As of and after the close of
business on the  Distribution  Date, the Rights will be evidenced solely by such
Right  Certificates  and may be  transferred  only by the transfer of the Rights
Certificates as permitted hereby,  separately and apart from any transfer of one
or more shares of Common Stock.

                  (b)  As soon as practicable after the date of this Amended and
Restated  Agreement,  the  Company  will mail a copy of the Summary of Rights to
Purchase  Common Stock

                                       6
<PAGE>

in the  form  attached  hereto  as  Exhibit  B (the  "Summary  of  Rights"),  by
first-class,  postage-prepaid mail, to each record holder of the Common Stock as
of the close of  business  on the Record  Date,  as shown by the  records of the
Company,  at the address of such holder shown on such  records.  With respect to
certificates  for Common  Stock  outstanding  as of the close of business on the
date of this Amended and Restated  Agreement or issued prior to the Distribution
Date, until the  Distribution  Date, the Rights will be evidenced solely by such
certificates registered in the names of the holders thereof (whether or not such
certificates  contain the legend contemplated by Section 3(c) of the 1989 Rights
Agreement). Until the Distribution Date (or the earlier redemption or expiration
of the Rights),  the surrender for transfer of any  certificate for Common Stock
outstanding as of the close of business on the Record Date shall also constitute
the  transfer  of  the  Rights  associated  with  the  shares  of  Common  Stock
represented thereby.

                  The  Company  will  mail  to  any  record  holder  of a  Right
(including,  prior to the Distribution Date, a record holder of shares of Common
Stock) a copy of this Rights Agreement, without charge, within ten Business Days
of a written request therefor.

                  (c)  Rights shall be issued in respect of all shares of Common
Stock  that  become  outstanding  after the date of this  Amended  and  Restated
Agreement and prior to the earlier of the  Distribution  Date and the Expiration
Date,  and all  certificates  for shares of Common  Stock issued or which become
outstanding  after the date of this Amended and Restated  Agreement but prior to
the  earlier  of the  Distribution  Date and the  Expiration  Date,  shall  have
impressed on, printed on, written on or otherwise affixed to them  substantially
the following legend:

         This  certificate  also  evidences  and entitles  the holder  hereof to
         certain Rights as set forth in a Rights Agreement between  Southwestern
         Energy Company and First Chicago Trust Company of New York, dated as of
         May 5, 1989,  as amended by the Amended and Restated  Rights  Agreement
         dated as of April 12,  1999 and as it may from time to time be  further
         supplemented or amended pursuant to its terms (the "Rights Agreement"),
         the terms of which are hereby  incorporated  by reference and a copy of
         which is on file at the  principal  executive  offices of  Southwestern
         Energy Company.  Under certain circumstances as set forth in the Rights
         Agreement,  such Rights will be evidenced by separate  certificates and
         will no longer be evidenced by this  certificate.  Southwestern  Energy
         Company will mail to the registered  holder of this  certificate a copy
         of the Rights  Agreement  without charge within ten business days after
         receipt of a written  request  therefor.  Under  certain  circumstances
         provided for in the Rights Agreement, Rights issued to, or beneficially
         owned by any  Person  who is an  Acquiring  Person or an  Affiliate  or
         Associate  thereof (as such terms are defined in the Rights  Agreement)
         or any subsequent holder of such Rights shall become null and void.

                  Section 4.  Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares and of assignment to be printed on
the reverse  thereof) shall be substantially in the form of Exhibit A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements  printed thereon as the Company may deem  appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any

                                       7
<PAGE>

rule or regulation of any stock exchange or quotation system on which the Rights
may  from  time to time be  listed,  or to  conform  to  usage.  Subject  to the
provisions  of  Sections  11 and 22  hereof,  the Right  Certificates,  whenever
distributed,  shall be dated as of the  Record  Date,  and on their  face  shall
entitle the holders thereof to purchase such number of shares of Common Stock as
shall be set forth  therein at the Purchase  Price (as such term is  hereinafter
defined), but the number and type of securities purchasable upon the exercise of
each Right and the Purchase  Price  thereof  shall be subject to  adjustment  as
provided herein. To the extent provided in Section  11(a)(iii)  hereof,  certain
Right Certificates shall contain the legend provided for therein.

                  Section 5.  Countersignature  and Registration.  (a) The Right
Certificates  shall be executed on behalf of the Company by its  Chairman of the
Board,  its President , its Chief Executive  Officer,  any Vice  President,  its
Treasurer or its Secretary,  either manually or by facsimile signature, and have
affixed  thereto  the  Company's  seal or a  facsimile  thereof  which  shall be
attested by the  Secretary  or an Assistant  Secretary  of the  Company,  either
manually or by facsimile  signature.  The Right  Certificates  shall be manually
countersigned  by the Rights Agent and shall not be valid for any purpose unless
so  countersigned.  In case any  officer of the Company who shall have signed or
attested  any of the Right  Certificates  shall cease to be such  officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates,  nevertheless, may be countersigned by the
Rights Agent,  and issued and delivered with the same force and effect as though
the person who signed or attested such Right  Certificates  had not ceased to be
such officer of the Company; and any Right Certificate may be signed or attested
on behalf of the Company by any person who, at the actual date of the  execution
of such Right  Certificate,  shall be a proper officer of the Company to sign or
attest such Right  Certificate,  although at the date of the  execution  of this
Rights Agreement any such person was not such an officer.

                  (b)  Following  the  Distribution  Date, the Rights Agent will
keep  or  cause  to be  kept,  at its  principal  office  or such  other  office
designated by it for such purpose,  books for  registration  and transfer of the
Right  Certificates  issued  hereunder.  Such books  shall show the  name(s) and
address(es)  of the  holder(s) of each Right  Certificate,  the number of Rights
evidenced on its face by each Right Certificate,  the certificate number of each
Right Certificate and the date of each Right Certificate.

                  Section 6.  Transfer,  Split Up,  Combination  and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the  provisions of Sections 7(e),  11(a)(iii)  and 14 hereof,  at any
time after the close of business on the  Distribution  Date,  and at or prior to
the close of business on the  Expiration  Date,  any Right  Certificate or Right
Certificates  may be  transferred,  split up,  combined or exchanged for another
Right  Certificate or Right  Certificates,  entitling the  registered  holder to
purchase  a like  number of shares of Common  Stock (or other  securities,  cash
and/or  assets,  as  the  case  may  be),  as the  Right  Certificate  or  Right
Certificates  surrendered then entitled such holder to purchase.  Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
shall make such  request in writing  delivered  to the Rights  Agent,  and shall
surrender the Right Certificate or Right  Certificates to be transferred,  split
up,  combined or exchanged at the  principal  office or such other office of the
Rights  Agent  designated  for such  purpose.  Neither the Rights  Agent nor the
Company  shall be  obligated to take any action  whatsoever  with respect to the
transfer  of any  such

                                       8
<PAGE>

surrendered Right Certificate  unless and until the registered holder shall have
completed and signed the certificate  contained in the form of assignment on the
reverse side thereof and shall have  provided  such  additional  evidence of the
identity of the Beneficial Owner (or former  Beneficial Owner) or Associates and
Affiliates of the foregoing as the Company shall reasonably  request.  Thereupon
the Rights Agent shall  countersign and deliver to the person entitled thereto a
Right  Certificate or Right  Certificates,  as the case may be, as so requested.
The Company may require payment, by the holder of Rights, of a sum sufficient to
cover any tax or governmental  charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.

                  (b)  Upon  receipt  by the  Company  and the  Rights  Agent of
evidence  reasonably  satisfactory  to them of the loss,  theft,  destruction or
mutilation of a Right  Certificate,  and, in case of loss, theft or destruction,
of an  indemnity  or  security  reasonably  satisfactory  to the Company and the
Rights  Agent,  and  reimbursement  to the Company  and the Rights  Agent of all
reasonable expenses  incidental thereto,  and upon surrender to the Rights Agent
and  cancellation of the Right  Certificate if mutilated,  the Company will make
and  deliver a new  Right  Certificate  of like  tenor to the  Rights  Agent for
countersignature  and  delivery  to the  registered  holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.

                  Section 7.  Exercise of  Rights;  Purchase  Price;  Expiration
Date of Rights.  (a) Subject to Sections  11(a)(iii)  and (iv),  the  registered
holder of any Right  Certificate  may exercise the Rights  evidenced  thereby in
whole or in part at any time after the  Distribution  Date upon surrender of the
Right Certificate,  with the form of election to purchase and certificate on the
reverse side thereof duly executed,  to the Rights Agent at its principal office
or such other office designated by it for such purpose, together with payment of
the  Purchase  Price for each share of Common Stock (or other  securities,  cash
and/or assets,  as the case may be) as to which the Rights are exercised,  at or
prior to the earliest of (i) the close of business on April 11, 2009 (the "Final
Expiration  Date"),  and (ii) the date and time at which the Rights are redeemed
as  provided  in Section 23 hereof,  (iii) the date and time at which the Rights
are  exchanged  as provided in Section 24 hereof,  or (iv) the time at which the
rights  expire  pursuant  to Section  13(d) (such  earliest  date and time being
referred to herein as the "Expiration Date").

                  (b)  The purchase price (the "Purchase  Price") for each share
of Common  Stock  pursuant to the  exercise of a Right shall  initially  be $40,
shall be subject to adjustment  from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful  money of the United  States of America
in accordance with paragraph (c) below.

                  (c)  Except as otherwise  provided  herein,  upon receipt of a
Right Certificate  representing exercisable Rights, with the form of election to
purchase and certificate  duly executed,  accompanied by payment of the Purchase
Price for the shares (or other  securities,  cash and/or assets, as the case may
be) to be  purchased  and an amount  equal to any  applicable  transfer  tax (as
determined  by the Rights  Agent) in cash,  or by certified  check or bank draft
payable to the order of the Company,  the Rights Agent shall thereupon  promptly
(i)  requisition  from any transfer agent of the shares of Common Stock (or make
available,  if the Rights  Agent is the  transfer  agent)  certificates  for the
number  of  shares  of  Common  Stock to be  purchased  and the  Company  hereby
irrevocably  authorizes  such transfer  agent to comply with all such  requests,
(ii) when  appropriate,

                                       9
<PAGE>

requisition  from the  Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof,  (iii) promptly after
receipt  of such  certificates,  cause the same to be  delivered  to or upon the
order of the registered holder of such Right Certificate registered in such name
or names as may be designated by such holder, and (iv) when appropriate, deliver
any  such  cash,  promptly  after  its  receipt,  to or upon  the  order  of the
registered  holder of such Right  Certificate.  In the event that the Company is
obligated to issue other securities of the Company,  pay cash and/or  distribute
other  property  pursuant to Section  11(a)  hereof,  the Company  will make all
arrangements  necessary so that such other securities,  cash and/or property are
available  for  distribution  by the  Rights  Agent,  if and  when  appropriate.
Notwithstanding  the foregoing  provisions of this Section 7(c), the Company may
suspend the issuance of shares of Common Stock or other securities upon exercise
of a Right for a reasonable  period,  not in excess of 90 days, during which the
Company  seeks to register  under the  Securities  Act of 1933 (the  "Act"),  as
amended, and any applicable securities law of any other jurisdiction, the shares
of Common Stock or such other securities to be issued pursuant to the Rights.

                  (d)  In case the registered  holder of any  Right  Certificate
shall  exercise  less  than  all  the  Rights  evidenced  thereby,  a new  Right
Certificate  evidencing  Rights  equivalent to the Rights remaining  unexercised
shall be issued  by the  Rights  Agent to the  registered  holder of such  Right
Certificate  or to his duly  authorized  assigns,  subject to the  provisions of
Sections 7(e), 11(a)(iii) and 14 hereof.

                  (e)  Notwithstanding  any other  provision of this  Agreement,
neither the Rights  Agent nor the Company  shall be obligated to take any action
whatsoever with respect to a registered holder of any Right Certificate upon the
occurrence of any purported  transfer or exercise as set forth in this Section 7
unless  and until the  registered  holder  shall have  completed  and signed the
certificate  contained  in the form of election to purchase  shares set forth on
the reverse side thereof and shall have provided such additional evidence of the
identity of the Beneficial Owner and former Beneficial Owner (and Associates and
Affiliates of the foregoing) as the Company shall reasonably request.

                  Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise,  transfer, split
up,  combination or exchange  shall,  if surrendered to the Company or to any of
its agents,  be delivered to the Rights Agent for  cancellation  or in cancelled
form, or, if  surrendered to the Rights Agent,  shall be cancelled by it, and no
Right Certificate shall be issued in lieu thereof except as expressly  permitted
by any of the provisions of this Rights Agreement.  The Company shall deliver to
the Rights Agent for cancellation and retirement,  and the Rights Agent shall so
cancel and retire,  any other  Right  Certificate  purchased  or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all  cancelled  Right  Certificates  to the  Company,  or shall,  at the written
request of the Company,  destroy such cancelled Right Certificates,  and in such
case shall deliver a certificate of destruction thereof to the Company.

                  Section 9.  Reservation and Availability of Capital Stock. (a)
The Company  covenants  and agrees  that it will cause to be  reserved  and kept
available out of its authorized and unissued Common Stock or other securities or
any Common Stock or other securities held in its treasury,  the number of shares
of  Common  Stock or  shares  of other  securities  that,  as  provided  in

                                       10
<PAGE>

this Agreement  (including  Section 11(a) (iv)  hereof),  will be  sufficient to
permit the exercise in full of all outstanding Rights.

                  (b)  The Company  covenants  and agrees  that it will take all
such action as may be  necessary  to insure that all Common  Stock  and/or other
securities  delivered upon exercise of Rights shall,  at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price),  be
duly and validly authorized and issued and fully paid and nonassessable shares.

                  (c)  The Company  covenants  and agrees  that it will pay when
due and payable any and all federal and state  transfer  taxes and charges which
may be payable in respect of the issuance or delivery of the Right  Certificates
or any  Common  Stock  and/or  other  securities,  as the case may be,  upon the
exercise  of Rights.  The  Company  shall not  however,  be  required to pay any
transfer  tax which may be payable in respect of any  transfer  involved  in the
transfer  or  delivery  of Right  Certificates  or the  issuance  or delivery of
certificates or depositary receipts for Common Stock and/or other securities, as
the case may be, in a name other than that of the registered holder of the Right
Certificate  evidencing  Rights  surrendered for exercise or to issue or deliver
any   certificates  or  depositary   receipts  for  Common  Stock  and/or  other
securities,  as the case may be, upon the  exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate  at the time of surrender) or until it has been  established  to the
Company's satisfaction that no such tax is due.

                  (d)  So long as the Common  Stock  (and/or  other  securities)
issuable  upon  the  exercise  of the  Rights  may  be  listed  on any  national
securities  exchange,  the Company shall use its best efforts to cause, from and
after such time as the Rights become  exercisable,  all shares reserved for such
issuance to be listed on such  exchange  upon  official  notice of issuance upon
such exercise.

                  (e)  The Company  shall use its best  efforts to (i) file,  as
soon as  practicable  following the earliest date after  occurrence of the Stock
Acquisition  Date as of which the  consideration  to be delivered by the Company
upon  exercise of the Rights has been  determined  in  accordance  with  Section
11(a)(iv)  hereof,  or as soon as is required by law following the  Distribution
Date, as the case may be, a registration statement under the Act with respect to
the securities  purchasable upon exercise of the Rights on an appropriate  form,
(ii)  cause  such  registration   statement  to  become  effective  as  soon  as
practicable  after such filing and (iii) cause such  registration  statement  to
remain effective (with a prospectus at all times meeting the requirements of the
Act and the rules and regulations  thereunder) until the earlier of (A) the date
as of which the Rights are no longer exercisable for such securities and (B) the
expiration  of the  Rights.  The  Company  will also take such  action as may be
appropriate to ensure  compliance  with the securities or "blue sky" laws of the
various  states.  The  Company  may  temporarily  suspend,  in  accordance  with
applicable  law,  for a period of time not to exceed 90 days  after the date set
forth  in  clause  (i)  of  the  first   sentence  of  this  Section  9(e),  the
exercisability  of the  Rights in order to  prepare  and file such  registration
statement  and  permit it to become  effective.  Upon any such  suspension,  the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended,  as well as a public announcement at such
time as the suspension is no longer in effect.  Notwithstanding any provision of
this  Agreement  to the  contrary,  the Rights shall not be  exercisable  in any
jurisdiction if the requisite  qualification in such

                                       11
<PAGE>

jurisdiction  shall not have been  obtained,  the exercise  thereof shall not be
permitted under  applicable law or a registration  statement shall not have been
declared effective.

                  Section 10.  Holders of Record.  Each person in whose name any
certificate  for Common Stock and/or  other  securities,  as the case may be, is
issued  upon the  exercise  of Rights  shall for all  purposes be deemed to have
become the holder of record of the Common Stock and/or other securities,  as the
case may be,  represented  thereby  on, and such  shall be dated,  the date upon
which the Right  Certificate  evidencing  such Rights was duly  surrendered  and
payment of the  Purchase  Price (and any  applicable  transfer  taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the transfer books of the Company are closed,  such Person shall be deemed
to have become the record holder of such shares on, and such  certificate  shall
be dated,  the next  succeeding  Business Day on which the transfer books of the
Company are open.  Prior to the exercise of the Rights  evidenced  thereby,  the
holder  of a  Right  Certificate  shall  not  be  entitled  to any  rights  of a
stockholder  of the Company with respect to shares for which the Rights shall be
exercisable,  including,  without  limitation,  the  right to vote,  to  receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company,  except
as provided herein.

                  Section 11.  Adjustment of Purchase Price, Number of Shares or
Number of Rights.  The Purchase  Price,  the number and kind of  securities,  or
fractions  thereof,  covered by each Right and the number of Rights  outstanding
are subject to adjustment from time to time as provided in this Section 11.

                  (a)  (i) In the event the Company  shall at any time after the
date of this  Agreement  (A)  declare  or pay a dividend  on the  Common  Stock,
payable in shares of Common  Stock,  (B)  subdivide  the  outstanding  shares of
Common Stock, (C) combine or consolidate the outstanding  shares of Common Stock
into a smaller  number of shares of Common  Stock or (D) issue any shares of its
capital  stock in a  reclassification  of the Common Stock  (including  any such
reclassification  in  connection  with a  consolidation  or  merger in which the
Company  is the  continuing  or  surviving  corporation),  except  as  otherwise
provided  in this  Section 11, the  Purchase  Price in effect at the time of the
record date for such  dividend  or of the  effective  date of such  subdivision,
split, combination,  consolidation or reclassification,  and the number and kind
of shares of capital stock issuable upon exercise of a Right on such date, shall
be proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive,  upon payment of the  Purchase  Price then in
effect,  the aggregate number and kind of shares of capital stock which, if such
Right had been exercised  immediately  prior to such date and at a time when the
transfer books of the Company were open,  such holder would have owned upon such
exercise and been entitled to receive by virtue of such  dividend,  subdivision,
split, combination,  consolidation or reclassification. If an event occurs which
would  require  an  adjustment  under both this  Section  11(a)(i)  and  Section
11(a)(ii),  the  adjustment  provided for in this Section  11(a)(i)  shall be in
addition  to, and shall be made prior to, any  adjustment  required  pursuant to
Section 11(a)(ii).

                       (ii)  In the event that a Stock Acquisition Date  occurs,
         proper  provision  shall be made so that each holder of a Right (except
         as otherwise  provided in clause (iii) below) thereafter shall have the
         right to receive,  upon exercise  thereof at the then current

                                       12
<PAGE>

         Purchase  Price in accordance  with the terms of this  Agreement,  such
         number  of shares of Common  Stock of the  Company  as shall  equal the
         result obtained by (x)  multiplying the then current  Purchase Price by
         the then  number of  shares  of Common  Stock for which a Right is then
         exercisable  and (y) dividing that product by 50% of the current market
         price per share of the Common  Stock  (determined  pursuant  to Section
         11(d)  hereof) on the Stock  Acquisition  Date,  and,  at the time such
         provision  is made the Company  shall  cause to be reserved  out of its
         authorized  but  unissued (or  treasury)  shares of Common  Stock,  the
         lesser  of (m) the  number  of  shares  of  Common  Stock  that will be
         sufficient  to permit the  exercise in full of all  outstanding  Rights
         (other than those referred to in clause (iii) below) and (n) the number
         of  shares of  Common  Stock  which  are  authorized  by the  Company's
         certificate  of  incorporation  but not  outstanding  or  reserved  for
         issuance for purposes other than upon exercise of the Rights.

                       (iii)  Notwithstanding any  provision of this  Agreement,
         from and after the Stock  Acquisition  Date,  any  Rights  beneficially
         owned by (p) an Acquiring Person or any Associate or Affiliate thereof,
         (q) a  transferee  of an  Acquiring  Person (or  Associate or Affiliate
         thereof) who becomes the  transferee of such Rights  concurrently  with
         such Acquiring Person becoming such or at any time thereafter, or (r) a
         transferee of an Acquiring  Person (or Associate or Affiliate  thereof)
         who becomes a transferee  prior to the Acquiring  Person  becoming such
         and receives such Rights pursuant to either (A) a transfer (whether not
         for  consideration)  by the Acquiring Person to holders of its stock or
         other  equity or to any Person with whom the  Acquiring  Person has any
         continuing agreement,  arrangement or understanding,  whether or not in
         writing,  regarding the transferred  Rights or (B) a transfer which the
         Board of  Directors  of the Company has  determined  is part of a plan,
         arrangement or understanding, whether or not in writing, which has as a
         primary  purpose or effect the  avoidance of this  Section  11(a)(iii),
         shall become null and void,  and any existing or  subsequent  holder of
         such Rights  shall  thereafter  have no right to  exercise  such Rights
         under any provision of this  Agreement.  Any Right  Certificate  issued
         pursuant  to  Section 3 or  Section 22 hereof  that  represents  Rights
         beneficially  owned by any Person referred to in clause (p), (q) or (r)
         above,  and any  Right  Certificate  issued  pursuant  to  Section 6 or
         Section 11 hereof upon transfer, exchange, replacement or adjustment of
         any other Right Certificate referred to in this sentence, shall contain
         (to the extent feasible) the following legend:

         The  Rights   represented  by  this  Right   Certificate  are  or  were
         beneficially  owned by a  Person  who is,  was or be came an  Acquiring
         Person or an Affiliate or an Associate of an Acquiring Person (as those
         terms are defined in the Rights Agreement).  This Right Certificate and
         the Rights represented hereby may be or may become null and void in the
         circumstances specified in the Rights Agreement.

The Company shall use all  reasonable  efforts to comply with this clause (iii),
but neither it nor the Rights Agent shall have any  liability to any Person as a
result of the failure to make any  determination  with  respect to an  Acquiring
Person, or its Associates, Affiliates or to transferees of the foregoing.

                                       13
<PAGE>

                           (iv)  In  the  event  that  the  number  of shares of
         Common  Stock  which  are  authorized  by  the  Company's  articles  of
         incorporation but not outstanding or reserved for issuance for purposes
         other than upon exercise of the Rights is not  sufficient to permit the
         exercise in full of the Rights in accordance with the foregoing  clause
         (ii) of this Section 11(a), the Company shall:

                  (A)  determine  the  excess  of (1) the  value  (the  "Current
         Value") of the shares of Common Stock  issuable  upon the exercise of a
         Right  pursuant  to the  foregoing  clause (ii) of this  Section  11(a)
         (assuming  that  there  were a  sufficient  number  of  authorized  but
         unissued shares to permit  exercise in full of all  outstanding  Rights
         for Common Stock) over (2) the then current Purchase Price (such excess
         being referred to herein as the "Spread"), and

                  (B)  with respect to each Right,  to the extent  permitted  by
         applicable law and any contractual restrictions binding on the Company,
         make adequate  provision to substitute  for such shares of Common Stock
         issuable upon exercise of a Right pursuant to the foregoing clause (ii)
         of this Section 11(a),  upon payment of the Purchase Price,  (1) Common
         Stock or other equity  securities  of the Company  (including,  without
         limitation,  shares,  or units of shares,  of preferred stock which the
         Board of  Directors of the Company has deemed to have the same value as
         shares of Common Stock (such shares of preferred  stock being  referred
         to herein as "Common Stock  Equivalents")),  (2) debt securities of the
         Company,  (3) cash,  (4) other assets,  or (5) any  combination  of the
         foregoing (provided,  that in making any such provision,  Rights shall,
         to the  fullest  extent  feasible  in view of the  number  of shares of
         authorized  Common Stock not  outstanding  or reserved for issuance for
         purposes  other than upon exercise of the Rights,  be  exercisable  for
         Common  Stock),  in each case  having an  aggregate  value equal to the
         Current Value,  where such aggregate  value has been  determined by the
         Board of Directors of the Company based upon the advice of a nationally
         recognized  investment  banking firm selected by the Board of Directors
         of the Company;

provided, however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following the
Stock Acquisition Date, then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without  requiring payment of the Purchase
Price,  shares of Common Stock (to the extent available) and then, if necessary,
cash,  which  shares  and/or cash have an  aggregate  value equal to the Spread.
Notwithstanding the immediately preceding sentence, if the Board of Directors of
the Company  shall  determine  in good faith that it is likely  that  sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the  Rights,  the  thirty  (30) day  period  set  forth  above may be
extended  to the extent  necessary,  but not to more than ninety (90) days after
the Stock  Acquisition  Date,  in order that the  Company  may seek  stockholder
approval for the authorization of such additional shares (such period, as may be
extended,  being referred to herein as the "Substitution Period"). To the extent
that the Company determines that some action need be taken pursuant to the first
and/or  second  sentences  of this  Section  11(a)(iv),  the  Company  (x) shall
provide,  subject to the foregoing clause (iii) of this Section 11(a), that such
action shall apply uniformly to all  outstanding  Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution  Period in
order to seek any  authorization  of  additional  shares  and/or

                                       14
<PAGE>

to decide the appropriate form of distribution to be made pursuant to such first
sentence  and to  determine  the  value  thereof.  In  the  event  of  any  such
suspension,  the Company  shall  issue a public  announcement  stating  that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section  11(a)(iv),  the terms of any Common Stock  Equivalent  shall be
determined so that such Common Stock Equivalent shall have the same value as the
Common Stock on the Stock Acquisition Date.

                  (b)  In case  the  Company  shall  fix a  record  date for the
issuance of rights, options or warrants to all holders of Common Stock entitling
them (for a period  expiring  within 45 calendar days after such record date) to
subscribe  for or  purchase  shares of Common  Stock (or shares  having the same
rights,  privileges,  and  preferences as the Common Stock  ("equivalent  common
shares"))  or  securities  convertible  into Common Stock or  equivalent  common
shares  at a price  per share of Common  Stock or  equivalent  common  share (or
having a conversion price per share, if a security convertible into Common Stock
or  equivalent  common  shares) less than the current  market price per share of
Common  Stock (as  defined in Section  11(d)  hereof) on such record  date,  the
Purchase  Price to be in effect  after such record date shall be  determined  by
multiplying the Purchase Price in effect  immediately  prior to such record date
by a fraction,  of which the  numerator  shall be the number of shares of Common
Stock and  equivalent  common  shares  outstanding  on such record date plus the
number of shares of Common Stock which the aggregate offering price of the total
number of  shares  of Common  Stock  and/or  equivalent  common  shares to be so
offered  (and/or  the  aggregate  initial  conversion  price of the  convertible
securities to be so offered)  would  purchase at such current market price an of
which  the  denominator  shall be the  number  of  shares  of  Common  Stock and
equivalent  common  shares  outstanding  on such  record date plus the number of
additional  shares of Common Stock and/or equivalent common shares to be offered
for subscription or purchase (or into which the convertible  securities so to be
offered are initially convertible).  In case such subscription price may be paid
in a  consideration  part or all of which shall be in a form other than cash the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company,  whose determination shall be described in a statement
filed with the Rights  Agent.  Common  Stock owned by or held for the account of
the Company or any of its Subsidiaries  shall not be deemed  outstanding for the
purpose of any such  computation.  Such  adjustment  shall be made  successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued,  the  Purchase  Price shall be adjusted to be the
Purchase  Price  which  would then be in effect if such  record the date had not
been fixed.

                  (c)  In case  the Company  shall  fix a  record  date  for the
making of a  distribution  to all holders of Common  Stock  (including  any such
distribution  made in  connection  with a  consolidation  or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets  (other than a regular  periodic cash dividend at a rate per share not
in  excess  of the  greater  of (x) 200% of the rate of the last  periodic  cash
dividend  theretofore  paid and (y) $0.10 per  quarter  (as such  amount  may be
appropriately  adjusted to reflect any stock split,  stock dividend,  or similar
transaction)  or a dividend  payable in shares of Common Stock) or  subscription
rights or warrants  (excluding  those referred to in Section 11(b) hereof),  the
Purchase  Price to be in effect  after such record date shall be  determined  by
multiplying the Purchase Price in effect  immediately  prior to such record date
by a fraction,  the  numerator  of which shall be the

                                       15
<PAGE>

current  market  price per share of Common  Stock (as  defined in Section  11(d)
hereof) on such record date,  less the fair market value (as  determined in good
faith by the Board of  Directors of the Company,  whose  determination  shall be
described  in a  statement  filed with the Rights  Agent) of the  portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or  warrants  applicable  to one  share of Common  Stock and of which the
denominator  shall be such current market price per share of Common Stock.  Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such  distribution  is not so made,  the Purchase  Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.

                  (d)  (i) For the  purpose  of any  computation  hereunder, the
"current  market  price" for any  security (a  "Security"  for  purposes of this
Section  1l(d)(i))  on any date  shall be deemed to be the  average of the daily
closing  prices  per share of such  Security  for the  thirty  (30)  consecutive
Trading Days (as such term is  hereinafter  defined)  immediately  prior to such
date;  provided,  however,  that in the event that the current  market price per
share of the Security is determined  during a period  following the announcement
by the issuer of such  Security of a dividend or  distribution  on such Security
payable  in  shares  of  such  Security  or  securities   convertible  into  (or
exercisable or exchangeable  for) shares of such Security,  or any  subdivision,
split,  combination,  consolidation or  reclassification  of such Security,  and
prior to the expiration of 30 Trading Days after the  ex-dividend  date for such
dividend  or  distribution  or the  record  date  for such  subdivision,  split,
combination, consolidation or reclassification, then, and in each such case, the
current market price shall be appropriately  adjusted to reflect  ex-dividend or
ex-distribution  trading.  The closing price for each day shall be the last sale
price,  regular  way,  or, in case no such  sale  takes  place on such day,  the
average of the  closing  bid and asked  prices,  regular  way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities  listed or admitted to trading on the New York Stock  Exchange or,
if the  Security  is not  listed or  admitted  to  trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national  securities exchange
on which the shares of the Security are listed or admitted to trading or, if the
shares of the  Security  are not listed or admitted  to trading on any  national
securities exchange,  the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers,  Inc. Automated Quotation System
or any successor ("NASDAQ") or such other system then in use, or, if on any such
date the shares of the  Security  are not quoted by any such  organization,  the
average of the  closing  bid and asked  prices as  furnished  by a  professional
market maker making a market in the Security  selected by the Board of Directors
of the  Company.  If on such date no such market maker is making a market in the
Security, the fair value of such shares on such date as determined in good faith
by the Board of Directors of the Company shall be used, such determination to be
described in a statement  filed with the Rights  Agent.  The term  "Trading Day"
shall mean a day on which the principal  national  securities  exchange on which
the shares of the  Security  are listed or  admitted  to trading is open for the
transaction  of  business  or, if the shares of the  Security  are not listed or
admitted  to  trading  on any  national  securities  exchange  but are quoted on
NASDAQ,  a day on which  NASDAQ is in operation or if the shares of the Security
are neither listed nor admitted to trading on any national  securities  exchange
nor quoted on NASDAQ, a Business Day.

                                       16
<PAGE>

                  (ii)  For  the  purpose  of  any  computation  hereunder,  the
"current  market  price" of the Common Stock shall be  determined  in accordance
with the method set forth in Section  11(d)(i),  except that if the Common Stock
is not publicly traded, the "current per share market price" shall mean the fair
value per share as  determined  in good faith by the Board of  Directors  of the
Company,  whose  determination  shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.

                   (e)  Notwithstanding  anything  herein  to the  contrary,  no
adjustment in the Purchase Price shall be required unless such adjustment  would
require an increase or decrease of at least 1% in such price; provided,  however
that any  adjustments  which by reason of this Section 11(e) are not required to
be made  shall be carried  forward  and taken  into  account  in any  subsequent
adjustment.  All calculations under this Section 11 shall be made to the nearest
cent  or  to  the   nearest   one-thousandth   of  a  share  of  Common   Stock.
Notwithstanding  the  first  sentence  of this  Section  11(e),  any  adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the  transaction  which mandates such adjustment and (ii)
the date of the expiration of the right to exercise any Rights.

                  (f)  In  the  event  that  at  any  time,  as a  result  of an
adjustment  made pursuant to Section 11(a) or Section  13(a),  the holder of any
Right thereafter exercised shall become entitled to receive any securities other
than Common Stock,  thereafter the number or amount of such other  securities so
receivable  upon exercise of any Right shall be subject to adjustment  from time
to time in a manner  and on terms as nearly  equivalent  as  practicable  to the
provisions with respect to the securities contained in Sections 11(a), (b), (c),
(e), (g),  (h), (i), (j), (k) and (m), and the  provisions of Sections 7, 9, 10,
13 and 14 of this Agreement with respect to the Common Stock shall apply on like
terms to any such other securities.

                  (g)  All Rights originally issued by the Company subsequent to
any adjustment  made to the Purchase Price hereunder shall evidence the right to
purchase,  at the adjusted  Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.

                  (h)  Unless the Company  shall have exercised  its election as
provided  in  Section  11(i) of this  Agreement,  upon  each  adjustment  of the
Purchase Price as a result of the calculations made in Sections 11(b) and (c) of
this Agreement,  each Right outstanding  immediately prior to the making of such
adjustment  shall  thereafter  evidence the right to  purchase,  at the adjusted
Purchase Price, that number of shares of Common Stock (calculated to the nearest
one-thousandth  of a share of Common Stock)  obtained by (i) multiplying (x) the
number of shares of Common Stock  covered by a Right  immediately  prior to such
adjustment  by (y) the  Purchase  Price  in  effect  immediately  prior  to such
adjustment  of the Purchase  Price and (ii)  dividing the product so obtained by
the Purchase Price in effect  immediately  after such adjustment of the Purchase
Price.

                  (i)  The  Company  may  elect  on or  after  the  date  of any
adjustment  of the  Purchase  Price to adjust the number of Rights  held by each
holder of Rights,  in substitution for any adjustment in the number of shares of
Common  Stock  purchasable  upon the  exercise  of a Right.  Each of the  Rights
outstanding  after such  adjustment of the number of Rights shall be

                                       17
<PAGE>

exercisable  for  the  number  of  shares  of  Common  Stock  for  which  it was
exercisable immediately prior to such adjustment. Each holder of a Right held of
record prior to such  adjustment of the number of Rights shall become the holder
of that number of Rights  (calculated to the nearest one hundredth)  obtained by
dividing the Purchase  Price in effect  immediately  prior to  adjustment of the
Purchase Price by the Purchase Price in effect  immediately  after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights,  indicating the record date for the  adjustment,
and,  if known  at the  time,  the  amount  of the  adjustment  to be made,  and
information  as to the manner in which such  adjustment is to be effected.  This
record date may be the date on which the  Purchase  Price is adjusted or any day
thereafter,  but, if the Right Certificates have been issued,  shall be at least
10 days later than the date of the public  announcement.  If Right  Certificates
have not been issued,  in the case of a stock split,  stock  dividend or similar
event,  such  adjustment in the number of Rights held by each existing holder of
Rights shall be effected (unless the Board of Directors  otherwise  elects),  by
allocating the adjusted number of Rights  proportionately  among all shares held
by such  holder  immediately  after such stock  split,  stock  dividend or other
event.  If Right  Certificates  have been issued,  upon each  adjustment  of the
number of Rights pursuant to this Section 11(i),  the Company shall, as promptly
as  practicable,  cause  to  be  distributed  to  holders  of  record  of  Right
Certificates  on such record date,  Right  Certificates  evidencing,  subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right  Certificates  held by such holders prior to the date of  adjustment,  and
upon  surrender  thereof,  if required by the  Company,  new Right  Certificates
evidencing  all the Rights to which such  holders  shall be entitled  after such
adjustment.  Right  Certificates so to be distributed shall be issued,  executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company,  the adjusted  Purchase  Price) and shall be  registered  in the
names  of the  holders  of  record  of Right  Certificates  on the  record  date
specified in the public announcement.

                  (j)  Irrespective  of any adjustment or change in the Purchase
Price or the number of shares of Common Stock  issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share of Common Stock and the number of shares of
Common  Stock which were  expressed  in the initial  Right  Certificates  issued
hereunder.

                  (k)  Before taking any action that would  cause an  adjustment
reducing  the  Purchase  Price  below the then par value,  if any, of the Common
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel,  be necessary in order that the
Company may validly and legally issue fully paid and nonassessable  Common Stock
at such adjusted Purchase Price.

                  (1)  In any case  in which this  Section 11 shall require that
an adjustment in the Purchase Price be made  effective as of a record date for a
specified  event,  the Company may elect to defer until the  occurrence  of such
event the issuing to the holder of any Right exercised after such record date of
the Common Stock and other capital  stock or securities of the Company,  if any,
issuable  upon such  exercise  over and above the Common Stock and other capital
stock or securities of the Company,  if any,  issuable upon such exercise on the
basis of the  Purchase  Price in

                                       18
<PAGE>

effect  prior to such  adjustment;  provided,  however,  that the Company  shall
deliver to such  holder a due bill or other  appropriate  instrument  evidencing
such holder's right to receive such  additional  shares of Common Stock upon the
occurrence of the event requiring such adjustment.

                  (m)  Anything   in   this   Section   11  to   the    contrary
notwithstanding,  the Company  shall be entitled to make such  reductions in the
Purchase  Price,  in addition to those  adjustments  expressly  required by this
Section 11, as and to the extent that the Company's Board of Directors shall, in
its  sole  discretion,   determine  to  be  advisable  in  order  that  any  (i)
consolidation or subdivision of the Common Stock,  (ii) issuance wholly for cash
of any Common Stock at less than the current market price, (iii) issuance wholly
for cash of Common Stock or securities which by their terms are convertible into
or exercisable or exchangeable for Common Stock,  (iv) Common Stock dividends or
(v)  issuance of rights,  options or warrants  referred to  hereinabove  in this
Section 11,  hereafter  made by the Company to holders of its Common Stock shall
not be taxable to such stockholders.

                  (n)  The Company  covenants and  agrees that it  shall not, at
any time after the  Distribution  Date,  (i)  consolidate  with any other Person
(other than a wholly-owned Subsidiary of the Company in a transaction which does
not violate  Section  11(o)  hereof),  (ii) merge with or into any other  Person
(other than a wholly-owned Subsidiary of the Company in a transaction which does
not violate  Section  11(o)  hereof),  or (iii) sell or transfer  (or permit any
Subsidiary  to sell or  transfer),  in one  transaction,  or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning  power of the  Company  and its  Subsidiaries  (taken as a whole) to any
other Person or Persons (other than the Company  and/or any of its  Subsidiaries
in one or more  transactions  each of  which  does  not  violate  Section  11(o)
hereof), if (x) at the time of or immediately after such consolidation,  merger,
sale or  transfer  there are any  charter or by-law  provisions  or any  rights,
warrants or other instruments or securities  outstanding or agreements in effect
or other actions taken, which would materially  diminish or otherwise  eliminate
the  benefits   intended  to  be  afforded  by  the  Rights  or  (y)  prior  to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes,  or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have  received a  distribution
of  Rights  previously  owned  by  such  Person  or any of  its  Affiliates  and
Associates.  The Company shall not  consummate any such  consolidation,  merger,
sale or transfer  unless  prior  thereto the Company and such other Person shall
have  executed  and  delivered  to the  Rights  Agent a  supplemental  agreement
evidencing compliance with this Section 11(n).

                  (o)  The Company  covenants  and  agrees  that,  after a Stock
Acquisition  Date it will not,  except as  permitted by Section 24 or Section 27
hereof,  take (or permit any Subsidiary to take) any action the purpose of which
is to, or if at the time such action is taken it is reasonably  foreseeable that
the effect of such action is to,  materially  diminish or eliminate the benefits
intended to be afforded by the Rights.

                  Section 12. Certification of Adjusted Purchase Price or Number
of Shares.  Whenever  an  adjustment  is made as  provided  in Sections 11 or 13
hereof, the Company shall (a) promptly prepare a certificate  setting forth such
adjustment and a brief statement of the facts accounting for such adjustment and
(b)  promptly  file with the Rights Agent and with each  transfer  agent for the
Common Stock a copy such certificate.

                                       19
<PAGE>

                  Section  13.  Consolidation,  Merger  or Sale or  Transfer  of
Assets or Earning Power. (a) In the event (a "Section 13 Event") that, following
the Stock  Acquisition  Date,  directly or  indirectly,  (x) the  Company  shall
consolidate with, or merge with and into, any Person or Persons, (y) the Company
shall  consolidate  with or merge with and into, any Person or Persons,  and the
Company shall be the continuing or surviving  corporation of such  consolidation
or merger (other than, in a case of any  transaction  described in (x) or (y), a
merger or  consolidation  which would result in all of the securities  generally
entitled  to vote in the  election of  directors  ("voting  securities")  of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining  outstanding or by being  converted  into  securities of the surviving
entity)  all of the  voting  securities  of  Company  or such  surviving  entity
outstanding  immediately  after such merger or consolidation and holders of such
securities not having changed as a result of such merger or  consolidation),  or
(z)  the  Company  shall  sell  or  otherwise  transfer  (or  one or more of its
Subsidiaries  shall sell or otherwise  transfer),  in one or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning  power  of the  Company  and its  Subsidiaries  (taken  as a  whole  and
calculated  on the  basis  of  the  Company's  most  recent  regularly  prepared
financial  statements)  to any Person or Persons  (other than the Company or any
Subsidiary  of the  Company in one or more  transactions  each of which does not
violate  Section 11(o) hereof),  then, and in each such case (except as provided
in Section 13(d) hereof), proper provision shall be made so that (i) each holder
of a Right,  except as provided in Section 11(a)(iii)  hereof,  shall thereafter
have the  right  to  receive,  upon the  exercise  thereof  at the then  current
Purchase Price in accordance  with the terms of this Agreement  Common Stock and
other securities or assets of the Company, such number of validly authorized and
issued,  fully paid,  non-assessable and freely tradeable shares of Common Stock
of the  Principal  Party (as  hereinafter  defined),  not  subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (A) multiplying the then current Purchase Price by the
number of shares of Common Stock for which a Right was  exercisable  immediately
prior to the first occurrence of a Section 13 Event (without taking into account
any adjustment  previously made pursuant to Section  11(a)(ii)) and (y) dividing
that product by 50% of the current market price per share of the Common Stock of
such Principal Party  (determined  pursuant to Section 11(d) hereof) on the date
of  consummation  of such  Section 13 Event;  (ii) such  Principal  Party  shall
thereafter be liable for, and shall assume,  by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement;  (iii)
the term "Company" shall  thereafter be deemed to refer to such Principal Party,
it being  specifically  intended that the  provisions of Section 11 hereof shall
apply only to such Principal Party  following the first  occurrence of a Section
13 Event;  and (iv) such Principal Party shall take such steps  (including,  but
not limited to, the  reservation of a sufficient  number of shares of its Common
Stock in accordance with Section 9 hereof (applying the provisions  thereof with
respect to Common  Stock of the  Company to the Common  Stock of such  Principal
Party)) in connection with such  consummation as may be necessary to assure that
the provisions  hereof shall  thereafter be applicable,  as nearly as reasonably
may be  possible,  in  relation  to the  shares of its Common  Stock  thereafter
deliverable upon the exercise of the Rights.

                  (b) "Principal Party" shall mean:

                                    (i) in the case of any transaction described
                  in clause (x) or (y) of the first  sentence of Section  13(a):
                  (A) the Person that is the issuer of any

                                       20
<PAGE>

                  securities  into  which  Common  Shares  of  the  Company  are
                  converted  in such  merger or  consolidation,  or, if there is
                  more than one such issuer, the issuer of Common Stock of which
                  has  the  greatest   aggregate  market  value  or  (B)  if  no
                  securities  are so issued,  the Person that is the other party
                  to such merger or consolidation, or, if there is more than one
                  such  Person,  the Person  the  Common  Stock of which has the
                  greatest aggregate market value (including, if applicable, the
                  Company if it is the surviving corporation); and

                                    (ii)  in  the   case   of  any   transaction
                  described  in clause  (z) of the  first  sentence  of  Section
                  13(a),  the Person that is the party  receiving  the  greatest
                  portion of the assets or earning power transferred pursuant to
                  such  transaction or transactions  or if the Person  receiving
                  the greatest  portion of the assets or earning power cannot be
                  determined,  whichever of such Persons  which is the issuer of
                  Common Stock having the greatest aggregate market value;

provided,  however,  that in any of the cases  described  in 13(b)(i) or (b)(ii)
above, (1) if the shares of Common Stock of such Person are not at such time and
have  not  been  continuously  over  the  preceding  twelve  (12)  month  period
registered  under Section 12 of the Exchange Act, and such Person is a direct or
indirect  Subsidiary  of another  Person the shares of Common Stock of which are
and have been so registered, "Principal Party" shall refer to such other Person;
(2) in case such Person is a Subsidiary,  directly or  indirectly,  of more than
one Person, the shares of Common Stock of two or more of which are and have been
so registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the shares of Common Stock having the greatest aggregate market value;
and (3) in case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of  ownership  having an interest in such joint  venture as if such party
were a  "Subsidiary"  of both or all of such joint  ventures  and the  Principal
Parties in each such chain shall bear the  obligations set forth in this Section
13 in the same ratio as their  direct or indirect  interests in such Person bear
to the total of such interests.

                  (c) The Company shall not consummate  any such  consolidation,
merger,  sale or transfer  unless the  Principal  Party shall have a  sufficient
number of its  authorized  shares of Common  Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this  Section 13 and unless  prior  thereto the Company and such  Principal
Party shall have  executed  and  delivered  to the Rights  Agent a  supplemental
agreement  providing for the terms set forth in  paragraphs  (a) and (b) of this
Section 13 and that all rights of first refusal or preemptive  rights in respect
of the issuance of shares of Common Stock of the  Principal  Party upon exercise
of the outstanding  Rights have been waived and that such transaction  shall not
result in a default by the  Principal  Party under this  Agreement,  and further
providing  that,  as soon as  practicable  after the date of any  consolidation,
merger,  sale or transfer  mentioned  in  paragraph  (a) of this Section 13, the
Principal Party at its own expense shall:

                                    (i)   prepare   and   file  a   registration
                  statement  under the Act with  respect  to the  Rights and the
                  securities  purchasable  upon the exercise of the Rights on an
                  appropriate  form,  and use its best  efforts  to  cause  such
                  registration

                                       21
<PAGE>

                  statement  to become  effective as soon as  practicable  after
                  such filing and to remain  effective (with a prospectus at all
                  times  meeting  the  requirements  of the Act) until the Final
                  Expiration Date;

                                    (ii)  use its best  efforts  to  qualify  or
                  register  the  Rights  and  the  securities  purchasable  upon
                  exercise  of the  Rights  under  the  blue  sky  laws  of such
                  jurisdictions as may be necessary or appropriate;

                                    (iii)  deliver  to  holders  of  the  Rights
                  historical  financial statements for the Principal Party which
                  comply in all respects with the  requirements for registration
                  on Form 10 under the Exchange Act; and

                                    (iv)  use  its  best  efforts  to  list  (or
                  continue  the  listing  of)  the  Rights  and  the  securities
                  purchasable   upon  exercise  of  the  Rights  on  a  national
                  securities exchange or to meet the eligibility requirement for
                  quotation on NASDAQ.

                  The  provisions  of this Section 13 shall  similarly  apply to
successive  mergers or consolidations or sales or other transfers.  In the event
that a Section 13 Event shall occur at any time after the  occurrence of a Stock
Acquisition Date, the Rights which have not theretofore been exercised  pursuant
to Section 11(a)(ii) shall thereafter become exercisable in the manner described
in Section 13(a).

                  (d)   Notwithstanding   anything  in  this  Agreement  to  the
contrary,  Section 13 shall not be  applicable  to a  transaction  described  in
subparagraphs  (x)  and  (y) of  Section  13(a)  if:  (i)  such  transaction  is
consummated  with a Person or Persons who acquired  Common Stock  pursuant to an
Approved  Offer (or an  Affiliate  of any such Person or Persons) as promptly as
reasonably  practical (and in any event within one year) following  consummation
of such Approved Offer; (ii) the price per share of Common Stock offered in such
transaction  is not less than the price  per share of Common  Stock  paid to all
holders of Common Stock whose shares were  purchased  pursuant to such  Approved
Offer;  and (iii) the form of  consideration  offered in such transaction is the
same as the form of  consideration  paid pursuant to such Approved  Offer.  Upon
consummation of any such  transaction  contemplated  by this Section 13(d),  all
Rights hereunder shall expire.

                  (e)  In case the Principal  Party  which is to be a party to a
transaction  referred  to in  this  Section  13  has  provision  in  any  of its
authorized securities or in its Certificate of Incorporation or By-Laws or other
instrument  governing  its corporate  affairs,  which  provision  would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the  consummation  of a transaction  referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then current
market  price per  share  (determined  pursuant  to  Section  11(d)  hereof)  or
securities  exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then  current  market  price  (other  than to holders of
Rights  pursuant to this Section 13) or (ii) providing for any special  payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such  Principal  Party  pursuant to the  provisions of Section 13, then, in such
event,  the Company  shall not  consummate  any such  transaction  unless  prior
thereto the Company and such  Principal  Party shall have

                                       22
<PAGE>

executed and delivered to the Rights Agent a  supplemental  agreement  providing
that the provision in question of such Principal Party shall have been canceled,
waived or amended, or that the authorized  securities shall be redeemed, so that
the  applicable  provision  will  have no  effect in  connection  with,  or as a
consequence of, the consummation of the proposed transaction.

                  Section 14.  Fractional Rights and Fractional Shares.  (a) The
Company shall not be required to issue fractions of Rights (except, prior to the
Distribution  Date,  as  provided in Section 11 hereof) or to  distribute  Right
Certificates  which  evidence  fractional  Rights.  In lieu  of such  fractional
Rights,  there shall be paid to the registered holders of the Right Certificates
with regard to which such  fractional  Rights would  otherwise  be issuable,  an
amount in cash equal to the same fraction of the current market value of a whole
Right.  For the purposes of this Section  14(a),  the current  market value of a
whole  Right  shall be the  closing  price of the  Rights  for the  Trading  Day
immediately  prior to the date on which such  fractional  Rights would have been
otherwise  issuable.  The  closing  price of the Rights for any day shall be the
last sale price,  regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices,  regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities  listed or admitted to trading on the New York Stock  Exchange or,
if the  Rights  are not  listed or  admitted  to  trading  on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national  securities exchange
on which the Rights are listed or  admitted to trading or, if the Rights are not
listed or  admitted to trading on any  national  securities  exchange,  the last
quoted  price or, if not so  quoted,  the  average of the high bid and low asked
prices in the  over-the-counter  market,  as  reported  by NASDAQ or such  other
system then in use or, if on any such date the Rights are not quoted by any such
organization,  the average of the closing bid and asked prices as furnished by a
professional  market  maker  making a market in the  Rights,  as selected by the
Board of Directors of the Company. If on any such date the Rights are not quoted
by any such  organization  and no  professional  market  maker is making  such a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.

                  (b)  Following the occurrence of the Stock Acquisition Date or
a Section 13 Event,  the Company  shall not be required  to issue  fractions  of
shares  of its  Common  Stock  upon  exercise  of the  Rights  or to  distribute
certificates  which evidence  fractional  shares of its Common Stock. In lieu of
fractional  shares of its Common  Stock,  the Company may pay to the  registered
holders of Right  Certificates  at the time such Rights are  exercised as herein
provided  an amount in cash equal to the same  fraction  of the  current  market
value of one share of Common  Stock.  For  purposes of this Section  14(b),  the
current  market value of a share of Common  Stock shall be the closing  price of
one share of Common Stock of the Company (as  determined  pursuant to the second
sentence of Section  11(d)(i)  hereof) for the Trading Day immediately  prior to
the date of such exercise.

                  (c) The holder of a Right by the acceptance  thereof expressly
waives any right to receive any fractional  Rights or any fractional shares upon
exercise of a Right (except as provided above).

                                       23
<PAGE>

                  Section 15. Rights of Action.  All rights of action in respect
of this  Agreement,  other than the rights of action  vested in the Rights Agent
pursuant to Section 18, are vested in the respective  registered  holders of the
Right  Certificates (and, prior to the Distribution Date, the registered holders
of the Common Stock);  and any registered  holder of any Right  Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right  Certificate  (or, prior to the
Distribution  Date, any holder of the Common Stock),  may, on his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding  against the Company to enforce,  or otherwise act in respect of, his
right to exercise the Rights  evidenced by such Right  Certificate in the manner
provided in such Right  Certificate and in this Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the  obligations  under,  and  injunctive  relief  against  actual or threatened
violations of the obligations of any Person subject to, this Agreement.

                  Section 16.  Agreement  of Right  Holders.  Every  holder of a
Right by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:

                  (a)  prior  to  the  Distribution  Date,  the  Rights  will be
         transferable only  simultaneously  and  together  with the  transfer of
         Common Stock;

                  (b)  after the Distribution  Date, the Right  Certificates are
         transferable  only  on the  registry  books  of  the  Rights  Agent  if
         surrendered at the principal  office or such other office of the Rights
         Agent  designated  for such purpose,  duly endorsed or accompanied by a
         proper  instrument  of  transfer  and with the  appropriate  forms  and
         certificates fully executed;

                  (c)  subject to  Section 6,  Section  7(e) and  Section  11(a)
         hereof,  the Company and the Rights Agent may deem and treat the person
         in whose  name the Right  Certificate  (or,  prior to the  Distribution
         Date, the  associated  Common Stock  certificate)  is registered as the
         absolute   owner   thereof   and  of  the  Rights   evidenced   thereby
         (notwithstanding  any  notations  of  ownership or writing on the Right
         Certificates or the associated  Common Stock certificate made by anyone
         other  than  the  Company  or  the  Rights   Agent)  for  all  purposes
         whatsoever,  and  neither  the  Company  nor the Rights  Agent shall be
         affected by any notice to the contrary; and

                  (d)   notwithstanding   anything  in  this  Agreement  to  the
contrary,  neither the Company nor the Rights Agent shall have any  liability to
any holder of a Right or other  Person as a result of its  inability  to perform
any of its  obligations  under this  Agreement by reason of any  preliminary  or
permanent  injunction  or other  order,  decree or  ruling  issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission,  or any statute,  rule, regulation or executive order promulgated
or enacted by any governmental  authority,  prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use its
best  efforts  to have any such  injunction,  order,  decree or  ruling  lifted,
dissolved or otherwise overturned as soon as possible.

                                       24
<PAGE>

                  Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,  receive
dividends  or be deemed for any purpose the holder of shares of Common  Stock or
any other  securities  of the  Company  which may at any time be issuable on the
exercise of the Rights represented  thereby, nor shall anything contained herein
or in any Right  Certificate be construed to confer upon the holder of any Right
Certificate,  as such,  any of the rights of a stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders  at any  meeting  thereof,  or to give or  withhold  consent to any
corporate  action,  or to receive notice of meetings or other actions  affecting
stockholders (except as provided in Section 25 of this Agreement), or to receive
dividends or other  distributions  or to exercise any preemptive or subscription
rights,  or  otherwise,  until  the  Right or  Rights  evidenced  by such  Right
Certificate shall have been exercised in accordance with the provisions hereof.

                  Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable  compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent,  its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this  Agreement and the exercise and  performance of its duties
hereunder.  The Company  also agrees to  indemnify  the Rights Agent for, and to
hold it harmless  against,  any loss,  liability  or expense,  incurred  without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection  with the  acceptance
and  administration  of this  Agreement,  including  the costs and  expenses  of
defending against any claim of liability.

                  The  Rights  Agent  shall  be  protected  and  shall  incur no
liability  for or in respect of any action  taken,  suffered or omitted by it in
connection with its  administration of this Agreement in reliance upon any Right
Certificate or certificate for shares of Common Stock or for other securities of
the  Company,   instrument  of  assignment  or  transfer,   power  of  attorney,
endorsement,   affidavit,  letter,  notice,  direction,   consent,  certificate,
statement,  or other  paper or  document  believed by it to be genuine and to be
signed, executed and, where necessary,  verified or acknowledged,  by the proper
person or persons.

                  Section  19.  Merger  or  Consolidation  or  Change of Name of
Rights  Agent.  Any  corporation  into which the Rights  Agent or any  successor
Rights  Agent  may be  merged  or  with  which  it may be  consolidated,  or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the  corporate  trust or stock  transfer  business  of the  Rights  Agent or any
successor  Rights  Agent,  shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the  parties  hereto,  provided  that such  corporation  would be
eligible for  appointment  as a successor  Rights Agent under the  provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this  Agreement,  any of the Right  Certificates  shall
have been  countersigned but not delivered,  any such successor Rights Agent may
adopt the  countersignature  of the  predecessor  Rights  Agent and deliver such
Right  Certificate so  countersigned;  and in case at that time any of the Right
Certificates shall not have been  countersigned,  any successor Rights Agent may
countersign such Right Certificate  either in the name of the predecessor Rights
Agent

                                       25
<PAGE>

or in the name of the successor Rights Agent;   and in all such cases such Right
Certificate shall have the  full force provided in the  Right Certificate and in
this Agreement.

                  In case at any  time  the name of the  Rights  Agent  shall be
changed  and at  such  time  any of  the  Right  Certificates  shall  have  been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right  Certificates  so  countersigned;  and in
case at that time the  Rights  Agent may  countersign  such  Right  Certificates
either in its prior  name or in its  changed  name;  and in all such  cases such
Right  Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

                  Section  20.  Duties  of  Rights   Agent.   The  Rights  Agent
undertakes the duties and obligations expressly set forth in this Agreement, and
no implied duties or obligations  shall be read into this Agreement  against the
Rights Agent. The Rights Agent undertakes the duties and obligations  imposed by
this  Agreement  upon the following  terms and  conditions,  by all of which the
Company  and the holders of Right  Certificates,  by their  acceptance  thereof,
shall be bound:

                  (a)  The Rights Agent may consult with legal  counsel (who may
         be legal  counsel for the  Company),  and the  opinion of such  counsel
         shall be full and complete  authorization  and protection to the Rights
         Agent as to any  action  taken or  omitted  by it in good  faith and in
         accordance with such opinion.

                  (b)  Whenever  in the  performance  of its  duties  under this
         Agreement  the Rights Agent shall deem it  necessary or desirable  that
         any fact or matter (including,  without limitation, the identity of any
         Acquiring  Person or any  Affiliate or Associate  thereof) be proved or
         established  by the  Company  prior to taking or  suffering  any action
         hereunder,  such fact or  matter  (unless  other  evidence  in  respect
         thereof  be  herein  specifically  prescribed)  may  be  deemed  to  be
         conclusively  proved and  established  by a  certificate  signed by the
         Chairman of the Board,  President  and Chief  Executive  Officer or the
         Vice  President-Treasurer  and Secretary or the Assistant  Treasurer or
         the  Assistant  Secretary  of the Company and  delivered  to the Rights
         Agent; and such certificate  shall be full  authorization to the Rights
         Agent for any action  taken or  suffered  in good faith by it under the
         provisions of this Agreement in reliance upon such certificate.

                  (c)  The Rights Agent  shall be liable  hereunder only for its
         own negligence, bad faith or willful misconduct.

                  (d)  The Rights Agent  shall not be liable for or by reason of
         any of the  statements of fact or recitals  contained in this Agreement
         or in the Right Certificates (except its countersignature  thereof), or
         be required to verify the same,  but all such  statements  and recitals
         are and shall be deemed to have been made by the Company only.

                  (e)  The Rights Agent shall not be under any responsibility in
         respect of the validity of this Agreement or the execution and delivery
         hereof  (except  the due  execution  hereof by the Rights  Agent) or in
         respect of the validity or execution of any Right  Certificate  (except
         its  countersignature  thereof);  nor shall it be  responsible  for any
         breach by the Company of any  covenant or  condition  contained in this
         Agreement or in any Right

                                       26
<PAGE>

         Certificate;  nor  shall  it be  responsible  for  any  change  in  the
         exercisability  of the Rights  (including Rights becoming null and void
         pursuant to Section 11(a)(iii) hereof); nor shall it be responsible for
         any  adjustment  required  under the  provisions  of  Sections 11 or 13
         hereof  or  responsible  for the  manner,  method or amount of any such
         adjustment  or the  ascertaining  of the  existence of facts that would
         require any such  adjustment  (except  with  respect to the exercise of
         Rights evidenced by Right  Certificates after actual notice of any such
         adjustment);  nor shall it by any act  hereunder  be deemed to make any
         representation  or warranty as to the  authorization  or reservation of
         Common  Stock  or  other  securities  to be  issued  pursuant  to  this
         Agreement or any Right Certificate or as to whether any Common Stock or
         other securities will, when issued,  be validly  authorized and issued,
         fully paid and nonassessable.

                  (f)  The Company agrees  that it will inform the Rights  Agent
         promptly upon the Company's  determination  that a Person has become an
         Acquiring  Person and the  Rights  Agent  will not be  responsible  for
         determining the status of a Person as an Acquiring Person prior to such
         notification  except as such status may be indicated in the  assignment
         or election to purchase of a Right Certificate. The Company agrees that
         it will  perform,  execute,  acknowledge  and  deliver  or  cause to be
         performed,  executed,  acknowledged  and delivered all such further and
         other acts, instruments and assurances as may reasonably be required by
         the Rights Agent for the carrying out or performing by the Rights Agent
         of the provisions of this Agreement.

                  (g)  The Rights Agent is hereby  authorized  and  directed  to
         accept  instructions  with  respect  to the  performance  of its duties
         hereunder from the Chairman of the Board, President and Chief Executive
         Officer, or the Vice  President-Treasurer and Secretary of the Company,
         and to apply to such officers for advice or  instructions in connection
         with its  duties,  and it shall not be liable for any  action  taken or
         suffered  to  be  taken  by  it  in  good  faith  in  accordance   with
         instructions of any such officer.

                  (h)  The Rights Agent  and any  stockholder, director, officer
         or  employee  of the Rights  Agent may buy,  sell or deal in any of the
         Rights  or  other  securities  of the  Company  or  become  pecuniarily
         interested in any  transaction  in which the Company may be interested,
         or contract with or lend money to the Company or otherwise act as fully
         and freely as though it were not  Rights  Agent  under this  Agreement.
         Nothing herein shall preclude the Rights Agent from acting in any other
         capacity for the Company or for any other legal entity.

                  (i)  The Rights  Agent may  execute  and  exercise  any of the
         rights or powers  hereby  vested in it or  perform  any duty  hereunder
         either itself or by or through its attorneys or agents,  and the Rights
         Agent shall not be  answerable  or  accountable  for any act,  default,
         neglect or misconduct  of any such  attorneys or agents or for any loss
         to the  Company  resulting  from  any such  act,  default,  neglect  or
         misconduct, provided reasonable care was exercised in the selection and
         continued employment thereof.

                  (j)  If, with respect to any Right Certificate  surrendered to
         the Rights Agent for exercise or transfer,  the certificate attached to
         the form of assignment or form of election

                                       27
<PAGE>

         to  purchase,  as the case may be,  has either  not been  completed  or
         indicates an affirmative response to any item therein, the Rights Agent
         shall  not take any  further  action  with  respect  to such  requested
         exercise or transfer without first consulting with the Company.

                  Section 21.  Change of Rights  Agent.  The Rights Agent or any
successor  Rights Agent may resign and be discharged  from its duties under this
Agreement  upon 30 days'  notice in writing  mailed to the  Company  and to each
transfer  agent of the Common Stock by registered or certified  mail, and to the
holders of the Right  Certificates  by first class mail.  The Company may remove
the Rights Agent or any successor  Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor  Rights Agent:,  as the case may be, and
to each transfer agent of the Common Stock by registered or certified  mail, and
to the holders of the Right  Certificates  by first  class  mail.  If the Rights
Agent shall resign or be removed or shall otherwise  become incapable of acting,
the Company shall appoint a successor to the Rights Agent.  If the Company shall
fail to make such  appointment  within a period of 30 days after such removal or
after it has been notified in writing of such  resignation  or incapacity by the
resigning or incapacitated  Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company),  then the registered  holder of any Right Certificate may apply to any
court of competent  jurisdiction  for the appointment of a new Rights Agent. Any
successor  Rights  Agent,  whether  appointed by the Company or by such a court,
shall be (i) a corporation,  bank or trust company  organized and doing business
under the laws of the United States or of any state  thereof,  in good standing,
having its principal office in the United States of America, which is authorized
under  applicable laws to exercise  corporate trust or stock transfer powers and
is subject to supervision or examination by federal or state authority and which
has at the time of its  appointment  as  Rights  Agent a  combined  capital  and
surplus of at least $50,000,000 or (ii) an Affiliate of a corporation  described
in clause (i) of this sentence.  After  appointment,  the successor Rights Agent
shall be vested with the same powers,  rights, duties and responsibilities as if
it had been  originally  named as Rights Agent without  further act or deed; but
the  predecessor  Rights Agent shall,  upon payment of its charges,  deliver and
transfer  to the  successor  Rights  Agent any  property  at the time held by it
hereunder,  and execute and deliver any further  assurance,  conveyance,  act or
deed  necessary for the purpose.  Not later than the effective  date of any such
appointment,  the  Company  shall  file  notice  thereof  in  writing  with  the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered  holders of the Right  Certificates.
Failure to give any notice  provided  for in this  Section 21,  however,  or any
defect therein,  shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the  case may be.  Notwithstanding  the  foregoing  provision,  in the  event of
resignation,  removal or incapacity of the Rights Agent,  the Company shall have
the  authority to act as the Rights  Agent until a successor  Rights Agent shall
have assumed the duties of the Rights Agent hereunder.

                  Section   22.    Issuance    of   New   Right    Certificates.
Notwithstanding  any of the provisions of this Agreement or of the Rights to the
contrary,  the  Company  may,  at  its  option,  issue  new  Right  Certificates
evidencing  Rights in such form as may be approved by its Board of  Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares of stock or other securities or property  purchasable  under the
Right Certificates made in accordance with the provisions of this Agreement.

                                       28
<PAGE>

                  In addition, in connection with the issuance or sale of shares
of Common Stock  following  the  Distribution  Date (other than upon exercise or
exchange of a Right) and prior to the Expiration  Date, the Company,  subject to
Section  11(a)(iii) hereof, (a) shall, with respect to shares of Common Stock so
issued or sold  pursuant to the exercise of stock  options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of securities,
notes or  debentures  issued by the Company,  and (b) may, in any other case, if
deemed  necessary  or  appropriate  by  the  Board  of  Directors,  issue  Right
Certificates  representing  the appropriate  number of Rights in connection with
such  issuance or sale;  provided,  however,  that (i) the Company  shall not be
obligated to issue any Right Certificate if, and to the extent that, the Company
shall be advised by counsel that such issuance  would create a significant  risk
of material  adverse tax  consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that,  appropriate  adjustment shall otherwise have
been made in lieu of the issuance thereof.

                  Section 23.  Redemption. (a) The Company may, by resolution of
its Board of Directors,  at its option,  at any time prior to the earlier of (x)
the Stock  Acquisition Date or (y) the close of business on the Final Expiration
Date,  redeem  all but not less  than all of the then  outstanding  Rights  at a
redemption  price  of $0.01  per  Right,  as such  amount  may be  appropriately
adjusted  to reflect any stock  split,  stock  dividend  or similar  transaction
occurring  after the date of this Amended and Restated  Rights  Agreement  (such
redemption  price  being  hereinafter  referred to as the  "Redemption  Price");
provided,  however,  that  in the  event  that a  redemption  of the  Rights  is
proposed,  requested  or  considered  at a time at which any Person (a "Proposed
Acquiror")  has  proposed  or  publicly  announced  an  intention  to  propose a
transaction that, if consummated, would cause a Stock Acquisition Date or any of
the events listed in Sections 13(a), (b) or (c) to occur, the Board of Directors
may only act to redeem the rights upon the prior recommendation of a majority of
its Independent  Directors at a time at which there are at least two Independent
Directors.  "Independent  Director"  shall  mean  any  member  of the  Board  of
Directors  of the  Company  who  is not a  proposed  Acquiror  or an  Affiliate,
Associate,  representative  or nominee of a Proposed  Acquiror and who is not an
officer or employee of the Company or any of its Subsidiaries. The redemption of
Rights by the Board of Directors  shall be made  effective at such time, on such
basis and with such  conditions as the Board of Directors in its sole discretion
may  establish.  The Company may , at its option,  pay the  Redemption  Price in
cash, shares of Common Stock (based on the "current market price", as defined in
Section  11(d)(i)  hereof,  of the  Common  Stock  at the  time  of  such  Board
resolution) or any other form of consideration  deemed  appropriate by the Board
of Directors.

                  (b)  Immediately  upon adoption of an effective  resolution of
the Board of Directors of the Company  ordering the  redemption of the Rights in
compliance  with  Section  23(a)  (or upon the  subsequent  satisfaction  of all
conditions to such redemption established by such resolution), evidence of which
shall have been filed with the Rights Agent,  and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right  thereafter  of the holders of Rights  shall be to receive the  Redemption
Price.  Within  10  Business  Days  after the  action of the Board of  Directors
ordering the redemption of the Rights (or such  subsequent  satisfaction  of all
such  conditions),  the  Company  shall give  notice of such  redemption  to the
holders  of the then  outstanding  Rights  by  mailing  such  notice to all such
holders at their last  addresses as they appear upon the  registry  books of the
Rights Agent or, prior

                                       29
<PAGE>

to the  Distribution  Date, on the registry  books of the transfer agent for the
Common Stock.  Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption  will state the method by which the payment of the  Redemption  Price
will be made.  Neither the Company nor any of its  Affiliates or Associates  may
redeem, acquire or purchase any Rights at any time in any manner other than that
specifically set forth in this Section 23, and other than in connection with the
repurchase of Common Stock of the Company prior to the Distribution Date.

                  (c)  In the  event  that  the  Board  of  Directors  adopts an
effective  resolution  ordering the redemption of the Rights in compliance  with
Section 23(a), the Company may, at its option,  discharge all of its obligations
with respect to the Rights by (i) issuing a press release  announcing the manner
of redemption of the Rights in accordance  with this  Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last  addresses  as they appear on the  registry  books of the Rights  Agent or,
prior to the  Distribution  Date, on the registry books of the transfer agent of
the  Common  Stock,  and upon such  action,  all  outstanding  Rights  and Right
Certificates shall be null and void without any further action by the Company.

                  Section  24.  Exchange.  (a) The  Board  of  Directors  of the
Company  may,  at its  option,  at any time  after  the Stock  Acquisition  Date
exchange all or part of the then-outstanding and exercisable Rights (which shall
not include  Rights that have become void pursuant to the  provisions of Section
11(a)(iii) hereof) for Common Stock (or Common Stock Equivalents) at an exchange
ratio of one share of Common Stock per Right,  appropriately adjusted to reflect
any stock split, stock dividend or similar transaction  occurring after the date
of this  Amended  and  Restated  Rights  Agreement  (such  exchange  ratio being
hereinafter referred to as the "Exchange Ratio") (provided that if there is then
a  Proposed  Acquiror,  the  Rights  may  not be  exchanged  without  the  prior
recommendation  of a majority of its  Independent  Directors  at a time at which
there are at least two Independent  Directors).  Notwithstanding  the foregoing,
the Board of  Directors  of the Company  shall not be  empowered  to effect such
exchange at any time after any Person  (other than a Company  Entity),  together
with all Affiliates and Associates of such Person,  becomes the Beneficial Owner
of 50% or more of the Common Stock then outstanding.

                  (b)  Immediately  upon the action of the Board of Directors of
the Company  ordering the exchange of Rights  pursuant to and in compliance with
subsection (a) of this Section 24 and without any further action and without any
notice,  the right to exercise  such Rights shall  terminate  and the only right
thereafter of a holder of such Rights,  which  excludes  Rights that have become
void  pursuant  to the  provisions  of Section  11(a)(iii)  hereof,  shall be to
receive  that number of shares of Common  Stock,  or Common  Stock  Equivalents,
equal  to the  number  of such  Rights  held by such  holder  multiplied  by the
Exchange Ratio. The Company shall promptly file notice of such Board action with
the Rights Agent and give public notice of any such exchange; provided, however,
that the failure to give,  or any defect in,  such  notice  shall not affect the
validity of such exchange.  The Company shall promptly mail a notice of any such
exchange to all of the holders of such  Rights at their last  addresses  as they
appear upon the registry  books of the Rights Agent.  Any notice which is mailed
in the manner herein  provided shall be deemed given,  whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the Common  Stock for Rights will be effected  and, in the event
of any  partial  exchange,  the number of Rights  which will be  exchanged.  Any
partial exchange shall be

                                       30
<PAGE>

effected  pro rata based on the number of Rights  (other than Rights  which have
become  void  pursuant to the  provisions  of Section  11(a)(iii))  held by each
holder of Rights.

                  (c)  In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange  of Rights as  contemplated  in  accordance  with this  Section 24, the
Company  shall take all such action as may be necessary to authorize  additional
Common Stock for issuance upon exchange of the Rights.

                  (d)  The  Company  shall  not be  required,  pursuant  to this
Section 24, to issue shares of Common Stock or to distribute  certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common  Stock,  the  Company  shall pay to the  registered  holders of the Right
Certificates,  with regard to which such fractional shares of Common Stock would
otherwise  be  issuable,  an amount in cash  equal to the same  fraction  of the
current market value of a whole share of Common Stock.  For the purposes of this
paragraph  (d), the current  market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as  determined  pursuant to the
second  sentence of Section  11(d)(i)  hereof)  for the Trading Day  immediately
prior to the date of exchange  pursuant to this Section 24, and the value of any
Common Stock Equivalent shall be deemed to have the same current market value as
the Common Stock on such date.

                  Section  25.  Notice of Certain  Events.  In case the  Company
shall propose,  at any time after the Distribution Date, (a) to pay any dividend
payable in stock of any class to the holders of its Common  Stock or to make any
other  distribution  described  to the holders of its Common Stock (other than a
regular quarterly cash dividend at a rate per share not in excess of the greater
of (x) 200% of the rate of the last quarterly dividend  theretofore paid and (y)
$0.10 per quarter (as such amount may be  appropriately  adjusted to reflect any
stock split, stock dividend,  or similar  transaction)),  or (b) to offer to the
holders of its Common Stock  rights,  options or warrants to subscribe for or to
purchase any  additional  Common  Stock or  securities  convertible  into Common
Stock, or (c) to effect any  reclassification  of its Common Stock (other than a
reclassification  involving only the subdivision of outstanding Common Stock) or
any other  event  described  in Section  11(a)(i)  hereof,  or (d) to effect any
merger, consolidation or other combination into or with any Person (other than a
Subsidiary of the Company in a transaction  which does not violate Section 11(o)
hereof),  or to effect any sale or other  transfer  (or to permit one or more of
its  Subsidiaries  to  effect  any  sale  or  other  transfer),  in one or  more
transactions, of more than 50% of the assets or earning power of the Company and
its  Subsidiaries  (taken as a whole) to any Person or Persons  (other  than the
Company and/or any of its Subsidiaries in one or more transactions each of which
does not  violate  Section  11(o)  hereof),  or (e) to effect  the  liquidation,
dissolution  or winding up of the Company,  then, in each such case, the Company
shall give to each holder of a Right,  in accordance  with Section 26 hereof,  a
notice of such  proposed  action to the extent  feasible and file a  certificate
with the Rights  Agent to that effect,  which shall  specify the record date for
the purposes of such stock dividend,  distribution  of rights or Rights,  or the
date on which such  reclassification,  consolidation,  merger,  sale,  transfer,
liquidation,  dissolution,  or  winding  up is to take  place  and  the  date of
participation  therein by the holders of Common Stock, if any such date is to be
fixed,  and such notice  shall be so given in the case of any action  covered by
clause (a) or (b) above at least  twenty  (20) days prior to the record date for
determining  holders of the Common Stock for purposes of such action, and in the
case of any

                                       31
<PAGE>

such other action,  at least twenty (20) days prior to the date of the taking of
such  proposed  action or the date of  participation  therein by the  holders of
Common Stock, whichever shall be earlier.

                  (b)  The Company shall, on the Stock  Acquisition  Date, or as
soon as practicable thereafter,  give each holder of a Right, in accordance with
Section 26 hereof, a notice of the occurrence of such event,  which notice shall
describe the event and the consequences of such event to holders of Rights under
Sections  11(a)(ii),  (iii) and (iv) hereof. The failure to give notice required
by this  Section 25 or any defect  therein  shall not  affect  the  legality  or
validity of the action taken by the Company or the vote upon any such action.

                  Section 26.  Notices.  Notices or demands  authorized  by this
Agreement  to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently  given or made if sent by
first class mail, postage prepaid,  addressed (until another address is filed in
writing with the Rights Agent) as follows:

                  Southwestern Energy Company
                  1083 Sain Street
                  P.O.  Box 1408
                  Fayetteville, Arkansas  72703
                  Attention:  Chief Executive Officer

Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement  to be given or made by the  Company  or by the  holder  of any  Right
Certificate  to or on the Rights  Agent shall be  sufficiently  given or made if
sent by first class mail,  postage prepaid,  addressed (until another address is
filed in writing with the Company) as follows:

                  First Chicago Trust Company of New York
                  525 Washington Boulevard
                  Suite 4660
                  Jersey City, New Jersey  07311
                  Attention:  Corporate Actions Administration

Notices  or  demands  authorized  by this  Agreement  to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if prior
to the Distribution  Date, to the holder of any certificate for shares of Common
Stock) shall be sufficiently  given or made if sent by first-class mail, postage
prepaid,  addressed to such holder at the address of such holder as shown on the
registry books of the Company.

                  Section 27.  Supplements and  Amendments.  The Company and the
Rights Agent shall,  if the Company so directs,  from time to time supplement or
amend this Agreement  without the approval of any holders of Rights in order (i)
to cure any  ambiguity,  (ii) to correct or supplement  any provision  contained
herein which may be defective or inconsistent  with any other provisions  herein
(provided  that any amendment made pursuant to clause (i) or (ii) hereof after a
Stock Acquisition Date or at any time that there is a Proposed  Acquiror,  shall
not  materially   adversely  affect  the  interests  of  the  holders  of  Right
Certificates  (other  than an  Acquiring  Person,  a  Proposed  Acquiror  or any
Affiliate or Associate thereof)),  (iii) prior to the Stock Acquisition

                                       32
<PAGE>

Date,  to effect any other  change or  modification  which the  Company may deem
necessary or desirable (provided that if there is then a Proposed Acquiror, this
Agreement may not be amended  pursuant to this Section 27(iii) without the prior
recommendation  of a majority of Independent  Directors at a time at which there
are at least two  Independent  Directors),  or (iv) after the Stock  Acquisition
Date or at any  time  that  there is a  Proposed  Acquiror,  to make  any  other
provisions in regard to matters or questions arising hereunder which the Company
may deem  necessary  or  desirable  and which  shall not  adversely  affect  the
interests of the holders of Right Certificates  (other than an Acquiring Person,
a Proposed  Acquiror or any  Affiliate  or Associate  thereof).  Notwithstanding
anything contained in this Agreement to the contrary,  this Agreement may not be
amended or supplemented (x) to reinstate a right of redemption if the Rights are
not then redeemable or (y) to decrease the Redemption  Price.  Upon the delivery
of a certificate  from an  appropriate  officer of the Company which states that
the proposed supplement or amendment has been approved by the Company's Board of
Directors  and is in  compliance  with the terms of this  Section 27, the Rights
Agent shall execute such supplement or amendment;  provided,  however,  that the
Rights Agent may, but shall not be obligated to, enter into any such  supplement
or amendment that adversely affects its rights,  duties or immunities under this
Agreement.  Prior to the  Distribution  Date,  the  interests  of the holders of
Rights  shall be deemed to coincide  with the  interests of holders of shares of
Common Stock  (other than an Acquiring  Person,  an Adverse  Person,  a Proposed
Acquiror or any Affiliate or Associate thereof).

                  Section 28.  Successors.   All the covenants and provisions of
this Agreement  by or for the benefit  of the Company  or the Rights Agent shall
bind  and  inure  to the benefit  of their  respective  successors  and  assigns
hereunder.

                  Section  29.  Benefits  of  this  Agreement.  Nothing  in this
Agreement shall be construed to give to any person or corporation other than the
Company,  the Rights Agent and the registered  holders of the Right Certificates
(and,  prior to the  Distribution  Date, of the Common Stock of the Company) any
legal or  equitable  right,  remedy  or claim  under  this  Agreement;  but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered  holders of the Right  Certificates  (and, prior to the
Distribution Date, of the Common Stock of the Company).

                  Section 30.  Severability. If any term, provision, covenant or
restriction  of this  Agreement  or the  Rights is held by a court of  competent
jurisdiction  or other  authority  to be  invalid,  void or  unenforceable,  the
remainder of this Agreement and the Rights shall remain in full force and effect
and shall in no way be affected,  impaired or  invalidated;  provided,  however,
that  notwithstanding  anything in this  Agreement to the contrary,  if any such
term,  provision,  covenant or restriction is held by such court or authority to
be invalid,  void or  unenforceable  and the Board of  Directors  of the Company
determines in its good faith  judgment  that severing the invalid  language from
this Agreement would  adversely  affect the purpose or effect of this Agreement,
the right of redemption  set forth in Section 23 hereof shall be reinstated  and
shall not expire until the close of business on the tenth Business Day following
the date of such determination by the Board of Directors.

                  Section  31.  Determinations  and  Actions  by  the  Board  of
Directors,  etc. The Board of Directors of the Company  shall have the exclusive
power and authority to administer

                                       33
<PAGE>

this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Agreement,  including,  without limitation, the right and
power to (i)  interpret  the  provisions  of this  Agreement,  and (ii) make all
determinations  deemed  necessary or advisable  for the  administration  of this
Agreement  (including,  without limitation,  a determination to redeem or not to
redeem the Rights  pursuant to Section 23 hereof or to  supplement  or amend the
Agreement and whether any proposed supplement or amendment adversely affects the
interests  of  the  holders  of  Right   Certificates   and  comports  with  the
requirements  of Section 27 hereof or to find or to announce  publicly  that any
Person has become an Acquiring Person, an Adverse Person or Proposed  Acquiror).
For all purposes of this  Agreement,  any calculation of the number of shares of
Common Stock or other securities  outstanding at any particular time,  including
for purposes of determining the particular percentage of such outstanding shares
of Common Stock or any other  securities  of which any Person is the  Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations  under the Exchange Act as in effect on the
date of this  Agreement.  All such actions,  calculations,  interpretations  and
determinations  (including  for purpose of clause (y) below,  all omissions with
respect to the  foregoing)  which are done or made by the Board of  Directors of
the Company in good  faith,  shall (x) be final,  conclusive  and binding on the
Company,  the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board of Directors  or any director to any  liability to the
holders of the Rights.

                  Section  32.  Governing  Law.  This  Agreement  and each Right
Certificate  issued  hereunder  shall be deemed to be a contract  made under the
laws of the State of  Arkansas  and for all  purposes  shall be  governed by and
construed in accordance  with the laws of such state  applicable to contracts to
be made and performed entirely within such state.

                  Section 33.  Counterparts.  This  Agreement may be executed in
any number of counterparts and each of such counterparts  shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

                  Section 34.  Descriptive Headings. Descriptive headings of the
several Sections of this  Agreement are inserted  for convenience only and shall
not control  or affect  the meaning  or construction  of any  of the  provisions
hereof.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement  to be duly  executed  and  their  respective  corporate  seals  to be
hereunto  affixed  and  attested,  all as of the date and the year  first  above
written.

                                       34
<PAGE>

Attest:                                          SOUTHWESTERN ENERGY COMPANY

By:   /s/ JEFF DANGEAU                           By:   /s/ GREG D. KERLEY
   --------------------------                       --------------------------
    Jeff Dangeau                                     Greg D. Kerley
    Assistant Secretary                              Senior Vice President and
                                                     Chief Financial Officer

                                                 FIRST CHICAGO TRUST COMPANY OF
Attest:                                          NEW YORK

By:  /s/ MARY E. GARCIA                          By:   /s/ JOANNE GOROSTIOLA
   --------------------------                       --------------------------
     Mary E. Garcia                                  Joanne Gorostiola
     Customer Service Officer                        Assistant Vice President

                                       35
<PAGE>

                                                                     EXHIBIT A

                           (Form of Right Certificate)

Certificate No.  R-                                    ___________ Rights

                  NOT  EXERCISABLE  AFTER APRIL 11, 2009 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION,  AT THE OPTION OF THE
COMPANY AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS  AGREEMENT  UNDER
CERTAIN  CIRCUMSTANCES,  RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY
ASSOCIATES  OR  AFFILIATES  THEREOF  (AS SUCH  TERMS ARE  DEFINED  IN THE RIGHTS
AGREEMENT)  OR ANY  SUBSEQUENT  HOLDER OF SUCH  RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON  WHO IS, WAS OR BECAME AN  ACQUIRING  PERSON OR AN  AFFILIATE  OR AN
ASSOCIATE  OF AN  ACQUIRING  PERSON  (AS THOSE  TERMS ARE  DEFINED IN THE RIGHTS
AGREEMENT).  THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT.]1

                                Right Certificate

                           SOUTHWESTERN ENERGY COMPANY

                  This certifies that            , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner  thereof,  subject  to the terms,  provisions  and  conditions  of the
Amended and Restated  Rights  Agreement  dated as of April 12, 1999 (the "Rights
Agreement") between  Southwestern  Energy Company, an Arkansas  corporation (the
"Company"),  and The First  National  Bank of Chicago (the "Rights  Agent"),  to
purchase from the Company at any time after the  Distribution  Date and prior to
5:00 P.M. (New York City time) on the Expiration Date (as such terms are defined
in the Rights  Agreement)  at the  principal  office or such other office of the
Rights Agent designated for such purpose,  or of its successors as Rights Agent,
one  fully-paid,  nonassessable  share of Common  Stock,  $0.10  par value  (the
"Common  Stock") of the Company,  at a purchase price of $40 per share of Common
Stock (the  "Purchase  Price"),  upon  presentation  and surrender of this Right
Certificate  with the  appropriate  Form of  Election  to  Purchase  Shares duly
executed. The number of Rights evidenced

____________________
[FN]
1     The portion of the legend in brackets shall be inserted only if applicable
      and shall replace the preceding sentence.
</FN>

<PAGE>

by this Right  Certificate  and the number of shares which may be purchased upon
exercise hereof) set forth above,  and the Purchase Price set forth above,  have
been determined as of April 7, 1999.

                  As provided in the Rights  Agreement,  the Purchase  Price and
the number of shares of Common Stock or other  securities which may be purchased
upon the exercise of the Rights evidenced by this Right  Certificate are subject
to  modification  and adjustment  upon the happening of certain  events,  and in
certain  circumstances may be exercised to purchase  securities of issuers other
than the Company.

                  This  Right  Certificate  is  subject  to all  of  the  terms,
provisions and conditions of the Rights Agreement,  which terms,  provisions and
conditions  are hereby  incorporated  herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations,  duties and immunities hereunder
of the Rights  Agent,  the Company  and the  holders of the Right  Certificates.
Copies of the Rights  Agreement are on file at the above mentioned office of the
Rights  Agent and are  available  free of charge upon  written  request from the
Company at:

                  Southwestern Energy Company
                  1083 Sain Street
                  P.O.  Box 1408
                  Fayetteville, Arkansas  72703
                  Attention:  Chief Executive Officer

                  This  Right   Certificate,   with  or  without   other   Right
Certificates, upon surrender at the office of the Rights Agent, may be exchanged
for  another  Right  Certificate  or Right  Certificates  of like tenor and date
evidencing  Rights  entitling the holder to purchase a like aggregate  number of
shares of Common Stock as the Rights evidenced by the Right Certificate or Right
Certificates  surrendered  shall have entitled such holder to purchase.  If this
Right  Certificate  shall be exercised in part,  the holder shall be entitled to
receive, upon surrender hereof,  another Right Certificate or Right Certificates
for the number of whole Rights not exercised.

                  Subject to the provisions of the Rights Agreement,  the Rights
evidenced  by  this  Right  Certificate  may be  redeemed  by the  Company  at a
redemption  price of $.01 per Right (payable in cash,  shares of Common Stock or
other consideration),  appropriately adjusted to reflect any Common Stock split,
Common Stock dividend or similar transaction occurring after the date hereof.

                  Subject to the provisions of the Rights Agreement,  the Rights
evidenced by this Right  Certificate  (and the Rights  Agreement  itself) may be
amended by action of the Company's Board of Directors.

                  No  fractional  shares of Common Stock will be issued upon the
exercise of any Right or Rights  evidenced  hereby,  but in lieu  thereof a cash
payment will be made, as provided in the Rights Agreement.

                                      A-2
<PAGE>

                  No  holder  of this  Right  Certificate,  as  such,  shall  be
entitled to vote or receive dividends or be deemed for any purpose the holder of
shares of Common Stock or of any other  securities  of the Company  which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights  Agreement or herein be construed  to confer upon the holder  hereof,  as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter  submitted to  stockholders  at any
meeting thereof,  or to give or withhold consent to any corporate  action, or to
receive notice of meetings or other actions  affecting  stockholders  (except as
provided  in the Rights  Agreement),  or to receive  dividends  or  subscription
rights,  or  otherwise,  until  the  Right or  Rights  evidenced  by this  Right
Certificate shall have been exercised as provided in the Rights Agreement.

                  This Right  Certificate  shall not be valid or obligatory  for
any purpose until it shall have been countersigned by the Rights Agent.

                  WITNESS the facsimile signature  of the proper officers of the
Company and its corporate seal.  Dated as of _________________, _____.

Attest:                                         SOUTHWESTERN ENERGY COMPANY

By:_________________________                    By_________________________
        Secretary                                  Title:

Countersigned:
FIRST CHICAGO TRUST COMPANY OF
NEW YORK

By:__________________________
      Authorized Signature

                                      A-3
<PAGE>

                   [Form of Reverse Side of Right Certificate]

                               FORM OF ASSIGNMENT

         (To be executed by the registered holder if such holder desires
                       to transfer the Right Certificate)

                 FOR VALUE RECEIVED ______________________ hereby sells, assigns
and transfers unto _____________________________________________________________
________________________________________________________________________________
                            (Please print name and address of transferee)

this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ____________________ Attorney, to
transfer the within Right Certificate on the books of the within-named  Company,
with full power of substitution.

DATED: ________________, ________

                                               _____________________________
                                               Signature

Signature Guaranteed:

                                      A-4
<PAGE>

                                   Certificate

                  The undersigned  hereby  certifies by checking the appropriate
boxes that:

                  (1)  this  Right  Certificate  [ ] is [ ] is not  being  sold,
assigned and  transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring  Person (as such terms
are defined pursuant to the Rights Agreement);

                  (2)  after  due  inquiry  and to  the  best  knowledge  of the
undersigned,  it [ ] did [ ] did not acquire the Rights  evidenced by this Right
Certificate  from any  Person who is, was or  subsequently  became an  Acquiring
Person or an Affiliate or Associate of an Acquiring Person.

Dated:______________________, ________              __________________________
                                                    Signature

Signature Guaranteed:

                                     NOTICE

                  The signature of the foregoing  Assignment  must correspond to
the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.

                                      A-5
<PAGE>

                       FORM OF ELECTION TO PURCHASE SHARES

                      (To be executed if holder desires to
                         exercise the Right Certificate)

To Southwestern Energy Company:

                  The  undersigned   hereby   irrevocably   elects  to  exercise
__________  Rights  represented by this Right Certificate to purchase the Common
Stock of the  Company  (or such  other  securities  of the  Company or any other
person) and requests  that  certificates  for such Common Stock be issued in the
name of:

Please insert social security or other identifying number

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

If such  number of Rights  shall not be all the Rights  evidenced  by this Right
Certificate,  a new Right  Certificate for the balance  remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security or other identifying number

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

Dated:______________________, _____

                                               ______________________________
                                               Signature

Signature Guaranteed:

                                      A-6
<PAGE>

                                   Certificate

                  The undersigned  hereby  certifies by checking the appropriate
boxes that:

                  (1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being  exercised  by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring  Person (as such terms
are defined pursuant to the Rights Agreement);

                  (2)  after  due  inquiry  and to  the  best  knowledge  of the
undersigned,  it [ ] did [ ] did not acquire the Rights  evidenced by this Right
Certificate  from any  Person who is,  was or became an  Acquiring  Person or an
Affiliate or Associate of an Acquiring Person.

Dated:________________________, ______       ____________________________
                                             Signature

Signature Guaranteed:

                                     NOTICE

                  The  signature  to the  foregoing  Election to  Purchase  must
correspond  to the name as written  upon the face of this Right  Certificate  in
every particular, without alteration or enlargement or any change whatsoever.

                                      A-7
<PAGE>

                                                                   Exhibit B

                           SOUTHWESTERN ENERGY COMPANY

                   SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK

                  On April 7, 1999,  the  Board  of  Directors  of  Southwestern
Energy Company (the "Company") adopted an Amended and Restated Rights Agreement,
dated as of April 12,  1999 (the  "Rights  Agreement"),  between the Company and
First Chicago  Trust Company of New York as Rights Agent,  that amends the terms
of the  outstanding  rights (the  "Rights")  previously  issued.  The Rights are
currently  evidenced (on the basis of one right for each  outstanding  share) by
the existing  certificates  for  outstanding  shares of common stock,  $0.10 par
value, of the Company (the "Common Stock") and are not  exerciseable  and do not
trade  separately  from such  shares.  The  Summary  describes  the rights as so
amended.

                  Each Right,  when  exercisable,  will  entitle the  registered
holder to purchase from the Company one share of the Company's Common Stock at a
price of $40 per share (the "Purchase Price"), subject to adjustment.

                  Until  the  close of  business  on  the  earliest  of: (i) the
tenth day after a public  announcement  that (A) a person or group of affiliated
or associated persons has acquired, or obtained the right to acquire, beneficial
ownership  ("Beneficial  Ownership") of 15% or more of the outstanding shares of
Common  Stock of the  Company  (other than  pursuant  to a tender  offer for all
outstanding  shares of Common  Stock at the price and on terms  approved  by the
Board  of  Directors  based  upon a  prior  recommendation  of  the  Independent
Directors at a time when there are at least two Independent  Directors or solely
as a result of a reduction of the number of shares of Common  Stock  outstanding
due to a  repurchase  of shares by the  Company),  (B) any person or group which
beneficially  owned  15% of the  outstanding  shares  on the date of the  Rights
Agreement,  or which  acquired  beneficial  ownership of 15% of the  outstanding
shares  as a result of any  repurchase  of  shares  by the  Company,  thereafter
acquired  beneficial  ownership of additional shares  constituting 1% or more of
the outstanding shares of Common Stock or (C) the Board of Directors  determines
that a holder of 10% or more of the Common Stock is an Adverse Person (each,  an
"Acquiring  Person");  and (ii) the tenth Business Day (or such later day as may
be  determined  by action of the Board of Directors of the Company prior to such
time  as  any  Person  becomes  an  Acquiring  Person)  after  the  date  of the
commencement  of, or the first public  announcement  of the intent of any person
(other than a Company  Entity (as defined in the Rights  Agreement)) to commence
(which intention to commence remains in effect for five business days after such
announcement)  a tender or  exchange  offer by any Person  (other than a Company
Entity) to  acquire  (when  added to any  shares as to which such  Person is the
Beneficial Owner immediately prior to such commencement) beneficial ownership of
15% or more of the issued and outstanding shares of Common Stock (the earlier of
such dates being called the "Distribution  Date"), the Rights will be evidenced,
with respect to any of the Company's Common Stock certificates outstanding as of
the Record Date, by such Common Stock certificate and this Summary.

                                      B-1
<PAGE>

                  The Rights  Agreement  provides that,  until the  Distribution
Date,  the Rights will be transferred  with and only with the Common Stock.  New
Common  Stock  certificates  issued  after the Record Date upon  transfer or new
issuance of the Common  Stock will contain a notation  incorporating  the Rights
Agreement by reference.  Until the Distribution Date, the surrender for transfer
of any of the Common Stock certificates outstanding as of the date of the Rights
Agreement  (whether or not  containing a notation  contemplated  by the original
Rights  Agreement  dated May 5, 1989) will also  constitute  the transfer of the
Rights  associated with the Common Stock represented by such certificate and the
number  of  Rights   associated  with  each  share  of  Common  Stock  shall  be
proportionately  adjusted in the event of any  dividend  in Common  Stock on the
Common Stock or subdivision, combination or reclassification of the Common Stock
(except as otherwise provided in the Rights  Agreement).  As soon as practicable
following the Distribution  Date,  separate  certificates  evidencing the Rights
("Right  Certificates")  will be mailed to holders of record of the Common Stock
as of the  close  of  business  on  the  Distribution  Date  and  such  separate
certificates alone will evidence Rights.

                  The Rights are not exercisable  until the  Distribution  Date.
The Rights will expire on April 11, 2009, unless earlier redeemed by the Company
as described  below or unless further  extended  pursuant to an amendment in the
Rights Agreement as described below.

                  The Purchase Price payable, and the number of shares of Common
Stock or other securities or property issuable,  upon exercise of the Rights are
subject to adjustment from time to time to prevent  dilution (i) in the event of
a stock dividend on, or a subdivision,  combination or reclassification  of, the
Common Stock,  (ii) upon the grant to holders of Common Stock of certain  rights
or warrants to subscribe for shares of Common Stock or convertible securities at
less  than the  current  market  price  of the  Common  Stock or (iii)  upon the
distribution  to holders of Common Stock of evidences of  indebtedness or assets
(excluding regular periodic cash dividends or dividends payable in Common Stock)
or of subscription rights or warrants (other than those referred to above).

                  In the  event  that,  at any  time  after  the  Rights  become
exercisable,  the Company is acquired in a merger or other business combination,
proper  provision shall be made so that each holder of a Right shall  thereafter
have the  right  to  receive,  upon the  exercise  thereof  at the then  current
exercise  price of the  Right,  that  number of  shares  of common  stock of the
surviving company (or its parent company or other  controlling  entity) which at
the time of such transaction would have a market value of two times the exercise
price of the Right.  In the event that any person  becomes an Acquiring  Person,
the Rights  Agreement  provides that proper provision would be made so that each
holder  of a  Right,  other  than  the  Acquiring  Person  (whose  Rights  would
thereafter be null and void) and certain of its  transferees,  would  thereafter
have the right to  receive  upon  exercise  that  number of shares of the Common
Stock having a market value of two times the exercise price of the Right.

                  With certain  exceptions,  no adjustment in the Purchase Price
will be required until cumulative  adjustments require an adjustment of at least
1% in such  Purchase  Price.  No  fractional  shares will be issued and, in lieu
thereof,  an  adjustment  in cash will be made based on the market  price of the
Common Stock on the last trading date prior to the date of exercise.

                                      B-2
<PAGE>

                  At any time  prior to the close of  business  on the date that
Rights  holders become  entitled to purchase  Common Stock of the Company (or of
the  surviving  entity after a merger with the  Company)  with a market value of
twice the Purchase  Price (as  described  above),  the Board of Directors of the
Company may redeem the Rights in whole,  but not in part, at a price of $.01 per
Right  (payable  in cash,  shares  of  Common  Stock  or  other  consideration),
appropriately  adjusted to reflect any stock  split,  stock  dividend or similar
transaction  occurring after the date hereof (the  "Redemption  Price").  In the
event, however, that any person or group (a "Proposed Acquiror") has proposed or
publicly  announced an intention to propose a transaction  that, if consummated,
would  cause an  Acquiring  Person to become  such or cause  the  Company  to be
acquired in a merger or other business  combination,  the Board of Directors may
only redeem the Rights after receiving a  recommendation  from a majority of its
Independent Directors.  Immediately upon the action of the Board of Directors of
the Company  electing to redeem the Rights (unless  otherwise  specified in such
Board  action),  the right to exercise  the Rights will  terminate  and the only
right of the holders of Rights will be to receive the Redemption Price.

                  Upon  the  first  public  announcement   (including,   without
limitation,  the filing of a report  pursuant to the Securities  Exchange Act of
1934) by the Company or an Acquiring Person  containing  information  indicating
that an  Acquiring  Person has become  such and prior to the  acquisition  by an
Acquiring Person of 50% or more of the Common Stock then outstanding,  the Board
of Directors may, at its option and after receiving the prior  recommendation of
its  Independent  Directors,  exchange all or part of the then  outstanding  and
existing  Rights (other than Rights owned by such  Acquiring  Person which shall
become void) for Common Stock at an Exchange  Ratio of one share of Common Stock
per Right (subject to adjustment) (the "Exchange  Ratio").  Immediately upon the
action of the Board of Directors of the Company electing to exchange the Rights,
the right to  exercise  the  Rights  will  terminate  and the only  right of the
holders of Rights will be to receive  that  number of shares of Common  Stock or
Common  Stock  equivalents  equal to the  number of Rights  held by such  holder
multiplied by the Exchange Ratio.

                  Until a Right is exercised,  the holder thereof, as such, will
have no rights as a stockholder of the Company,  including,  without limitation,
no right to vote or to receive dividends.

                  At any time  prior to the time that an  Acquiring  Person or a
Potential  Acquiror has become such, the Company may amend the Rights  Agreement
and the  terms of the  Rights  in any  manner  deemed  necessary  or  desirable.
Thereafter,  the Rights  Agreement and the terms of the Rights may be amended by
the Company under certain  circumstances,  but not in any manner that  adversely
affects  the  interests  of the holders of the Rights  (other than an  Acquiring
Person or a Proposed Acquiror).

                  A copy  of the  Rights  Agreement  is  being  filed  with  the
Securities and Exchange Commission as an Exhibit to a Registration  Statement on
Form 8-A. A copy of the Rights  Agreement  will be available free of charge from
the  Company.  This  summary  description  of the Rights  does not purport to be
complete and is qualified in its entirety by reference to the Rights  Agreement,
which is incorporated herein by reference.

                                      B-3================================================================================

                        ASSET SALE AND PURCHASE AGREEMENT

                                  By and Among

                          SOUTHWESTERN ENERGY COMPANY,

                          ARKANSAS WESTERN GAS COMPANY

                                       and

                            ATMOS ENERGY CORPORATION

                          Dated as of October 15, 1999

================================================================================

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                            Page
<S>                                                                          <C>
I.    DEFINITIONS.............................................................1

II.   SALE AND PURCHASE.......................................................5

   2.1.  Sale and Purchase of Assets..........................................5

   2.2.  Excluded Assets......................................................6

   2.3.  Purchase Price; Adjustment...........................................7

   2.4.  Assumption of Liabilities............................................9

   2.5.  Closing.............................................................10

   2.6.  Nonassignable Contracts.............................................11

III.  REPRESENTATIONS AND WARRANTIES OF SELLERS..............................11

   3.1.  Corporate Existence.................................................11

   3.2.  Authorization and Validity of Agreement.............................12

   3.3.  No Contravention....................................................12

   3.4.  Title to Assets; Adequacy; Condition................................12

   3.5.  Material Contracts..................................................12

   3.6.  Real Property.......................................................13

   3.7.  Permits.............................................................13

   3.8.  Litigation..........................................................13

   3.9.  Compliance with Laws................................................13

   3.10.    Governmental Consents............................................13

   3.11.    Tax Matters......................................................13

   3.12.    Financial Statements.............................................14

   3.13.    Employee Matters.................................................14

   3.14.    Brokerage........................................................15

   3.15.    Environmental Matters............................................15

   3.16.    No Undisclosed Liabilities; No Material Adverse Effect...........16

   3.17.    Customers; Suppliers.............................................16

   3.18.    Books and Records................................................16

   3.19.    Insurance........................................................16

                                      -i-
<PAGE>

   3.20.    Accounts Receivable..............................................16

   3.21.    Y2K Compliance...................................................16

   3.22.    No Other Representations.........................................16

IV.   REPRESENTATIONS AND WARRANTIES OF BUYER................................17

   4.1.  Organization........................................................17

   4.2.  Authorization and Validity of Agreement.............................17

   4.3.  No Contravention....................................................17

   4.4.  Consents............................................................17

   4.5.  Brokerage...........................................................17

   4.6.  Litigation..........................................................17

   4.7.  Financing...........................................................17

V.    OBLIGATIONS OF SELLERS.................................................17

   5.1.  Consents............................................................18

   5.2.  Conduct of Business.................................................18

   5.3.  Access Before Closing...............................................18

   5.4.  Clearance Certificate...............................................18

VI.   OBLIGATIONS OF BUYER...................................................18

   6.1.  Consents............................................................18

VII.     EMPLOYEE MATTERS....................................................19

   7.1.  Employment of Employees.............................................19

   7.2.  Severance Benefits..................................................19

   7.3.  Transfer of Pension Assets and Liabilities..........................19

   7.4.  Savings Plan........................................................20

   7.5.  Indemnification for Plan Liabilities................................20

   7.6.  Service Credit......................................................21

   7.7.  Medical and Dental Plans............................................21

   7.8.  Vacation and Sick Day Benefits Accrued Through Closing Date.........22

   7.9.  Welfare Benefits....................................................22

   7.10.    Long Term Disability.............................................22

   7.11.    Flexible Spending Accounts.......................................22

   7.12.    WARN Act Liability...............................................22

                                      -ii-
<PAGE>

   7.13.    Health Care Continuation Coverage................................22

   7.14.    Employment Taxes.................................................22

VIII.    ADDITIONAL RIGHTS AND OBLIGATIONS...................................23

   8.1.  Access After Closing................................................23

   8.2.  Further Assurances..................................................23

   8.3.  Confidentiality.....................................................23

   8.4.  Schedules...........................................................23

   8.5.  Tax Matters.........................................................23

   8.6.  Use of Name and Logos...............................................24

   8.7.  Environmental Matters...............................................24

   8.8.  Abstracts...........................................................24

   8.9.  Y2K.................................................................25

IX.   CONDITIONS TO BUYER'S OBLIGATIONS......................................25

   9.1.  Representations, Warranties and Covenants of Sellers................25

   9.2.  No Prohibition......................................................25

   9.3.  Further Action......................................................25

   9.4.  No Material Adverse Effect..........................................25

   9.5.  Abstracts...........................................................25

   9.6.  Omnibus Gas Transportation and Supply Agreement.....................26

   9.7.  Other Documents.....................................................26

X.    CONDITIONS TO SELLERS' OBLIGATIONS.....................................26

   10.1.    Representations, Warranties and Covenants of Buyer...............26

   10.2.    No Prohibition...................................................26

   10.3.    Further Action...................................................26

   10.4.    Omnibus Gas Transportation and Supply Agreement..................26

   10.5.    Other Documents..................................................26

XI.   TERMINATION PRIOR TO CLOSING...........................................26

   11.1.    Termination......................................................26

   11.2.    Effect of Termination............................................27

XII.     INDEMNIFICATION AND SURVIVAL........................................27

   12.1.    Indemnification by Sellers.......................................27

                                     -iii-
<PAGE>

   12.2.    Indemnification by Buyer.........................................27

   12.3.    Limitations on Liability.........................................27

   12.4.    Indemnification Procedure........................................28

   12.5.    Exclusive Remedies...............................................29

XIII.    MISCELLANEOUS.......................................................29

   13.1.    Entire Agreement.................................................29

   13.2.    Waiver of Bulk Transfer Requirements.............................29

   13.3.    Successors and Assigns...........................................29

   13.4.    Counterparts.....................................................29

   13.5.    Headings.........................................................29

   13.6.    Modification and Waiver..........................................29

   13.7.    No Third-Party Beneficiary Rights................................30

   13.8.    Sales and Transfer Taxes.........................................30

   13.9.    Expenses.........................................................30

   13.10.   Waiver of Conditions.............................................30

   13.11.   Notices..........................................................30

   13.12.   Knowledge of Sellers.............................................31

   13.13.   Governing Law....................................................31

   13.14.   Waiver of Jury Trial.............................................31

   13.15.   Announcements....................................................31

   13.16.   Severability.....................................................32

</TABLE>

                                      -iv-
<PAGE>

<TABLE>
<CAPTION>

SCHEDULES

<S>             <C> <C>
2.1.1           -   Owned Property
2.1.2           -   Leased Property
2.1.4           -   List of Machinery, Equipment, etc.
2.1.6           -   Contracts
2.1.13          -   Intellectual Property
2.2(c)          -   Names and Logos
2.2(k)          -   Other Excluded Assets
2.3.3           -   Financial Principles
2.4             -   Certain Excluded Liabilities
2.5.2(c)        -   Gas Transportation and Supply Matters
3.3             -   Sellers' Third Party Consents
3.4             -   Encumbrances on Transferred Assets
3.5             -   Material Contracts
3.6             -   Real Property
3.7             -   Permits
3.8             -   Litigation
3.9             -   Compliance with Laws
3.10            -   Seller Governmental Consents
3.12            -   Financial Statements
3.13.1          -   Employee Benefit Plans
3.13.2          -   Pension Plans
3.13.4          -   Labor Matters
3.15            -   Environmental Matters
3.16            -   Certain Liabilities
3.19            -   Insurance Policies
3.20            -   Accounts Receivable
4.4             -   Buyer's Consents
7.1             -   Transferred Employees
7.2             -   Severance Benefits
7.3.2           -   Accumulated Benefit Obligation and Calculation Assumption
7.11            -   Flexible Spending Accounts
9.3             -   Required Non-Governmental Third Party Consents

</TABLE>

<PAGE>

                        ASSET SALE AND PURCHASE AGREEMENT

         ASSET SALE AND PURCHASE AGREEMENT (the "Agreement") dated as of October
15, 1999, by and among  SOUTHWESTERN  ENERGY  COMPANY,  a corporation  organized
under  the laws of the  state  of  Arkansas  ("Parent"),  ARKANSAS  WESTERN  GAS
COMPANY, a corporation  organized under the laws of the state of Arkansas ("AWG"
and,  together with Parent,  the  "Sellers"),  and ATMOS ENERGY  CORPORATION,  a
corporation organized under the laws of Texas and Virginia ("Buyer").

                                   BACKGROUND

         Sellers  desire  to sell and  assign to Buyer,  and  Buyer  desires  to
purchase  and  assume  from  Sellers,   the   Transferred   Assets  (as  defined
hereinafter) and the Assumed  Liabilities (as defined  hereinafter),  all on the
terms and subject to the conditions of this Agreement.

                                      TERMS

         NOW, THEREFORE, intending to be legally bound hereby, the parties agree
as follows:

                                 I. DEFINITIONS.

         For  purposes of this  Agreement,  the  following  terms shall have the
following meanings:

         "Affiliate"  means,  when  used with  respect  to a  specified  Person,
another  Person  that,  either  directly  or  indirectly  through  one  or  more
intermediaries, controls or is controlled by or is under common control with the
Person specified.

         "Abstracts" has the meaning specified in Section 8.8.

         "Agreement" has the meaning specified in the first paragraph.

         "Assumed Contracts" has the meaning specified in Section 2.1.6.

         "Assumed Liabilities" has the meaning specified in Section 2.4.

         "Assumption Agreement" has the meaning specified in Section 2.5.3.

         "AWG" has the meaning specified in the first paragraph.

         "Business" means the gas distribution and transmission business and the
unregulated  operations  conducted  by  AWG's  Associated  Natural  Gas  Company
Division in the State of Missouri immediately prior to the date hereof; provided
that the Business  shall not be deemed to include any  operations of the Sellers
conducted in the State of Arkansas.

         "Buyer" has the meaning specified in the first paragraph.

         "Buyer Medical Plan" has the meaning specified in Section 7.7.1.

         "Buyer's Pension Plan" has the meaning specified in Section 7.3.1.

         "Buyer's  Post-Retirement  Trusts" has the meaning specified in Section
7.7.3.

                                      -1-
<PAGE>

         "Buyer's Savings Plan" has the meaning specified in Section 7.4.

         "Closing"  and "Closing  Date" have the  meanings  specified in Section
2.5.1.

         "Closing Purchase Price" has the meaning specified in Section 2.3.1.

         "Closing Statement" has the meaning specified in Section 2.3.3.

         "Code" has the meaning specified in Section 7.3.1.

         "Current  Assets" means the current  assets of the Sellers  reported as
(i) accounts  receivable,  (ii) inventory,  (iii) stores expense  undistributed,
(iv) deferred gas purchases and (v) (to the extent not exceeding $100,000) other
current assets that are included in the Transferred Assets, all as determined in
accordance with the Financial Principles applied consistently with the Financial
Statements.

         "Current  Liabilities"  means the  current  liabilities  of the Sellers
reported as (i) accounts payable,  (ii) other taxes payable,  (iii) deferred gas
purchases, (iv) customer deposits, (v) accrued vacation payable and (vi) (to the
extent  not  exceeding  $50,000)  other  current  liabilities  that are  Assumed
Liabilities,  all as  determined in  accordance  with the  Financial  Principles
applied consistently with the Financial Statements.

         "Current Period" has the meaning specified in Section 2.3.4.

         "Eligible  Transferred  Employee" has the meaning  specified in Section
7.4.

         "Encumbrances" has the meaning specified in Section 2.1.

         "Environmental  Laws"  means  any  federal,  state,  local  or  foreign
statute,  law,  ordinance,  regulation,  rule, code, order,  common law, and any
enforceable  judicial or administrative  interpretation  thereof,  including any
judicial or administrative order, writ, consent decree or judgment, relating: to
(a)  emissions,   discharges,  releases  or  threatened  releases  of  Hazardous
Materials  into the natural  environment,  including  into  ambient  air,  soil,
sediments, land surface or subsurface,  buildings or facilities,  surface water,
groundwater,  publicly-owned  treatment  works,  septic systems or land; (b) the
generation,   treatment,   storage  disposal,   use,  handling,   manufacturing,
transportation or shipment of Hazardous  Materials;  (c) occupational health and
safety;  or  (d)  otherwise  relating  to the  pollution  or  protection  of the
environment,  health, safety or natural resources;  provided that "Environmental
Laws"  shall not mean or refer to any of the  foregoing  except to the extent in
existence  and in full  force  and  effect  on and as of the  Closing  Date and,
accordingly,  shall  not  include  any of the  foregoing  as it may be  enacted,
promulgated,  amended, changed or altered (by statute,  judicial interpretation,
official  interpretation or otherwise) at any time with effect after the Closing
Date.

         "Environmental  Permit"  means  any  permit,  approval,  identification
number,  license or other authorization required under or issued pursuant to any
Environmental Law.

         "ERISA" has the meaning specified in Section 3.13.2.

         "Excluded Assets" has the meaning specified in Section 2.2.

         "Excluded Liabilities" has the meaning specified in Section 2.4.

         "Financial Principles" has the meaning specified in Section 2.3.3.

                                      -2-
<PAGE>

         "Financial Statements" has the meaning specified in Section 3.12.

         "FSA's" has the meaning specified in Section 7.11.

         "Hazardous Material" means (a) any petroleum,  petroleum  hydrocarbons,
gas, gas liquids,  or any other  petroleum  products,  by-products  or breakdown
products,  radioactive materials,  asbestos-containing  materials in any form or
condition  or  polychlorinated  biphenyls  in any form or  condition  or (b) any
solid,  chemical,  material or substance regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any Environmental Law.

         "Knowledge of Sellers" has the meaning specified in Section 13.12.

         "Leased Property" has the meaning specified in Section 2.1.2.

         "Leave" has the meaning specified in Section 7.1.

         "Losses" has the meaning specified in Section 12.1.

         "Material  Adverse  Effect"  means any  change  in, or effect  on,  the
Business  or the  Transferred  Assets  that  is or is  reasonably  likely  to be
materially  adverse to the  Transferred  Assets  taken as a whole or the assets,
liabilities,  operations,  results of operations  or financial  condition of the
Business taken as a whole, except for any such changes or effects resulting from
(i) changes in general economic,  regulatory or political  conditions or changes
that affect the industry in general and (ii) this Agreement or the  transactions
contemplated hereby .

         "Material Contracts" has the meaning specified in Section 3.5.

         "Matters of Environmental Concern" has the meaning specified in Section
8.7(a).

         "Measurement Period" has the meaning specified in Section 2.3.3.

         "Names and Logos" has the meaning specified in Section 2.2(c).

         "Net Working Capital" has the meaning specified in Section 2.3.3.

         "Non-Assigned Contracts" has the meaning specified in Section 2.6.

         "Omnibus  Gas  Transportation  and Supply  Agreement"  has the  meaning
specified in Section 2.5.2.

         "Owned Property" has the meaning specified in Section 2.1.1.

         "Parent" has the meaning specified in the first paragraph.

         "Pension Plans" has the meaning specified in Section 3.13.2.

         "Permits" has the meaning specified in Section 3.7.

         "Permitted Encumbrances" has the meaning specified in Section 3.4.

                                      -3-
<PAGE>

         "Person"  means  any  individual,   partnership,   firm,   corporation,
association,  trust,  limited liability  company,  unincorporated  organization,
governmental authority or other entity.

         "Plans" has the meaning specified in Section 3.13.1.

         "Post-Retirement Benefits" has the meaning specified in Section 7.7.3.

         "Pre-Closing Returns" has the meaning specified in Section 8.5.

         "Purchase Price" has the meaning specified in Section 2.3.1.

         "Returns" has the meaning specified in Section 3.11.

         "Seller Medical Plans" has the meaning specified in Section 7.7.1.

         "Seller Pension Plan" has the meaning specified in Section 7.3.1.

         "Seller Pension Plan Trust" has the meaning specified in Section 7.3.1.

         "Seller Savings Plan" has the meaning specified in Section 7.4.

         "Sellers" has the meaning specified in the first paragraph.

         "Seller's  Post-Retirement Trusts" has the meaning specified in Section
7.7.3.

         "SFAS 106 Obligations" has the meaning specified in Section 3.13.5.

         "System Property" has the meaning specified in Section 2.1.3.

         "Taxes"  means all  federal,  state,  local and other taxes and similar
levies,  fees,  charges and  assessments  imposed by a  governmental  authority,
including without  limitation,  income,  gross receipts,  sales, use,  transfer,
business and occupation,  franchise,  profits,  license, lease, service, service
use, duties, excise, severance, stamp, occupation, ad valorem, real and personal
property, withholding, payroll, and value added taxes.

         "Threshold" has the meaning specified in Section 8.7.

         "Transfer Taxes" has the meaning specified in Section 13.8.

         "Transferred Assets" has the meaning specified in Section 2.1.

         "Transferred  Employee" and  "Transferred  Employees" have the meanings
specified in Section 7.1.

         "Transferred  Pension Plan  Participants"  has the meaning specified in
Section 7.3.1.

         "Transition  Services  Agreement" has the meaning  specified in Section
2.5.2.

         "WARN Act" has the meaning specified in Section 7.12.

         "Welfare Plans" has the meaning specified in Section 3.13.3.

                                      -4-
<PAGE>

                             II. SALE AND PURCHASE.

         2.1. Sale and Purchase of Assets.  Subject to the terms and  conditions
of this Agreement,  at the Closing,  each Seller shall sell, transfer and assign
to Buyer, free and clear of any lien, pledge, option, security interest,  claim,
charge or other encumbrance ("Encumbrances"), except Permitted Encumbrances, and
Buyer shall purchase and assume from each Seller,  the Transferred  Assets.  For
purposes  of this  Agreement,  "Transferred  Assets"  shall  mean the  following
assets:

                  2.1.1. The real property owned in fee by Sellers and listed on
         Schedule 2.1.1 (the "Owned Property"),  together with all improvements,
         fixtures, rights, and other appurtenances thereto of Sellers;

                  2.1.2.  The leasehold  interests of Sellers in all  possessory
         leases  of  real  property   listed  on  Schedule  2.1.2  (the  "Leased
         Property");

                  2.1.3. All rights of way, easements, appurtenances and similar
         realty  interests  of Sellers  relating  to the Owned  Property  or the
         Leased Property or necessary for or relating  primarily to the Business
         (the "System Property");

                  2.1.4. Machinery,  equipment,  tools and fixed assets owned by
         Sellers  listed  on  Schedule   2.1.4,   subject  to  such   additions,
         substitutions  or  deletions  thereto  as shall  have  occurred  in the
         ordinary  course of the  conduct of the  Business  prior to the Closing
         Date that is consistent with past practice;

                  2.1.5. All vehicles and other tangible assets of Sellers which
         are used primarily in or related primarily to the Business;

                  2.1.6.  All rights of Sellers  under the  contracts  listed on
         Schedule 2.1.6,  subject to such  additions,  substitution or deletions
         thereto as shall  have  occurred  in the  ordinary  course of  Sellers'
         conduct of the Business  prior to the Closing  Date that is  consistent
         with past practice (the "Assumed Contracts");

                  2.1.7.  To  the  extent   assignable  to  Buyer,  all  of  the
         governmental   permits,   franchises,   licenses,   consents  or  other
         authorizations issued or given to Sellers which relate primarily to the
         Business  or any of the  Transferred  Assets and which are  required in
         connection with the conduct, use, operation or ownership thereof;

                  2.1.8. Copies of all customer,  supplier and personnel records
         and other records as are in either Seller's possession or control which
         are used primarily in or related primarily to the Business;

                  2.1.9.  Accounts and notes  receivable  of Sellers which arose
         from the  operations  of the  Business  (other than  accounts and notes
         receivable  relating to  inter-company  accounts  between the  Sellers,
         which  accounts  and  notes  receivable  shall not be  included  on the
         Closing Statement);

                  2.1.10.  All inventories of gas,  materials and spare parts of
         Sellers used primarily in or relating primarily to the Business;

                                       -5-
<PAGE>

                  2.1.11.  All prepaid expenses of Sellers relating primarily to
         the Business,  except for prepaid expenses attributable to any Excluded
         Asset or Excluded Liability;

                  2.1.12.  To the extent the rights and benefits  thereunder are
         assignable to Buyer, all rights and benefits under any  manufacturer's,
         subcontractor's,   supplier's,   repairman's   or   other   third-party
         warranties,  guarantees,  and service and replacement programs, and all
         rights of indemnification,  insurance proceeds, claims against insurers
         and similar rights of Sellers relating to the Transferred Assets or the
         Business,  except to the extent any such rights or  benefits  relate to
         Excluded  Assets or losses  or  conditions  which  Sellers  have  fully
         remedied prior to the Closing;

                  2.1.13. All patents,  patent rights,  trademarks,  trade names
         and logos used in the Business  listed on Schedule  2.1.13,  other than
         the name "Associated  Natural Gas" or "ANG" or variants thereof and the
         associated logos; and

                  2.1.14.  All of  either  Seller's  other  assets,  properties,
         franchises,  interests,  and  rights and  privileges  of every kind and
         description, real, personal or mixed, tangible or intangible, necessary
         for,  or  primarily  used  by the  Sellers  in,  the  operation  of the
         Business.

         2.2.     Excluded   Assets.    Anything   herein   to    the   contrary
notwithstanding, the  Transferred  Assets shall  not include  the following (the
"Excluded Assets"):

                           (a)      all   cash   on   hand,   cash  equivalents,
                  investments, and bank  accounts of Sellers  as of the  Closing
                  Date;

                           (b)      all  negotiable   instruments  (other   than
                  notes  receivable  of the  type  included  in the  Transferred
                  Assets pursuant to Section 2.1.9) and chattel paper of Sellers
                  as of the Closing Date;

                           (c)      all rights to the name  "Associated  Natural
                  Gas" (or  any  derivative  thereof) or  the  logos  identified
                  on Schedule  2.2(c) (the "Names and  Logos"),  subject  to the
                  provisions of Section 8.6;

                           (d)      refunds  or  claims  for  refunds  due  from
                  federal,  state,  local and  foreign  taxing  authorities with
                  respect to taxes paid or to be paid by Sellers;

                           (e)      all  insurance  policies  of Sellers, except
                  to the extent  provided  in Section  2.1.12,  and any  related
                  unearned premiums;

                           (f)      Sellers' rights under this Agreement;

                           (g)      each Seller's  corporate charter, minute and
                  stock record books and corporate seal;

                           (h)      each  Seller's  ledgers,  journals  and  tax
                  returns;

                           (i)      any   assets   relating   to   any  benefits
                  provided or  plans  maintained  by Sellers for any  employees,
                  subject to the provisions of Article VII;

                                      -6-
<PAGE>

                           (j)      any  assets  of  Sellers  primarily  used in
                  Sellers'   gas   distribution   and   transmission    business
                  conducted in the State of Arkansas; and

                           (k)      the assets identified on Schedule 2.2(k).

         2.3.     Purchase Price; Adjustment.

                  2.3.1.   Determination   and  Payment.   In  addition  to  the
         assumption of the Assumed Liabilities  contemplated by Section 2.4, the
         consideration  to be paid by Buyer for the  Transferred  Assets will be
         $32,000,000 (the "Closing Purchase Price"),  payable at Closing by wire
         transfer of  immediately  available  funds to an account  designated by
         Sellers.  The Closing  Purchase  Price  shall be subject to  adjustment
         after Closing pursuant to Section 2.3.3 (as so adjusted,  the "Purchase
         Price").

                  2.3.2.  Allocation.  Within ninety (90) days after the Closing
         Date, the Purchase Price and the value of the Assumed  Liabilities will
         be  allocated  among the  Transferred  Assets by Buyer and Sellers in a
         mutually acceptable manner which is consistent with Section 1060 of the
         Code and the regulations  thereunder.  The parties agree that they will
         report the federal,  state and local and other tax  consequences of the
         purchase and sale hereunder (including,  without limitation, in filings
         on Internal Revenue Service Form 8594) in a manner consistent with such
         allocation  and that  they  will not  take  any  position  inconsistent
         therewith in connection with any tax return,  refund claim,  litigation
         or otherwise.  The  provisions of this Section 2.3.2 shall apply to any
         subsequent  adjustments  to  the  Purchase  Price,  including,  without
         limitation,  adjustment  pursuant  to  Sections  2.3.3 and 13.8 of this
         Agreement.

                  2.3.3.  Post-Closing  Adjustments.  Within  90 days  after the
         Closing Date,  Sellers shall deliver to Buyer a statement (the "Closing
         Statement")  of (i) the net  amount  of the  Current  Assets  minus the
         Current  Liabilities ("Net Working Capital") as at the Closing Date and
         (ii) capital expenditures with respect to the Business and depreciation
         with respect to the Business  during the period from the date hereof to
         and including the Closing Date ("Measurement  Period"), in each case in
         accordance with the accounting principles and assumptions set forth in,
         and in the form provided in, the document entitled Financial Principles
         which  is   included   as  Schedule   2.3.3   hereto  (the   "Financial
         Principles").

                                      -7-
<PAGE>

                  If Net Working  Capital is more than  $1,600,000,  the Closing
         Purchase  Price shall be  increased  by the amount by which Net Working
         Capital  exceeds  $1,600,000.  If Net  Working  Capital  is  less  than
         $1,600,000, the Closing Purchase Price shall be decreased by the amount
         by which Net  Working  Capital  is less  than  $1,600,000.  If  capital
         expenditures with respect to the Business during the Measurement Period
         exceed depreciation with respect to the Business during the Measurement
         Period,  the Closing Purchase Price shall be increased by the amount by
         which such  capital  expenditures  exceed such  depreciation,  but this
         amount shall not exceed $1,000,000. If depreciation with respect to the
         Business  during the Measurement  Period exceeds  capital  expenditures
         with respect to the Business during the Measurement Period, the Closing
         Purchase  Price  shall  be  decreased  by  the  amount  by  which  such
         depreciation exceeds such capital expenditures.  If the Purchase Price,
         as adjusted  as provided  above,  exceeds the Closing  Purchase  Price,
         Buyer shall pay the amount of such excess to Sellers.  If the  Purchase
         Price, as adjusted as provided above, is less than the Closing Purchase
         Price,  then Sellers shall pay the amount of such deficit to Buyer. Any
         such payment  shall be made by wire transfer of  immediately  available
         funds within 15 days after Buyer's  written  notification to Sellers of
         Buyer's  acceptance  of the Closing  Statement  or within 15 days after
         Buyer is deemed to have  accepted the Closing  Statement as provided in
         this Section 2.3.3.  The amount of any payment required by this Section
         2.3.3 shall bear  interest  from the Closing  Date  through the date of
         actual payment at the rate of 30-day LIBOR plus 50 basis points.

                  After delivery of the Closing Statement,  Sellers shall permit
         Buyer and  Buyer's  independent  accountants  access,  upon  reasonable
         notice and  during  reasonable  business  hours,  to review  their work
         papers  and all books and  records  of  Sellers  relevant  to the items
         covered  by the  Closing  Statement,  and  Sellers  shall  permit  such
         accountants  to perform  such tests as they may  reasonably  require to
         confirm the accuracy of such items.

                  In the event  Buyer  disputes  any  matter or  matters  on the
         Closing  Statement,  Buyer may  within  forty-five  (45) days after the
         delivery of the Closing  Statement  notify Sellers of such dispute in a
         writing  setting forth in reasonable  detail the nature of such dispute
         and the facts upon which it is based,  together with the application or
         treatment  proposed by Buyer and the reasons supporting the use of such
         application or treatment rather than that used by Sellers.  If both the
         Closing  Statement  as  delivered  by Sellers to Buyer and the  Closing
         Statement  as  proposed  by Buyer  would  require a payment by the same
         party pursuant to the second paragraph of this Section 2.3.3, then such
         party  shall  make a payment  of the  lesser  amount  reflected  on the
         respective  Closing  Statements  within 15 days of  delivery of Buyer's
         proposed Closing  Statement to Sellers,  together with interest thereon
         as  provided  by such  paragraph.  If no such  notice is given by Buyer
         within  the time  specified,  the  Closing  Statement  shall be  deemed
         accepted by Buyer.

                                      -8-
<PAGE>

                  If the  parties  have not  resolved  all  matters  in  dispute
         relating to the Closing  Statement  within  forty-five  (45) days after
         Sellers'  receipt of such notice from Buyer,  then any party may notify
         the others in writing that it elects to submit all remaining  issues to
         resolution by a neutral accounting firm of national reputation.  Within
         ten (10) days after receipt of such notice of election by a party,  the
         parties shall agree upon the selection of a neutral accounting firm or,
         if they are unable to agree,  Sellers  and Buyer  shall each submit the
         names of two neutral  firms and a firm shall be selected at random from
         among them. A firm shall be considered neutral if it has not within the
         past  three  years   performed  and  does  not  currently   perform  or
         contemplate performing any accounting, consulting or other services for
         any of the parties and their respective  Affiliates having an aggregate
         value in excess of $250,000.

                  As soon as reasonably  practicable,  the firm  selected  shall
         resolve all  matters  remaining  in dispute  solely on the basis of the
         Financial  Principles and the  provisions of this Section  2.3.3.  Such
         firm shall not be required to follow any particular rules of procedure,
         it being the  intention of the parties to create a feasible,  practical
         and expeditious  method for resolving any disagreement  hereunder.  The
         decision  of such firm  hereunder  shall be final and binding and shall
         not be  subject to review or  challenge  of any kind.  The  appropriate
         party shall pay to the other any disputed  amount that is determined to
         be due within 15 days after such determination,  together with interest
         thereon as provided in the second  paragraph of this Section 2.3.3. The
         fees and expenses of such firm shall be borne equally by Buyer,  on the
         one hand, and Sellers, on the other.

                  If the parties resolve all matters in dispute  relating to the
         Closing  Statement,  then the  Closing  Statement  shall be adjusted as
         required  by the  agreement  resolving  the  matters in dispute and the
         Closing Statement as modified shall be deemed accepted by Buyer.

                  2.3.4.  Proration  of  Certain  Expenses.  To the  extent  not
         reflected on the Closing  Statement,  real property,  personal property
         and other ad valorem Taxes, rents, utility charges and similar expenses
         of Sellers related to the Transferred Assets shall be allocated between
         Buyer,  on the one hand, and Sellers,  on the other,  on the basis of a
         daily  proration and the net amount owing from Buyer to Sellers or from
         Sellers  to Buyer on account  of such  proration  shall be paid at such
         time as the post-closing  adjustment is paid pursuant to Section 2.3.3.
         If an  assessment  for the period that  includes  the Closing Date (the
         "Current  Period")  has not been made by the time that  payment  is due
         under the preceding sentence, a tentative payment shall be made at that
         time based on the assessment for the immediately  preceding tax period,
         and Buyer or  Sellers,  as the case may be,  shall make an  appropriate
         adjusting  payment within 10 days  following  receipt of the assessment
         for the Current Period.

         2.4.     Assumption of Liabilities.  In addition  to the payment of the
Purchase Price in accordance  with Section  2.3.1,  Buyer  shall assume and pay,
perform  and  discharge in  accordance  with the  terms  thereof  the  following
liabilities  and  obligations  (the "Assumed Liabilities"):

                  2.4.1. The obligations of Sellers not required to be performed
         prior to or as of the Closing Date under the Assumed Contracts;

                  2.4.2. The Current  Liabilities  included in the determination
         of Net Working Capital;

                                      -9-
<PAGE>

                  2.4.3. The obligations of Sellers not required to be performed
         prior to or as of the  Closing  Date  under the  governmental  permits,
         franchises,   consents   or  other   authorizations   included  in  the
         Transferred Assets pursuant to Section 2.1.7;

                  2.4.4. The obligations of Sellers not required to be performed
         prior  to  or  as  of  the  Closing  Date  under  the   agreements  and
         arrangements  giving  rise to the rights and  benefits  included in the
         Transferred Assets pursuant to Section 2.1.12; and

                  2.4.5.  The  obligations  of  Sellers to  customers  providing
         advances for  construction  to refund  portions of such advances to the
         extent additional  amounts are received by Buyer after the Closing Date
         from other customers with respect to reimbursement of such advances.

         Notwithstanding  the  foregoing,  the  Assumed  Liabilities  shall  not
include any of the following (collectively, the "Excluded Liabilities"): (a) any
liabilities that AWG's Associated Natural Gas Company Division owes to either of
the Sellers or any of its other  Affiliates  (other than those  arising under an
Assumed  Contract for the payment of natural gas or  transportation  services to
the extent not  disallowed by any  regulatory  agency);  (b) any  liabilities or
obligations that relate primarily to the Excluded Assets; (c) any liabilities or
obligations  of  Sellers  with  respect to any  legal,  administrative  or other
action,  proceeding or  governmental  investigation  pending or threatened on or
prior to the Closing Date; (d) any Taxes  attributable to Tax periods that close
on or before the Closing  Date,  or to the extent a Tax period  closes after the
Closing Date but includes  the period on or before the Closing  Date,  any Taxes
attributable  to the portion of such Tax period that is on or before the Closing
Date; (e) any liability  relating to employee  benefits or employment  except as
provided in Article VII; (f) any liability or obligation  identified on Schedule
2.4; and (g) any other  contingent  liability or  obligation,  whether  known or
unknown,  of either  Seller to the  extent  arising  out of or  relating  to the
operation  or conduct of the  Business  on or prior to the  Closing  Date or the
ownership of the Transferred Assets on or prior to the Closing Date which is not
a liability or  obligation  specifically  referred to in Section  2.4.1,  2.4.2,
2.4.3,  2.4.4 or 2.4.5.  For the  avoidance  of doubt,  the  provisions  of this
paragraph  are not  intended to qualify the  obligations  of Buyer to the extent
provided in Section 2.3.4, Article VII, Section 8.7 or Section 13.8. The Sellers
shall  retain  and pay,  perform  or  discharge  when due,  all of the  Excluded
Liabilities.

         2.5.     Closing.

                  2.5.1.  Time  and  Place.  The  closing  of  the  transactions
         contemplated  hereby (the "Closing") shall take place at the offices of
         Parent, 1083 Sain Street, Fayetteville,  Arkansas 72703, at 11:00 a.m.,
         Central  Time (or at such  other  place and time as Buyer  and  Sellers
         shall  agree),  on the  last  day  of the  month  in  which  all of the
         conditions specified in Articles IX and X hereof have been satisfied or
         waived (the "Closing Date").

                  2.5.2.  Sellers'  Deliveries  at  Closing.   At  the  Closing,
         Sellers shall deliver to Buyer:

                           (a) Such bills of sale and instruments of conveyance,
                  transfer  and  assignment,  dated the Closing  Date,  as Buyer
                  shall  reasonably  request  to vest in Buyer  the  Transferred
                  Assets;

                           (b)   An   agreement   (the   "Transition    Services
                  Agreement") requiring Sellers to furnish to Buyer post-Closing
                  information technology, human resources,  billing, call center
                  and other  transition  services to be mutually  agreed upon by
                  Sellers and Buyer for a

                                      -10-
<PAGE>

                  period not to exceed  ninety (90) days  following  the Closing
                  Date  for  consideration  and  upon  such  other  terms  to be
                  mutually agreed upon by Sellers and Buyer;

                           (c) An agreement (the "Omnibus Gas Transportation and
                  Supply Agreement") relating to certain arrangements  regarding
                  gas  transportation  contracts and related matters,  including
                  those matters identified on Schedule 2.5.2(c),  on terms to be
                  mutually agreed upon by Sellers and Buyer; and

                           (d) The closing  certificates and documents  required
                  by this Agreement and such other  documents and instruments as
                  may be reasonably requested by Buyer.

                  2.5.3.  Buyer's Deliveries at Closing.  At the Closing,  Buyer
         shall deliver to Sellers:

                           (a)      By wire transfer, the Closing Purchase Price
                  in the manner specified in Section 2.3.1 hereof;

                           (b)      An instrument of assumption of  liabilities,
                  dated the  Closing Date,  in a form  reasonably  acceptable to
                  Sellers (the "Assumption Agreement");

                           (c)      An  executed  counterpart  of  each  of  the
                  Transition   Services    Agreement   and   the   Omnibus   Gas
                  Transportation and Supply Agreement; and

                           (d) The closing  certificates and documents  required
                  by this Agreement and such other  documents and instruments as
                  may be reasonably requested by Sellers.

         2.6.  Nonassignable  Contracts.  In the case of any  contract  or other
agreement  (other  than  agreements  described  in Section  2.1.7) that would be
included  in the  Transferred  Assets but which by its terms or by virtue of its
subject matter is not assignable to Buyer as of the Closing Date  (collectively,
the  "Non-Assigned  Contracts"),   such  Non-Assigned  Contracts  shall  not  be
transferred  or  assigned  to  Buyer,  and  Sellers  agree  to use  commercially
reasonable efforts to obtain, as soon as is reasonably practicable following the
Closing Date, any consents necessary to convey to Buyer the benefit thereof,  it
being understood that such efforts shall not include any requirement to offer or
grant any  material  financial  accommodations  to any third  party or to remain
secondarily liable with respect to any such Non-Assigned Contract. Sellers agree
to use commercially  reasonable  efforts to provide Buyer with the same economic
and other benefits of each  Non-Assigned  Contract as if such contracts had been
assigned on the Closing Date. Nothing in this Agreement shall be construed as an
attempt or an agreement to assign or cause the  assignment  of any  Non-Assigned
Contract  which is not  assignable  without  the  consent of the other  party or
parties  thereto,  unless such consent shall have been given, or as to which all
the  remedies for the  enforcement  thereof  enjoyed by Sellers  would not, as a
matter of law, pass to Buyer as an incident of the assignments  provided by this
Agreement. The provision of benefits under this Section 2.6 shall not constitute
satisfaction of the conditions in Articles IX and X.

                 III. REPRESENTATIONS AND WARRANTIES OF SELLERS.

         Sellers,  jointly and severally,  hereby represent and warrant to Buyer
as follows:

         3.1.  Corporate  Existence.  Each  Seller  (a)  is a  corporation  duly
incorporated,  validly existing and in good standing under the laws of the State
of Arkansas, (b) has the requisite power and authority to

                                      -11-
<PAGE>

enter into and perform its  obligations  under this  Agreement,  and (c) is duly
qualified to do business as a foreign  corporation,  and is in good  standing in
each jurisdiction where the Business makes such qualification necessary,  except
where the failure to be so qualified or in good standing would not reasonably be
expected to have a Material Adverse Effect.

         3.2. Authorization and Validity of Agreement.  The execution,  delivery
and  performance by each Seller of this  Agreement have been duly  authorized by
all  necessary  corporate  action.  This  Agreement  has been  duly and  validly
executed  and  delivered  by each  Seller and  constitutes  a valid and  binding
obligation  enforceable against each Seller in accordance with its terms, except
to the  extent  that  such  enforceability  (i) may be  limited  by  bankruptcy,
insolvency,  reorganization,  moratorium  or  other  similar  laws  relating  to
creditors' rights generally, or (ii) is subject to general principles of equity.

         3.3. No Contravention.  The execution, delivery and performance by each
Seller of this Agreement and the consummation by each Seller of the transactions
contemplated  on its part hereby will not,  subject to obtaining  the  consents,
approvals, authorizations, exemptions or waivers identified on Schedule 3.3, 3.7
or 3.10,  (i) violate any  provision of law,  rule or regulation to which either
Seller is subject,  (ii)  violate any order,  judgment or decree  applicable  to
either Seller or (iii)  conflict  with, or result in a breach or default  under,
any term or  condition  of any of the charter or bylaws of either  Seller or any
material term or condition of any contract,  agreement or instrument  (including
the  Assumed  Contracts)  to  which  it is a party  or by which it or any of the
Transferred Assets may be bound.

         3.4. Title to Assets; Adequacy;  Condition.  Each Seller has good title
to the Transferred Assets to be sold by it hereunder, subject to no Encumbrance,
except  Permitted  Encumbrances.  For  purposes  of this  Agreement,  "Permitted
Encumbrances"  shall  mean (i) liens for  Taxes and  assessments  not yet due or
being  contested  in good  faith by  appropriate  proceedings,  (ii) such  minor
imperfections of title and encumbrances that do not secure monetary  obligations
which individually or in the aggregate are not substantial and do not materially
detract  from the value or impair  the use of the  Transferred  Assets and (iii)
such  encumbrances as set forth in Schedule 3.4. The Transferred  Assets include
all assets and properties that are necessary for the supply and servicing of the
customers  of the  Business in  accordance  in all  material  respects  with the
historical supply and service standards of the Sellers, except for the functions
subject to the Transition  Services Agreement and the Omnibus Gas Transportation
and Supply Agreement. The tangible assets included in the Transferred Assets are
in good operating condition, reasonable wear and tear excepted, and are adequate
for the uses to which they are being put in the conduct of the Business.

         3.5. Material  Contracts.  Schedule 3.5 contains a list of each Assumed
Contract in  existence  as of  September  30,  1999,  (i) which is a gas supply,
transportation or storage agreement relating to the Business involving a minimal
annual  payment  of more than  $50,000,  (ii) which  involves  a minimum  annual
payment to or by a Seller  relating to the Business of more than $50,000,  (iii)
the loss of which would have a Material  Adverse Effect,  (iv) pursuant to which
either  Seller  is  subject  to  take-or-pay  obligations  with  respect  to gas
purchases or gas marketing in connection  with the Business which impose minimum
obligations of more than $50,000 over the remaining term thereof or (v) which is
otherwise material to the Business or the Transferred Assets (collectively,  the
"Material Contracts"). Except as set forth in Schedule 3.5, each of the Material
Contracts is in full force and effect and is valid and enforceable in accordance
with its terms, subject as to enforceability to the effects of any bankruptcy or
similar  laws.  Except as set forth in Schedule  3.5, each Seller is in material
compliance  with all  applicable  terms of each  Material  Contract,  and to the
Knowledge of each  Seller,  each other party  thereto

                                      -12-
<PAGE>

is in material  compliance with all applicable terms of each Material  Contract.
Neither  Seller has given to or received  from any other  party to any  Material
Contract  any  notice or other  written  communication  regarding  any actual or
alleged  material breach of or default under any Material  Contract that has not
been withdrawn, settled, or otherwise resolved.

         3.6. Real Property.  To the Knowledge of each Seller,  no condemnation,
expropriation,  eminent domain or similar  proceeding is pending or contemplated
with respect to the Owned Property,  the Leased Property or the System Property.
Except as set forth in  Schedule  3.6,  each  Seller  is in  compliance,  in all
material respects,  with all covenants,  restrictions,  rights of way, easements
and similar realty  interests  benefiting or encumbering the Real Property,  the
Leased Property and the System Property.  The Real Property, the Leased Property
and the System  Property,  and all improvements  thereon,  do not violate in any
material respect any applicable zoning,  construction code or other governmental
restriction.

         3.7. Permits.  Except with regard to Environmental Permits, as to which
the Sellers' sole  representations and warranties are set forth in Section 3.15,
each Seller  holds all material  permits,  franchises  and other  authorizations
necessary  to conduct the Business as  currently  conducted by such Seller.  The
Sellers are in compliance,  in all material respects,  with all of such permits,
franchises and other authorizations.  A list of all material permits, franchises
and other  authorizations,  other than  Environmental  Permits,  relating to the
Business is set forth in Schedule 3.7 (the "Permits").

         3.8.  Litigation.  Except as set  forth in  Schedule  3.8,  there is no
legal,  administrative or other action,  proceeding or, to the Knowledge of each
Seller,  governmental  investigation either pending or, to the Knowledge of each
Seller, threatened (i) against either Seller with respect to the Business or the
Transferred  Assets,  or (ii) which seeks to enjoin or obtain damages in respect
of the consummation of the transactions  contemplated  hereby,  which, in either
case,  if decided  adversely,  would  reasonably  be expected to have a Material
Adverse Effect.

         3.9.  Compliance  with Laws.  Except as set forth in Schedule 3.9, each
Seller  is in  compliance,  in all  material  respects,  with all  laws,  rules,
regulations,  ordinances,  judgments, injunctions, orders and decrees applicable
to the Transferred  Assets or the Business,  excluding,  however,  Environmental
Laws, as to which the Sellers' sole representations and warranties are set forth
in Section 3.15.

         3.10.  Governmental Consents.  Except as set forth in Schedule 3.10, no
consent,  approval  or  authorization  of,  or  exemption  by,  or  declaration,
registration  or filing  with,  any  governmental  or  regulatory  authority  is
required in connection  with the execution,  delivery and performance by Sellers
of this  Agreement  or the  taking  of any  other  action  contemplated  hereby,
excluding, however, consents, approvals, authorizations, exceptions and filings,
if any,  where the  failure  to obtain or make the same  would not impair in any
material  respect the  consummation  of the  transactions  contemplated  by this
Agreement  and  would  not  materially  affect  the  use  or  operation  of  the
Transferred Assets after the Closing Date.

         3.11.    Tax Matters.

         (a) Tax  Returns.  All  federal,  state,  local and other Tax  returns,
declarations,  statements,  reports or other documents required to be filed with
respect to Taxes  ("Returns") by Sellers on or before the Closing Date have been
filed  or will be  filed on a timely  basis  with the  appropriate  governmental

                                      -13-
<PAGE>

agencies in all  jurisdictions  in which such  Returns are required to be filed.
All such Returns are true, complete and correct in all material respects and all
Taxes  shown on such  Returns  as being due,  or  otherwise  due,  in respect of
material Taxes either (i) have been or will be fully paid or adequately provided
for or (ii) are being contested in good faith by appropriate proceedings.

         (b)  Transferred  Asset  Status.  None of the  Transferred  Assets  (i)
secures any debt the interest on which is  tax-exempt  under  Section 103 of the
Code, (ii) is "tax-exempt use property"  within the meaning of Section 168(h) of
the code,  (iii) is "tax-exempt  bond financing  property" within the meaning of
Section 168(g)(5) of the Code, (iv) is "limited use property" within the meaning
of Revenue  Procedure  76-30, or (v) is required to be treated as being owned by
any other Person  pursuant to the provisions of former section  168(f)(8) of the
Code.

         3.12.  Financial  Statements.  Attached  hereto as Schedule  3.12 are a
balance  sheet and a statement of income for the Business as of and for the nine
months ended  September  30, 1999 and a balance  sheet and a statement of income
for  the  Business  for  the  year  ended  December  31,  1998  (the  "Financial
Statements"). The Financial Statements have been prepared in accordance with the
Financial  Principles  and with the books and records of Sellers.  To the extent
relevant to the  Financial  Statements,  in all material  respects the books and
records of Sellers are true,  accurate and  complete;  have been  maintained  in
accordance  with  good  accounting  practices;  and,  except as set forth in the
Financial Principles,  have been maintained on a consistent basis. The Financial
Statements make adequate provision, in accordance with the Financial Principles,
for any material contracts (or material group of similar  contracts)  reasonably
expected to be performed at a loss. The Financial  Statements fairly present, in
all material  respects,  the financial position and the results of operations of
the  Business  as of and for such  dates  and  periods  in  accordance  with the
Financial Principles consistently applied. Since September 30, 1999, the Sellers
have not made any capital  expenditures  outside the ordinary course of business
or  inconsistent  with past practice with respect to the Business,  entered into
any material  contracts  (or  material  group of similar  contracts)  reasonably
expected  to be  performed  at a  loss,  or  experienced  any  material  damage,
destruction  or loss  (whether  or not  covered by  insurance)  to the assets or
properties used in the conduct of the Business.

         3.13.    Employee Matters.

                  3.13.1.  Schedule  3.13.l  contains a list,  which is true and
         complete in all material  respects,  of (a) each  employment  agreement
         with any  Transferred  Employee,  written or oral,  and (b) each bonus,
         deferred compensation,  incentive compensation,  stock purchase,  stock
         option, severance pay, change in control, disability,  medical, dental,
         life or other insurance,  supplemental  unemployment  benefits,  profit
         sharing, pension or retirement plan, program,  agreement or arrangement
         (collectively,  the "Plans") sponsored, maintained or contributed to or
         required to be contributed to by either Seller or with respect to which
         Seller has any  liability for the benefit of any  Transferred  Employee
         (as hereinafter defined) or any former employee of the Business.

                  3.13.2. Each Seller maintains, sponsors or contributes to only
         those employee pension benefit plans (as defined in Section 3(2) of the
         Employee  Retirement Income Security Act of 1974, as amended ("ERISA"),
         whether  or  not  excluded  from  coverage  under  specific  Titles  or
         Subtitles  of ERISA)  established  or  maintained  for the  benefit  of
         employees or former  employees of the  Business  that are  described in
         Schedule   3.13.2   (the   "Pension   Plans"),   none  of  which  is  a
         multi-employer  plan  (within the  meaning of Section  3(37) of ERISA).
         Except as set  forth on

                                      -14-
<PAGE>

         Schedule 3.13.2, each Pension Plan that is intended to be tax qualified
         under  Sections  401(a) and 501(a) of the Code  is  so  qualified,  has
         received  one  or  more  favorable  IRS determination letters as to its
         qualification,  covering such plan from its inception,  and nothing has
         occurred that could jeopardize such tax qualified status.

                  3.13.3. Each Seller maintains, sponsors or contributes to only
         those  employee  welfare  benefit  plans (as defined in Section 3(1) of
         ERISA,  whether or not excluded from coverage under specific  Titles or
         Subtitles of ERISA) for the benefit of employees or former employees of
         the  Business  that are  described  in Schedule  3.13.1  (the  "Welfare
         Plans"),  none of which is a multi-employer plan (within the meaning of
         Section 3(37) of ERISA).

                  3.13.4. Except as set forth on Schedule 3.13.4, neither Seller
         is a party to any collective  bargaining or labor agreement relating to
         the Business,  and there is not, as of the date of this Agreement,  any
         strike,  work stoppage or material labor controversy or dispute pending
         or, to the best of the Knowledge of each Seller, threatened relating to
         the Business.

                  3.13.5  The  post-retirement  health and life  obligations  of
         Sellers for Transferred  Employees and former employees of the Business
         ("SFAS 106  Obligations")  for the year ended December 31, 1998 did not
         exceed by more than  $20,000 the amount  included in rate  recovery for
         the Business with respect to SFAS 106 Obligations  pursuant to Sellers'
         most recent  Missouri  rate case  (effective  January 10,  1998).  That
         portion  of all  rates  reflecting  the  SFAS 106  Obligations  paid to
         Sellers  relating  to the  Business  has been  deposited  in the trusts
         created to fund the SFAS 106 Obligations.

                  3.13.6   Prior   to   January   10,   1998,   there   were  no
         post-retirement  health or life obligations of Sellers for employees or
         former employees of the Business included in rate recovery,  other than
         "pay-as-you-go" obligations.

         3.14.  Brokerage.  No broker or finder has acted directly or indirectly
for  either  Seller  in  connection  with  this  Agreement  or the  transactions
contemplated  hereby,  and no broker or finder is entitled to any  brokerage  or
finder's  fee or  other  commission  in  respect  thereof  based  in any  way on
agreements,  arrangements  or  understandings  made by or on  behalf  of  either
Seller.

         3.15. Environmental Matters. Except as disclosed in Schedule 3.15, each
Seller holds all  Environmental  Permits that are required for the  operation of
the Business. Except as disclosed in Schedule 3.15, each Seller's conduct of the
Business,  and the condition of all properties and improvements  included in the
Transferred  Assets (and, to the Knowledge of each Seller,  any off-site storage
or disposal of any Hazardous Materials from such operations),  is in compliance,
in all material  respects,  with all Environmental  Laws. Except as disclosed on
Schedule  3.15,  neither  Seller is currently  in receipt of any written  claim,
demand,  notice  or  complaint  alleging  material  violation  of,  or  material
liability under, any Environmental Law relating to the operation of the Business
or the  Transferred  Assets.  Except  as  described  on  Schedule  3.15,  to the
Knowledge of each Seller, neither of Sellers has incurred any material liability
or  obligation  in  connection  with any  release or  threatened  release of any
Hazardous Material in the environment or any material reclamation or remediation
requirements under any Environmental Law, in each case relating to the operation
of the  Business  or the  Transferred  Assets.  No  Seller  has been  named as a
potential  responsible  party under the  Comprehensive  Environmental  Response,
Compensation and Liability Act of 1980, as amended,  or any corresponding  state
laws.  Except

                                      -15-
<PAGE>

as described on Schedule  3.15,  to the  Knowledge of each Seller,  no Hazardous
Materials were  incorporated  in the Real Property,  the Leased  Property or the
System  Property prior to the acquisition  thereof by such Seller.  There are no
sites, locations or operations at which any Seller is currently undertaking,  or
has  completed,  any  remedial or response  action  relating to the  disposal or
release of a Hazardous Material, as required by Environmental Laws, with respect
to the Business.  Buyer acknowledges that (i) the representations and warranties
contained in this Section 3.15 are the only representations and warranties being
made with respect to compliance  with or liability under  Environmental  Laws or
with respect to any  environmental,  health or safety matter,  including natural
resources,  related in any way to this  Agreement or its subject matter and (ii)
no other  representation  contained  in this  Agreement  shall apply to any such
matters and no other  representation or warranty,  express or implied,  is being
made with respect thereto.

         3.16. No Undisclosed Liabilities; No Material Adverse Effect. There are
no material  liabilities  or  obligations  of the  Business or of either  Seller
arising out of or relating to the Business or the Transferred Assets, except (i)
Excluded  Liabilities,   (ii)  liabilities  and  obligations  reflected  in  the
Financial Statements,  (iii) liabilities and obligations arising since September
30, 1999 in the ordinary course of business that are not  inconsistent  with the
types and amounts of such liabilities and obligations  historically  incurred in
the Business,  and (iv) liabilities and obligations  identified on Schedule 3.16
or another Schedule hereto. Since September 30, 1999, there has not occurred any
event resulting in a Material Adverse Effect.

         3.17.    Customers;  Suppliers.  Neither of Sellers  has been  involved
in any material  controversy with any  group of similarly  situated customers of
the Business or with any  material suppliers of the Business during the last two
years.

         3.18.  Books and  Records.  All books and  records of each  Seller with
respect to the Business or the Transferred Assets have been prepared,  assembled
and  maintained  in  accordance  in all  material  respects  with the  usual and
customary policies and procedures and accurately  reflect, in reasonable detail,
the assets and  transactions  of each  Seller  relating  to the  Business or the
Transferred Assets.

         3.19.    Insurance.  Schedule 3.19 identifies each  material  insurance
policy of Sellers relating to the Transferred Assets.

         3.20.    Accounts  Receivable.  Except as set forth on  Schedule  3.20,
the accounts and notes receivable included in the Transferred Assets:  (a) arose
from bona fide  sales or  contracting  transactions  by  Sellers in the ordinary
course of  business consistent  with past practices; and (b) represent bona fide
indebtedness of the respective debtors.

         3.21.  Y2K  Compliance.  Sellers  have put into effect  reasonable  and
customary  practices  and  programs  designed to enable all  material  software,
hardware and equipment that are owned or utilized by Sellers in the operation of
the  Business to be  capable,  by  December  31,  1999,  of  accounting  for all
calculations  using a century  and date  sensitive  algorithm  for the year 2000
without any material interruption caused by the occurrence of the year 2000.

         3.22.    No  Other  Representations.    Except as  set  forth  in  this
Article III or made pursuant to Section 9.1,  Sellers make no  representation or
warranty whatsoever to Buyer.

                                      -16-
<PAGE>

                  IV. REPRESENTATIONS AND WARRANTIES OF BUYER.

         Buyer hereby represents and warrants to Sellers as follows:

         4.1.     Organization.  Buyer is a corporation  duly organized, validly
existing  and in  good  standing  under the  laws of the  State of Texas and the
Commonwealth of Virginia and has all requisite corporate  power and authority to
execute, deliver  and perform this Agreement  and to consummate the transactions
contemplated hereby.

         4.2. Authorization and Validity of Agreement.  The execution,  delivery
and  performance  by Buyer of this  Agreement  have been duly  authorized by all
necessary  corporate  action.  This Agreement has been duly and validly executed
and  delivered  by  Buyer  and  constitutes  a  valid  and  binding   obligation
enforceable  against  Buyer in accordance  with its terms,  except to the extent
that  such  enforceability  (i)  may  be  limited  by  bankruptcy,   insolvency,
reorganization,  moratorium or other similar laws relating to creditors'  rights
generally, or (ii) is subject to general principles of equity.

         4.3. No Contravention. The execution, delivery and performance by Buyer
of this Agreement and the consummation of the  transactions  contemplated on its
part hereby will not,  subject to obtaining  any required  consents,  approvals,
authorizations, exemptions or waivers, (i) violate any provision of law, rule or
regulation  to which it is subject,  (ii) violate any order,  judgment or decree
applicable  to it, or (iii)  conflict  with,  or  result in a breach or  default
under, any term or condition of Buyer's articles of incorporation or bylaws,  or
any contract,  agreement or other  instrument to which it is a party or by which
it may be bound.

         4.4.  Consents.  Except  as set  forth on  Schedule  4.4,  no  consent,
approval or authorization  of, or exemption by, or declaration,  registration or
filing with, any governmental or regulatory  authority is required in connection
with the execution,  delivery and performance by Buyer of this Agreement, or the
taking of any other action contemplated hereby.

         4.5.  Brokerage.  No broker or finder has acted  directly or indirectly
for Buyer in connection  with this  Agreement or the  transactions  contemplated
hereby,  and no broker or finder is entitled to any brokerage or finder's fee or
other commission in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of Buyer.

         4.6.  Litigation.  There is no legal,  administrative  or other action,
proceeding or, to Buyer's knowledge,  governmental  investigation pending or, to
Buyer's knowledge, threatened (i) against Buyer with respect to which there is a
reasonable  likelihood of a  determination  which would have a material  adverse
effect on the ability of Buyer to perform its  obligations  under this Agreement
or (ii) which seeks to enjoin or obtain  damages in respect of the  consummation
of the transactions contemplated hereby.

         4.7.     Financing.   Buyer has all funds  necessary to  consummate the
transactions contemplated by this Agreement.

                           V. OBLIGATIONS OF SELLERS.

         Sellers hereby covenant and agree with Buyer as follows:

                                      -17-
<PAGE>

         5.1. Consents.  Each Seller will use commercially  reasonable  efforts,
and will  cooperate  with Buyer,  to secure all necessary  consents,  approvals,
authorizations,   exemptions   and  waivers   from  third   parties,   including
governmental  authorities,  as shall be required  in order to enable  Sellers to
effect the transactions contemplated on their part hereby. It is understood that
such efforts do not require Sellers to offer or grant  financial  accommodations
to any third party or to remain  secondarily  liable with respect to any Assumed
Liability.

         5.2.  Conduct of Business.  Except as may be otherwise  contemplated by
this Agreement or required by any of the documents listed in any Schedule hereto
or except as Buyer may otherwise consent in writing, between the date hereof and
the  Closing  Date  Sellers  will:  (i) in all  material  respects,  conduct the
Business only in the ordinary  course  consistent  with past practice;  (ii) use
commercially reasonable efforts to preserve intact the Business and the goodwill
of its customers,  suppliers,  employees and any other Persons  having  business
relations with them with respect to the Business; (iii) maintain the properties,
machinery  and  equipment  included  in the  Transferred  Assets  in  sufficient
operating  condition  and repair to enable  Buyer to  conduct  the  Business  as
currently conducted by Sellers; and (iv) use commercially  reasonable efforts to
conduct the Business in such a manner so that the representations and warranties
of the Sellers  contained  herein  shall  continue to be true and correct at all
times  prior to the  Closing  Date as if made on and as of such  times.  Without
limiting the generality of the foregoing,  except as Buyer may otherwise consent
in  writing,  Sellers  shall not (i) enter into any  contract  which  would be a
Material Contract, or amend or modify any existing Material Contract, not in the
ordinary  course of business  consistent  with past  practice or (ii) except for
budgeted  compensation  increases,  adopt, amend or terminate any Plan, increase
any salary,  bonus or other compensation or benefit,  or promise or commit to do
any of the foregoing,  except in a manner which individually or in the aggregate
will not result in a material increase in benefits or compensation expense.

         5.3. Access Before  Closing.  From the date of this Agreement until the
Closing  Date,  Sellers  will permit  Buyer and its  representatives  reasonable
access on  reasonable  notice during normal  business  hours to the  properties,
personal property,  personnel, books and records,  contracts, and commitments of
the  Business,  including  the right to make  copies of such books and  records,
contracts,  and commitments.  In the event that any record or other  information
requested by Buyer is subject to a confidentiality agreement with a third party,
attorney-client privilege, or other legal restriction or privilege,  Sellers and
Buyer  will  endeavor  to  find  means  of  disclosing  as much  information  as
practicable that is needed by Buyer to prepare for the transfer of the Business,
but Sellers will not be obligated to breach such restriction or privilege. Buyer
shall return all copies of such books and records,  contracts,  and  commitments
promptly  upon the  request of Sellers  if for any reason the  Closing  does not
occur.

         5.4.  Clearance  Certificate.  On or prior to the Closing Date, Sellers
shall use commercially  reasonable efforts to provide Buyer, at Buyer's request,
with all clearance certificates or similar documents that may be required by any
state,  local or  other  taxing  authority  in  order  to  relieve  Buyer of any
obligation to withhold or escrow any portion of the Purchase Price.

                            VI. OBLIGATIONS OF BUYER.

         Buyer hereby covenants and agrees with Sellers as follows:

         6.1. Consents. Buyer will use commercially reasonable efforts, and will
cooperate   with  Sellers,   to  secure  all  necessary   consents,   approvals,
authorizations,   exemptions   and  waivers   from  third

                                      -18-
<PAGE>

parties,  including governmental  authorities,  as shall be required in order to
enable Buyer to effect the transactions  contemplated  hereby.  It is understood
that  such   efforts  do  not  require   Buyer  to  offer  or  grant   financial
accommodations  to any  third  party or to become  liable  with  respect  to any
Excluded Liability.

                             VII. EMPLOYEE MATTERS.

         7.1. Employment of Employees. As of the Closing Date, Buyer shall offer
to employ each employee  listed in Schedule 7.1 (which Schedule shall be updated
as of the Closing  Date with  appropriate  deletions  and  additions  thereto to
reflect the then  current  employees  of the  Business,  but not  including  any
employee then on long-term disability,  short-term disability or not actively at
work other than those employees on vacation,  bereavement leave, short-term sick
leave or other short-time due to non-medical  reasons which are not scheduled to
last more than ten (10) business days ("Leave"),  unless and until such employee
returns to full-time work from such long-term disability,  short-term disability
or Leave after the  Closing  Date) at a base salary or hourly rate not less than
the base salary or hourly rate then  applicable  to such employee and to provide
such benefits,  holidays,  vacation  days,  and similar  benefits as are, in the
aggregate,  substantially comparable to those then in effect for such employees,
except that Buyer shall not be required to provide a 401(k)  savings plan.  Each
such  employee  as of the  Closing  Date (or for an  employee  on  long-term  or
short-term  disability  or Leave as of the Closing  Date,  who returns from such
disability or Leave after the Closing  Date),  who becomes  employed by Buyer is
herein referred to individually as a "Transferred  Employee" and collectively as
the "Transferred Employees".

         7.2.     Severance   Benefits.   For a  period  of one  year  after the
Closing   Date,  Buyer  shall   provide  to each  Transferred  Employee  who  is
involuntarily terminated not for cause by Buyer the severance benefits set forth
on Schedule 7.2 hereto.

         7.3.     Transfer of Pension Assets and Liabilities.

                  7.3.1.  Transfer.  Subject  to the  review  of  Sellers'  plan
         documents,  as soon as practicable  following the Closing Date, but not
         earlier than thirty (30) days following the filing of appropriate Forms
         5310A, if applicable,  with the Internal Revenue Service,  Parent shall
         cause  to be  transferred  (i)  from the  Southwestern  Energy  Company
         Pension Plan (the "Seller  Pension Plan") to the pension plan sponsored
         by or to be established by Buyer ("Buyer's Pension Plan"),  and Buyer's
         Pension Plan shall  assume,  the accrued  benefits  liability as of the
         Closing Date for each of the Transferred  Employees who participated in
         the Seller  Pension  Plan prior to the Closing  Date (the  "Transferred
         Pension  Plan  Participants"),  and (ii) from the  Southwestern  Energy
         Company  Pension  Trust (the  "Seller  Pension  Plan Trust") to Buyer's
         Pension Plan trust,  an amount in cash equal to the  projected  benefit
         obligation to the Transferred  Pension Plan Participants on the Closing
         Date under the Seller Pension Plan, increased by interest at the plan's
         actuarial  rate  from  Closing  to the  actual  date  of  transfer  and
         decreased by the amount of any benefit payments to Transferred  Pension
         Plan  Participants  after  the  Closing  Date  but  before  the date of
         transfer.  Parent  shall not be  obligated  to cause  any  amount to be
         transferred  to any  plan or trust  designated  by  Buyer  until  Buyer
         provides  evidence (such as a favorable  determination  letter from the
         Internal  Revenue  Service,  an opinion of counsel or other  reasonably
         satisfactory  evidence)  reasonably  acceptable to Parent that (i) such
         plan and trust satisfy the requirements for qualification under Section
         40l(a) of the  Internal  Revenue  Code (the  "Code") and (ii) such plan
         provides that each Transferred  Pension Plan Participant is entitled to
         a nonforfeitable  accrued

                                      -19-
<PAGE>

         benefit  under  such  plan  that  is not less  than the  nonforfeitable
         accrued benefit to which such Transferred  Pension Plan Participant was
         entitled under the Seller Pension Plan on the Closing Date.

                  7.3.2. Benefit Calculations.  The projected benefit obligation
         to Transferred  Pension Plan Participants shall be determined using the
         projected  benefit  obligation  methodology  of  Statement of Financial
         Accounting  Standards  No.  87, on the basis of (i) each  participant's
         age, service for benefit accrual purposes and average  compensation and
         the terms of the Seller Pension Plan in effect on the Closing Date, and
         (ii) the  actuarial  assumptions  and method used for  determining  the
         projected  benefit  obligation  as set forth in Schedule  7.3.2.  In no
         event shall each  amount  transferred  pursuant to this  Section 7.3 be
         less  than  the  amount   required  to  be   transferred  to  meet  the
         requirements  of  Sections  401(a)(12)  and  414(1)  of the  Code.  The
         calculation of projected  benefit  obligation  required for purposes of
         this Section 7.3.2 shall be made in accordance with the assumptions set
         forth on Schedule 7.3.2.

                  7.3.3.  Plan  Termination.  Subject  to  the  requirements  of
         applicable law, in the event of the termination of Buyer's Pension Plan
         within  five (5)  years  after  the  Closing  Date,  all of the  assets
         transferred  to such plan  pursuant to this Section  7.3,  adjusted for
         earnings,  gains or losses  after the date of such  transfer,  shall be
         used to provide benefits to Transferred  Pension Plan  Participants and
         their beneficiaries who are entitled to benefits under such plan at the
         time of its termination.

         7.4. Savings Plan. Subject to the review of Sellers' plan documents, as
soon as  practicable  following  the  Closing  Date,  to the  extent  that Buyer
sponsors a 401(k)  savings  plan (which it shall not be required to do),  Parent
shall cause to be transferred  (i) from the  Southwestern  Energy Company 401(k)
savings plan (the "Seller Savings Plan") to the 401(k) savings plan sponsored by
Buyer ("Buyer's Savings Plan"),  and the Buyer's Savings Plan shall assume,  the
account  balance  liability  as of the date of  transfer  for  each  Transferred
Employee who  participated in the Seller Savings Plan prior to the Closing Date,
who is  employed  by Buyer on the date of transfer  (the  "Eligible  Transferred
Employee"),  and (ii) from the trust  relating to the Seller  Savings  Plan,  an
amount in cash or other property, including participant loans, acceptable to the
trustee of the Buyer's  Savings Plan equal to the sum of the account  values (as
of the date of transfer) of each Eligible Transferred Employee. Parent shall not
be obligated to cause any amount to be transferred  to the Buyer's  Savings Plan
or the trust  thereunder  until  Buyer  provides  evidence  (such as a favorable
determination letter from the Internal Revenue Service, an opinion of counsel or
other reasonably  satisfactory  evidence)  reasonably  acceptable to Parent that
such plan and trust satisfy the  requirements  for  qualification  under Section
40l(a) of the Code. Each Eligible  Transferred Employee shall be entitled on the
date of transfer to a  nonforfeitable  account balance under the Buyer's Savings
Plan that is not less than such Eligible Transferred  Employee's  nonforfeitable
account  balance  under  the  Seller  Savings  Plan  immediately  prior  to such
transfer.  Buyer agrees to permit any Eligible  Transferred  Employee who has an
unpaid loan balance under the Seller Savings Plan to continue to repay such loan
under the Buyer's Savings Plan under the same terms as such loan was required to
be repaid under the Seller Savings Plan.  However,  nothing herein shall require
Buyer to sponsor or  establish a Savings  Plan,  in which case this  Section 7.4
shall not apply. Buyer shall permit the Transferred  Employees to participate in
Buyer's Employee Stock Ownership Plan.

         7.5.  Indemnification  for  Plan  Liabilities.  From  the  dates of the
transfers of assets  referred to in Sections 7.3 and 7.4, Buyer shall  indemnify
and hold Sellers and Seller  Savings Plan and Seller

                                      -20-
<PAGE>

Pension  Plan  harmless  for any loss that  Sellers or said  plans may  incur in
respect of any obligation or liability transferred under Sections 7.3 and 7.4 to
the applicable plan of Buyer designated under such Sections.

         7.6. Service Credit. For purposes of vesting,  benefit accrual, benefit
calculation,  participation,   eligibility  (including  for  optional  forms  of
benefits or early  retirement or  disability  retirement  under Buyer's  Pension
Plan), and matching contribution  benefits, if any, Buyer shall, with respect to
each benefit  required to be provided  under the terms of this Article 7, credit
each Transferred  Employee with all service credited to the Transferred Employee
under  each  Seller's  corresponding  plan,  policy,   program,  or  arrangement
applicable to such Transferred Employee as of the Closing Date.

         7.7.     Medical and Dental Plans.

                  7.7.1.  Effective  as of the  Closing  Date,  Buyer shall make
         enrollment  available to all  Transferred  Employees and their eligible
         dependents  without  any  waiting  period  in a  Buyer  plan  or  plans
         providing  medical and dental benefits (the "Buyer Medical  Plan"),  to
         the extent such  individuals  were covered under Seller's Medical Plan,
         as contemplated by Section 7.1. Such Buyer Medical Plan shall waive any
         restrictions  and  limitations  for  pre-existing  conditions  for  all
         Transferred  Employees,  to the extent such  restrictions did not apply
         under Seller's  Medical Plan, and shall give credit to each Transferred
         Employee for any deductibles and out-of-pocket expenses paid during the
         current  plan  year  by  such   Transferred   Employee  under  Sellers'
         applicable medical and dental Plans (hereinafter  collectively referred
         to as the "Seller Medical Plans").

                  7.7.2.  Buyer  shall be  responsible  for  medical  and dental
         expenses  covered under the terms of the Buyer Medical Plan incurred on
         the later of (i) the Closing Date or (ii) the date such person  becomes
         a Transferred  Employee,  by a Transferred  Employee and/or his covered
         dependents who are enrolled in the Buyer Medical Plan. Sellers shall be
         responsible  only for medical  and dental  expenses  covered  under the
         terms of the Seller  Medical Plans  incurred  prior to the Closing Date
         (or if later,  for the period from the Closing Date until the date such
         person becomes a Transferred Employee) by a Transferred Employee and/or
         his  covered  dependents.  If  a  Transferred  Employee  or  a  covered
         dependent  of a  Transferred  Employee  enrolled in the Seller  Medical
         Plans is  hospitalized  on the Closing Date,  the Seller  Medical Plans
         shall  continue to provide  coverage for such person until he or she is
         discharged from the hospital,  to the extent coverage is provided under
         the terms of the Seller Medical Plans.

                  7.7.3. As soon as possible  following the Closing Date, but in
         no event later than 30 days  following the later of the Closing Date or
         the establishment of Buyer's Post-Retirement Trusts (as defined below),
         Parent  shall  cause to be  transferred  to Buyer,  either  through the
         transfer   from  the   trusts   or  other   vehicles   (the   "Seller's
         Post-Retirement  Trusts") funding the post-retirement medical and other
         welfare benefits (the "Post  Retirement  Benefits") for all Transferred
         Employees  listed on Schedule 7.1 and not greater than thirty-five (35)
         former  employees  of the  Business  (to be listed on a Schedule  to be
         provided by Sellers to Buyer within five days of the date  hereof,  and
         updated as of the Closing Date) to the trust or trusts  established  or
         maintained  by Buyer (the  "Buyer's  Post-Retirement  Trusts")  for the
         funding  of  post-retirement  medical  and other  welfare  benefits  or
         through a direct  payment to Buyer,  an amount equal to the  difference
         between (a) the amount of the  Post-Retirement  Benefits which has been
         recovered by Seller in

                                      -21-
<PAGE>

         rates  on  or  after  January 10, 1998,   and  (b)  the  amount  of the
         Post-Retirement Benefits paid by Seller in the form of benefit payments
         between  January 10, 1998  and  the  Closing  Date.  In  the  event the
         representations  and  warranties  of Sellers in  Section 3.13.6  do not
         continue to be true and correct,  Sellers shall pay to Buyer the amount
         by which the rate recovery  with respect to the  Business  for  periods
         prior to January 10, 1998 exceeded  the  "pay-as-you-go" obligations of
         the Business for periods prior to January 10, 1998.

         7.8. Vacation and Sick Day Benefits Accrued Through Closing Date. Buyer
shall credit each  Transferred  Employee with any vacation and sick days accrued
as of the Closing  Date in  accordance  with the terms of Sellers'  vacation and
sick day policies in effect as of such date.

         7.9.     Welfare Benefits.  Sellers shall be liable for claims incurred
under the Welfare Plans prior to the Closing Date.

         7.10.    Long Term  Disability.  Buyer shall not assume sponsorship of,
or any liabilities under, the  Southwestern  Energy Company Long Term Disability
Plan.  Any and all such liabilities shall remain solely with Sellers.

         7.11.  Flexible Spending  Accounts.  As soon as possible  following the
Closing Date, Sellers shall transfer to Buyer, and Buyer agrees to accept, those
amounts which  represent the  Transferred  Employees'  debit and credit balances
under the Southwestern Energy Company Salary Conservation Plan (the "FSA's"),  a
schedule  of  which is  attached  hereto  as  Schedule  7.11.  Buyer  agrees  to
administer the FSA's  (consistent  with the terms of the flex plan applicable to
Buyer's  employees)  such  that  Transferred  Employees  will be  able to  defer
additional  compensation  (in accordance with the terms of the applicable  Buyer
plan) and to submit claims  against the FSA within the time period  permitted by
applicable law.

         7.12.  WARN Act  Liability.  Sellers shall pay and be solely liable for
all liability under the Worker Adjustment and Retraining Notification Act ("WARN
Act"),  in each case,  arising  from any act or omission of Sellers on or before
the Closing Date.  Buyer shall pay and be solely liable for all liability  under
the WARN Act,  in each case,  arising  from any act or  omission of Buyer or its
Affiliates after the Closing Date.

         7.13. Health Care Continuation  Coverage.  Sellers shall be responsible
for compliance with all requirements under Section 4980B of the Code and Section
601 et seq. of ERISA with respect to any (a) Transferred  Employee or (b) family
member  of such  Transferred  Employee,  in each case who  becomes  a  qualified
beneficiary within the meaning of Section 4980B(g)(1) of the Code as a result of
any  "qualifying  event" within the meaning of Section  4980B(f)(3)  of the Code
which occurs on or prior to the Closing  Date.  Buyer shall be  responsible  for
compliance with all requirements under Section 4980B of the Code and Section 601
et seq.  of ERISA with  respect to any (a)  Transferred  Employee  or (b) family
member  of such  Transferred  Employee,  in each case who  becomes  a  qualified
beneficiary within the meaning of Section 4980B(g)(1) of the Code as a result of
any  "qualifying  event" within the meaning of Section  4980B(f)(3)  of the Code
which occurs after the Closing Date.

         7.14.  Employment Taxes.  Sellers hereby acknowledge that, for FICA and
FUTA tax purposes,  Buyer qualifies as a successor  employer with respect to the
Transferred  Employees.  In connection with the foregoing,  the parties agree to
follow the "Alternative  Procedures" set forth in Section 5 of Revenue Procedure
96-60,  1996-2-C.B.399.  In connection with the application of the  "Alternative
Procedures,"

                                      -22-
<PAGE>

(i) Sellers and Buyer each shall report on a  predecessor-successor basis as set
forth in such Revenue Procedure, (ii) provided that Sellers provide to Buyer all
necessary  payroll records for the calendar year that includes the Closing Date,
Sellers shall be relieved from furnishing Forms W-2 to employees of Sellers that
become  employees  of Buyer, and (iii)  provided  that Sellers provide  to Buyer
all necessary  payroll records for the calendar  year that includes  the Closing
Date, Buyer shall assume the obligations of Sellers to furnish such Forms W-2 to
such employees for the full calendar year in which the Closing occurs.

                    VIII. ADDITIONAL RIGHTS AND OBLIGATIONS.

         8.1.  Access  After  Closing.  Buyer  will  permit  Sellers  and  their
representatives  reasonable  access on reasonable  notice during normal business
hours,  for a period of three  years  following  the  Closing  Date and for such
longer  period as may be required in  connection  with any pending or threatened
tax audit or judicial or administrative proceeding, (i) to the books and records
of Sellers  included  in the  Transferred  Assets,  including  the right to make
copies  thereof,  and to personnel (for reasonable  inquiry and testimony),  and
(ii)  to  any  computerized  data  included  in  the  Transferred   Assets.  All
information so obtained shall be kept  confidential by the Sellers,  unless such
information   otherwise  becomes  publicly   available  or  disclosure  of  such
information is required by applicable law.

         8.2.  Further  Assurances.  At any time and from time to time after the
Closing Date,  Sellers shall,  at the request of Buyer,  and Buyer shall, at the
request of Sellers, execute and deliver any further instruments or documents and
take all such further action as the other party may reasonably  request in order
to  consummate  and make  effective the sale of the  Transferred  Assets and the
assumption of the Assumed  Liabilities  pursuant to this Agreement or to fulfill
any other of such party's obligations hereunder.

         8.3. Confidentiality.  The terms of the Confidentiality Agreement dated
June 15,  1999  between  Parent  and Buyer  are  hereby  incorporated  herein by
reference  and shall  continue in full force and effect  until the  Closing,  at
which time such  Confidentiality  Agreement and the  obligations  of Buyer under
this  Section  8.3  shall  terminate.  If this  Agreement  is,  for any  reason,
terminated prior to the Closing, the Confidentiality Agreement shall continue in
full force and effect.

         8.4.  Schedules.  Certain  information  set forth in the  Schedules  is
included  solely  for  informational  purposes  and  may not be  required  to be
disclosed  pursuant to this Agreement.  The disclosure of any information  shall
not be deemed to constitute an acknowledgment  that such information is required
to be disclosed in condition with the  representations  and  warranties  made by
Sellers in this Agreement. .

         8.5. Tax  Matters.  Sellers  shall  prepare or cause to be prepared and
timely file or cause to be timely  filed all  required  Tax Returns  relating to
Transfer  Taxes  imposed on Sellers  for (i) all  taxable  periods  ending on or
before the Closing  Date for which  Returns  shall not have been filed as of the
Closing Date,  and (ii) all taxable  periods  ending  following the Closing Date
that include the Closing  Date (all such  Returns  referred to in clause (i) and
(ii)  being  "Pre-Closing  Returns").  All  such  Pre-Closing  Returns  shall be
prepared on a basis consistent with prior practice unless a different  treatment
is required by a change in applicable law.

                                      -23-
<PAGE>

         8.6.     Use of Name and Logos.

                  8.6.1.  Buyer agrees to cease using the Names and Logos on its
         literature, inventory, products, labels, packaging or materials as soon
         as available supplies thereof are exhausted and in any event within six
         months after the Closing Date with respect to inventory  and  products,
         and within 90 days after the Closing Date with respect to literature.

                  8.6.2.  For thirty days after  Closing,  Buyer may use, as is,
         any of Sellers'  receipts,  bags,  boxes,  stationery,  purchase  order
         forms,  bills or other similar paper goods on hand or order at Closing.
         After such time,  Buyer shall not use any such supplies  which state or
         otherwise  indicate  thereon that the  business  operated by Buyer is a
         subsidiary,  division or unit of either Seller  without first  crossing
         out or marking over such  statement or indication or otherwise  clearly
         indicating on such  supplies that the business  operated by Buyer is no
         longer a subsidiary, division or unit of either Seller.

         8.7.     Environmental Matters.

         (a) Sellers  jointly and  severally  agree to indemnify  and hold Buyer
harmless  against any and all Losses incurred by Buyer resulting from Matters of
Environmental Concern (as hereinafter defined);  provided that: (i) any claim by
Buyer for indemnification pursuant to this clause 8.7(a) must be made by written
notice given within  three (3) years after the Closing  Date;  (ii) Sellers will
have no obligation to indemnify  Buyer for such Losses except to the extent that
such Losses, taken together, exceed $200,000 in the aggregate (the "Threshold"),
and  then  only to the  extent  of the  excess  that  has not  and  will  not be
recoverable through rates; and (iii) any clean-up,  remediation,  reclamation or
other costs with respect to the Transferred  Assets for which a claim is made by
Buyer under this  Section  8.7(a)  shall be borne,  after  giving  effect to the
Threshold,  50% by Sellers and 50% by Buyer. "Matters of Environmental  Concern"
means (i) any failure by Sellers to have complied prior to the Closing Date with
applicable  Environmental Laws or (ii) any handling,  use, storage,  generation,
release,  discharge,  disposal,  dumping or migration of any Hazardous Materials
(whether legal, illegal,  accidental or intentional) on, to, from or beneath the
Real  Property,  the Leased  Real  Property,  the System  Property  or any other
Transferred Asset to the extent occurring prior to the Closing Date.

         (b) If Buyer or  either  Seller  has or may have the  right to  recover
Losses  indemnified  by Sellers or borne by Buyer pursuant to clause (a) of this
Section 8.7 from a party in addition to Sellers,  Buyer and each Seller,  as the
case may be, shall assign such right to the other (in proportion to the relative
amounts indemnified against or borne) and shall reasonably cooperate in pursuing
any rights against such third party.

         8.8.  Abstracts.  Within 60 days after the date hereof,  Sellers  shall
cause to be prepared by a title  abstractor  reasonably  acceptable to Buyer and
delivered  to Buyer  abstracts  of title for the Real  Property  and the  Leased
Property  (other than office and warehouse  space) and the System  Property (the
"Abstracts")   showing,  in  customary  detail,  the  state  of  title  to  such
Transferred Assets, including the legal description and any other identification
of  such  Transferred  Assets,  the  instruments  creating  or  evidencing  such
Transferred Assets and the encumbrances affecting such Transferred Assets.

                                      -24-
<PAGE>

         8.9.  Y2K.  To the  extent,  if any,  that the  information  technology
included in the  Transferred  Assets  (including  components of the  Transferred
Assets that interface with or whose operation is dependent upon the operation of
information  technology systems) will not operate without error relating to date
data that references different centuries or more than one century, Sellers shall
use commercially  reasonable  efforts, at Sellers' expense, to modify or replace
such   information   technology  so  it  will  so  operate  without  error.  Any
modification  or  replacement  will be made as  promptly  as  practicable  after
Buyer's request; provided that Buyer's request is made not later than six months
after the Closing Date.

                     IX. CONDITIONS TO BUYER'S OBLIGATIONS.

         The   obligations  of  Buyer  under  this  Agreement  to  purchase  the
Transferred Assets and to consummate the other transactions  contemplated hereby
shall be  subject  to the  satisfaction  (or waiver by Buyer) on or prior to the
Closing Date of all of the following conditions:

         9.1.  Representations,  Warranties  and  Covenants of Sellers.  Sellers
shall have complied in all material respects with their agreements and covenants
contained  herein to be performed on or prior to the Closing  Date,  and all the
representations and warranties of Sellers contained herein shall be (a) true and
correct on and as of the date  hereof and (b) true and  correct in all  material
respects  on and as of the  Closing  Date with the same effect as though made on
and as of the Closing Date,  (i) except to the extent that such  representations
and warranties were made as of a specified date, and as to such  representations
and warranties the same shall continue on the Closing Date to have been true and
correct in all material  respects as of the specified  date and (ii) in the case
of clause (b) above, except for changes after the date hereof resulting from the
conduct of the  Business in the ordinary  course of business  that do not result
from a violation of Section 5.2, if such changes could not adversely  affect the
Buyer, the Transferred  Assets or the use or operations  thereof in any material
respect.  Buyer shall have  received a certificate  of Sellers,  dated as of the
Closing  Date and  signed by an  officer of each  Seller,  certifying  as to the
fulfillment of the condition set forth in this Section 9.1.

         9.2.     No  Prohibition.  No statute,  rule or regulation  or order of
any court or administrative agency shall be in effect which prohibits Buyer from
consummating the transactions contemplated hereby.

         9.3.  Further  Action.  All  consents  and  approvals  of  governmental
authorities  referred to in Schedule  3.10 or 4.4 hereto,  the granting of which
are necessary to consummate the  transactions  contemplated  hereby,  shall have
been obtained and shall not (a) result in rate  adjustments  with respect to the
Business which would be materially less favorable in the aggregate to Buyer than
the rates  currently  in effect on the date  hereof,  (b)  prevent or  adversely
affect the  operation of the  Transferred  Assets (or the results of  operations
therefrom)  after the Closing Date in a manner  consistent  with the Business or
(c) contain any other terms  materially  adverse to the Buyer.  The consents and
approvals of third parties (other than governmental  authorities)  identified on
Schedule 9.3 shall have been  obtained and shall be reasonably  satisfactory  to
Buyer.

         9.4.     No Material Adverse Effect.  Since the date of this Agreement,
there shall not have occurred any event resulting in a Material Adverse Effect.

         9.5.     Abstracts.  Buyer shall have received the  Abstracts,  and the
Abstracts  reflect a state of title that is reasonably satisfactory to Buyer.

                                      -25-
<PAGE>

         9.6.     Omnibus Gas Transportation and Supply  Agreement.  The parties
shall have reached agreement on,  and executed,  the Omnibus Gas  Transportation
and Supply Agreement.

         9.7.     Other Documents.  The Sellers  shall have  delivered to  Buyer
such certificates,  documents and instruments, including certified  resolutions,
authorizations and confirmations of incumbency, as Buyer may reasonably  request
to effect or confirm the transactions contemplated hereby.

                     X. CONDITIONS TO SELLERS' OBLIGATIONS.

         The obligations of Sellers under this Agreement to sell the Transferred
Assets and to consummate  the other  transactions  contemplated  hereby shall be
subject to the  satisfaction  (or waiver by  Sellers) on or prior to the Closing
Date of all of the following conditions:

         10.1.  Representations,  Warranties and Covenants of Buyer. Buyer shall
have complied in all material  respects with all of its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and all of the
representations  and warranties of Buyer contained  herein shall be (a) true and
correct on and as of the date  hereof and (b) true and  correct in all  material
respects  on and as of the  Closing  Date with the same effect as though made on
and as of the Closing Date, except to the extent that such  representations  and
warranties were made as of a specified date, and as to such  representations and
warranties  the same shall  continue on the  Closing  Date to have been true and
correct in all material  respects as of the specified  date.  Sellers shall have
received a certificate  of Buyer,  dated as of the Closing Date and signed by an
officer of Buyer, certifying as to the fulfillment of the condition set forth is
this Section 10.1.

         10.2.    No  Prohibition.  No statute, rule, regulation or order of any
court or administrative  agency shall be in effect  which prohibits Sellers from
consummating the transactions contemplated hereby.

         10.3.    Further  Action.  All consents and  approvals of  governmental
authorities,  referred to in Schedule 3.10 or Schedule 4.4 hereto,  the granting
of which are necessary to consummate the transactions contemplated hereby, shall
have been obtained.

         10.4.    Omnibus Gas Transportation and Supply  Agreement.  The parties
shall have reached  agreement on, and executed,  the Omnibus  Gas Transportation
and Supply Agreement.

         10.5.    Other  Documents.  Buyer shall have  delivered to Sellers such
certificates,  documents  and  instruments,  including  certified   resolutions,
authorizations   and  confirmations  of  incumbency,  as Sellers  may reasonably
request to effect or confirm the transactions contemplated hereby.

                        XI. TERMINATION PRIOR TO CLOSING.

         11.1.    Termination.    This  Agreement  may  be  terminated  and  the
transactions  contemplated  hereby  may be abandoned  at any time  prior  to the
Closing:

                    (i)    By the mutual  written consent of  Buyer and Sellers;
                           or

                                      -26-
<PAGE>

                   (ii)    By either Buyer or Sellers, if the Closing shall have
                           not   occurred  on  or  before   December  31,  2000;
                           provided,  however,  that the right to terminate this
                           Agreement  under  this  subclause  (ii)  shall not be
                           available  to any party whose  failure to fulfill any
                           obligation  under this Agreement  shall have been the
                           cause of, or resulted  in, the failure of the Closing
                           to occur on or before such date.

         11.2.  Effect  of  Termination.  In the  event of  termination  of this
Agreement as provided in Section 11.1,  this Agreement  shall  forthwith  become
void;  provided,  however,  that such termination shall not relieve any party of
its  obligations  under Section 8.3,  Section 13.9 and Section 13.15 nor relieve
any party from  liability for any breach  hereof.  Upon any  termination of this
Agreement,  each party hereto will return all  documents,  work papers and other
material of the other party relating to the transactions contemplated hereby and
all copies of such materials,  whether so obtained before or after the execution
hereof, to the party furnishing the same.

                       XII. INDEMNIFICATION AND SURVIVAL.

         12.1.  Indemnification  by Sellers.  Subject to Sections 12.3 and 12.4,
Sellers will jointly and severally indemnify and hold Buyer harmless against any
and all Losses to which Buyer becomes  subject or which Buyer suffers or incurs,
insofar as such Losses arise out of or result from (a) the Excluded Liabilities,
(b) the  inaccuracy  of any  representation  or  warranty  of Sellers  contained
herein,  (c) the breach of any covenant of Sellers contained herein, (d) subject
to  Sections  2.3.4  and  13.8,  any  Tax  imposed  upon  either  Seller  or the
Transferred  Assets for any event or period through the Closing Date and (e) any
failure to comply with any bulk transfer or similar law in  connection  with the
transactions  contemplated  hereby or, subject to the provisions of Section 8.7,
the  imposition  on Buyer of any liability or obligation of Sellers that are not
Assumed  Liabilities  pursuant to any successor  liability  law. As used herein,
"Losses"  means  losses,  liabilities,   claims,  damages,  costs  and  expenses
(including  reasonable  attorneys' fees and costs of investigation),  whether or
not  involving a third party claim;  provided  that Losses shall not include (i)
any multiple, punitive or exemplary damages, except to the extent resulting from
third party claims, (ii) consequential or special damages,  except to the extent
proximately  resulting from any inability to operate the Transferred Assets in a
manner  consistent  with the  Business,  or (iii) any matter to the extent taken
into account on the Closing Statement.

         12.2.  Indemnification  by Buyer.  Subject to  Sections  12.3 and 12.4,
Buyer will  indemnify  and hold Sellers  harmless  against any and all Losses to
which either Seller  becomes  subject or which either Seller  suffers or incurs,
insofar as such Losses arise out of or result from (a) the Assumed  Liabilities,
(b) the inaccuracy of any  representation or warranty of Buyer contained herein,
(c) the  breach of any  covenant  of Buyer  contained  herein or (d)  expect for
matters as to which  Buyer is entitled  to  indemnification  pursuant to Section
12.1, the operation or use of the Transferred  Assets  subsequent to the Closing
Date.

         12.3.    Limitations on Liability.

                  12.3.1.  Time Limitations and Survival.  The  representations,
         warranties,  covenants and  agreements of the parties shall survive the
         Closing and any  investigation  by the parties.  Any claim by any party
         with respect to any  representation or warranty,  or any covenant to be
         performed  on or  prior to the  Closing  Date,  by  another  party  for
         indemnification must be made by written notice given within twelve (12)
         months after the Closing Date; provided that (i) claims with respect to
         the  representations  and  warranties  contained in Section 3.15 may be
         made by

                                      -27-
<PAGE>

         written  notice  within three (3) years after the Closing Date and (ii)
         claims with  respect to the  representations  and  warranties contained
         in Section  3.13.6 may be made by written  notice  until the earlier of
         four (4) years after the Closing Date or the conclusion of Buyer's next
         rate case with respect to the Business.

                  12.3.2.  Limitation on Amount. Sellers will have no obligation
         to indemnify Buyer for any Losses pursuant to clause (b) (other than in
         respect of Section  3.13.6)  or clause (c) (to the extent  relating  to
         covenants to be  performed on or prior to the Closing  Date) of Section
         12.1,  except to the extent that such Losses,  taken  together,  exceed
         $100,000 (provided that if a Loss relates to breach of a representation
         or  warranty   contained  in  Section  3.15   relating  to  Matters  of
         Environmental  Concern,  such Loss  shall be  subject  to the  $200,000
         deductible  provided in Section  8.7(a) and not towards  this  $100,000
         deductible),  and then only to the extent of such  excess.  In no event
         shall Sellers be liable for  aggregate  Losses under  Sections  12.1(b)
         (other than in respect of Section  3.15 or Section  3.13.6) and 12.1(c)
         (but only in respect of the covenants in Section 5.2) of more than $3.2
         million.

                  12.3.3.  Other Limitations.  If any indemnified party may have
         the right to recover  Losses from a third party (other than an insurer)
         in addition to the  indemnifying  party,  the  indemnified  party shall
         assign to the indemnifying  party any such right remaining against such
         third party after the indemnified party shall have recovered all of its
         Losses,  and  shall  reasonably   cooperate  (at  the  expense  of  the
         indemnifying party) in pursuing any rights against such third party.

         12.4.  Indemnification   Procedure.   Promptly  after  receipt  by  any
indemnified  party of notice of the commencement of any action,  proceeding,  or
claim in respect of which the indemnified party intends to seek  indemnification
pursuant  to  Section  12.1 or 12.2,  the  indemnified  party  shall  notify the
indemnifying party in writing; provided that the omission to so notify shall not
relieve the indemnifying party of its indemnification  obligations except to the
extent the indemnifying party is materially prejudiced thereby. The indemnifying
party shall be entitled to assume control of the defense of such action or claim
with  counsel  reasonably  satisfactory  to  the  indemnified  party;  provided,
however, that:

                    (i)    the   indemnified   party   shall  be   entitled   to
                           participate  in the  defense  of  such  claim  and to
                           employ  counsel  at its own  expense to assist in the
                           handling of such claim;

                   (ii)    no  indemnifying  party shall consent to the entry of
                           any judgment or enter into any  settlement  that does
                           not  include as an  unconditional  term  thereof  the
                           giving  by  each   claimant  or   plaintiff   to  the
                           indemnified  party of a release from all liability in
                           respect  of such  claim  or if,  pursuant  to or as a
                           result of such consent or  settlement,  injunctive or
                           other  equitable  relief would be imposed against the
                           indemnified  party  or such  judgment  or  settlement
                           could   materially   interfere   with  the  business,
                           operations or assets of the indemnified party; and

                  (iii)    after written notice by the indemnifying party to the
                           indemnified  party of its election to assume  control
                           of the defense of any such action in accordance  with
                           the  foregoing  provisions,  the  indemnifying  party
                           shall  not  be  liable  to  such  indemnified   party
                           hereunder  for any legal  fees,  costs  and  expenses
                           subsequently  incurred by such  indemnified  party in
                           connection with the defense thereof.

                                      -28-
<PAGE>

         If the  indemnifying  party does not assume  control of the  defense of
such claim in accordance with the foregoing  provisions,  the indemnified  party
shall  have the  right  to  defend  such  claim  in such  manner  as it may deem
appropriate at the reasonable cost and expense of the  indemnifying  party,  and
the indemnifying  party will promptly  reimburse the indemnified party therefore
in accordance with this Section 12.4;  provided that the indemnified party shall
not be  entitled  to  consent  to the entry of any  judgment  or enter  into any
settlement of such claim without the prior written  consent of the  indemnifying
party (not to be unreasonably withheld).

         12.5.  Exclusive  Remedies.  If the Closing  occurs,  then the remedies
provided in this Article XII shall  constitute  the sole and exclusive  remedies
with  respect to all claims for breach of any  representation  or  warranty,  or
covenant to be  performed  on or prior to the Closing  Date,  contained  in this
Agreement,  except for fraud or other willful  dishonesty.  Notwithstanding  the
foregoing, the provisions of this Article XII shall not affect the rights of any
party  hereto  against  any third  party  (including  a third  party whose claim
against a party  hereto is the basis of a claim for  indemnification)  and shall
not inure to the benefit of any third party.

                              XIII. MISCELLANEOUS.

         13.1.  Entire  Agreement.  This  Agreement  (including the Exhibits and
Schedules hereto) and the  Confidentiality  Agreement referred to in Section 8.3
constitute the entire  understanding  of the parties with respect to the subject
matter hereof and, except as provided in Section 8.3, supersedes all other prior
or contemporaneous oral or written statements by any party with respect thereto.

         13.2.  Waiver of Bulk Transfer  Requirements.  Subject to Section 12.1,
Buyer  agrees  to  waive  Sellers'  compliance  with  Article  6 of the  Uniform
Commercial Code (Bulk Transfers), as in effect in any jurisdiction, or any other
applicable bulk sales law.

         13.3.  Successors  and  Assigns.  The  terms  and  conditions  of  this
Agreement  shall  inure to the  benefit  of and be binding  upon the  respective
successors of the parties hereto; provided, however, that this Agreement may not
be assigned by Buyer without the prior written consent of Sellers, which consent
shall not be  unreasonably  withheld in the case of an  assignment  to an entity
that is controlled by Buyer.

         13.4.    Counterparts.  This  Agreement may be  executed in one or more
counterparts,  each of which shall for all purposes be  deemed to be an original
and all of which shall constitute the same instrument.

         13.5.    Headings.  The headings of the sections and paragraphs of this
Agreement  are  inserted  for  convenience  only  and  shall  not  be  deemed to
constitute a part of this Agreement or to affect the construction hereof.

         13.6. Modification and Waiver. No amendment, modification or alteration
of the terms or provisions of this  Agreement  shall be binding  unless the same
shall be in writing and duly executed by the parties hereto,  except that any of
the terms or provisions  of this  Agreement may be waived in writing at any time
by the  party  which  is  entitled  to the  benefits  of such  waived  terms  or
provisions. No waiver of any of the provisions of this Agreement shall be deemed
to or shall  constitute a waiver of any other  provision  hereof (whether or not
similar).  No delay on the part of any party in exercising  any right,  power or
privilege hereunder shall operate as a waiver thereof.

                                      -29-
<PAGE>

         13.7. No Third-Party Beneficiary Rights. This Agreement is not intended
to and shall not be  construed  to give any  person  or  entity  other  than the
parties signatory hereto any interest or rights (including,  without limitation,
any third party  beneficiary  rights) with respect to or in connection  with any
agreement or provision contained herein or contemplated hereby.

         13.8. Sales and Transfer Taxes. Sellers, on the one hand, and Buyer, on
the  other,  shall  each  be  responsible  for  and pay  one-half  (1/2)  of all
applicable sales, transfer,  documentary,  or use taxes and recording and filing
fees ("Transfer  Taxes") that may become due or payable as a result of the sale,
conveyance, assignment, transfer or delivery of any of the Transferred Assets or
the  transactions  contemplated  hereby whether levied on Buyer,  Sellers or any
Affiliate of Sellers. At the Closing, Sellers shall execute and deliver to Buyer
any  certificates  or other  documents as Buyer may reasonably  request to claim
available exemptions from the payment of Transfer Taxes under applicable law.

         13.9. Expenses.  Except as expressly provided otherwise herein, each of
Sellers  and Buyer  shall pay all costs and  expenses  incurred  by it or on its
behalf in  connection  with this  Agreement  and the  transactions  contemplated
hereby,  including,  without limiting the generality of the foregoing,  fees and
expenses of its own financial consultants, accountants and counsel.

         13.10.   Waiver  of  Conditions.    The  conditions  to  each   party's
obligations  hereunder are for the sole benefit of such party  and may be waived
by such party in whole or in part to the extent permitted by applicable law.

         13.11. Notices. Any notice,  request,  instruction or other document to
be given hereunder by either party hereto to the other party shall be in writing
and shall be sent by telefax  (with  confirmation  received  of the  recipient's
number) to the number  stated below or shall be delivered  personally or sent by
registered or certified mail (postage  prepaid and return receipt  requested) to
the address stated below.

         If to either Seller, to:

         Southwestern Energy Company
         1083 Sain Street
         Fayetteville, AR 72703
         Attention:        Greg D. Kerley
                           Senior Vice President and
                           Chief Financial Officer
         Telephone:        (501) 521-1141
         Telefax:          (501) 521-1147

         With a copy to:

         Cahill Gordon & Reindel
         80 Pine Street
         New York, New York 10005
         Attention:        Gary W. Wolf, Esq.
         Telephone:        (212) 701-3000
         Telefax:          (212) 269-5420

                                      -30-
<PAGE>

         If to Buyer, to:

         Atmos Energy Corporation
         1800 Three Lincoln Center
         5430 LBJ Freeway
         Dallas, Texas 75240
         Attention:        John P. Reddy
         Telephone:        (972) 934-9227
         Telefax:          (972) 855-3080

         With a copy to:

         Gibson, Dunn & Crutcher LLP
         1717 Main Street, Suite 5400
         Dallas, Texas 75201-7390
         Attention:        Irwin F. Sentilles, III, Esq.
         Telephone:        (214) 698-3100
         Telefax:          (214) 698-3400

or at such other telefax  number or address for a party as shall be specified by
like notice.  Any notice which is delivered  personally  in the manner  provided
herein  shall be  deemed  to have  been  duly  given to the  party to whom it is
directed upon actual receipt by such party.  Any notice which is sent by telefax
or addressed  and mailed in the manner  herein  provided  shall be  conclusively
presumed  to have been duly given to the party to which it is  addressed  on the
date indicated on the telefax confirmation or the postal receipt.

         13.12.   Knowledge  of  Sellers.   For  purposes  of  this   Agreement,
"knowledge of Sellers" or any similar term shall mean the actual knowledge of an
executive officer of Parent or of  Charles V. Stevens,  Senior Vice President of
AWG, after reasonable inquiry.

         13.13.  Governing Law. This Agreement  shall be construed in accordance
with and governed by the laws of the State of Arkansas  applicable to agreements
made and to be performed wholly within such  jurisdiction  without regard to the
conflicts  of laws  provisions  thereof.  Each of the parties  agrees to (i) the
irrevocable  designation  of the  Secretary of State of the State of Arkansas as
its  agent  upon  whom  process  against  it may be  served  and  (ii)  personal
jurisdiction  in any action brought in any court,  Federal or State,  within the
State of Arkansas having subject matter  jurisdiction over matters arising under
this  Agreement.  Any suit,  action or proceeding  arising out of or relating to
this  Agreement  shall only be instituted in a Federal or State court located in
the State of Arkansas.  Each party waives any objection which it may have now or
hereafter  to the laying of the venue of such suit,  action or  proceeding,  and
irrevocably  submits  to the  jurisdiction  of any such  court in any such suit,
action or proceeding.

         13.14.  Waiver  of  Jury  Trial.  Each  of  Sellers  and  Buyer  hereby
irrevocably  waives  all  right to trial by jury in any  action,  proceeding  or
counterclaim  (whether based on contract,  tort or otherwise)  arising out of or
relating  to  this  Agreement  or  the  actions  of  Sellers  or  Buyer  in  the
negotiations, administration, performance and enforcement thereof.

         13.15. Announcements. No party hereto shall make any public statements,
including, without limitation, any press release, with respect to this Agreement
and the  transactions  contemplated  hereby

                                      -31-
<PAGE>

without the  prior written  consent of the other parties,  other than  as may be
required by law, which consent shall not be unreasonably withheld.

         13.16.  Severability.  If any term or other provision of this Agreement
is held to be  invalid,  illegal or  incapable  of being  enforced  by any court
having jurisdiction, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect.

         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Agreement to be executed on its behalf as of the date first above written.

                                    SELLERS:

                                    SOUTHWESTERN ENERGY COMPANY

                                    By:  /s/GREG D. KERLEY
                                       -----------------------------------
                                           Greg D. Kerley
                                           Senior Vice President

                                    ARKANSAS WESTERN GAS COMPANY

                                    By:  /s/GREG D. KERLEY
                                       -----------------------------------
                                           Greg D. Kerley
                                           Senior Vice President

                                    BUYER:

                                    ATMOS ENERGY CORPORATION

                                    By:  /s/LARRY J. DAGLEY
                                       -----------------------------------
                                           Larry J. Dagley
                                           Executive Vice President and
                                           Chief Financial Officer

                                      -32-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]