Document:

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                                                                   EXHIBIT 10.51

                   LLC MEMBERSHIP INTEREST PURCHASE AGREEMENT

                                 BY AND BETWEEN

                           CMS PANHANDLE HOLDINGS, LLC

                                    AS SELLER

                                       AND

                         MARATHON ASHLAND PETROLEUM LLC
                                       AND
                TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

                               SEVERALLY AS BUYERS

                                JANUARY 30, 2003

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                   LLC MEMBERSHIP INTEREST PURCHASE AGREEMENT

      THIS LLC MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is
entered into as of January 30, 2003, by and between CMS PANHANDLE HOLDINGS, LLC,
a Delaware limited liability company (the "Seller"), and MARATHON ASHLAND
PETROLEUM LLC, a Delaware limited liability company ("MAP") and TE PRODUCTS
PIPELINE COMPANY, LIMITED PARTNERSHIP, a Delaware limited partnership,
("TEPPCO") (MAP and TEPPCO severally herein the "Buyers"). The Seller and the
Buyers are sometimes referred to collectively herein as the "Parties" and
individually as a "Party."

                                    RECITALS

      WHEREAS, Seller's predecessor in interest, Panhandle Eastern Pipe Line
Company ("PEPL"), MAP and TEPPCO are the sole members of Centennial Pipeline
LLC, a Delaware limited liability company ("Centennial"), pursuant to that
certain Amended and Restated Limited Liability Company Agreement entered into
among them effective August 20, 2000, amended on May 4, 2001 and on December 3,
2002 ("LLC Agreement"); and

      WHEREAS, the Seller's membership interest in Centennial was acquired by
assignment from PEPL, its Affiliate, on November 1, 2001; and

      WHEREAS, the Seller owns a 33 1/3% membership interest in Centennial (the
"Membership Interest"); and

      WHEREAS, each of the Buyers owns a 33 1/3% membership interest in
Centennial; and

      WHEREAS, the Parties have reached an agreement in principle pursuant to
which Seller will sell to the Buyers, and the Buyers will purchase from Seller,
in equal shares, Seller's Membership Interest; and

      WHEREAS, the Parties desire hereby to reduce their agreement to writing.

      NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:

      1.    Definitions.

            "Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations,
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taxes, liens, losses, expenses, and fees, including court costs and attorneys'
fees and expenses, but excluding punitive, exemplary, special or consequential
damages (except as to third party claims for which a Party has rights of
indemnification under this Agreement).

            "Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.

            "Buyers" has the meaning set forth in the preface.

            "Centennial" has the meaning set forth in the recitals.

            "Centennial Assets" means all of the assets of Centennial of
whatever nature.

            "Centennial Project Debt" means the debt facility pursuant to that
certain Master Shelf Agreement dated as of May 4, 2001, as amended and in effect
from time to time, by and between Centennial and The Prudential Insurance
Company of America pursuant to which $140,000,000 Senior Notes were issued and
that certain Revolving Note Agreement dated as of May 4, 2001, as amended and in
effect from time to time, by and between Centennial and The Prudential Insurance
Company of America pursuant to which Senior Floating Rate Revolving Notes due
May 4, 2004 were issued.

            "Closing" has the meaning set forth in Section 2(c).

            "Closing Date" has the meaning set forth in Section 2(c).

            "Encumbrance" means any mortgage, pledge, lien (including tax
liens), encumbrance, charge, other security interest or defect in title.

            "Governmental Authority" means the United States and any state,
county, city or other political subdivision, agency, court or instrumentality.

            "Indemnified Party" has the meaning set forth in Section 7(d).

            "Indemnifying Party" has the meaning set forth in Section 7(d).

            "Laws" means any statute, code, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any applicable
Governmental Authority.

            "LLC Agreement" has the meaning set forth in the recitals.

            "Maintenance Agreement" has the meaning set forth in Section 4(h).

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            "Material Adverse Effect" means any change or effect that,
individually or in the aggregate with other changes or effects, is materially
adverse to the businesses, operations and properties of a Buyer, Seller or
Centennial, each taken as a whole, provided that in determining whether a
Material Adverse Effect has occurred, changes or effects relating to (i) the
liquids pipeline industry generally (including, but not limited to, the price of
liquids and the costs associated with the production and delivery of liquids) or
changes in the regulation thereof, or (ii) United States or global economic
conditions or financial markets in general, shall not be considered.

            "Membership Interest" has the meaning set forth in the recitals.

            "Party" and "Parties" have the meanings set forth in the preface.

            "PEPL" means Panhandle Eastern Pipe Line Company, a Delaware
corporation.

            "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency or political
subdivision thereof).

            "Post-Closing Membership Interest" has the meaning set forth in
Section 2(a).

            "Purchase Price" has the meaning set forth in Section 2(b).

            "Seller" has the meaning set forth in the preface.

            "Third Party Claim" has the meaning set forth in Section 7(d).

            "Trunkline" means CMS Trunkline Gas Company, LLC, a Delaware limited
liability company, formerly known as Trunkline Gas Company.

      2.    Purchase and Sale.

            (a)   Sale of Membership Interest. Subject to the terms and
                  conditions of this Agreement, the Seller agrees to sell to the
                  Buyers, and the Buyers agree to purchase from the Seller, in
                  equal shares, all of the Seller's right, title and interest in
                  and to the Membership Interest. From and after such sale and
                  purchase, each of the Buyers shall own a 50% membership
                  interest in Centennial ("Post-Closing Membership Interest").

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            (b)   Purchase Price. In consideration for the sale of the
                  Membership Interest, each of the Buyers agrees to pay to the
                  Seller at the Closing TWENTY MILLION DOLLARS ($20,000,000.00)
                  (with respect to each Buyer, the "Purchase Price") payable by
                  wire transfer or delivery of other immediately available
                  funds, pursuant to Seller's written instructions received at
                  least five (5) days prior to the Closing.

            (c)   The Closing. The closing of the transactions contemplated by
                  this Agreement (the "Closing") shall take place at the offices
                  of the Seller, commencing at 9:00 a.m. local time on the
                  second business day following the satisfaction or waiver of
                  all conditions to the obligations of the Parties to consummate
                  the transactions contemplated hereby (other than conditions
                  with respect to actions each Party will take at the Closing
                  itself) or such other date as the Parties may mutually
                  determine (the "Closing Date").

            (d)   Deliveries at the Closing. At the Closing, (i) the Seller will
                  deliver to the Buyers the various certificates, instruments,
                  and documents referred to in Section 6(a), (ii) each of the
                  Buyers will deliver to the Seller the various certificates,
                  instruments, and documents referred to in Section 6(b), (iii)
                  the Seller will deliver to each of the Buyers an Assignment
                  and Conveyance in the form of Exhibit 2(d) transferring to
                  each Buyer its respective share of the Seller's right, title
                  and interest in and to the Membership Interest, and (iv) each
                  of the Buyers will deliver to the Seller the Purchase Price.

      3.    Representations and Warranties Concerning the Transaction.

            (a)   Representations and Warranties of the Seller. The Seller
                  hereby, severally, represents and warrants to each Buyer as
                  follows:

                  (i)   Organization of the Seller. The Seller is a limited
                        liability company duly organized, validly existing, and
                        in good standing under the Laws of the state of
                        Delaware. Seller is duly licensed or qualified and in
                        good standing as a foreign entity authorized to do
                        business in all jurisdictions wherein the character of
                        the property owned or leased, or the nature of the
                        activities conducted, by it make such licensing or
                        qualification necessary, except where the failure to be
                        so licensed or qualified would not constitute a Material
                        Adverse Effect.

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                  (ii)  Authorization of Transaction. The Seller has full power
                        and authority (including full limited liability company
                        power and authority) to execute and deliver this
                        Agreement and to perform its obligations hereunder. Upon
                        receipt of the approval of Seller's Board of Directors
                        referenced in Schedule 3(a)(ii), this Agreement and the
                        transactions contemplated hereby will have been duly
                        authorized by all requisite limited liability company
                        action on the part of the Seller and no further
                        corporate approvals will be required to execute and
                        deliver this Agreement or to consummate such
                        transactions. This Agreement has been duly executed and
                        delivered by Seller and constitutes the valid and
                        legally binding obligation of the Seller, enforceable in
                        accordance with its terms and conditions, subject,
                        however, to the effects of bankruptcy, insolvency,
                        reorganization, moratorium or similar Laws affecting
                        creditors' rights generally, and to general principles
                        of equity (regardless of whether such enforceability is
                        considered in a proceeding in equity or at law). Except
                        as set forth on Schedule 3(a)(ii), the Seller need not
                        give any notice to, make any filing with, or obtain any
                        authorization, consent, or approval of any Governmental
                        Authority or any Person in order to consummate the
                        transactions contemplated by this Agreement. Seller has
                        received, or will have received by the Closing any
                        written consent required of Southern Union Panhandle
                        Corp. for Seller to execute and deliver this Agreement
                        and for Seller to perform its obligations hereunder.

                  (iii) Noncontravention. Except for the approvals and filings
                        specified in Section 3(a)(ii) or as set forth in
                        Schedule 3(a)(iii), neither the execution and delivery
                        of this Agreement, nor the consummation of the
                        transactions contemplated hereby, will (A) violate any
                        statute, regulation, rule, injunction, judgment, order,
                        decree, ruling, charge, or other restriction of any
                        Governmental Authority to which the Seller is subject or
                        any provision of its charter or bylaws or (B) conflict
                        with, result in a breach of, constitute a default under,
                        result in the acceleration of, create in any party the
                        right to accelerate, terminate, modify, or cancel, or
                        require any notice, approval or consent under any
                        agreement, contract, lease, license, instrument, or
                        other arrangement to which the Seller is a party or by
                        which it is bound or to which any of its assets is
                        subject,

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                        including the Centennial LLC Agreement, except for such
                        violations, defaults, breaches, or other occurrences
                        that do not, individually or in the aggregate, have a
                        Material Adverse Effect or a material adverse effect on
                        the ability of the Seller to consummate the transactions
                        contemplated by this Agreement, and except for any
                        requirements that have been specifically waived herein
                        by the Buyers.

                  (iv)  Brokers' Fees. The Seller has no liability or obligation
                        to pay any fees or commissions to any broker, finder, or
                        agent with respect to the transactions contemplated by
                        this Agreement for which the Buyers could become liable
                        or obligated.

                  (v)   Capitalization of Centennial. Seller has legal and
                        beneficial ownership of the Membership Interest, free
                        and clear of any restrictions on transfer or
                        Encumbrances other than as is provided in the Centennial
                        LLC Agreement. Upon transfer of the Membership Interest
                        to the Buyers pursuant to this Agreement, the Buyers
                        will own, legally and beneficially, the Membership
                        Interest as herein provided, in each case, free and
                        clear of any restrictions on transfer or Encumbrances
                        by, through or under Seller, other than as is provided
                        in the Centennial LLC Agreement. Seller has no
                        membership interests issued or outstanding in Centennial
                        other than the Membership Interest. The Membership
                        Interest has been duly authorized, is validly issued and
                        is owned of record by the Seller. There are no
                        outstanding or authorized options, warrants, purchase
                        rights, subscription rights, conversion rights, exchange
                        rights, or other contracts, commitments, equities,
                        claims, or demands that could require the Seller to
                        sell, transfer, or otherwise dispose of any of the
                        Membership Interest (other than this Agreement). The
                        Seller is not a party to any voting trust, proxy, or
                        other agreement or understanding with respect to the
                        voting of any membership interests, including the
                        Membership Interest, of Centennial.

                  (vi)  Litigation. There is no litigation pending against
                        Seller or any of its Affiliates that seeks to modify or
                        prevent the consummation of any of the transactions or
                        related agreements contemplated herein.

            (b)   Representations and Warranties of each Buyer. Each Buyer,
                  severally and not jointly, hereby represent represents and
                  warrants to Seller as follows,

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                  each Buyer representing and warranting only as to itself and
                  not as to the other Buyer:

                  (i)   Organization of the Buyers. MAP is a limited liability
                        company duly organized, validly existing and in good
                        standing under the Laws of the state of Delaware. TEPPCO
                        is a limited partnership duly organized, validly
                        existing and in good standing under the Laws of the
                        state of Delaware. The Buyer is duly licensed or
                        qualified and in good standing as a foreign entity
                        authorized to do business in all jurisdictions wherein
                        character of the property owned or leased, or the nature
                        of the activities conducted, by it make such licensing
                        or qualification necessary, except where the failure to
                        be so licensed or qualified would not constitute a
                        Material Adverse Effect on the Buyer.

                  (ii)  Authorization of Transaction. The Buyer has full power
                        and authority (including, with respect to MAP, full
                        limited liability company power and authority, and with
                        respect to TEPPCO, full limited partnership power and
                        authority) to execute and deliver this Agreement and to
                        perform its obligations hereunder. Upon receipt of the
                        approval of the applicable Board of Directors or Board
                        of Managers referenced in Schedule 3(b)(ii), this
                        Agreement and the transactions contemplated hereby will
                        have been duly authorized by all requisite limited
                        liability company or partnership, as applicable, action
                        on the part of the Buyer and no further limited
                        liability company or partnership approvals will be
                        required to execute and deliver this Agreement or to
                        consummate such transactions. This Agreement has been
                        duly executed and delivered by Buyer and constitutes the
                        valid and legally binding obligation of the Buyer,
                        enforceable in accordance with its terms and conditions,
                        subject, however, to the effects of bankruptcy,
                        insolvency, reorganization, moratorium, or similar Laws
                        affecting creditors' rights generally and to general
                        principles of equity (regardless of whether such
                        enforceability is considered in a proceeding in equity
                        or at law). Except as set forth on Schedule 3(b)(ii)
                        with respect to such Buyer, the Buyer need not give any
                        notice to, make any filing with, or obtain any
                        authorization, consent, or approval of any Governmental
                        Authority or any Person in order to consummate the
                        transactions contemplated by this Agreement.

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                  (iii) Noncontravention. Except for the approvals and filings
                        specified in Section 3(b)(ii) or as set forth in
                        Schedule 3(b)(iii) with respect to such Buyer, neither
                        the execution and delivery of this Agreement, nor the
                        consummation of the transactions contemplated hereby,
                        will (A) violate any statute, regulation, rule,
                        injunction, judgment, order, decree, ruling, charge, or
                        other restriction of any Governmental Authority to which
                        the Buyer is subject or any provision of its charter or
                        bylaws or (B) conflict with, result in a breach of,
                        constitute a default under, result in the acceleration
                        of, create in any Party the right to accelerate,
                        terminate, modify, or cancel, or require any notice,
                        approval or consent under any agreement, contract,
                        lease, license, instrument, or other arrangement to
                        which the Buyer is a party or by which it is bound or to
                        which any of its assets is subject, including the LLC
                        Agreement, except for such violations, defaults,
                        breaches, or other occurrences that do not, individually
                        or in the aggregate, have a Material Adverse Effect on
                        such Buyer or material adverse effect on the ability of
                        the Buyer to consummate the transactions contemplated by
                        this Agreement, except for any requirements that have
                        been specifically waived herein by Seller.

                  (iv)  Brokers' Fees. The Buyer has no liability or obligation
                        to pay any fees or commissions to any broker, finder, or
                        agent with respect to the transactions contemplated by
                        this Agreement for which Seller could become liable or
                        obligated.

                  (v)   Investment. The Buyer is not acquiring the Membership
                        Interest with a view to or for sale in connection with
                        any distribution thereof within the meaning of the
                        Securities Act. The Buyer, together with its directors
                        and executive officers and advisors, is familiar with
                        investments of the nature of the Membership Interest,
                        understands that this investment involves substantial
                        risks, has adequately investigated the Membership
                        Interest, and has substantial knowledge and experience
                        in financial and business matters such that it is
                        capable of evaluating, and has evaluated, the merits and
                        risks inherent in purchasing the Membership Interest,
                        and is able to bear the economic risks of such
                        investment.

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                  (vi)  Financing. At Closing, the Buyer will have sufficient
                        immediately available funds (excluding financing tied
                        specifically to or secured primarily by the Membership
                        Interest) to enable it to make payment of the Purchase
                        Price at Closing without encumbrance or delay and
                        without causing the Buyer to become insolvent or to
                        declare insolvency.

                  (vii) Litigation. There is no litigation pending against
                        either of the Buyers or any of their respective
                        Affiliates that seeks to modify or prevent the
                        consummation of any of the transactions or related
                        agreements contemplated herein.

            (c)   Disclaimer of Representations and Warranties Concerning
                  Membership Interest. Each Buyer acknowledges that (a) it has
                  had and pursuant to this Agreement will have before Closing
                  reasonable access to the Seller (with respect to the
                  Membership Interest) and the officers and employees of the
                  Seller, and (b) in making the decision to enter into this
                  Agreement and consummate the transactions contemplated hereby,
                  the Buyer has relied solely on the basis of its knowledge of
                  Centennial and the Centennial Assets by virtue of its status
                  as a member of Centennial, its own independent investigation
                  and upon the express representations, warranties, covenants,
                  and agreements set forth in this Agreement. Accordingly, each
                  Buyer acknowledges that, except as expressly set forth in this
                  Agreement or in other written agreements, the Seller has not
                  made, and THE SELLER MAKES NO AND DISCLAIMS ANY REPRESENTATION
                  OR WARRANTY, WHETHER EXPRESS OR IMPLIED, WHETHER BY COMMON
                  LAW, STATUTE, OR OTHERWISE, REGARDING SELLER'S MEMBERSHIP
                  INTEREST OR ANY OF THE CENTENNIAL ASSETS REPRESENTED BY SUCH
                  MEMBERSHIP INTEREST, INCLUDING (i) THE QUALITY, CONDITION, OR
                  OPERABILITY OF ANY PERSONAL PROPERTY, EQUIPMENT, OR FIXTURES,
                  (ii) ITS MERCHANTABILITY, (iii) ITS FITNESS FOR ANY PARTICULAR
                  PURPOSE, OR (iv) ITS CONFORMITY TO MODELS, SAMPLES OF
                  MATERIALS OR MANUFACTURER DESIGN. Nothing in this Agreement,
                  including this Section 3(c), shall modify or terminate any
                  representation or warranty made by Seller or any of its
                  Affiliates or former Affiliates to Buyers, their Affiliates or
                  Centennial, in other written agreements or in connection with
                  other transactions, including without limitation, that certain
                  Formation Agreement dated as of August 10, 2000 by and among
                  PEPL, MAP and TEPPCO.

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      4. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the date of this Agreement and the Closing:

            (a)   General. Each Party will use its reasonable commercial efforts
                  to take all action and to do all things necessary, proper, or
                  advisable in order to consummate and make effective the
                  transactions contemplated by this Agreement.

            (b)   Notices and Consents. The Seller will give any notices to
                  third parties and will use its reasonable commercial efforts
                  to obtain any third party consents necessary for the
                  consummation of the transaction contemplated by this
                  Agreement. Each of the Parties will (and the Seller will and
                  each Buyer will cause its Affiliates to) give any notices to,
                  make any filings with, and use its reasonable commercial
                  efforts to obtain any authorizations, consents, and approvals
                  of Governmental Authorities or any Persons in connection with
                  the matters referred to in Section 3(a)(ii), Section 3(b)(ii)
                  and Section 4(b) so as to permit the Closing to occur by
                  February 14, 2003, or as soon thereafter as possible. The
                  Parties shall cooperate in the preparation of any filings
                  required to be made with any Governmental Agency in connection
                  with the transaction contemplated hereby.

            (c)   Full Access. The Seller will permit representatives of each
                  Buyer to have full access at all reasonable times, and in a
                  manner so as not to interfere with the normal business
                  operations of the Seller to all premises, properties,
                  personnel, books, records, contracts, and documents of or
                  pertaining to Seller's Membership Interest. Any information
                  obtained by a Buyer, its employees, representatives,
                  consultants, attorneys, agents, lenders and other advisors
                  under this Section 4(c) shall be considered and held
                  confidential. All "due diligence" activities of the Buyers
                  shall be conducted in accordance with applicable Laws and each
                  Buyer shall indemnify the Seller and its Affiliates from and
                  against all damages, losses and liabilities incurred as a
                  result of such Buyer's negligence or willful misconduct in the
                  conduct of such activities.

            (d)   Waiver of Buyers' Rights Under LLC Agreement. For the purposes
                  of this transaction only, each Buyer hereby waives its rights
                  under Section 10.04 of the LLC Agreement and hereby agrees
                  that the sale and purchase of Seller's Membership Interest is
                  to be consummated and governed by this Agreement.

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            (e)   Cash Calls. Each Buyer acknowledges that there are no
                  outstanding calls for capital contributions to be made by the
                  members of Centennial as of January 16, 2003. Subject to
                  Section 8(b) below, as of the date hereof, Seller shall be
                  relieved, and each of the Buyers shall cause Centennial to
                  relieve Seller, of any obligation to make any further capital
                  contributions to Centennial.

            (f)   Centennial Debt. Each Buyer shall use reasonable commercial
                  efforts to obtain the release of PEPL from its obligations as
                  Guarantor of the Centennial Project Debt with Prudential
                  Insurance Company of America ("Prudential") effective as of
                  the Closing Date or as soon thereafter as possible. From the
                  Closing Date until Prudential has advised PEPL that it has
                  been released of its obligations as Guarantor, each of the
                  Buyers, individually and limited to the extent of their
                  Post-Closing Membership Interest in Centennial, agrees to
                  defend and indemnify and hold PEPL harmless for all Adverse
                  Consequences, including without limitation the payment of
                  principal, interest and penalties and credit fees, if any,
                  incurred by PEPL as such Guarantor from and after the Closing
                  Date except to the extent such payments relate to matters
                  occurring prior to the Closing Date. Subject to Section 8(b)
                  below, as of the date of execution of this Agreement, PEPL and
                  its parent and Affiliates shall be relieved of their
                  responsibilities to make credit support payments to either of
                  the Buyers.

            (g)   Conduct of Business. Except as expressly provided elsewhere in
                  this Agreement, Seller agrees not (i) to sell transfer, pledge
                  or otherwise dispose of or encumber its Membership Interest;
                  (ii) to cancel or compromise any of the Centennial Project
                  Debt; (iii) other than voting its Membership Interest in any
                  action to come before the Centennial Board of Managers, to
                  take any action on behalf of or in the name of Centennial; or
                  (iv) to agree to do any of the foregoing.

            (h)   Maintenance Agreement. Seller shall cause its Affiliate CMS
                  Trunkline Gas Company ("Trunkline") and MAP shall cause its
                  Affiliate Marathon Ashland Pipe Line LLC ("MAPL") to execute
                  an amendment to the Maintenance Agreement dated May 4, 2001
                  between Trunkline and MAPL ("Maintenance Agreement") in the
                  form of Exhibit 4(h) hereto.

      5. Post-Closing Covenants. The Parties agree as follows:

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            (a)   General. If at any time after the Closing any further action
                  is necessary to carry out the purposes of this Agreement, each
                  of the Parties will take such further action (including the
                  execution and delivery of such further instruments and
                  documents) as the other Party reasonably may request, all at
                  the sole cost and expense of the requesting Party (unless the
                  requesting Party is entitled to indemnification therefor under
                  Section 7).

            (b)   Litigation Support. In the event and for so long as any Party
                  actively is contesting or defending against any action, suit,
                  proceeding, hearing, investigation, charge, complaint, claim,
                  or demand in connection with (i) any transaction contemplated
                  under this Agreement or (ii) any fact, situation,
                  circumstance, status, condition, activity, practice, plan,
                  occurrence, event, incident, action, failure to act, or
                  transaction on or before the Closing Date involving Centennial
                  or any of the Centennial Assets, the other Parties shall
                  cooperate with the contesting or defending Party and its
                  counsel in the defense or contest, make available its
                  personnel, and provide such testimony and access to its books
                  and records (other than books and records which are subject to
                  privilege or to confidentiality restrictions) as shall be
                  necessary in connection with the defense or contest, all at
                  the sole cost and expense of the contesting or defending Party
                  (unless the contesting or defending Party is entitled to
                  indemnification therefor under Section 7 or is adverse to such
                  other Party or Parties).

            (c)   Surety Bonds; Other Guarantees. In addition to the obligation
                  of the Buyers with respect to the Centennial Project Debt as
                  provided in Section 4(f) above, each of the Buyers or their
                  Affiliates, individually and limited to the extent of their
                  Post-Closing Membership Interest in Centennial, agrees to be
                  substituted as the surety or guarantor of those surety bonds
                  or other guarantees listed on Schedule 5(c), as well as any
                  other surety bonds or other guarantees as properly authorized
                  by Centennial, issued by the Seller or any of its Affiliates
                  with respect to Centennial or the Centennial Assets, effective
                  as of the Closing Date, but such substitution as surety or
                  guarantor shall not encompass any claims, obligations or
                  liabilities that may arise with respect to matters or events
                  occurring prior to the Closing Date under such surety bonds or
                  other guarantees. Buyers and Seller shall cooperate to effect
                  all such substitutions and each Buyer shall indemnify and hold
                  Seller and its Affiliates harmless from and against any
                  Adverse Consequences arising from and after the Closing due to
                  the failure of such Buyer or its Affiliate to be so
                  substituted.

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            (d)   Reimbursement Agreement. Each of the Buyers agrees to vote its
                  membership interest in support of the compliance by Centennial
                  with its obligation, pursuant to the existing terms and
                  conditions of the Reimbursement Agreement between Centennial
                  and Trunkline dated August 10, 2000, to reimburse Trunkline
                  for the agreed costs associated with the abandonment of
                  Trunkline's 26-inch natural gas pipeline subsequently
                  contributed to Centennial.

            (e)   Confidentiality Agreement. Upon consummation of the
                  transactions contemplated by this Agreement, Seller agrees
                  that it and its Affiliates and employees will maintain in
                  confidence and not use any and all information relating to
                  Centennial or its assets or operations, except for such
                  information as becomes public knowledge through no breach of
                  this or any other confidentiality undertaking or information
                  that it is required to be disclosed by Law or by order of a
                  Governmental Authority. Seller shall treat, and shall cause
                  its Affiliates and employees to treat, such confidential
                  information in the same manner as it treats its own
                  confidential business information.

            (f)   Records. On or as promptly as practicable after the Closing
                  Date, Seller shall, and shall cause its Affiliates to, deliver
                  to the Buyers or Centennial as the case may be, all records in
                  the possession of Seller or its Affiliates pertaining to the
                  operation of Centennial other than those Seller is required to
                  retain by law or for audit purposes. Seller shall maintain the
                  records which are not included in the records delivered to the
                  Buyers, and will make such records reasonably available,
                  without charge, to the Buyers at a reasonable place and time.
                  The Buyers shall be entitled to make copies thereof (at
                  Buyers' cost) as they shall deem necessary for purposes of
                  making such records available to appropriate Governmental
                  Authorities or for other proper corporate purposes in
                  connection with this Agreement or Centennial's business. As a
                  condition to such access, review and copying, Seller may
                  require that the Buyers keep all such records and data
                  contained therein confidential in the same manner as such
                  company would keep similar records of its own. Notwithstanding
                  the foregoing, Seller shall not be obligated to make available
                  any such records that are privileged or that Seller is
                  prohibited from disclosing by law.

                                       13
<PAGE>

            (g)   Right-of-Way Records. As soon as reasonably practicable after
                  the Closing Date, but in no event later than May 1, 2003,
                  Seller agrees to provide the Buyers and Centennial,
                  collectively, with (i) a copy of all right-of-way records,
                  including applicable easements and assignments, pertaining to
                  or affecting the Shared Rights-of-Way (as such term is defined
                  in the "Conveyance, Assignment and Bill of Sale" from
                  Trunkline Pipeline Holdings, Inc. (predecessor in interest to
                  Seller) to Centennial effective as of April 2, 2001), and (ii)
                  the originals of all right-of-way records, including
                  applicable easements and assignments, pertaining to or
                  affecting the Exclusive Rights-of-Way (as such term is defined
                  in the aforementioned "Conveyance, Assignment and Bill of
                  Sale"), to the extent such records are within the possession
                  and control of Seller or any of its Affiliates. Seller agrees
                  to provide the Buyers and Centennial, collectively, with
                  copies of any future amendments, extensions and renewals and
                  other changes and modifications (collectively, "Changes") to
                  or of any documents affecting the Shared Rights-of-Way as soon
                  as reasonably practicable following such Changes. Seller and
                  the Buyers and Centennial, collectively, shall cooperate and
                  endeavor to agree as to the manner and process by which the
                  records are to be copied and provided. Seller shall have the
                  right to use an outside contractor for such purpose, provided
                  that the selection of such contractor shall be subject to the
                  reasonable approval of the Buyers and Centennial,
                  collectively. The Buyers agree, or agree to cause Centennial,
                  to reimburse Seller or its designated Affiliate for Seller's
                  or its Affiliate's reasonable costs and expenses, including
                  its internal costs, incurred in copying or otherwise incurred
                  in providing such records within fifteen (15) days from their
                  receipt of an invoice for such costs and expenses. Buyers
                  agree, and will cause their Affiliates and Centennial and
                  employees to agree, to treat and maintain such records in the
                  same manner as they maintain their own right-of-way records.
                  Seller and the Buyers and Centennial, collectively, agree to
                  advise the other party of any issues, claims or controversies
                  alleged by Governmental Entities or Persons concerning the
                  Shared-Rights-of-Way and within the knowledge of such Party or
                  its Affiliates. Buyers further agree, and will cause their
                  Affiliates and Centennial and employees to agree, not to
                  initiate any conversations, discussions or negotiations of any
                  kind or nature with any landowner or other interest owner of
                  any of the properties covered by the Shared Rights-of-Way so
                  long as Trunkline or another Affiliate of Seller is
                  maintaining the Shared Rights-of-Way on behalf of Centennial
                  or its operator, without the express prior consent of Seller
                  or such Affiliate, which consent shall not

                                       14
<PAGE>

                  unreasonably be withheld. By January 31 of each year following
                  the Closing, or as soon thereafter as the required information
                  is available to Seller, Seller or its Affiliate agrees to
                  furnish the Buyers and Centennial, collectively, with a
                  certificate from one of its authorized officials certifying
                  that to the best of Seller's or such Affiliate's knowledge,
                  information and belief, all payments of any kind required to
                  have been paid during the previous calendar year in order to
                  maintain the validity and efficacy of the Shared Rights-of-Way
                  have been made. The Parties acknowledge and agree that nothing
                  in this subparagraph (g) shall be deemed (i) to affect any of
                  the rights and obligations of any of the Parties or of
                  Centennial, or any of their successors and permitted assigns,
                  pursuant to Section 11.7 of the Formation Agreement dated
                  August 10, 2000, or (ii) to enlarge or otherwise affect or
                  alter any of the "Assigned Rights in Shared Rights-of-Way" (as
                  such term is defined in the aforementioned "Assignment, Bill
                  of Sale and Conveyance") granted Centennial thereunder. To the
                  extent any of Seller's obligations under this subparagraph (g)
                  are duplicative of any of the obligations of Trunkline under
                  the Maintenance Agreement and/or any other agreements between
                  Trunkline and MAPL affecting the Maintenance Agreement while
                  the Maintenance Agreement and/or such agreements are in
                  effect, the performance of Seller or its Affiliate under this
                  subparagraph (g) or under the Maintenance Agreement and/or
                  such other agreements shall be deemed performance under all
                  such agreements.

      6.    Conditions to Obligation to Close.

            (a)   Conditions to Obligation of the Buyers. The obligation of the
                  Buyers to consummate the transactions to be performed by it in
                  connection with the Closing is subject to satisfaction of the
                  following conditions:

                  (i)   the representations and warranties of the Seller
                        contained in Section 3(a) shall be true and correct as
                        of the date of this Agreement and as of the Closing Date
                        (except to the extent expressly made as of a specific
                        date), except to the extent that any failures of such
                        representations and warranties to be so true and
                        correct, in the aggregate, would not have a Material
                        Adverse Effect on Seller or Centennial or a material
                        adverse effect on the ability of the Seller to
                        consummate the transactions contemplated hereby;

                  (ii)  the Seller shall have performed and complied with all of
                        its

                                       15
<PAGE>

                        covenants hereunder in all material respects through the
                        Closing;

                  (iii) there shall not be any injunction, judgment, order,
                        decree, ruling, or charge in effect preventing
                        consummation of any of the transactions contemplated by
                        this Agreement, nor shall there be any litigation
                        pending on behalf of any Governmental Authority that
                        seeks to modify or prevent the consummation of the
                        transactions contemplated herein;

                  (iv)  any and all required prior partnership approvals or
                        approvals of any Governmental Authority or Person or
                        otherwise called for in Schedules 3(a)(ii), 3(a)(iii),
                        3(b)(ii) and 3(b)(iii) shall have been received;

                  (v)   any and all required prior partnership approvals or
                        approvals of the Board of Directors or Board of Managers
                        of each of the Buyers shall have been obtained;

                  (vi)  To the extent provided for under applicable law, Seller
                        shall have delivered to Buyers certificates or other
                        writings issued by appropriate Governmental Authorities
                        evidencing that all applicable state franchise and
                        similar taxes have been paid in the states of Delaware,
                        Texas and Illinois;

                  (vii) The deliveries called for by Section 2(d) shall have
                        occurred;

                 (viii) Trunkline shall have executed an amendment to the
                        Maintenance Agreement as contemplated in Section 4(h)
                        hereof in the form of Exhibit 4(h) hereto and delivered
                        same to Buyers.

                  (ix)  The Seller shall have delivered to the Buyers any
                        required consent of Southern Union Panhandle Corp. as
                        contemplated by Section 3(a)(ii) for the transactions
                        contemplated by this Agreement, specifically including
                        the amendment the Maintenance Agreement, in form
                        satisfactory to the Buyers; and

                  (x)   The Seller shall have delivered to the Buyers a
                        certificate, signed by an appropriate officer of Seller,
                        to the effect that (a) each of the conditions specified
                        in subsection 6(a)(i) through 6(a)(ix) has been
                        satisfied in all respects, and (b) certifying as to the
                        accuracy and completeness of the copies of, as well as
                        the current effectiveness

                                       16
<PAGE>

                        of, the resolutions attached thereto as the approval by
                        the Board of Managers of Seller authorizing the
                        execution, delivery and performance of this Agreement
                        and the consummation of the transactions contemplated
                        herein and the incumbency of the officer executing this
                        Agreement on behalf of Seller and any other documents to
                        be executed at the Closing.

                  Each Buyer may waive on its own behalf any condition specified
                  in this Section 6(a) if it executes a writing so stating at or
                  before the Closing.

            (b)   Conditions to Obligation of the Seller. The obligation of the
                  Seller to consummate the transactions to be performed by it in
                  connection with the Closing is subject to satisfaction of the
                  following conditions:

                  (i)   the representations and warranties of each Buyer
                        contained in Section 3(b) shall be true and correct as
                        of the date of this Agreement and as of the Closing Date
                        (except to the extent expressly made as of a specific
                        date), except to the extent that any failures of such
                        representations and warranties to be so true and
                        correct, in the aggregate, would not have a material
                        adverse effect on the ability of such Buyer to
                        consummate the transactions contemplated hereby;

                  (ii)  each Buyer shall have performed and complied with all of
                        its covenants hereunder in all material respects through
                        the Closing;

                  (iii) there shall not be any injunction, judgment, order,
                        decree, ruling, or charge in effect preventing
                        consummation of any of the transactions contemplated by
                        this Agreement, nor shall there be any litigation
                        pending on behalf of any Governmental Authority that
                        seeks to modify or prevent the consummation of the
                        transactions contemplated herein;

                  (iv)  any and all required prior approvals of any Governmental
                        Authority or Person or otherwise called for in Schedules
                        3(a)(ii), 3(a)(iii), 3(b)(ii) and 3(b)(iii) shall have
                        been received;

                  (v)   any and all required prior approvals of the Board of
                        Managers of Seller shall have been obtained;

                                       17
<PAGE>

                  (vi)  the deliveries called for by Section 2(d) shall have
                        occurred;

                  (vii) MAPL shall have executed an amendment to the Maintenance
                        Agreement as contemplated in Section 4(h) hereof in the
                        form of Exhibit 4(h) hereto and delivered same to
                        Seller;

                 (viii) each Buyer shall have delivered to Seller a
                        certificate, signed by an appropriate officer of such
                        Buyer, to the effect that (a) each of the conditions
                        specified in subsection 6(b)(i) through 6(b)(vii) as
                        applicable to such Buyer has been satisfied in all
                        respects, and (b) certifying as to the accuracy and
                        completeness of the copies of, as well as the current
                        effectiveness of, the resolutions attached thereto as
                        the approval by the Board of Directors or Board of
                        Managers, as applicable, of such Buyer authorizing the
                        execution, delivery and performance of this Agreement
                        and the consummation of the transactions contemplated
                        herein and the incumbency of the officers executing this
                        Agreement on behalf of such Buyer and any other
                        documents to be executed at the Closing.

The Seller may waive any condition specified in this Section 7(b) if it executes
a writing so stating at or before the Closing.

      7. Remedies for Breaches of this Agreement.

            (a)   Survival of Representations, Warranties and Certain Covenants.
                  All of the representations and warranties of the Seller
                  contained in Section 3 (other than Section 3(a)(v)) shall
                  survive the Closing hereunder for a period of 18 months after
                  the date of the Closing; and the representations and
                  warranties in Section 3(a)(v) shall survive the Closing
                  indefinitely. The representations and warranties of the Buyers
                  contained in Section 3 shall survive the Closing for a period
                  of 18 months after the date of the Closing. Except as
                  otherwise provided herein, the covenants contained in this
                  Agreement to be performed after the Closing shall survive the
                  Closing indefinitely.

                                       18
<PAGE>

            (b)   Indemnification Provisions for Benefit of the Buyers.

                  (i)   Subject to the provisions of Section 7(a), in the event
                        the Seller breaches any of its representations,
                        warranties, and covenants contained in this Agreement,
                        the Seller agrees to indemnify each of the Buyers from
                        and against any Adverse Consequences to the extent they
                        are caused proximately by any such breach and suffered
                        by the Buyers before, during and after the date of the
                        claim for indemnification; provided, however, that
                        Seller shall have no obligation to indemnify Buyers from
                        any such Adverse Consequences unless a bona fide written
                        claim for indemnification pursuant to Section 9(g) is
                        delivered to Seller during the 18-month period after the
                        date of the Closing, except with respect to claims for
                        indemnification with respect to the representation and
                        warranties in Section 3(a)(v) for which there shall be
                        no time limitations;

                  (ii)  Except for the rights of indemnification provided in
                        this Section 7, the Buyers hereby waive any claim or
                        cause of action pursuant to common or statutory law or
                        otherwise against the Seller or its parent or Affiliates
                        regarding obligations and liabilities of any nature
                        whatsoever that are attributable to the transfer of the
                        Membership Interest pursuant to this Agreement, whether
                        arising before or after the Closing Date.

      (c)   Indemnification Provisions for the Benefit of the Seller. Subject to
            the provisions of Section 7(a), in the event a Buyer breaches any of
            its representations, warranties and covenants contained herein, that
            the Buyer agrees to indemnify the Seller from and against any
            Adverse Consequences caused proximately by the breach and suffered
            by the Seller before, during or after the date of the claim for
            indemnification; provided however, that Buyers shall have no
            obligation to indemnify Sellers from any such Adverse Consequences
            unless a bona fide written claim for indemnification is delivered to
            Buyers in accordance with Section 9(g) during the 18-month period
            after the date of the Closing.

                                       19
<PAGE>

            (d)   Matters Involving Third Parties.

                  (i)   If any third party shall notify any Party (the
                        "Indemnified Party") with respect to any matter (a
                        "Third Party Claim") that may give rise to a claim for
                        indemnification against any other Party (the
                        "Indemnifying Party") under this Section 7, then the
                        Indemnified Party shall promptly notify the Indemnifying
                        Party thereof in writing;

                  (ii)  The Indemnifying Party will have the right to assume and
                        thereafter conduct the defense of the Third Party Claim
                        with counsel of its choice reasonably satisfactory to
                        the Indemnified Party; provided, however, that the
                        Indemnifying Party will not consent to the entry of any
                        judgment or enter into any settlement with respect to
                        the Third Party Claim without the prior written consent
                        of the Indemnified Party (not to be withheld
                        unreasonably) unless the judgment or proposed settlement
                        involves only the payment of money damages and does not
                        impose an injunction or other equitable relief upon the
                        Indemnified Party;

                  (iii) Unless and until the Indemnifying Party assumes the
                        defense of the Third Party Claim as provided in
                        subsection 7(d)(ii), the Indemnified Party may defend
                        against the Third Party Claim in any manner it
                        reasonably may deem appropriate; and

                  (iv)  In no event will the Indemnified Party consent to the
                        entry of any judgment or enter into any settlement with
                        respect to the Third Party Claim without the prior
                        written consent of the Indemnifying Party which consent
                        shall not be withheld unreasonably.

            (e)   Determination of Amount of Adverse Consequences. The Adverse
                  Consequences giving rise to any indemnification obligation
                  hereunder shall be limited to the actual loss suffered by the
                  Indemnified Party (i.e., reduced by any insurance proceeds or
                  other payment or recoupment received, realized or retained by
                  the Indemnified Party as a result of the events giving rise to
                  the claim for indemnification net of any expenses related to
                  the receipt of such proceeds, payment or recoupment, including
                  retrospective premium adjustments, if any). Upon the request
                  of the Indemnifying Party, the Indemnified Party shall provide
                  the Indemnifying Party with information sufficient to allow
                  the Indemnifying Party to

                                       20
<PAGE>

                  calculate the amount of the indemnity payment in accordance
                  with this Section 7(e). An indemnified party shall take all
                  reasonable steps to mitigate damages in respect of any claim
                  for which it is seeking indemnification and shall use
                  reasonable best efforts to avoid any costs or expenses
                  associated with such claim and, if such costs and expenses
                  cannot be avoided, to minimize the amount thereof.

      8. Termination.

            (a)   Termination of Agreement. The Parties may terminate this
                  Agreement as provided below:

                  (i)   The Buyers and the Seller may terminate this Agreement
                        by mutual written consent of all Parties at any time
                        before the Closing;

                  (ii)  Either Buyer may terminate this Agreement by giving
                        written notice to the Seller at any time before Closing
                        in the event the Seller has breached any representation,
                        warranty or covenant contained in this Agreement in any
                        material respect, the Buyer has notified the Seller of
                        the breach, the breach has continued without cure for a
                        period of 10 days after the notice of breach and such
                        breach would result in a failure to satisfy a condition
                        to Buyer's obligation to consummate the transactions
                        contemplated hereby;

                  (iii) The Seller may terminate this Agreement by giving
                        written notice to the Buyers at any time before the
                        Closing in the event a Buyer has breached any
                        representation, warranty or covenant contained in this
                        Agreement in any material respect, the Seller has
                        notified the Buyer of the breach, the breach has
                        continued without cure for a period of 10 days after the
                        notice of breach and such breach would result in a
                        failure to satisfy a condition to Seller's obligation to
                        consummate the transactions contemplated hereby;

                  (iv)  Either of the Buyers or the Seller may terminate this
                        Agreement if any court of competent jurisdiction or any
                        governmental, administrative or regulatory authority,
                        agency or body shall have issued an order, decree or
                        ruling or shall have taken any other action permanently
                        enjoining, restraining or otherwise prohibiting the
                        transactions contemplated hereby and such order, decree,
                        ruling or other action shall have become final and
                        nonappealable; or

                                       21
<PAGE>

                  (v)   Either of the Buyers or the Seller may terminate this
                        Agreement if Closing has not occurred by March 1, 2003
                        (unless the Parties agree to extend such date, in which
                        event, by such extended date), unless such failure to
                        close by such date is due to the breach by the Party
                        seeking to terminate of any of its representations,
                        warranties or covenants under this Agreement.

            (b)   Effect of Termination. If any Party terminates this Agreement
                  pursuant to Section 8(a), all rights and obligations of the
                  Parties hereunder shall terminate without any liability of any
                  Party to any other Party (except for any liability of any
                  Party then in breach); provided however, that the
                  confidentiality provisions agreed to herein shall survive
                  termination. In the event of a termination, all of Seller's or
                  its Affiliates' obligations to the Buyers or Centennial,
                  including without limitation, the making of capital
                  contributions, or the payment of credit support payments,
                  shall be reinstated retroactive to January 16, 2003 and Seller
                  shall make such payments within five business days after the
                  termination of this Agreement. Likewise, the Buyers'
                  agreements herein to assume any obligations of Seller or its
                  Affiliates and to indemnify and defend Seller and its
                  Affiliates with respect thereto shall terminate as of the
                  effective dates of such undertakings and shall be of no force
                  or effect. If, prior to the termination of this Agreement, any
                  payments are made or other obligations undertaken by either
                  Buyer in conjunction with such assumed obligations or
                  agreements to defend and indemnify, Seller shall promptly upon
                  such termination assume all such obligations and agreements
                  and shall promptly reimburse the Buyers within five business
                  days after the termination of this Agreement. Likewise, in
                  such event, the release of Seller, PEPL, their parents and
                  Affiliates of any obligations or responsibilities to make
                  payments or otherwise shall be terminated as of the effective
                  date of such release and shall be of no force and effect.

      9. Miscellaneous.

      (a)   No Joint Liability. The rights, entitlements and obligations of the
            Buyers shall be several, and not joint or joint and several, and
            shall be in the ratio of their Post-Closing Membership Interest in
            Centennial.

      (b)   Press Releases and Public Announcements. No Party shall issue any
            press release or make any public announcement relating to the
            subject matter of this Agreement before the Closing without the
            prior written approval of

                                       22
<PAGE>

            the other Parties; provided that any Party may make any public
            disclosure it believes in good faith is required by applicable Law
            or any listing or trading agreement concerning its publicly traded
            securities (in which case the disclosing Party will use its
            reasonable best efforts to advise the other Parties before making
            the disclosure).

            (c)   No Third Party Beneficiaries. Except as specifically provided
                  herein, this Agreement shall not confer any rights or remedies
                  upon any Person other than the Parties and their respective
                  successors and permitted assigns.

            (d)   Succession and Assignment. This Agreement shall be binding
                  upon and inure to the benefit of the Parties named herein and
                  their respective successors and permitted assigns. No Party
                  may assign either this Agreement or any of its rights,
                  interests or obligations hereunder without the prior written
                  approval of the other Parties, except that a Buyer may assign
                  its rights hereunder to an Affiliate, provided that such Buyer
                  shall continue to be responsible and liable for its
                  obligations hereunder.

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

            (f)   Headings. The section headings contained in this Agreement are
                  inserted for convenience only and shall not affect in any way
                  the meaning or interpretation of this Agreement.

            (g)   Notices. All notices, requests. demands, claims, and other
                  communications hereunder will be in writing. Any notice,
                  request, demand, claim, or other communication hereunder shall
                  be deemed duly given two business days after it is sent by
                  registered or certified mail, return receipt requested,
                  postage prepaid, and addressed to the intended recipient as
                  set forth below:

      If to the Seller:   CMS Panhandle Holdings, LLC
                          5444 Westheimer Road, Suite 500
                          Houston, Texas 77056
                          Attention: President

                          With a copy to:
                          CMS Gas Transmission Company
                          Fairlane Plaza North
                          330 Town Center Drive, Suite 3000
                          Dearborn, Michigan 48126
                          Attention: General Counsel

                                       23
<PAGE>

      If to either or both Buyers:
                         Marathon Ashland Petroleum LLC
                         539 South Main Street
                         Findlay, Ohio 45840
                         Attention: Vice President, Business Development

                                    -- and --

                         TE Products Pipeline Company, LP
                         P. O. Box 2521
                         Houston, Texas 77252
                         Attention: President and CEO

                  Any Party may send any notice, request, demand, claim, or
                  other communication hereunder to the intended recipient at the
                  addresses set forth above using any other means (including
                  personal delivery, expedited courier, messenger service,
                  telecopy, facsimile, ordinary mail, or electronic mail), but
                  no such notice, request, demand, claim, or other communication
                  shall be deemed to have been duly given unless and until it
                  actually is received by the intended recipient. Any Party may
                  change the address to which notices, requests, demands,
                  claims, and other communications hereunder are to be delivered
                  by giving the other Party notice in the manner herein set
                  forth.

            (h)   Governing Law. This Agreement shall be governed by and
                  construed in accordance with the domestic Laws of the state of
                  Delaware without giving effect to any choice or conflict of
                  law provision or rule (whether of the state of Delaware or any
                  other jurisdiction) that would cause the application of the
                  Laws of any jurisdiction other than the state of Delaware.

            (i)   Amendments and Waivers. No amendment of any provision of this
                  Agreement shall be valid unless the same shall be in writing
                  and signed by the Buyers and the Seller. No waiver by any
                  Party of any default, misrepresentation, or breach of warranty
                  or covenant hereunder, whether intentional or not, shall be
                  deemed to extend to any prior or subsequent default,
                  misrepresentation, or breach of warranty or covenant hereunder
                  or affect in any way any rights arising by virtue of any prior
                  or subsequent such occurrence

            (j)   Severability. Any term or provision of this Agreement that is
                  invalid or unenforceable in any situation in any jurisdiction
                  shall not affect the validity or enforceability of the
                  remaining terms and provisions hereof or

                                       24
<PAGE>

                  the validity or enforceability of the offending term or
                  provision in any other situation or in any other jurisdiction.

            (k)   Transaction Expenses. Each of the Buyer and the Seller will
                  bear its own costs and expenses (including legal fees and
                  expenses) incurred in connection with this Agreement and the
                  transactions contemplated hereby.

            (l)   Construction. The Parties have participated jointly in the
                  negotiation and drafting of this Agreement. In the event an
                  ambiguity or question of intent or interpretation arises, this
                  Agreement shall be construed as if drafted jointly by the
                  Parties and no presumption or burden of proof shall arise
                  favoring or disfavoring any Party by virtue of the authorship
                  of any of the provisions of this Agreement. Any reference to
                  any federal, state, local, or foreign statute or Law shall be
                  deemed also to refer to all rules and regulations promulgated
                  thereunder, unless the context requires otherwise. The word
                  "including" shall mean including without limitation.

            (m)   Incorporation of Exhibits and Schedules. The Exhibits and
                  Schedules identified in this Agreement are incorporated herein
                  by reference and made a part hereof.

            (n)   ENTIRE AGREEMENT. THIS AGREEMENT (INCLUDING THE DOCUMENTS
                  REFERRED TO HEREIN) CONSTITUTES THE ENTIRE AGREEMENT AMONG THE
                  PARTIES AND SUPERSEDES ANY PRIOR UNDERSTANDINGS, AGREEMENTS,
                  OR REPRESENTATIONS BY OR AMONG THE PARTIES, WRITTEN OR ORAL,
                  WITH RESPECT TO THE SUBJECT MATTER HEREOF.

                                       25
<PAGE>

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

                                      CMS PANHANDLE HOLDINGS, LLC

                                      By: /s/ CHRISTOPHER A. HELMS
                                          --------------------------------------
                                      Name: Christopher A. Helms
                                            ------------------------------------
                                      Title: President
                                             -----------------------------------

                                      MARATHON ASHLAND PETROLEUM LLC

                                      By: /s/ A. R. KENNEY
                                          --------------------------------------
                                      Name: A.R. Kenney
                                            ------------------------------------
                                      Title: Vice President Business Development
                                             -----------------------------------

                                      TE PRODUCTS PIPELINE COMPANY, LIMITED
                                      PARTNERSHIP
                                         By: TEPPCO GP, Inc.,
                                                Its General Partner

                                      By: /s/ CHARLES H. LEONARD
                                          --------------------------------------
                                      Name: Charles H. Leonard
                                            ------------------------------------
                                      Title:: Senior Vice President
                                              ----------------------------------

                                       26
<PAGE>

                                                                    EXHIBIT 2(d)

                            ASSIGNMENT AND CONVEYANCE

THIS ASSIGNMENT AND CONVEYANCE, made and entered into effective as of the
_____day of __________________, 2003, by and between CMS PANHANDLE HOLDINGS,
LLC, a Delaware limited liability company ("ASSIGNOR") and TE PRODUCTS PIPELINE
COMPANY, LIMITED PARTNERSHIP, a Delaware limited partnership ("ASSIGNEE").

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

      WHEREAS, ASSIGNOR'S predecessor in interest Panhandle Eastern Pipe Line
Company, ASSIGNEE and Marathon Ashland Petroleum LLC ("Marathon") are parties to
that certain Amended and Restated Limited Liability Company Agreement of
Centennial Pipeline LLC dated August 10, 2000 (the "Centennial LLC Agreement");
and

      WHEREAS, ASSIGNOR, ASSIGNEE and Marathon are parties to that certain LLC
Membership Interest Purchase Agreement dated as of _______________________, 2003
pursuant to which ASSIGNOR agreed to sell its membership interest in Centennial
Pipeline, LLC ("Centennial") to ASSIGNEE and Marathon, in equal shares, and
ASSIGNEE and Marathon agreed to purchase such membership interest from ASSIGNOR;
and

      WHEREAS, ASSIGNOR and ASSIGNEE desire to consummate the agreement of the
parties to the LLC Membership Interest Purchase Agreement with respect to the
share of ASSIGNOR's membership interest in Centennial to be sold to and
purchased by ASSIGNEE.

      NOW, THEREFORE, for the consideration set forth and agreed to in the
aforesaid LLC Membership Interest Purchase Agreement, ASSIGNOR does by these
presents ASSIGN, TRANSFER AND CONVEY unto ASSIGNEE one-half of ASSIGNOR's 33
1/3% membership interest (or a total of 16 2/3%) in Centennial together with all
of ASSIGNOR'S rights, title, and interest associated with such share of such
membership interest (collectively "Membership Rights") pursuant to the
Centennial LLC Agreement.

      TO HAVE AND TO HOLD the Membership Rights together with all other rights
thereunto belonging to ASSIGNEE, its successors and assigns.
<PAGE>

      ASSIGNEE hereby accepts and assumes, and agrees to perform all of
ASSIGNOR'S duties and obligations arising from and after the Effective Date
hereof under and with respect to the Membership Rights assigned hereunder.

      This Assignment is being made pursuant to the LLC Membership Interest
Purchase Agreement referenced above. In addition to the express representations,
warranties, covenants and conditions set forth hereinabove, this Assignment
shall be subject to each of the representations, warranties, covenants and
conditions contained in said LLC Membership Interest Purchase Agreement.

      IN WITNESS WHEREOF, each of the parties hereto has caused this Assignment
and Conveyance to be executed by its duly authorized official effective as of
the ______ day of _____________, 2003 ("Effective Date").

                                    CMS PANHANDLE HOLDINGS, LLC

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                    TE PRODUCTS PIPELINE COMPANY, LIMITED
                                      PARTNERSHIP
                                       By: TEPPCO GP, Inc. Its General Partner

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                       2
<PAGE>

                                                                    EXHIBIT 2(d)

                            ASSIGNMENT AND CONVEYANCE

      THIS ASSIGNMENT AND CONVEYANCE, made and entered into effective as of the
_____day of __________________, 2003, by and between CMS PANHANDLE HOLDINGS,
LLC, a Delaware limited liability company ("ASSIGNOR") and MARATHON ASHLAND
PETROLEUM LLC, a Delaware limited liability company ("ASSIGNEE").

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

      WHEREAS, ASSIGNOR'S predecessor in interest Panhandle Eastern Pipe Line
Company, ASSIGNEE and TE Products Pipeline Company, Limited Partnership
("TEPPCO") are parties to that certain Amended and Restated Limited Liability
Company Agreement of Centennial Pipeline LLC dated August 10, 2000 (the
"Centennial LLC Agreement");

      WHEREAS, ASSIGNOR, ASSIGNEE and TEPPCO are parties to that certain LLC
Membership Interest Purchase Agreement dated as of _______________________, 2003
pursuant to which ASSIGNOR agreed to sell its membership interest in Centennial
Pipeline, LLC ("Centennial") to ASSIGNEE and TEPPCO, in equal shares, and
ASSIGNEE and TEPPCO agreed to purchase such membership interest from ASSIGNOR;
and

      WHEREAS, ASSIGNOR and ASSIGNEE desire to consummate the agreement of the
parties to the LLC Membership Interest Purchase Agreement with respect to the
share of ASSIGNOR's membership interest in Centennial to be sold to and
purchased by ASSIGNEE.

      NOW, THEREFORE, for the consideration set forth and agreed to in the
aforesaid LLC Membership Interest Purchase Agreement, ASSIGNOR does by these
presents ASSIGN, TRANSFER AND CONVEY unto ASSIGNEE one-half of ASSIGNOR's 33
1/3% membership interest (or a total of 16 2/3%) in Centennial together with all
of ASSIGNOR's rights, title, and interest associated with such share of such
membership interest (collectively "Membership Rights") pursuant to the
Centennial LLC Agreement.

      TO HAVE AND TO HOLD the Membership Rights together with all other rights
thereunto belonging to ASSIGNEE, its successors and assigns.

<PAGE>

      ASSIGNEE hereby accepts and assumes, and agrees to perform, all of
ASSIGNOR'S duties and obligations arising from and after the Effective Date
hereof under and with respect to the Membership Rights assigned hereunder.

      This Assignment is being made pursuant to the LLC Membership Interest
Purchase Agreement referenced above. In addition to the express representations,
warranties, covenants and conditions set forth hereinabove, this Assignment
shall be subject to each of the representations, warranties, covenants and
conditions contained in said LLC Membership Interest Purchase Agreement.

      IN WITNESS WHEREOF, each of the parties hereto has caused this Assignment
and Conveyance to be executed by its duly authorized official effective as of
the ______ day of _____________, 2003 ("Effective Date").

                                    CMS PANHANDLE HOLDINGS, LLC

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                    MARTHON ASHLAND PETROLEUM LLC

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                       2
<PAGE>

                                                                    EXHIBIT 4(h)

                       AMENDMENT TO MAINTENANCE AGREEMENT

      THIS AMENDMENT, dated and effective as of the _____day of
___________________, 2003, between CMS TRUNKLINE GAS COMPANY, LLC, a Delaware
limited liability company, formerly known as Trunkline Gas Company ("TGC") and
MARATHON ASHLAND PIPE LINE, LLC, a Delaware limited liability company ("MAPL").
TGC and MAPL are at times hereinafter referred to individually as a "Party" and
collectively as "Parties".

                                   WITNESSETH:

      WHEREAS, TGC and MAPL are parties to that certain "Maintenance Agreement"
made and entered into as of May 4, 2001 (the "Maintenance Agreement"), pursuant
to which TGC agreed to maintain the Trunkline 26 portion of the Long Haul System
of the Centennial Line on behalf of MAPL, the Operator of the Centennial Line,
as those terms are defined in said Maintenance Agreement;

      WHEREAS, TGC and MAPL executed a certain Memorandum of Understanding in
January 2002 (the "MOU") which further defined the scope of TGC's obligations
under the Maintenance Agreement; and

      WHEREAS, pursuant to a "LLC Membership Interest Purchase Agreement"
entered into concurrently herewith among the members of Centennial Pipeline LLC,
which include affiliates of the Parties hereto, the parties to that agreement
have agreed on certain amendments to be made to the Maintenance Agreement: and

      WHEREAS, the Parties hereto now desire to carry out the agreement of the
parties to said LLC Membership Interest Purchase Agreement and to that end do
hereby agree to amend the Maintenance Agreement as herein provided.

      NOW THEREFORE, for and in consideration of the premises and the mutual
benefits, covenants and agreements herein contained, the Parties hereto agree as
follows:

      1.    Section 2.2 Term of the Maintenance Agreement shall be deleted in
            its entirety and the following substituted therefor:

            "2.2 Term. This Agreement shall run for a period which is the
            shorter of the following: (a) the period during which TGC or one of
            its Affiliates owns and operates one or more natural gas pipelines
            on the Shared Rights-of-Way; or (b) the period during
<PAGE>

            which the Trunkline 26 remains in use and operation; or (c) the
            period ending December 31, 2005 (the "Term"). The right of TGC to
            maintain the Trunkline 26 portion of the Long Haul System pursuant
            to this Agreement shall be binding on the successors and assigns of
            MAPL, in its capacity as operator of the Trunkline 26 portion of the
            Long Haul System."

      2.    Section 2.4(a) of the Maintenance Agreement shall be deleted in its
            entirety and the following substituted therefor:

            "(a)  TGC shall neglect or fail to perform any or all of its
                  obligations under this Agreement or the MOU and after thirty
                  (30) days written notice of such default fails to rectify the
                  same; or"

      3.    The first sentence of Section 5.1 Fee of the Maintenance Agreement
            shall be deleted in its entirety and the following substituted
            therefor: "TGC shall be paid an annual fee (the "Fee") of Two
            Million Five Hundred Thousand Dollars ($2,500,000) per year;
            provided, that for the calendar years 2003, 2004 and 2005, the Fee
            shall be Two Million Dollars ($2,000,000)."

      4.    Section 6.1 of the Maintenance Agreement shall be deleted in its
            entirety and the following substituted therefor:

            "6.1  (A) MAPL HEREBY AGREES TO RELEASE, INDEMNIFY, HOLD HARMLESS
                  AND DEFEND TGC AND THE COMPANY, THEIR RESPECTIVE AFFILIATES
                  AND THEIR RESPECTIVE OFFICERS, BOARD OF MANAGERS, DIRECTORS,
                  MEMBERS, EMPLOYEES, SUCCESSORS AND ASSIGNS FROM AND AGAINST
                  ANY AND ALL DAMAGES ARISING OUT OF, IN ANY WAY RELATING TO, OR
                  IN ANY DEGREE CAUSED BY THE OPERATION OF THE CENTENNIAL LINE,
                  EXCEPT FOR ANY SUCH DAMAGES ALLEGED TO RESULT FROM TGC'S
                  NEGLIGENCE OR WILLFUL MISCONDUCT, AND WHETHER OCCURRING AS THE
                  SOLE OR A CONCURRENT CAUSE OF AN ACT OR EVENT GIVING RISE TO
                  AN INDEMNITY OBLIGATION HEREUNDER. TGC AND MAPL AGREE THAT THE
                  INDEMNITY PROVIDED BY THIS SECTION IS TO BE CONSTRUED SO THAT
                  IT IS AS BROAD AS IS PERMISSIBLE BY LAW, AND IS SUBJECT ONLY
                  TO THOSE EXCEPTIONS AND LIMITATIONS REQUIRED FOR THIS
                  INDEMNITY TO BE AND REMAIN VALID UNDER APPLICABLE LAW.

                                       2
<PAGE>

            (B)   TGC HEREBY AGREES TO RELEASE, INDEMNIFY, HOLD HARMLESS AND
                  DEFEND MAPL, ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS,
                  BOARD OF MANAGERS, DIRECTORS, MEMBERS, EMPLOYEES, SUCCESSORS
                  AND ASSIGNS FROM AND AGAINST ANY AND ALL DAMAGES ARISING OUT
                  OF, IN ANY WAY RELATING TO, OR IN ANY DEGREE CAUSED BY THE
                  OPERATION OF THE LONG HAUL SYSTEM ALLEGED TO RESULT FROM TGC'S
                  NEGLIGENCE OR WILLFUL MISCONDUCT IN THE PERFORMANCE OF ITS
                  OBLIGATIONS UNDER THIS AGREEMENT, AND WHETHER OCCURRING AS THE
                  SOLE OR A CONCURRENT CAUSE OF AN ACT OR EVENT GIVING RISE TO
                  AN INDEMNITY OBLIGATION HEREUNDER. TGC AND MAPL AGREE THAT THE
                  INDEMNITY PROVIDED BY THIS SECTION IS TO BE CONSTRUED SO THAT
                  IT IS AS BROAD IN SCOPE AS IS PERMISSIBLE BY LAW, AND IS
                  SUBJECT ONLY TO THOSE EXCEPTIONS AND LIMITATIONS REQUIRED FOR
                  THIS INDEMNITY TO BE AND REMAIN VALID UNDER APPLICABLE LAW."

      5.    The first sentence of Section 6.8 Settlements of the Maintenance
            Agreement shall be deleted in its entirety and the following
            substituted therefor: "All Claims for Damages against MAPL (i)
            arising out of or in any way relating to the Operation of the Long
            Haul System and (ii) not discharged by insurance required hereunder
            shall be defended by TGC, with the approval of MAPL, at the expense
            of MAPL but no claim for Damages against MAPL or TGC shall be
            settled by TGC for a sum in excess of Ten Thousand Dollars
            ($10,000), and no multiple claims for Damages against MAPL or TGC
            shall be settled by TGC for a cumulative sum in excess of Twenty
            Thousand Dollars ($20,000) without prior approval of MAPL or such
            person or persons as may be authorized by MAPL to approve such
            settlements.

      6.    Unless otherwise specifically provided herein, the capitalized terms
            used in this Amendment shall have the same meaning ascribed to those
            terms in the Maintenance Agreement.

      7.    This Amendment shall be effective as of the effective date of the
            Assignment and Conveyance provided for in the above-referenced LLC
            Membership Interest Purchase Agreement.

      8.    As amended hereby, the Maintenance Agreement shall remain in effect
            according to its original terms

                                       3
<PAGE>

      IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed
in multiple counterparts, each of which shall be an original but which when
taken together shall be deemed but one and the same instrument, effective as
provided herein.

                                    CMS TRUNKLINE GAS COMPANY, LLC

                                    By: ________________________________________

                                    Title: _____________________________________

                                    MARATHON ASHLAND PIPE LINE LLC

                                    By: ________________________________________

                                    Title: _____________________________________

                                       4
<PAGE>

                                    SCHEDULES

                                SCHEDULE 3(a)(ii)

1.    APPROVAL REQUIRED FROM SELLER'S BOARD OF MANAGERS.

2.    APPROVAL REQUIRED FROM SOUTHERN UNION PANHANDLE CORP. FOR AMENDMENT TO
      MAINTENANCE AGREEMENT AS CONTEMPLATED BY SECTION 4(H).

3.    NOTICE REQUIRED TO PRUDENTIAL INSURANCE COMPANY OF AMERICA OF TRANSFER OF
      SELLER'S MEMBERSHIP INTEREST.

<PAGE>

                                    SCHEDULES

                               SCHEDULE 3(a)(iii)

NONE.

<PAGE>

                                    SCHEDULES

                                SCHEDULE 3(b)(ii)

1.    APPROVAL REQUIRED FROM TEPPCO'S BOARD OF DIRECTORS.

2.    APPROVAL REQUIRED FROM MAP'S BOARD OF MANAGERS.

<PAGE>

                                    SCHEDULES

                               SCHEDULE 3(b)(iii)

      1. NOTICE REQUIRED TO PRUDENTIAL INSURANCE COMPANY OF AMERICA OF TRANSFER
OF SELLER'S MEMBERSHIP INTEREST TO BUYERS.

<PAGE>

                                    SCHEDULES

                                  SCHEDULE 5(c)

                             CENTENNIAL PIPELINE LLC
                       SAFECO INSURANCE COMPANY OF AMERICA
                               MASTER BOND LISTING

<TABLE>
<CAPTION>
 Bond No.       Origin          Expiration   Bond Type     Obligee
 --------       ------          ----------   ---------     -------
<S>           <C>               <C>          <C>           <C>
 6070758      12/31/01          12/31/03      Permit       William County Highway Department
                                                           Marion, Illinois

 6095613      12/15/00          12/15/03      Permit       Orange County, Texas - Orange County Courthouse
                                                           Orange, Texas

 6095688      04/05/01          04/05/03      Permit       Illinois Department of Transportation
                                                           Springfield, Illinois

 6112681      06/29/01          06/29/03      Permit       Commonwealth of Kentucky - Transportation Cabinet
                                                           District Office No. One
                                                           Paducah, Kentucky

 6112698      08/13/01          08/13/03       Court       U.S. District Court of Newton County, Texas
                                              (Cost)       Beaumont, Texas

 6127314      08/13/01          08/13/03       Court       U.S. District Court of Newton County, Texas
                                             (Condemn-     Beaumont, Texas
                                              nation)

 6169094      10/21/02          10/21/03        Tax        State of Texas - Comptroller of Public Accounts
                                                           Austin, Texas

 6169100      10/21/02          10/21/03        Tax        State of Texas - Comptroller of Public Accounts
                                                           Austin, Texas

 6190340      11/01/02          11/01/03        Tax        Illinois Department of Revenue
                                                           Springfield, Illinois
</TABLE>

<TABLE>
<CAPTION>
 Bond No.       Amount       Annual Premium                      Purpose                                               State
 --------       ------       --------------                      -------                                               -----
<S>         <C>              <C>             <C>                                                                       <C>
 6070758    $  150,000.00      $  262.50     Oversize/Overweight Loads on County Roads/Highways                          IL

 6095613    $  140,000.00      $  560.00     Installation of Pipeline under Orange County Roads                          TX

 6095688    $   15,000.00      $   45.00     26" Natural Gas Pipeline under Interstate Route Crossings in District #7    IL

 6112681    $   10,000.00      $   45.00     Excavation/Encroachment within Kentucky State Highway Right-Of-Way          KY

 6112698    $      670.00      $   60.00     Possession of condemned property of H. C. Freese, and the unknown
                                             heirs, successors and assigns of H. C. Freese                               TX

 6127314    $      670.00      $   60.00     Possession of condemned property of H. C. Freese, and the unknown
                                             heirs, successors and assigns of H. C. Freese                               TX

 6169094    $  600,000.00      $2,400.00     Financial Responsibility for Tax as Gasoline Distributor                    TX

 6169100    $  600,000.00      $2,400.00     Financial Responsibility for Tax as Gasoline Distributor                    TX

 6190340    $2,200,000.00      $3,850.00     Financial Responsibility for Tax as Gasoline Distributor                    IL

            $3,716,340.00      $9,682.50
</TABLE><PAGE>
                                                                   EXHIBIT 10.24

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT, made as of this 11th day of December, 2002,
by and between Natco Group Inc., a corporation organized and existing under the
laws of the State of Delaware (hereinafter referred to as "NATCO"), and
Nathaniel A. Gregory (hereinafter referred to as "the Executive").

                                   WITNESSETH

         WHEREAS, the Executive and a subsidiary of NATCO entered into an
employment agreement dated March 15, 1994, which agreement was amended on July
31, 1996 and July 31, 1997 (the "Previous Employment Agreement"), under which
the Executive has agreed to employment by such subsidiary under certain terms
and conditions, and under which the Executive is entitled to certain
compensation, including various provisions in the event of a change in control
of NATCO under certain terms and conditions; and

         WHEREAS, the Executive and NATCO desire to clarify and amend the
Previous Employment Agreement to specify terms and conditions for compensation
in the event of a change in control and to further modify other provisions as
necessary to effect such amendments; and

         WHEREAS, NATCO desires to continue the Executive in the employment
capacity hereinafter set forth and the Executive agrees to accept such
employment on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is hereby agreed by and between NATCO and the Executive as
follows:

         1.       Capacity and Services.

                  (a) NATCO hereby agrees to continue to employ the Executive
and the Executive hereby agrees to accept such employment by NATCO as Chairman
and Chief Executive Officer of NATCO on the terms and conditions set forth
herein. The employment of the Executive pursuant to this Employment Agreement
shall commence on December 11, 2002 and continue through the Period of Active
Employment, as defined in Section 1(e) of this Employment Agreement. In his
capacity as Chairman and Chief Executive Officer of NATCO, the Executive shall
assume such responsibilities, perform such duties, and have such authority, as
may from time to time be assigned or delegated by the Board of Directors of
NATCO (the "Board") consistent with the Executive's position. The Executive
agrees to perform such duties in accordance with the By-laws of NATCO, the
Board's instructions, and NATCO's policies.

                  (b) The Executive shall devote his full business time to his
duties hereunder, provided, however, that the foregoing shall not prevent the
Executive from serving as a member of the board of directors of a corporation if
the Board, or the appropriate Committee thereof, determines in its sole
discretion that such membership is not adverse to the interests of NATCO.
Subject to the foregoing, the Executive shall not engage in any business

                                       1
<PAGE>

activities that are directly or indirectly competitive with any business then
conducted by NATCO or any of its affiliated companies.

                  (c) The Executive may be an investor, shareholder, joint
venturer, or partner (hereinafter referred to as an "Investor") in any
enterprise, association, corporation, joint venture or partnership (hereinafter
referred to as an "Investment"), provided, however, that any such Investment
does not (i) violate NATCO's conflict of interest policy as in effect from time
to time, (ii) require the Executive's involvement in the management (except
service on boards of directors to the extent permitted by Section 1(b) of this
Employment Agreement) or operation of such Investment (recognizing that the
Executive shall be permitted to monitor and oversee the Investment, as would any
prudent Investor) or (iii) interfere with the performance of the Executive's
duties and obligations hereunder.

                  (d) The Executive shall fully and faithfully discharge his
duties under the direction of the Board.

                  (e) "Period of Active Employment", as used herein, shall mean
the period beginning on December 11, 2002 and terminating on the date on which
the first of the following events occurs:

                     (i)    The death of the Executive;

                     (ii)   The Disability of the Executive, as provided in
                            Section 7 of this Employment Agreement;

                     (iii)  The termination of the Executive's employment, as
                            provided in Section 12 of this Employment Agreement;
                            or

                     (iv)   Expiration of the Term of this Employment Agreement,
                            as provided in Section 2 hereof (or as such
                            expiration may be extended pursuant to Section 3
                            hereof).

         2.       Term of Employment.

The term ("Term") of this Employment Agreement shall commence on December 11,
2002 (the "Commencement Date") and unless extended or terminated earlier as
provided hereunder, shall continue through the third anniversary of the
Commencement Date.

         3.       Term Extension.

         Commencing on the anniversary of the Commencement Date (the "Extension
Date") and on each subsequent Extension Date each year thereafter, the Term of
this Employment Agreement shall automatically be extended for one additional
year, unless at least 90 days prior to such Extension Date, NATCO shall have
given notice that it does not wish to extend this Employment Agreement.
Notwithstanding the foregoing, upon the occurrence of a Change in Control, as
defined in Section 12 hereof, during the Term of this Agreement, including any
extensions thereof, this Employment Agreement shall automatically be extended

                                       2
<PAGE>

until the end of the Effective Period, as defined in Section 12 hereof, and may
not be terminated by NATCO during such time.

         4.       Compensation and Benefits.

                  (a) During the Period of Active Employment, NATCO shall pay to
the Executive as base compensation for his services hereunder, a base salary of
$400,000 per annum ("Base Salary"), payable in arrears and subject to increase
from time to time at the sole discretion of the Board. Amounts payable shall be
reduced by standard withholding and other authorized deductions.

                  (b) During the Period of Active Employment, the Executive
shall have the right to participate in any of NATCO's fringe benefit and
insurance plans presently in effect or that may be established for the benefit
of executives of NATCO. NATCO reserves the right to modify, suspend or
discontinue any or all such plans or benefits at any time without recourse by
the Executive.

                  (c) The Executive shall be entitled to take vacation in
accordance with NATCO's policy and practices for senior executives.

                  (d) During the Period of Active Employment, NATCO shall, upon
receipt of appropriate itemized vouchers for expenses, submitted to NATCO on a
monthly basis in accordance with NATCO's procedures from time to time in effect,
reimburse the Executive for any reasonable and actual costs of leasing an
automobile for the Executive's business and private use during the Period of
Active Employment ("Monthly Automobile Lease Cost"). The make, model, color and
year of the leased automobile described herein may be selected by the Executive.
In addition to reimbursement of the Monthly Automobile Lease Cost, during the
Period of Active Employment, NATCO shall, upon receipt of itemized vouchers for
expenses, submitted to NATCO on a monthly basis in accordance with NATCO's
procedures from time to time in effect, reimburse the Executive for his
reasonable and necessary expenses, including maintenance, repairs, gasoline and
insurance, incurred in the operation of the leased automobile described herein.

                  (e) During the Period of Active Employment, NATCO shall, upon
receipt of appropriate itemized vouchers for expenses, submitted to NATCO on a
monthly basis in accordance with NATCO's procedures from time to time in effect,
reimburse the Executive for any reasonable and actual rent payment required of
and made by the Executive in connection with the Executive's rental of an hotel
room, house, apartment or condominium in the Houston, Texas area, on an
income-tax grossed-up basis.

                  (f) During the Period of Active Employment, NATCO shall
reimburse the Executive for all actual and reasonable expenses associated with
the Executive's personal travel between Houston, Texas and Greenwich,
Connecticut.

                                       3
<PAGE>

         5.       Bonus Compensation.

                  (a) During each fiscal year in which the Executive is employed
by NATCO under the terms and conditions of this Employment Agreement, the
Executive will be eligible to receive Bonus Compensation pursuant to the Natco
Group Inc. Target Bonus Plan (the "Bonus Plan"), which Bonus Compensation shall
be payable at the time and in the manner provided for (or elected) under the
terms of the Bonus Plan. For these purposes, Executive's "target" annual bonus
will be 75% of his Base Salary. The Board will determine, annually, the criteria
which determine "target" performance.

                  (b) In the event the Executive is employed by NATCO under the
terms and conditions of this Employment Agreement for a period less than any
full fiscal year and the Executive's employment with NATCO has been terminated
due to death or Disability pursuant to Section 12(a), or by NATCO without Cause
or by the Executive for Good Reason pursuant to Section 12(d) hereof, any Bonus
Compensation payable to the Executive under Section 5(a) of this Employment
Agreement shall be prorated accordingly. If the Executive terminates his
employment without Good Reason as provided in Section 12(b) hereof or NATCO
terminates the Executive's employment for Cause as provided in Section 12(c)
hereof, the Executive shall not be eligible for any Bonus Compensation under
this Employment Agreement for the year in which such termination occurs.

                  (c) Any Bonus Compensation payment to which the Executive is
entitled under the terms of Section 5(a) of this Employment Agreement shall be
paid to the Executive as soon as practicable after financial statements have
been prepared for the fiscal period to which such Bonus Compensation payment
relates, but no later than ninety days from the date such financial statements
shall have been prepared.

                  (d) During each fiscal year in which the Executive is employed
by NATCO under the terms and conditions of this Employment Agreement, the
Executive will be eligible to receive additional bonus payments as the Board
deems appropriate in its sole and absolute discretion.

                  (e) All references to Bonus Compensation herein are to the
gross amounts thereof. NATCO shall have the right to deduct therefrom all taxes
which may be required to be deducted or withheld under any provision of
applicable law now in effect or which may become effective any time during the
term of this Employment Agreement.

         6.       Certain Expenses Incident to Employment.

                  Subject to such rules and procedures as from time to time are
specified by NATCO or the Board, NATCO agrees to reimburse the Executive for
travel, entertainment or other reasonable business expenses or disbursements
incurred ordinarily by the Executive as part of and in connection with the
performance of his duties under this Employment Agreement.

         7.       Disability.

                  "Disability" or "Disabled", as used in Sections 1(e) and 12(a)
of this Employment Agreement, shall mean a physical or mental incapacity of the
Executive which has prevented him from performing the duties customarily
assigned him by the Board for ninety (90)

                                        4
<PAGE>

days, whether or not consecutive, out of any twelve (12) consecutive months and
which thereafter can reasonably be expected, in the judgment of a physician
selected by NATCO, to continue.

         8.       Agreement Not to Compete.

                  Except as otherwise provided by this Employment Agreement, the
Executive hereby agrees that, during the Period of Active Employment, the
Executive will not directly or indirectly, either through any form of ownership
(other than ownership of securities of a publicly-held corporation of which the
Executive owns less than one percent of any class of outstanding securities), or
as a director, officer, principal agent, employer, advisor, consultant,
copartner, or in any individual or representative capacity, either for his own
benefit or for the benefit of any other person, firm, corporation or other
entity, engage in any business that is in competition with NATCO or any of its
affiliated companies.

         9.       Intangible and Other Property Rights.

                  (a) All right, title and interest of every kind and nature
whatsoever, whether now known or unknown, in and to any intangible property,
including all trade names, unregistered trademarks and service marks, brand
names, patents, copyrights, registered trademarks and service marks and all
trade secrets and confidential know-how (the "Intangible Property"), invented,
created, written, developed, furnished, produced or disclosed by the Executive
hereunder shall, as between the parties hereto, be and remain the sole and
exclusive property of NATCO for any and all purposes and uses whatsoever, and
the Executive shall have no right, title or interest of any kind or nature
therein or thereto, or in or to any results or proceeds therefrom. The Executive
will, at the request of NATCO, execute such assignments, certificates and other
instruments as NATCO may from time to time deem necessary or desirable to
evidence, establish, maintain, perfect, protect, enforce or defend its right,
title and interest in and to any of the foregoing.

                  (b) The Executive agrees that all "Intangible Property",
materials, books, files, reports, correspondence, records and documents
(collectively "NATCO Material") used, prepared or made available to the
Executive in the course of rendering his services to NATCO hereunder shall
remain the property of NATCO. At the end of the Period of Active Employment, all
NATCO Material shall be returned immediately to NATCO.

         10.      Confidentiality.

                  The Executive shall hold in a fiduciary capacity for the
benefit of NATCO all secret or confidential information, knowledge or data
relating to NATCO and its affiliates, which shall have been obtained by the
Executive during his employment by NATCO and which shall not be public
knowledge. After termination of the Executive's employment with NATCO, he shall
not, without the prior written consent of the Board, communicate or divulge any
such information, knowledge or data to anyone other than the Board and those
designated by the Board.

                                       5
<PAGE>

         11.      Notice of Termination.

                  (a) Any termination of the Executive's employment by NATCO, or
by any affiliate of NATCO by which the Executive is employed, for Cause or by
the Executive for Good Reason, both terms as defined in Section 12 hereof, shall
be communicated by a Notice of Termination to the other party hereto given in
accordance with Section 24 of this Employment Agreement. For purposes of this
Employment Agreement, a "Notice of Termination" for termination of employment
for Cause or Good Reason means a written notice which (i) is given at least
thirty (30) days prior to the date of termination; (ii) indicates the specific
termination provision in this Employment Agreement relied upon; (iii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated; (iv) specifies the employment termination date; and
(v) allows the recipient of the Notice of Termination at least thirty (30) days
to cure the act or omission relied upon in the Notice of Termination. The
failure to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause will not waive any right of the
party giving the Notice of Termination hereunder or preclude such party from
asserting such fact or circumstance in enforcing its rights hereunder.

                  (b) A Termination of Employment of the Executive will not be
deemed to be for Cause, as defined by Section 12 hereof, unless and until there
has been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive has engaged in the conduct
described in Section 12(j)(i) hereof, and specifying the particulars of such
conduct.

                  (c) A Termination of Employment of the Executive will not be
deemed to be for Good Reason, as defined by Section 12 hereof, unless the
Executive gives the Notice of Termination provided for herein within twelve (12)
months after the Executive has actual knowledge of the act or omission of the
Company constituting such Good Reason.

         12.      Termination of Employment.

                  (a) Termination Upon Death or Disability of Executive. If the
Executive dies or becomes Disabled during the Term hereof, this Employment
Agreement will terminate in accordance with Section 1(e) hereof; provided,
however, that in any such event, NATCO will pay to the Executive, or to his
estate or designated beneficiary, as the case may be, (i) a lump sum in cash
equal to the Executive's Base Salary through the date of termination, to the
extent not theretofore paid, and (ii) such other benefits that have vested in
the Executive at the time of such termination as a result of his participation
in any benefits plans of NATCO or any of its affiliates, in accordance with and
subject to the provisions of such plans. Any Bonus Compensation that has been
earned under the Bonus Plan, the payment of which has been deferred under the
terms of the Bonus Plan, will be paid to the Executive, or to his estate or
designated beneficiary, as the case may be, in accordance with the terms of the
Bonus Plan.

                                        6

<PAGE>

                  (b) Termination by the Executive. If the Executive terminates
this Employment Agreement for any reason other than Good Reason, as defined
below, NATCO shall have no further obligations or responsibilities hereunder
(except for Base Salary amounts earned but not yet paid to the Executive through
the date of the Executive's termination) and the Executive shall not be entitled
to receive any Bonus Compensation pursuant to Section 5 of this Employment
Agreement nor any severance pay specified in any severance plan or policy that
NATCO presently has in effect or may establish in the future for employees of
NATCO. Any Bonus Compensation that has been earned under the Bonus Plan, the
payment of which has been deferred under the terms of the Bonus Plan, will be
paid to the Executive in accordance with the terms of the Bonus Plan. Any
benefits that have vested in the Executive at the time of such termination as a
result of his participation in any of NATCO's benefit plans will be paid to the
Executive, or to his estate or designated beneficiary, subject to the terms of
such plans.

                  (c) Termination for Cause. The Company has the right, at any
time during the Term of this Employment Agreement, subject to all of the
provisions hereof, and exercisable by serving a Notice of Termination in
accordance with Section 11 above, to terminate the Executive's employment under
this Employment Agreement and discharge the Executive for Cause. If such right
is exercised, the obligations of NATCO to the Executive will be limited solely
to payment by NATCO of unpaid Base Salary accrued, and subject to the provisions
of the applicable benefit plans, any benefits vested, up to the effective date
specified in the Notice of Termination, and the Executive shall not be entitled
to receive any Bonus Compensation pursuant to Section 5 hereof or any severance
pay specified in any severance plan or policy that NATCO presently has in effect
or may establish in the future for employees of NATCO. Any Bonus Compensation
that has been earned under the Bonus Plan, the payment of which has been
deferred under the terms of the Bonus Plan, will be paid to the Executive in
accordance with the terms of the Bonus Plan.

                  (d) Termination by the Company Without Cause or by the
Executive for Good Reason. NATCO has the right, at any time during the Term,
subject to all of the provisions hereof, to terminate the Executive's employment
under this Employment Agreement and discharge the Executive without Cause.
Furthermore, notwithstanding any other provision of this Employment Agreement,
the Executive's employment under this Agreement may be terminated at any time
during the Term by the Executive for Good Reason. In the event of termination of
employment either by NATCO without Cause or by the Executive for Good Reason
prior to the occurrence of a Change in Control, the Executive shall be entitled
to severance pay in accordance with any severance plan or policy that NATCO then
has in effect. Any Bonus Compensation that has been earned under the Bonus Plan,
the payment of which has been deferred under the terms of the Bonus Plan, will
be paid to the Executive in accordance with the terms of the Bonus Plan.

                  (e) Termination of Employment following a Change in Control.
If, during the Effective Period, as defined herein, NATCO terminates the
Executive's employment other than for Cause or the Executive terminates his
employment with NATCO for Good Reason, NATCO will pay the following to the
Executive as soon as practicable following the date of termination, but in no
event later than thirty (30) days, or such period otherwise specifically
provided, thereafter:

                                       7

<PAGE>

                     (i)    cash in the amount of the Executive's Base Salary
                            through the date of termination to the extent not
                            theretofore paid, including amounts due for accrued
                            but unused vacation time;

                     (ii)   cash in the amount of the Bonus Compensation earned
                            by the Executive under the Bonus Plan in accordance
                            with its terms through the date of termination,
                            based on NATCO performance through such date and
                            prorationed by multiplying such Bonus Compensation
                            by the fraction obtained by dividing the number of
                            days in the year through the date of termination by
                            365, payable no later than sixty (60) days following
                            the date of termination;

                     (iii)  cash in an amount equal to the product of three
                            times the Executive's Base Salary at the greater of
                            (A) the rate in effect at the time Notice of
                            Termination is given or (B) the rate in effect
                            immediately preceding the Change in Control, payable
                            in a lump sum;

                     (iv)   a lump sum cash amount equal to the product of three
                            times the target Bonus Compensation at the greater
                            of (A) the target Bonus Compensation in effect at
                            the time Notice of Termination is given or (B) the
                            target Bonus Compensation in effect immediately
                            preceding the Change in Control;

                     (v)    the continuation of the provision of health
                            insurance, dental insurance and life insurance
                            benefits for a period of three years following the
                            date of termination to the Executive and the
                            Executive's family at least equal to and to the same
                            extent as those which would have been provided to
                            them in accordance with this Employment Agreement
                            and the plans, programs, practices and policies of
                            NATCO as in effect and applicable generally to other
                            peer executives and their families during the 90-day
                            period immediately preceding the Effective Period or
                            on the date of termination, at the election of the
                            Executive; provided, however, that if the Executive
                            becomes re-employed with another employer and is
                            eligible to receive medical or other welfare
                            benefits under another employer provided plan, the
                            medical and other welfare benefits described herein
                            will be secondary to those provided under such other
                            plan during such applicable period of eligibility;

                     (vi)   any and all deferred Bonus Compensation under the
                            Bonus Plan at the time and in the manner provided
                            for (or elected) under the terms of the Bonus Plan.

                                        8

<PAGE>
If, during the Effective Period as defined herein, NATCO terminates the
Executive's employment for Cause, or the Executive terminates his employment
without Good Reason, NATCO's obligations and responsibilities to the Executive
under this Employment Agreement are limited to those stated in Sections 12(b)
and 12(c), as the case may be.

                  (f) "Compensation" Under Retirement Plans. Any and all amounts
paid under Section 12 of this Employment Agreement in the amount of or otherwise
in respect of the Executive's Base Salary and Bonus Compensation, whether or not
deferred under a deferred compensation plan or program, are intended to be and
will be "Compensation" for purposes of determining Compensation under any and
all retirement plans sponsored or maintained by the Company or by any affiliate
controlled by the Company.

                  (g) Effect of Death. In the event of the Executive's death
following the Executive's date of termination, but prior to the payment of any
severance payments and benefits provided under this Section 12 , if any, such
payments and benefits will be paid to the Executive's beneficiary.

                  (h) Mitigation of Damages. The Executive will not be required
to mitigate damages or the amount of any payment provided for under Section 12
of this Employment Agreement by seeking other employment or otherwise. Except as
otherwise specifically provided in this Employment Agreement, the amount of any
payment provided for under Section 12 of this Employment Agreement will not be
reduced by any compensation earned by the Executive as the result of
self-employment or employment by another employer or otherwise.

                  (i) Stock Options. The benefits provided under Section 12 of
this Employment Agreement are intended to be in addition to the value of any
options to acquire common stock of NATCO awarded to the Executive pursuant to
Stock Option Agreements entered into by and between the Company and the
Executive dated July 31, 1996, July 31, 1997, as amended July 12, 1999
(collectively the "1996 and 1997 Stock Option Agreements"), and May 2, 2000, or
awarded under the Natco Group Inc. 2001 Stock Incentive Plan (the "Stock Plan")
and any other incentive or similar plan or award agreement heretofore or
hereafter adopted by NATCO. Notwithstanding provisions to the contrary contained
in Section 5(a)(3) of the 1996 and 1997 Stock Option Agreements, or the terms of
the Stock Plan or of any other incentive plan or other award agreement
evidencing awards of stock options to purchase stock of NATCO, all outstanding
stock options held by the Executive shall fully vest as of the date of the
Change in Control and become immediately exercisable in accordance with their
terms; provided, however, that if NATCO terminates the Executive's employment
other than for Cause or the Executive terminates employment with NATCO for Good
Reason during the Effective Period, then the stock options granted under the
Stock Option Agreement dated May 2, 2000 and under the Stock Plan shall be
exercisable for the longer period of (A) three months after the Executive's date
of termination or (B) eighteen months after the effective date of the Change in
Control, unless the term of the stock option expires before the end of such
longer period, in which case the stock option shall be exercisable until the
expiration of its term. In the event NATCO terminates the Executive's employment
other than for Cause or the Executive terminates employment with NATCO for Good
Reason during the Effective Period, then the stock options granted under the
1996 and 1997 Stock Option Agreements shall remain exercisable in accordance
with the terms of the 1996 and 1997 Stock Option Agreements, other

                                       9

<PAGE>

than Section 5(a)(3) of the 1996 and 1997 Stock Option Agreements, which
provision is superseded hereby and of no further force or effect.

                  (j) Definitions. The following terms shall have the meanings
ascribed to them as follows:

                     (i)    "Cause" means:

                            (A)    the Executive's willful and continued failure
                                   to substantially perform the Executive's
                                   duties with NATCO or its affiliates, as
                                   provided in this Employment Agreement (other
                                   than any such failure resulting from the
                                   Executive's incapacity due to physical or
                                   mental illness), after a written demand for
                                   substantial performance is delivered to the
                                   Executive by NATCO which specifically
                                   identifies the manner in which NATCO believes
                                   that the Executive has not substantially
                                   performed his or her duties;

                            (B)    the final conviction of the Executive, or an
                                   entering of a guilty plea or a plea of no
                                   contest by the Executive, to a felony or of a
                                   misdemeanor involving moral turpitude; or

                            (C)    the willful engaging by the Executive in
                                   illegal conduct or gross misconduct which is
                                   materially and demonstrably injurious to
                                   NATCO; or

                            (D)    a material breach by the Executive of the
                                   terms of this Employment Agreement.

                            For purposes of this definition, no act or failure
                            to act on the part of the Executive shall be
                            considered "willful" unless it is done, or omitted
                            to be done, by the Executive in bad faith or without
                            a reasonable belief that the action or omission was
                            in the best interests of NATCO or its affiliates.
                            Any act, or failure to act, based on authority given
                            pursuant to a resolution duly adopted by the Board
                            or the advice of counsel to NATCO or its affiliates
                            will be conclusively presumed to be done, or omitted
                            to be done, by the Executive in good faith and in
                            the best interest of NATCO and its affiliates.

                     (ii)   "Change in Control" means the occurrence of any one
                            of the following events:

                            (A)    the Company is not the surviving entity in
                                   any merger or consolidation (or survives only
                                   as a subsidiary of an entity);

                                        10

<PAGE>

                            (B)    the Company sells, leases or exchanges, or
                                   agrees to sell, lease or exchange, all or
                                   substantially all of its assets to any other
                                   person or entity;

                            (C)    the Company is to be dissolved and
                                   liquidated;

                            (D)    any person or entity, including a "group" as
                                   contemplated by Section 13(d)(3) of the
                                   Securities Exchange Act of 1934, as amended,
                                   acquires or gains ownership or control
                                   (including, without limitation, power to
                                   vote) of more than 50% of the outstanding
                                   shares of the Company's voting stock (based
                                   upon voting power); or

                            (E)    as a result of or in connection with a
                                   contested election of Directors, the persons
                                   who were Directors of the Company before such
                                   election shall cease to constitute a majority
                                   of the Board.

                     (iii)  "Director" means an individual elected to the Board
                            by the stockholders of the Company or by the Board
                            under applicable corporate law who is serving on the
                            Board on the date of this Agreement or who is
                            elected to the Board after such date.

                     (iv)   "Effective Period" means the 36-month period
                            following a Change in Control.

                     (v)    "Good Reason" means, unless the Executive has
                            consented in writing thereto, the occurrence of any
                            of the following:

                            (A)    the assignment to the Executive of any duties
                                   inconsistent with the Executive's position,
                                   including any material change in status,
                                   title, authority, duties or responsibilities
                                   or any other action which results in a
                                   material diminution in such status, title,
                                   authority, duties or responsibilities,
                                   excluding for this purpose an isolated,
                                   insubstantial and inadvertent action not
                                   taken in bad faith and which is remedied by
                                   the Company or the Executive's employer
                                   promptly after receipt of notice thereof
                                   given by the Executive;

                            (B)    a reduction by NATCO or the Executive's
                                   employer of the Executive's Base Salary;

                            (C)    an unreasonable change in the Executive's
                                   current office location;

                            (D)    following a Change in Control, unless a plan
                                   providing a substantially similar
                                   compensation or benefit is substituted,

                                        11

<PAGE>

                                   (A) the failure by NATCO or any of its
                                   affiliates or successors to continue in
                                   effect any material fringe benefit or
                                   compensation plan, retirement plan, life
                                   insurance plan, health and accident plan or
                                   disability plan in which the Executive is
                                   participating prior to the Change in
                                   Control, or (B) the taking of any action by
                                   NATCO or any of its affiliates or successors
                                   which would adversely affect the Executive's
                                   participation in or materially reduce his
                                   benefits under any of such plans or deprive
                                   him of any material fringe benefit; or

                            (E)    following a Change in Control, the failure of
                                   NATCO or the affiliate of NATCO by which the
                                   Executive is employed, or any affiliate which
                                   directly or indirectly owns or controls any
                                   affiliate by which the Executive is employed,
                                   to obtain the assumption in writing of
                                   NATCO's obligation to perform this Employment
                                   Agreement by any successor to all or
                                   substantially all of the assets of NATCO or
                                   such affiliate within fifteen (15) days after
                                   a reorganization, merger, consolidation, sale
                                   or other disposition of assets of NATCO or
                                   such affiliate.

                            (F)    any purported termination of the Executive's
                                   employment by NATCO which is not effected
                                   pursuant to a Notice of Termination
                                   satisfying the requirements of Section 11
                                   hereof; and for purposes of this Employment
                                   Agreement, no such purported termination
                                   shall be effective.

                            (G)    a termination of employment by the Executive
                                   for any reason or no reason at all during the
                                   30-day period immediately following the first
                                   anniversary of a Change in Control, which
                                   shall be deemed to be a termination for Good
                                   Reason.

                            For purposes of this Employment Agreement, any
                            determination of "Good Reason" made by the Executive
                            in good faith based upon his reasonable belief and
                            understanding shall be conclusive.

         13.      Limitation of Benefits

                  (a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any benefit, payment
or distribution by NATCO to or for the benefit of the Executive (whether payable
or distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would, if paid, be subject to the excise tax imposed by Section 4999
of the Code (the "Excise Tax"), then the Payment shall be reduced to the extent
necessary to avoid the imposition of the Excise Tax. The Executive may select
the Payments to be limited or reduced.

                                        12
<PAGE>

                  (b) All determinations required to be made under this Section
13, including whether an Excise Tax would otherwise be imposed and the
assumptions to be utilized in arriving at such determination, shall be made by
Independent Tax Counsel which shall provide detailed supporting calculations
both to NATCO and the Executive within fifteen (15) business days of the receipt
of notice from the Executive that a Payment is due to be made, or such earlier
time as is requested by NATCO. For purposes of this paragraph, "Independent Tax
Counsel" will mean a lawyer, a certified public accountant with a nationally
recognized accounting firm, or a compensation consultant with a nationally
recognized actuarial and benefits consulting firm with expertise in the area of
executive compensation, who will be selected by NATCO and will be reasonably
acceptable to the Executive. If, as a result of any uncertainty in the
application of Section 4999 of the Code at the time the initial determination is
made by the Independent Tax Counsel hereunder, Payments hereunder have been
unnecessarily limited by this Section 13 (the "Underpayment"), consistent with
the calculations required to be made hereunder, then the Independent Tax Counsel
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be properly paid by NATCO to or for the benefit of the
Executive. If, however, Payments hereunder have not been sufficiently limited by
this Section 13, consistent with the calculations required to be made hereunder,
to prevent the imposition of an Excise Tax upon the Executive (the
"Overpayment"), then the Executive shall notify NATCO in writing within fifteen
(15) days of any claim by the Internal Revenue Service, that, if successful,
would require the payment by the Executive of any Excise Tax, and the
Independent Tax Counsel shall determine the amount of Overpayment that has
occurred and any such Overpayment shall be properly refunded by the Executive by
or for the benefit of NATCO so as to properly prevent the imposition of the
Excise Tax.

         14.      Representation and Warranty.

                  The Executive hereby represents and warrants that the
execution and performance of this Employment Agreement will not result in or
constitute a default, breach or violation, or an event which, with notice or
lapse of time or both, would be a default, breach or violation, of any
understanding, agreement or commitment, written or oral, express or implied, to
which the Executive is a party or by which the Executive or his property is
bound.

         15.      Rights and Waivers.

                  All rights and remedies of the parties hereto are separate and
cumulative, and no one of them, whether exercised or not, shall be deemed to be
to the exclusion of any other rights or remedies or shall be deemed to limit or
prejudice any other legal or equitable rights or remedies under this Employment
Agreement unless such waiver is in writing and signed by such party. No delay or
omission on the part of either party in exercising any right or remedy shall
operate as a waiver of such right or remedy or any other rights or remedies. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion.

         16.      Non-Assignability of Executive's Duties.

                  This Employment Agreement is personal to the Executive and,
with the exception of the Executive's rights to compensation and benefits
hereunder, which may be

                                        13
<PAGE>

transferred by will or operation of law, this Agreement shall not, without the
prior written consent of the Board, be assignable by the Executive.

         17.      Savings Clause.

                  If any provision of this Employment Agreement or the
application hereof is held invalid, the invalidity shall not affect other
provisions or application of this Employment Agreement that can be given effect
without the invalid provisions or application, and to this end the provisions of
this Employment Agreement are declared to be severable.

         18.      Construction.

                  Each party has cooperated in the drafting and preparation of
this Employment Agreement. Hence, in any construction to be made of this
Employment Agreement, the same shall not be construed against any party on the
basis of that party being the "drafter."

         19.      Entire Agreement.

                  This Employment Agreement constitutes the entire agreement
between the parties hereto with respect to the employment of the Executive by
NATCO and supersedes all prior agreements between the parties concerning the
subject matter hereof, other than any and all promissory notes entered into by
and between the Executive and NATCO (collectively the "Promissory Notes") and
that certain Registration Rights Agreement ("Registration Rights Agreement")
entered into on or about November 18, 1998 by and among Natco Group, Inc.,
Capricorn Investors, LP, a Delaware limited partnership, and Capricorn Investors
II, LP, a Delaware limited partnership, which Promissory Notes and Registration
Rights Agreement shall remain in full force and effect. This Employment
Agreement may be modified only with a written instrument duly executed by each
of the parties. No person has any authority to make any representations or
promises on behalf of any of the parties not set forth herein and this
Employment Agreement has not been executed in reliance upon any representation
or promise except those contained herein.

         20.      Section Headings

                  The section headings and captions of this Employment Agreement
are for reference purposes only, are not part of the provisions hereof and shall
not erect in any way the meaning or interpretation of this Employment Agreement.

         21.      Governing Law.

                  This Employment Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without reference to
principles of conflict of laws.

         22.      Arbitration.

                  Any dispute between the parties to this Employment Agreement
relating to or in respect of this Employment Agreement, its negotiation,
execution, performance, subject

                                        14

<PAGE>

matter, or any course of conduct or dealing or actions under or in respect of
this Employment Agreement, shall be submitted to, and resolved exclusively by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). Such arbitration shall take place in New York,
New York. Arbitration shall be commenced by filing a demand for arbitration with
the AAA within sixty (60) days after such dispute has arisen. The prevailing
party in such an arbitration proceeding shall be entitled to recover reasonable
attorneys' fees, all reasonable out-of-pocket costs and disbursements, as well
as any and all charges that may be made for the cost of the arbitration and the
fees of the arbitrators.

         23.      Enforcement of Arbitration Award.

                  In the event of litigation to enforce an arbitration award in
connection with or concerning the subject matter of this Employment Agreement,
the prevailing party shall be entitled to recover all reasonable costs and
expenses incurred by such party in connection therewith, including reasonable
attorneys' fees.

         24.      Notice

                  All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                  If to the Executive, to him at:
                  Nathaniel A. Gregory
                  Frost Road
                  Greenwich, Connecticut 06830

                  If to NATCO, to it at:

                  Brookhollow Central III
                  2950 North Loop West, Suite 750
                  Houston, Texas 77092
                  Attention: Chief Financial Officer

                  With a copy to:

                  O'Melveney & Myers
                  Citigroup Center
                  153 East 53rd Street
                  New York, New York  10022-4611
                  Attention:  Mr. Mark Thierfelder

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications hereunder shall be
effective when actually received by the addressee.

                                        15

<PAGE>

         25.      Legal Counsel.

                  In entering into this Employment Agreement, the parties
represent that they have relied upon the advice of their attorneys, who are
attorneys of their own choice, and that the terms of this Employment Agreement
have been completely read and explained to them by their attorneys, and that
those terms are fully understood and voluntarily accepted by them.

                  In witness whereof, the parties hereto have executed this
Agreement as of the date first above written.

On behalf of
NATCO GROUP INC.                              NATHANIEL A. GREGORY

By: /s/ J. Michael Mayer                      /s/ Nathaniel A. Gregory
   -----------------------------              --------------------------

Title: Senior Vice President and
       Chief Financial Officer
      --------------------------

                                       16

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