Document:

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                                                                   EXHIBIT 10.76

                             CONTRIBUTION AGREEMENT

                                BETWEEN AND AMONG

                          WILLIAMS ENERGY SERVICES, LLC

                                 WILLIAMS GP LLC

                                       AND

                          WILLIAMS ENERGY PARTNERS L.P.

                                  APRIL 11,2002

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                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                        Page
<S>                                                                                                     <C>
ARTICLE 1 CONTRIBUTION................................................................................... 1
   1.1     Excluded Assets..............................................................................  1

ARTICLE 2 CONTRIBUTION AND CLOSING......................................................................  2
   2.1     Contribution and Closing.....................................................................  2
   2.2     Deliveries at the Closing....................................................................  2
   2.3     Transfer Taxes and Recording Fees............................................................  3
   2.4     Working Capital..............................................................................  3

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF WES.........................................................  4
   3.1     Organization and Existence...................................................................  4
   3.2     Capitalization of WPL........................................................................  4
   3.3     Subsidiaries.................................................................................  4
   3.4     Authority and Approval.......................................................................  5
   3.5     No Conflict..................................................................................  5
   3.6     Consents.....................................................................................  6
   3.7     Laws and Regulations; Litigation.............................................................  6
   3.8     Financial Statements.........................................................................  7
   3.9     No Adverse Changes...........................................................................  7
   3.10    Liabilities..................................................................................  7
   3.11    Taxes  ......................................................................................  8
   3.12    Employees and Benefits.......................................................................  9
   3.13    Accurate and Complete Records................................................................ 10
   3.14    Environmental................................................................................ 10
   3.15    Bankruptcy................................................................................... 12
   3.16    Contracts and Commitments.................................................................... 12
   3.17    Assets....................................................................................... 14
   3.18    Assets Other than Real Property Interests.................................................... 14
   3.19    Title to Real Property....................................................................... 15
   3.20    Intellectual Property........................................................................ 15
   3.21    Licenses; Permits............................................................................ 16
   3.22    Insurance.................................................................................... 16
   3.23    Utility Status............................................................................... 16
   3.24    Brokerage Arrangements....................................................................... 16
   3.25    Securities Laws.............................................................................. 16
   3.26    Transactions with Affiliates................................................................. 17
   3.27    Excluded Assets.............................................................................. 17

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF WILLIAMS GP LLC AND
ENERGY PARTNERS......................................................................................... 17
   4.1(a)  Organization and Existence................................................................... 17
   4.1(b)  Authority and Approval....................................................................... 18
</Table>

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<Table>
<S>                                                                                                     <C>
   4.1(c)  Brokerage Arrangements....................................................................... 18
   4.1(d)  Utility Status............................................................................... 18
   4,1(e)  Securities Laws.............................................................................. 18
   4.2(a)  Organization and Existence................................................................... 19
   4.2(b)  Authority and Approval....................................................................... 19
   4.2(c)  Brokerage Arrangements....................................................................... 19
   4.2(d)  Utility Status............................................................................... 20
   4.2(e)  New Units.................................................................................... 20

ARTICLE 5 ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS...................................... 20
   5.1     Certain Changes.............................................................................. 20
   5.2     Operations................................................................................... 21
   5.3     Access....................................................................................... 22
   5.4     Reporting Requirements....................................................................... 23
   5.5     Reasonable Best Efforts; Further Assurances.................................................. 23
   5.6     Casualty Loss................................................................................ 23

ARTICLE 6 CONDITIONS TO CLOSING......................................................................... 24
   6.1     Conditions to the Obligations of Williams GP LLC and Energy Partners......................... 24
   6.2     Conditions to the Obligation of WES.......................................................... 25

ARTICLE 7 TAX MAYFERS................................................................................... 26
   7.1     Liability for Taxes.......................................................................... 26
   7.2     Tax Returns.................................................................................. 28
   7.3     Tax Proceedings.............................................................................. 30
   7.4     Cooperation and Exchange of Information...................................................... 30
   7.5     Survival..................................................................................... 31
   7.6     Conflict..................................................................................... 31
   7.7     Miscellaneous................................................................................ 31

ARTICLE 8 INVESTIGATION; LIMITATIONS.................................................................... 31
   8.1     Independent Investigation; Limitations....................................................... 31

ARTICLE 9 TERMINATION................................................................................... 32
   9.1     Events of Termination........................................................................ 32
   9.2     Effect of Termination........................................................................ 33

ARTICLE 10 INDEMNIFICATION upon closing................................................................. 33
   10.1    Indemnification of Williams GP LLC and Energy Partners upon Closing.......................... 33
   10.2    Indemnification of WES....................................................................... 33
   10.3    Demands...................................................................................... 34
   10.4    Right to Contest and Defend.................................................................. 34
   10.5    Cooperation.................................................................................. 35
   10.6    Right to Participate......................................................................... 35
   10.7    Payment of Damages........................................................................... 35
</Table>

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<Table>
<S>                                                                                                     <C>
   10.8    Limitations on Indemnification............................................................... 36
   10.9    Sole Remedy.................................................................................. 37
   10.10   Addition to or Substitution of WES as Indemnitor............................................. 37
   10.11   Express Negligence........................................................................... 39

ARTICLE 11 MISCELLANEOUS................................................................................ 39
   11.1    Expenses..................................................................................... 39
   11.2    Notices...................................................................................... 39
   11.3    No Negotiations.............................................................................. 40
   11.4    Governing Law................................................................................ 41
   11.5    Public Statements............................................................................ 41
   11.6    Form of Payment.............................................................................. 41
   11.7    Entire Agreement; Amendments and Waivers..................................................... 41
   11.8    Conflicting Provisions....................................................................... 42
   11.9    Binding Effect and Assignment................................................................ 42
   11.10   WES Right of First Refusal................................................................... 42
   11.11   Severability................................................................................. 43
   11.12   Interpretation............................................................................... 43
   11.13   Headings and Schedules....................................................................... 43
   11.14   Multiple Counterparts........................................................................ 44
</Table>

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                                  DEFINED TERMS

<Table>
<S>                                                                                                  <C>
Adverse Effect........................................................................................5
Affiliate.............................................................................................1
Agreement.............................................................................................1
Cap...................................................................................................37
Closing...............................................................................................2
Closing Date..........................................................................................2
Constituent Documents.................................................................................41
Contracts.............................................................................................12
Contributor's Tax.....................................................................................29
Damages...............................................................................................33
Deductible............................................................................................36
Disclosure Letter.....................................................................................6
Energy Partners.......................................................................................1
Energy Partners Notice................................................................................30
Energy Partners Parties...............................................................................33
Environmental Deductible..............................................................................36
Environmental Laws....................................................................................10
Excluded Assets.......................................................................................1
Financial Statements..................................................................................7
Hazardous Materials...................................................................................11
Historical WPL Working Capital........................................................................3
Indemnity Claim.......................................................................................34
Knowledge.............................................................................................6
Liens.................................................................................................15
Net Cash Proceeds.....................................................................................2
New Units.............................................................................................2
Notice................................................................................................39
PACE Collective Bargaining Agreement..................................................................10
Permitted Liens.......................................................................................15
Person................................................................................................5
Proceeding Notice.....................................................................................30
Tax...................................................................................................26
Tax Losses............................................................................................27
Tax Returns...........................................................................................27
Taxes.................................................................................................26
Taxing Authority......................................................................................27
Transfer..............................................................................................43
WES...................................................................................................1
WES Equity Amount.....................................................................................2
WES Parties...........................................................................................33
Williams Group........................................................................................28
</Table>

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<Table>
<S>                                                                                                   <C>
WPL...................................................................................................1
WPL Benefit Plans.....................................................................................10
WPL LLC Interest......................................................................................1
WPL Working Capital...................................................................................3
</Table>

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                                    ARTICLE 2
                            CONTRIBUTION AND CLOSING

2.1      Contribution and Closing

         Subject to the satisfaction or waiver of the conditions to closing set
         forth in Article 6, the closing of the contributions of the WPL LLC
         Interest and the other transactions described in Section 2.2 (the
         "Closing") will be held at the offices of WES on or before the third
         business day following satisfaction or waiver of all such conditions,
         commencing at 9:00 a.m., Tulsa, Oklahoma time or such other place, date
         and time as may be mutually agreed upon by the parties hereto. The
         "Closing Date," as referred to herein, shall mean the date of the
         Closing.

2.2      Deliveries at the Closing.

         (a)      WES will contribute the WPL LLC Interest to Williams GP LLC;

         (b)      In exchange for WES' contribution of the WPL LLC Interest,
                  Williams GP LLC will assign and transfer to WES an additional
                  20.72% membership interest in Williams GP LLC;

         (c)      Williams GP LLC will contribute the WPL LLC Interest to Energy
                  Partners in exchange for the following:

                           (A) the right to receive $674,364,000 in cash (the
                           "Net Cash Proceeds") pursuant to a borrowing of $700
                           million, reduced by transaction fees of $10,600,000
                           and the amount of $15,036,000 for the WPL trade notes
                           and accounts receivable reflected in Part V of
                           Exhibit 1.1 and assigned to WES before Closing; and

                           (B) a number of Class B units of limited partnership
                           interest in Energy Partners (the "New Units")
                           determined by dividing 98% of the WES Equity Amount
                           (as that term is defined below in this section) by
                           the average price per unit for Energy Partners'
                           common units (determined by averaging the closing
                           price for such common units as reported in the
                           principal composite reporting system for the NYSE for
                           each of the first twenty trading days of the
                           twenty-one trading days immediately preceding the
                           Closing. If there are no sales on any one of those
                           days of that twenty-day period, the average of the
                           closing bid and asked prices for that day, as
                           reported in the principal composite reporting system
                           for the NYSE, will be used). Such New Units would
                           have the rights and obligations specified in the
                           Amended and Restated Agreement of Limited Partnership
                           of Energy Partners as further amended by the First
                           Amendment thereto dated as of the Closing Date. The
                           term "WES Equity Amount" means $1,000,000,000 minus
                           the sum of (i) the Net Cash Proceeds and (ii)

                                       2

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                           the amount of $15,036,000 for the "NFL trade notes
                           and accounts receivable reflected in Part V of
                           Exhibit 1.1 and assigned to WES before Closing); and

                           (C) an additional General Partner Interest in Energy
                           Partners equal to 2% of the WES Equity Amount in
                           satisfaction of Williams GP LLC's obligation, in
                           connection with the transaction contemplated by this
                           Agreement, to contribute 2% of total contributions to
                           Energy Partners in accordance with the terms of
                           Energy Partners' Amended and Restated Agreement of
                           Limited Partnership; and.

         (d)      In accordance with clause (c)(1) above, Energy Partners will
                  borrow the necessary funds and distribute the Borrowing
                  Proceeds to Williams GP LLC in satisfaction of GP LLC's right
                  to receive such amount as set forth in clause (c)(1)(A) above.

2.3      Transfer Taxes and Recording Fees

         (a)      WES and Williams GP LLC, as contributors hereunder, will each
                  be responsible for any and all taxes or fees imposed or
                  incurred by reason of the contributions hereunder and/or the
                  filing or recording of any instruments necessary to effect the
                  contributions hereunder, regardless of when such taxes or fees
                  are levied or imposed.

2.4      Working Capital

         The term "WPL Working Capital" means the adjusted net working capital
         working capital of WPL which excludes the receivables, intercompany
         amounts and other items specified by, and calculated a~ set forth, in
         Schedule 2.4 hereto. "Historical WPL Working Capital" means the average
         of the adjusted net working capital WPL Working Capital amounts for the
         six months of September - December, 2001 and January and February,
         2002, as shown on Schedule 2.4.

         As soon after Closing as is practicable (but not later than June 30,
         2002), the Historical WPL Working Capital will be compared to WPL's
         Working Capital amount as of March 31, 2002. If there is a change from
         the Historical WPL Working Capital to the WPL Working Capital as of
         March 31, 2002, the following shall occur: (a) If such difference
         reflects either an increase in positive WPL Working Capital or a
         decrease in negative WPL Working Capital, Energy Partners shall
         promptly pay (in New Units or cash or a combination thereof, as the
         Parties shall mutually agree) the amount of such difference to WES; (b)
         if such difference reflects either a decrease in positive WFL Working
         Capital or an increase in negative WPL Working Capital, WES shall
         promptly pay (in New Units or cash or a combination thereof, as the
         Parties shall mutually agree) the amount of such difference to Energy
         Partners.

                                       3
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                                    ARTICLE 3
                      REPRESENTATIONS AND WARRANTIES OF WES

WES hereby represents and warrants to Williams GP LLC and Energy Partners that
as of the date hereof and as of the Closing Date:

3.1      Organization and Existence

         (a)      WES is duly formed, validly existing and in good standing
                  under the laws of the State of Delaware. WES has full limited
                  liability company power and authority to transfer its
                  ownership interest in WPL and perform its obligations
                  hereunder

         (b)      WPL is duly formed, validly existing and in good standing
                  under the laws of the State of Delaware. WPL has full limited
                  liability company power and authority to own and hold the
                  properties and assets it now owns and holds and to carry on
                  its business as and where such properties are now owned or
                  held and such business is now conducted. WPL is duly licensed
                  or qualified to do business and is in good standing in the
                  states in which the character of the properties and assets now
                  owned or held by it or the nature of the business now
                  conducted by it requires it to be so licensed or qualified,
                  except where the failure to be so qualified or in good
                  standing would not reasonably be expected to have a material
                  adverse effect on WPL's business, financial condition or
                  results of operations. The Limited Liability Company Agreement
                  of WPL is attached as Schedule 3.1 to the Disclosure Letter
                  (as that term is defined in Section 3.5).

3.2      Capitalization of WPL

         (a)      The authorized ownership interest of WPL consists of the WPL
                  LLC Interest. The WPL LLC Interest has been validly issued and
                  is fully paid and non-assessable and has not been issued in
                  violation of any pre-emptive rights.

         (b)      There are no outstanding subscriptions, options, convertible
                  securities, warrants, calls or rights of any kind issued or
                  granted by, or binding upon, WPL, WES or any of their
                  Affiliates (other than Energy Partners, Williams GP LLC or
                  their subsidiaries) to purchase or otherwise acquire or issue,
                  sell or otherwise transfer any security of or equity interest
                  in WPL. WES owns the legal and beneficial title to, and has
                  full legal right to contribute, assign and transfer the WPL
                  LLC Interest to Williams GP LLC and will, at the time of
                  delivery thereof to Williams GP LLC pursuant to the terms
                  hereof, transfer good and valid title thereto free and clear
                  of all Liens.

3.3      Subsidiaries

         As of the Closing, WPL will not own any equity interest in any Person.

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3.4      Authority and Approval

         WES has the full limited liability company power and authority to
         execute and deliver this Agreement, to consummate the transactions
         contemplated hereby and to perform all of the terms and conditions
         hereof to be performed by it. The execution and delivery of this
         Agreement, the performance of all the terms and conditions hereof to be
         performed by WES and the consummation of the transactions contemplated
         hereby have been duly authorized and approved by all requisite limited
         liability company governance action of WES. The WES Board of Directors
         has approved this Agreement and the transactions contemplated hereby.
         This Agreement constitutes the valid and binding obligation of WES
         enforceable in accordance with its terms, except as such enforcement
         may be limited by bankruptcy, insolvency, reorganization, moratorium or
         other similar laws affecting enforcement of creditors' rights generally
         and by general principles of equity (whether applied in a proceeding at
         law or in equity).

3.5      No Conflict

         Except as set forth in Part 3.5 of the Disclosure Letter (as defined
         below in this section), this Agreement and the execution and delivery
         hereof by WES does not, and the fulfillment and compliance with the
         terms and conditions hereof and the consummation of the transactions
         contemplated hereby will not, (a) conflict with any of, or require the
         consent of any Person (as defined below in this section) under, the
         terms, conditions or provisions of the limited liability company
         agreements charter, by-laws or equivalent governing instruments of WES,
         WPL or any of their Affiliates (other than Energy Partners, Williams GP
         LLC and their subsidiaries); (b) violate any provision of any law or
         administrative regulation or any judicial, administrative or
         arbitration order, award, judgment, writ, injunction or decree
         applicable to WES, WPL or any of their Affiliates (other than Energy
         Partners, Williams GP LLC and their subsidiaries); (c) conflict with,
         result in a breach of, constitute a default under (whether with notice
         or the lapse of time or both), or accelerate or permit the acceleration
         of the performance required by, or require any consent, authorization
         or approval under, any indenture, mortgage, lien or Contract to which
         WES, WPL or any of their Affiliates (other than Energy Partners,
         Williams GP LLC and their subsidiaries) is a party or by which it is
         bound or to which any property of WES, WPL or any of their Affiliates
         (other than Energy Partners, Williams GP LLC and their subsidiaries) is
         subject; (d) result in the creation of any lien, charge or encumbrance
         on the assets of WPL under any such indenture, mortgage, lien, lease or
         Contract, except in the case of clauses (b), (c) and (d), for those
         which individually or in the aggregate would not reasonably be expected
         to have an Adverse Effect as defined below in this section); or

         As used in this Agreement: "Adverse Effect" means an adverse effect on
         the business, financial condition or results of operations of WPL,
         provided that Adverse Effect shall not include an adverse effect
         arising from matters that generally affect the economy or the industry
         in which WPL is engaged; "Person" means an individual or entity,
         including without limitation any partnership, corporation,

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         association, trust, limited liability company, joint venture,
         unincorporated organization or Governmental Authority; and "Disclosure
         Letter" means the disclosure letter delivered by WES to Williams GP LLC
         and Energy Partners concurrently with the execution and delivery of
         this Agreement.

3.6      Consents

         Except as set forth in Part 3.6 of the Disclosure Letter, no consent,
         approval, license, permit, order or authorization of any court or
         federal, state, municipal or other governmental department, commission,
         board, bureau, agency or instrumentality (collectively, "Governmental
         Authorities") or other Person is required to be obtained or made by or
         with respect to WES, WPL or any of their Affiliates (other than Energy
         Partners, Williams GP LLC and their subsidiaries) in connection with:

         (a)      the execution, delivery, and performance of this Agreement or
                  the consummation of the transactions contemplated hereby; and

         (b)      the conduct by WPL of its business following the Closing as
                  conducted on the date hereof.

3.7      Laws and Regulations; Litigation

         Part 3,7 of the Disclosure Letter sets forth a list, as of the date of
         this Agreement, of all pending lawsuits or claims, with respect to
         which either WES, WPL or any of their Affiliates (other than Energy
         Partners, Williams GP LLC and their subsidiaries) has been contacted in
         writing, against or affecting WPL or any of its properties, assets,
         operations or businesses. Except as set forth in the Disclosure Letter,
         none of such pending lawsuits or claims (a) would individually, or in
         the aggregate, reasonably be expected to have an Adverse Effect or (b)
         seek any injunctive relief.

         Except for those violations which would not individually, or in the
         aggregate, have an Adverse Effect, WPL is not in violation of or in
         default under any law or regulation or under any order of any
         Governmental Authorities applicable to it. Part 3.7 of the Disclosure
         Letter lists all of the claims, fines, actions, suits, demands,
         investigations or proceedings pending or, to WES' Knowledge (as the
         term Knowledge is defined below in this section), threatened against or
         affecting WPL, at law or in equity, by any Governmental Authorities
         having jurisdiction over WPL. Except as set forth in the Disclosure
         Letter none of such listed claims, fines, actions, suits, demands,
         investigations or proceedings would, individually or in the aggregate,
         reasonably be expected to have an Adverse Effect. Except as set forth
         in Part 3.7 of the Disclosure Letter, as of the date of this Agreement
         there is no lawsuit or claim by WPL that is pending against any other
         Person.

         "Knowledge," as used in this Agreement with respect to a party means
         the actual knowledge of that party's designated officer without the
         need by that officer to have

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         conducted any independent investigation or inquiry. The designated
         officers for WES and WPL are Mike Mears, Bob Cronk, Rick Olson, Ralph
         Hill, Melanie Little, Paul Nelson, Scott Welch, and Joe Willis. The
         designated officer for both Williams GP LLC and Energy Partners is Don
         Wellendorf.

3.8      Financial Statements

         Set forth as Schedule 3.8 of the Disclosure Letter are true and correct
         copies of Ernst & Young-audited WPL balance sheets as of December 31,
         1999, 2000 and 2001, statements of income, cash flows and changes in
         member's equity for the fiscal years ended December 31, 1999, 2000 and
         2001, including the notes thereto (the "Financial Statements"). Such
         Financial Statements present fairly, in all material respects, the
         financial condition, the results of operations and the cash flows of
         WPL as of such dates for each of those three years in conformity with
         generally accepted accounting principles applied on a consistent basis.

3.9      No Adverse Changes

         Except as set forth in Part 3.9 of the Disclosure Letter, since
         December 31, 2001 there have been no changes in (a) the assets,
         liabilities, operations or financial condition of WPL, from that set
         forth in the Financial Statements or (b) the business or results of
         operations of WPL, which changes have had, or could reasonably be
         expected to have, an Adverse Effect.

         Except as set forth in Part 3.9 of the Disclosure Letter, since
         December 31, 2001, WES has caused the business of WPL to be conducted
         in the ordinary course and in substantially the same manner as
         previously conducted and has made all reasonable efforts consistent
         with past practices to preserve WPL's relationships with customers and
         suppliers.

3.10     Liabilities

         Except as set forth in the Financial Statements, WPL has incurred no
         obligations or liabilities (whether accrued, absolute, contingent,
         unliquidated or otherwise, whether due or to become due) that would
         individually or in the aggregate reasonably be expected to have an
         Adverse Effect, other than contractual and other liabilities incurred
         in the ordinary course of business which are not required to be
         disclosed on the Financial Statements under generally-accepted
         accounting principles and which would not, individually or in the
         aggregate, have an Adverse Effect.

         WES or its Affiliates (excluding Energy Partners, its general partner
         and their subsidiaries) will, at Closing, assume or retain all
         liabilities and obligations relating to the Excluded Assets.

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3.11     Taxes

         (a)      Except as set forth in Part 3.11 of the Disclosure Letter, (1)
                  all Tax Returns (as defined in Section 7.1) required to be
                  tiled by or with respect to WPL or its income, business assets
                  or activities and any affiliated, consolidated, combined,
                  unitary or similar group of which WPL or a predecessor to WPL
                  is or was a member have been or will be duly filed on a timely
                  basis (taking into account all extensions of due dates); (2)
                  all Taxes owed by WPL or a predecessor to WPL and any
                  affiliated, consolidated, combined, unitary or similar group
                  of which WPL or a predecessor to WPL is or was a member which
                  are or have become due have been timely paid in full; (3) WPL
                  and its predecessor have withheld and paid over all Taxes
                  required to have been withheld and paid over, and complied
                  with all information reporting and backup withholding
                  requirements, in connection with amounts paid or owing to any
                  employee, creditor, independent contractor, or other third
                  party; (4) there are no liens on any of the assets of WPL that
                  arose in connection with any failure (or alleged failure) to
                  pay any Tax on any of the assets of the WPL, with respect to
                  Taxes, other than liens for Taxes not yet due and payable; (5)
                  there is no pending action, proceeding or investigation for
                  assessment or collection of Taxes and no Tax assessment,
                  deficiency or adjustment has been asserted or proposed with
                  respect to WPL or any predecessor to WPL.

         (b)      Except as set forth in Part 3.11 of the Disclosure Letter,
                  there are no outstanding claims by an authority in a
                  jurisdiction where WPL (or any predecessor to WPL or any
                  affiliated, consolidated, combined, unitary or similar group
                  of which WPL is or was a member) does not file Tax Returns
                  that WPL or any predecessor to WPL is or may be subject to
                  taxation in that jurisdiction.

         (c)      Except as set forth in Part 3.11 of the Disclosure Letter, the
                  total amounts set up as liabilities for current Taxes in the
                  Financial Statements (as adjusted for operations and
                  transactions in the ordinary course of business since the date
                  of the Financial Statements in accordance with past custom and
                  practice) will be sufficient to cover the payment of all
                  Taxes, whether or not assessed or disputed, which are, or are
                  hereafter found to be, or to have been, due by or with respect
                  to WPL up to and through the periods ending on the dates
                  thereof.

         (d)      Appended to Part 3.11 of the Disclosure Letter are true and
                  complete copies of each written Tax allocation or sharing
                  agreement (if any) and a true and complete description of each
                  unwritten Tax allocation or sharing arrangement affecting WPL
                  (if any). All such Tax allocation or sharing arrangements will
                  be terminated with respect to WPL effective as of the Closing
                  Date, and no payments will become due by WPL thereafter.

         (e)      WPL owns no interest in any controlled foreign corporation (as
                  defined in section 957 of the Internal Revenue Code of 1986,
                  as amended), foreign

                                       8
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                  personal holding company (as defined in Section 552 of the
                  Internal Revenue Code of 1986, as amended), passive foreign
                  investment company (as defined in section 1297 of the Internal
                  Revenue Code of 1986, as amended) or other entity the income
                  of which is or could be required to be included in the income
                  of WPL.

         (f)      WPL is a disregarded entity for Federal income tax purposes.
                  WPL has never made any election to be treated as a corporation
                  under the Internal Revenue Code of 1986, as amended.

         (g)      None of the assets of WPL are subject to a safe-harbor lease
                  (pursuant to section 168(0(8) of the Internal Revenue Code of
                  1954 as in effect after the Economic Recovery Tax Act of 1981
                  and before the Tax Reform Act of 1986) or is "tax-exempt use
                  property" (within the meaning of section 168(h) of the
                  Internal Revenue Code of 1986, as amended) or "tax-exempt bond
                  financed property" (within the meaning of section 168(g)(5) of
                  the Internal Revenue Code of 1986, as amended). No Person
                  other than WPL may be treated as the owner of the assets of
                  WPL for income tax purposes.

         (h)      Except as set forth in Part 3.11 of the Disclosure Letter,
                  neither WPL nor its predecessor (1) has been a member of an
                  affiliated group filing a consolidated federal income Tax
                  Return (other than a group the common parent of which was The
                  Williams Companies, Inc.) and (2) has any liability for the
                  Taxes of any person or entity under Treasury Regulations
                  Section 1.1502-6 (or any similar provision of state, local, or
                  foreign law), as a transferee or successor, by contract, or
                  otherwise.

         (i)      Neither WPL nor Energy Partners will be required to include
                  any material amount in taxable income for any taxable period
                  ending after the Closing Date attributable to any item that
                  was economically accrued by WPL prior to the Closing Date.
                  Furthermore, there are no agreements or arrangements with any
                  Taxing Authority (as defined in Section 7.1) that may affect
                  Taxes related to WPL following the Closing Date.

3.12     Employees and Benefits

         (a)      All of the non-union individuals performing employment-related
                  services to WPL are shared services employees provided by WES.
                  As of the Closing Date, WPL will not have any employees.

         (b)      Prior to Closing, Williams Petroleum Services, LLC will become
                  a party to, and WPL will cease to be a party to, an amended
                  collective bargaining agreement with the Paper,
                  Allied-Industrial, Chemical, and Energy Workers International
                  Union ("PACE") and with PACE Local 5-348 with respect to
                  certain individuals who perform services in connection with
                  the operations of WPL (the "PACE Collective Bargaining
                  Agreement," a copy of which will be appended to Part 3.12 of
                  the Disclosure Letter). Except for the foregoing,

                                       9
<PAGE>
                  WPL is not a party to or bound by any collective bargaining
                  agreement with respect to employees who perform services in
                  connection with the business or operations of WPL and, to the
                  Knowledge of WES, there are not any union organizing efforts
                  underway with respect to any such employees.

         (c)      Except as set forth in the Disclosure Letter, WPL does not
                  sponsor, contribute to or maintain or have an obligation to
                  sponsor, contribute to or maintain, and at any time during the
                  past six (6) years has not sponsored, contributed to or
                  maintained any employee benefit plan as defined in Section
                  3(3) of the Employee Retirement Income Security Act of 1974,
                  as amended, or any other employee benefit or compensation
                  arrangement, agreement or program under which any director,
                  employee, service provider or consultant or former director,
                  employee, service provider or consultant of WPL has any
                  present or future right to benefits, sponsored, contributed to
                  or maintained by The Williams Companies, Inc., WES or WPL, or
                  under which WPL has had or has any present or future liability
                  (collectively, the "WPL Benefit Plans").

         (d)      At the Closing, Williams Petroleum Services, LLC and WES will
                  assume or retain all liabilities and obligations relating to
                  employees of WPL, any individuals performing services for WPL,
                  and any WPL Benefit Plans with respect to all periods prior to
                  Closing.

3.13     Accurate and Complete Records

                  To the Knowledge of WES, the books, ledgers, financial records
                  and other records of WPL, all of which have been made
                  available to Williams GP LLC and Energy Partners, are, or will
                  be as of the Closing Date, in the possession of or accessible
                  by and available to WPL, and have, in all material respects,
                  been maintained in accordance with all applicable laws, rules
                  and regulations and generally accepted standards of practice.

3.14     Environmental

         (a)      For purposes of this Agreement:

                  "Environmental Laws" includes, without limitation, the
                  following laws, as amended: (1) the Resource Conservation and
                  Recovery Act; (2) the Clean Air Act; (3) the Comprehensive
                  Environmental Response, Compensation and Liability Act
                  ("CERCLA"); (4) the Federal Water Pollution Control Act; (5)
                  the Safe Drinking Water Act; (6) the Toxic Substances Control
                  Act; (7) the Emergency Planning and Community Right-to Know
                  Act; (8) the National Environmental Policy Act; (9) the
                  Occupational Safety and Health Act; (10) the Pollution
                  Prevention Act of 1990; (11) the Oil Pollution Act of 1990;
                  and (12) the Hazardous Materials Transportation Act. The term
                  "Environmental Laws" also includes all rules, regulations,
                  orders, judgments, decrees promulgated or issued with respect
                  to the foregoing Environmental Laws by Governmental
                  Authorities with jurisdiction and any other federal,

                                       10
<PAGE>

                  state or local statutes, laws, ordinances, rules, regulations,
                  orders, codes, decisions, injunctions or decrees that regulate
                  or otherwise pertain to the protection of human health,
                  natural resources or the protection of the environment,
                  including the management, control, discharge, emission,
                  treatment, containment, handling, removal, use, generation,
                  permitting migration, storage, release, transportation,
                  disposal, remediation, manufacture, processing or distribution
                  of Hazardous Materials that are or may present a threat to
                  public health, worker or public safety or the environment,

         "Hazardous Materials" means any substance, whether solid, liquid, or
         gaseous: (1) which is listed, classified, defined, or regulated as a
         "hazardous material," "hazardous waste," "solid waste," "hazardous
         substance," "toxic substance," "pollutant," "contaminant" or words of
         similar import, or otherwise classified as hazardous or toxic, in or
         pursuant to any Environmental Law; or (2) which is or contains
         asbestos, polychlorinated biphenyls, radon, urea formaldehyde foam
         insulation, explosives, or radioactive materials; or (3) any petroleum,
         petroleum hydrocarbons, petroleum products, crude oil and any
         components, fractions, or derivatives thereof, any oil or gas
         exploration or production waste, and any natural gas, synthetic gas and
         any mixtures thereof; or (4) which causes or poses a threat to cause
         contamination or nuisance on any properties, or any adjacent property
         or a hazard to the environment or to the health or safety of persons on
         or about any properties.

(b)      All current investigations, remediations and sites being monitored in
         connection with the assets, properties or operations of WPL are set
         forth in Part 3.14 of the Disclosure Letter. Except as disclosed in
         Part 3.14 of the Disclosure Letter or as would not reasonably be
         expected, individually or in the aggregate, to have an Adverse Effect:
         (1) the respective assets, properties and operations of WPL are in
         compliance with applicable Environmental Laws and with the terms and
         conditions of all permits, registrations, licenses, filings,
         notifications, exemptions, authorizations and other approvals required
         under applicable Environmental Laws; (2) no circumstances exist with
         respect to WPL's respective assets and operations that give rise to an
         obligation by WPL to investigate, remediate, monitor or otherwise
         address the presence, on-site or offsite, of Hazardous Materials under
         any applicable Environmental Laws; (3) except as set forth in Part 3.14
         of the Disclosure Letter, WPL and its respective assets and operations
         are not subject to any pending or, to the Knowledge of WES or WPL,
         threatened, claim, action, suit, investigation, inquiry or proceeding
         under any Environmental Law (including, without limitation, designation
         as a potentially responsible party under CERCLA or any similar local or
         state law); (4) all notices, permits, permit exemptions, registrations,
         licenses, approvals or similar authorizations, if any, required to be
         obtained or filed by WPL under any Environmental Law in connection with
         its operations and businesses have been duly obtained or filed and are
         valid and currently in effect; (5) there has been no release of any
         Hazardous Material into the environment by WPL or in connection with
         its assets, properties and operations; (6) there has been no exposure
         of any person or property to any Hazardous Material in

                                       11
<PAGE>

         connection with the properties, operations or activities of WPL; (7)
         there are no facts or circumstances that could reasonably be expected
         to form the basis for any claim, action, investigation, notice or
         demand by any Person alleging potential liability against WPL or its
         assets or operations arising out of the presence or release of any
         Hazardous Material or noncompliance with Environmental Laws; and (8)
         WPL has made available to Williams GP LLC and Energy Partners all
         internal and external environmental audits, studies, correspondence and
         related documents on environmental matters (in each case relevant to
         WPL) in the possession or control of WPL.

3.15     Bankruptcy

         There are no bankruptcy, reorganization or arrangement proceedings
         pending against, being contemplated by, or to WES's Knowledge,
         threatened against WES or WPL.

3.16     Contracts and Commitments

         (a)      Part 3.16 of the Disclosure Letter contains a complete and
                  accurate list of all contracts (written or oral), plans,
                  undertakings, commitments or agreements (including all
                  amendments or supplements thereto) of the following categories
                  to which WPL is a party or by which it or its assets are bound
                  as of the date of this Agreement (the "Contracts"):

                  (1)      each Contract that obligates WPL to perform services
                           or deliver goods or materials;

                  (2)      each Contract that obligates WPL to purchase services
                           or goods or materials that either has a term
                           extending beyond December 31, 2002 or would cause WPL
                           to exceed budgeted amounts in its existing plan for
                           2002;

                  (3)      each Contract that was not entered into in the
                           ordinary course of business and that involves
                           expenditures or receipts of WPL in excess of $100,000
                           per year;

                  (4)      each lease, rental, license, and installment and
                           conditional sale agreement affecting the ownership
                           of, leasing of, title to, use of, or any or other
                           interest in, any material real or personal property
                           of WPL;

                  (5)      each licensing agreement or other Contract with
                           respect to patents, trademarks, copyrights, or other
                           intellectual property;

                                       12
<PAGE>

                  (6) each joint venture, partnership, investment and other
                  Contract (however named) requiring the investment of funds or
                  the making of any loan by WPL in another Person, the purchase
                  of any securities of any Person, the making of any investment
                  in any venture or other business enterprise or involving a
                  sharing of profits, losses, costs, or liabilities by WPL with
                  any other Person;

                  (7) each Contract containing covenants that in any way purport
                  to restrict the business activity of WPL or limit the freedom
                  of WPL to engage in any line of business or to compete with
                  any person;

                  (8) each Contract providing for payments to or by any person
                  based on sales, purchases, or profits, other than direct
                  payments for goods;

                  (9) each Contract for capital expenditures in excess of
                  $1,000,000 and all Contracts for capital expenditures which,
                  in the aggregate, exceed a total of $7.5 million;

                  (10) each written indemnity or guaranty, and any other similar
                  undertaking with respect to contractual performance extended
                  by WPL;

                  (11) each Contract relating to indebtedness for borrowed money
                  or the mortgaging, pledging or encumbering of any assets; and

                  (12) each Contract with any Affiliate of WPL other than
                  Contracts for the use of WPL's pipeline facilities in the
                  ordinary course of business, arrangements related to services
                  provided to WPL at cost and agreements for the purchase and
                  sale of commodities required to operate the WPL facilities in
                  the ordinary course of business.

(b)      True copies of the written Contracts, and accurate written summaries of
         the oral Contracts, have been made available to Energy Partners. Except
         as set forth on Exhibit 3.16, neither WPL nor, to WES's Knowledge, any
         other party is in default under, or in breach or violation of (and no
         event has occurred which, with notice or the lapse of time or both,
         would constitute a default under, or a breach or violation or lapse of)
         any term, condition or provision of any Contract except for defaults,
         breaches, violations or events which, individually or in the aggregate,
         would not reasonably be expected to have an Adverse Effect.

(c)      Other than Contracts which have terminated or expired in accordance
         with their terms, each of the Contracts is in full force and effect and
         constitutes valid, binding and enforceable obligations of WPL and
         enforceable obligations of any other party thereto, in accordance with
         its terms (subject to the effects of bankruptcy, insolvency, fraudulent
         conveyance, reorganization, moratorium and other similar laws relating
         to or affecting creditors' rights generally, general equitable
         principles (whether considered in a proceeding in equity or at law) and
         an implied covenant of good faith and fair dealing), except where the
         failure of such Contracts to be in full

                                       13
<PAGE>

         force and effect or to have enforceable obligations would not
         reasonably be expected to have an Adverse Effect.

         (d)      Except as set forth in Part 3.16 of the Disclosure Letter or
                  as would not, individually, or in the aggregate, reasonably be
                  expected to have an Adverse Effect, in connection with any
                  Contract (1) WPL has not received any prepayment, advance
                  payment, deposits or similar payments, and has no refund
                  obligation, with respect to any products or capacity
                  purchased, sold, leased, transported, stored or handled by or
                  on behalf of WPL; (2) WPL has not received any compensation
                  for transportation, capacity leasing, storage or handling
                  services which would be subject to any refund or creates any
                  repayment obligation either by or to WPL, and to WES's
                  Knowledge, there is no basis for a claim that such a refund is
                  due; and (3) with regard to capacity leasing, transportation,
                  handling and storage Contracts in effect as of the Closing
                  Date, WPL will be entitled to receive the full contract price
                  in accordance with the terms of each such contract for all
                  capacity leased and for all products transported, handled,
                  stored and/or sold on and after the Closing Date.

3.17     Assets

         All of the assets which are necessary for the continued conduct of the
         business of WPL, as such business is conducted on the date of this
         Agreement, are, owned or leased by WPL.

         The pipeline and terminal facilities, structures and equipment of WPL
         necessary to conduct its business as it's now being conducted are in
         good operating condition and repair (ordinary wear and tear excepted)

3.18     Assets Other than Real Property Interests

         WPL has good and valid title to all non-real property material assets
         reflected on the balance sheets of the Financial Statements or
         thereafter acquired, except those sold or otherwise disposed of since
         December 31, 2001 in the ordinary course of business consistent with
         past practice and/or in accordance with the terms of this Agreement, in
         each case free and clear of all Liens (as defined below in this
         section) except (a) such Liens as are set forth in Part 3.18 of the
         Disclosure Letter, (b) mechanics', carriers', workmen's, repairmen's or
         other like Liens arising or incurred in the ordinary course of
         business, (c) Liens arising under original purchase price conditional
         sales contracts and equipment leases with third parties entered into in
         the ordinary course of business, (d) Liens for Taxes that are not due
         and payable or that may thereafter be paid without penalty, and (e)
         other imperfections of title or encumbrances, if any, that,
         individually or in the aggregate, would not reasonably be expected to
         have an Adverse Effect or to interfere with the

                                       14
<PAGE>

         conduct of WPL's business (the Liens described in clauses (b), (c), (d)
         and (e) above are hereinafter referred to collectively as "Permitted
         Liens")

         As used herein, the term "Liens" means liens, mortgages, security
         interests, pledges, charges, encumbrances or rights of others.

3.19     Title to Real Property

         WPL has:

         (a)      Valid and indefeasible rights in and to all easements and
                  rights-of-way as are necessary to enable WPL to continue to
                  conduct its business as it is now being conducted;

         (b)      good and valid title in fee to all real property and interests
                  in real property purported to be owned in fee by WPL; and

         (c)      good and valid title to the leasehold estates in all real
                  property and interests in real property purported to be leased
                  by WPL, and in the case of both clause (b) and (c), free and
                  clear of all Liens, except:

                  (1)      Liens set forth in Part 3.19 of the Disclosure
                           Letter;

                  (2)      Permitted Liens; and

                  (3)      easements, covenants, rights-of-way and other similar
                           restrictions of record.

3.20     Intellectual Property

         Part 3.20 of the Disclosure Letter sets forth a true and complete list
         of all material patents, trademarks (registered or unregistered), trade
         names, service marks and copyrights and applications therefore
         (collectively, "Intellectual Property"), owned, used, filed by or
         licensed to WPL. With respect to registered trademarks, Part 3.20 of
         the Disclosure Letter sets forth a list of all jurisdictions in which
         such trademarks are registered or applied for and all registration and
         application numbers. Except as set forth in Part 3.20 of the Disclosure
         Letter, WPL owns, and WPL has the right to use, execute, reproduce,
         display, perform, modify, enhance, distribute, prepare derivative works
         of and sublicense, without payment to any other person, all of the
         Intellectual Property, as applicable, and the consummation of the
         transactions contemplated hereby will not conflict with, alter or
         impair any such rights, in each case, except as such, individually or
         in the aggregate, would not reasonably be expected to have an Adverse
         Effect.

                                       15
<PAGE>

3.21     Licenses; Permits

         Except as set forth in Part 3.21 of the Disclosure Letter WPL has all
         material licenses, permits and authorizations issued or granted by
         Governmental Authorities that are necessary for the conduct of the
         business of WPL as now being conducted. Except as set forth in Part
         3.21 of the Disclosure Letter, all such licenses, permits and
         authorizations are validly held by WPL, WPL has complied in all
         material respects with all terms and conditions thereof and the same
         will not be subject to suspension, modification, revocation or
         nonrenewal as a result of the execution and delivery of this Agreement
         or the consummation of the transactions contemplated hereby, except
         such as, individually or in the aggregate, would not reasonably be
         expected to have an Adverse Effect.

3.22     Insurance

         WES' parent company currently maintains policies of fire and casualty,
         liability, and other forms of insurance covering WPL in such amounts,
         with such deductibles, and against such risks and losses as are listed
         in Part 3.22 of the Disclosure Letter. All such policies are in full
         force and effect, all premiums due and payable thereon have been paid
         (other than retroactive or retrospective premium adjustments that are
         not yet, but may be, required to be paid with respect to any period
         ending prior to the Closing Date under comprehensive general liability
         and workmen's compensation insurance policies), and no notice of
         cancellation or termination has been received with respect to any such
         policy that has not been replaced on substantially similar terms prior
         to the date of such cancellation. To the Knowledge of WES, the
         activities and operations of WPL have been conducted in a manner so as
         to conform in all material respects to all applicable provisions of
         such insurance policies.

3.23     Utility Status

         Neither WES nor WPL is a "Holding Company" or a "Public Utility
         Company" or a "Gas Utility Company" as those terms are defined in the
         Public Utility Holding Company Act of 1935.

3.24     Brokerage Arrangements

         Neither WES nor WPL has entered (directly or indirectly) into any
         agreement with any person, firm or corporation that would obligate
         Williams GP LLC, Energy Partners or WPL to pay any commission,
         brokerage or "finder's fee" or other fee in connection with this
         Agreement or the transactions contemplated herein.

3.25     Securities Laws

         (1)      WES is an accredited investor within the meaning of Rule
                  501(a) under the Securities Act.

                                       16
<PAGE>

         (2)      WES has such knowledge and experience in financial and
                  business matters so as to be capable of evaluating the merits
                  and risks of its investment herein and WES is capable of
                  bearing the economic risks of such investment.

3.26     Transactions with Affiliates

         Except as set forth in Part 3.26 of the Disclosure Letter, there are no
         agreements, contracts or arrangements between WPL and any of its
         Affiliates other than Contracts for the use of WPL's pipeline
         facilities in the ordinary course of business, arrangements related to
         services provided to WPL at cost and agreements for the purchase and
         sale of commodities required to operate the WPL facilities in the
         ordinary course of business.

3.27     Excluded Assets

         With the exception of the Atlas software (for which a license has been
         granted to Energy Partners and its Affiliates), none of the assets that
         are Excluded Assets set forth in Exhibit 1.1 are used in the operation
         of WPL's business as currently conducted, or are reasonably expected to
         be necessary in the operation of WPL's business in the foreseeable
         future.

                                    ARTICLE 4
          REPRESENTATIONS AND WARRANTIES OF WILLIAMS GP LLC AND ENERGY
                                    PARTNERS

4.1      Williams GP LLC, as the general partner of Energy Partners, hereby
         represents and warrants to WES and Energy Partners that as of the date
         hereof and as of the Closing Date:

         4.1(a) Organization and Existence

                  Williams GP LLC is a limited liability company validly
                  existing and in good standing under the laws of the State of
                  Delaware. Williams GP LLC has full limited liability company
                  power and authority to own and hold the properties and assets
                  it now owns and holds and to carry on its business as and
                  where such properties are now owned or held and such business
                  is now conducted. Williams GP LLC is duly licensed or
                  qualified to do business as a foreign limited liability
                  company and is in good standing in the states in which the
                  character of the properties and assets now owned or held by it
                  or the nature of the business now conducted by it requires it
                  to be so licensed or qualified, except where the failure to be
                  so qualified or in good standing would not reasonably be
                  expected to have a material adverse effect on the business,
                  financial condition or results of operations of Williams GP
                  LLC.

                                       17
<PAGE>

         4.1(b) Authority and Approval

                  Williams GP LLC has the limited liability company power and
                  authority to execute and deliver this Agreement, to consummate
                  the transactions contemplated hereby and to perform all the
                  terms and conditions hereof to be performed by it. Prior to
                  Closing, the execution and delivery by Williams GP LLC of this
                  Agreement, the performance by Williams GP LLC of all the terms
                  and conditions hereof to be performed by it and the
                  consummation of the transactions contemplated hereby shall
                  have been duly authorized and approved by all requisite
                  limited liability company action of Williams GP LLC. The
                  Conflicts Committee of the Board of Directors of Williams GP
                  LLC and the Board of Directors of Williams GP LLC have
                  approved this Agreement and the transactions contemplated
                  hereby on behalf of Energy Partners. This Agreement
                  constitutes the valid and binding obligation of Williams GP
                  LLC enforceable in accordance with its terms, except as such
                  enforcement may be limited by bankruptcy, insolvency,
                  reorganization, moratorium or other similar laws affecting
                  enforcement of creditors' rights generally and by general
                  principles of equity (whether applied in a proceeding at law
                  or in equity). Assuming receipt of good and valid title to the
                  WPL LLC Interest by Williams GP LLC upon the contribution
                  pursuant to this Agreement of the WPL LLC Interest to Williams
                  GP LLC by WES, Williams GP LLC will have the full legal right
                  to contribute, assign and transfer the WPL LLC Interest to
                  Energy Partners and will, at the time of delivery thereof to
                  Energy Partners pursuant to the terms hereof, transfer good
                  and valid title thereto free and clear of all Liens.

         4.1(c) Brokerage Arrangements

                  Williams GP LLC has not entered (directly or indirectly) into
                  any agreement with any person, firm or corporation that would
                  obligate WES or any of its Affiliates (other than Williams GP
                  LLC and Energy Partners and its subsidiaries) to pay any
                  commission, brokerage or "finder's fee" in connection with
                  this Agreement or the transactions contemplated herein.

         4.1(d) Utility Status

                  Williams GP LLC is not a "Holding Company" or a "Public
                  Utility Company" or a "Gas Utility Company" as those terms are
                  defined in the Public Utility Holding Company Act of 1935.

         4.1(e) Securities Laws

                  (1)      Williams GP LLC is an accredited investor within the
                           meaning of Rule 50 1(a) under the Securities Act.

                                       18
<PAGE>

                  (2)      Williams GP LLC has such knowledge and experience in
                           financial and business matters so as to be capable of
                           evaluating the merits and risks of its investment in
                           the New Units and Williams GP LLC is capable of
                           bearing the economic risks of such investment.

4.2      Energy Partners represents and warrants to WES and to Williams GP LLC
         that as of the date hereof and as of the Closing Date:

         4.2(a) Organization and Existence

                  Energy Partners is a limited partnership validly existing and
                  in good standing under the laws of the State of Delaware.
                  Energy Partners has full limited partnership power and
                  authority to own and hold the properties and assets it now
                  owns and holds and to carry on its business as and where such
                  properties are now owned or held and such business is now
                  conducted. Energy Partners is duly licensed or qualified to do
                  business as a foreign limited partnership and is in good
                  standing in the states in which the character of the
                  properties and assets now owned or held by it or the nature of
                  the business now conducted by it requires it to be so licensed
                  or qualified, except where the failure to be so qualified or
                  in good standing would not reasonably be expected to have a
                  material adverse effect on the business, financial condition
                  or results of operations of Energy Partners.

         4.2(b) Authority and Approval

                  Energy Partners has the limited partnership power and
                  authority to execute and deliver this Agreement, to consummate
                  the transactions contemplated hereby and to perform all the
                  terms and conditions hereof to be performed by it. The
                  execution and delivery by Energy Partners of this Agreement,
                  the performance by Energy Partners of all the terms and
                  conditions hereof to be performed by it and the consummation
                  of the transactions contemplated hereby have been duly
                  authorized and approved by all requisite action of the general
                  partner of Energy Partners, This Agreement constitutes the
                  valid and binding obligation of Energy Partners enforceable in
                  accordance with its terms, except as such enforcement may be
                  limited by bankruptcy, insolvency, reorganization, moratorium
                  or other similar laws affecting enforcement of creditors'
                  rights generally and by general principles of equity (whether
                  applied in a proceeding at law or in equity).

         4.2(c) Brokerage Arrangements

                  Energy Partners has not entered (directly or indirectly) into
                  any agreement with any person, firm or corporation that would
                  obligate WES or any of its Affiliates (other than Williams GP
                  LLC and Energy Partners and its subsidiaries) to pay any
                  commission, brokerage or "finder's fee" in

                                       19
<PAGE>

                  connection with this Agreement or the transactions
                  contemplated herein.

         4.2(d) Utility Status

                  Energy Partners is not a "Holding Company" or a "Public
                  Utility Company" or a "Gas Utility Company" as those terms are
                  defined in the Public Utility Holding Company Act of 1935.

         4.2(e) New Units

                  The New Units to be delivered at Closing shall be duly
                  authorized and validly issued in accordance with, and subject
                  to the terms of, the Amended and Restated Agreement of Limited
                  Partnership of Energy Partners, as further amended by the
                  First Amendment thereto dated as of the Closing Date, and free
                  of all Liens and restrictions other than as expressly set
                  forth in accordance with, and subject to the terms of, the
                  Amended and Restated Agreement of Limited Partnership of
                  Energy Partners, as further amended by the First Amendment
                  thereto dated as of the Closing Date.

                                    ARTICLE 5
                             ADDITIONAL AGREEMENTS,
                        COVENANTS, RIGHTS AND OBLIGATIONS

5.1      Certain Changes

         Except as set forth in Part 5.1 of the Disclosure Letter or with
         respect to the Excluded Assets, without first obtaining the written
         consent of Energy Partners, from the date hereof until the Closing
         Date, WIES covenants that it will cause WPL not to:

         (a)      make any material change in the conduct of its businesses and
                  operations, or its financial reporting and accounting methods;

         (b)      other than in the ordinary course of business, enter into any
                  contract or agreement that would be defined as a "Contract"
                  hereunder or terminate or amend in any material respect any
                  Contract;

         (c)      declare, set aside .or pay any dividends, or make any
                  distributions, in respect of the WPL LLC Interest, or
                  repurchase, redeem or otherwise acquire any such securities;

         (d)      merge into or with or consolidate with any other entity or
                  acquire all or substantially all of the business or assets of
                  any person or other entity;

                                       20
<PAGE>
         (e)      make any change in its charter documents, limited liability
                  company documents, or equivalent governing instruments;

         (f)      purchase any securities of any person or entity, except short
                  term debt securities of governmental entities and banks, or
                  make any investment in any venture or other business
                  enterprise other than as required pursuant to existing
                  Contracts;

         (g)      increase the indebtedness of, or incur any obligation or
                  liability, direct or indirect, for WPL, other than the
                  incurrence of liabilities pursuant to existing Contracts or in
                  the ordinary course of business consistent with past
                  practices;

         (h)      sell, lease or otherwise dispose of any of its assets other
                  than the sale of assets in the ordinary course of business or
                  pursuant to existing Contracts;

         (i)      purchase, lease or otherwise acquire any property of any kind
                  other than in the ordinary course of business;

         (j)      implement or adopt any material change in its tax methods,
                  principles or elections;

         (k)      hire any employees, enter into any employment agreement or
                  enter into or amend any collective bargaining or labor
                  agreements (except as set forth in Section 3.12) or adopt,
                  modify or terminate any benefit plan (except as contemplated
                  by Section 3.12);

         (1)      permit any of its assets to become subjected to any material
                  Lien, covenant, right-of-way or other similar restriction of
                  any nature whatsoever;

         (m)      waive any claims or rights of substantial value;

         (n)      enter into or agree upon any settlement or compromise of
                  pending litigation or other pending proceedings before any
                  Governmental Authority other than any matter that is settled
                  or compromised by the payment of damages or fines of less than
                  $100,000;

         (o)      except as contemplated in Sections 5.2(d) and 5.2(e) or as may
                  be required to perform WES's obligations under this Agreement,
                  make any application, filing or other request for approval
                  from any Governmental Authority with respect to any new rates,
                  services, terms and conditions of service or construction of
                  facilities; or

         (p)      enter into a binding commitment to do any of the foregoing.

5.2      Operations

         Other than as provided in this Agreement, WES will cause WPL to:

                                       21
<PAGE>

         (a)      maintain its properties and facilities necessary to conduct
                  its business as it is now being conducted in as good working
                  order and condition as of the date hereof, ordinary wear and
                  tear excepted;

         (b)      use its reasonable best efforts to maintain and preserve its
                  business, retain present employees and maintain its
                  relationship with suppliers, customers and others having
                  business relations with it;

         (c)      advise Williams GP LLC and Energy Partners promptly in writing
                  of any material change in any document, schedule or other
                  information delivered pursuant to this Agreement;

         (d)      file on a timely basis all notices, reports or other filings
                  necessary or required for the continuing operation of WPL's
                  business to be filed with or reported to any federal, state,
                  municipal or other governmental department, commission, board,
                  bureau, agency or any instrumentality of any of the foregoing
                  wherever located; and

         (e)      file on a timely basis all complete and correct applications
                  or other documents necessary to maintain, renew or extend any
                  permit, variance or any other approval required by any
                  Governmental Authority necessary or required for the
                  continuing operation of WPL's business whether or not such
                  approval would expire before or after the Closing Date.

5.3      Access

         WES will continue to afford Williams GIP LLC and Energy Partners and
         their authorized representatives reasonable access to WPL's financial,
         title, tax, corporate and legal materials and operating data and
         information available as of the date hereof and which becomes available
         to WES at any time prior to the Closing Date, and will furnish to
         Williams GP LLC and Energy Partners such other information as it may
         reasonably request, unless any such access and disclosure would violate
         the terms of any confidentiality agreement to which WES and/or WPL is
         bound or any applicable law or regulation.

         WES will use its reasonable best efforts upon request to secure all
         requisite consents for the examination by Williams GP LLC and Energy
         Partners and its representatives of any information covered by
         confidentiality agreements which would restrict their access to
         information. WES will cause WPL to allow Williams GP LLC and Energy
         Partners and their representative's access to and consultation with the
         lawyers, accountants, and other professionals employed by or used by
         the WPL for all purposes under this Agreement. Any such consultation
         shall occur under circumstances appropriate to maintain intact the
         attorney-client privilege as to privileged communications and attorney
         work product.

                                       22
<PAGE>

         Additionally, WES will afford to Williams GP LLC and Energy Partners
         and their representatives reasonable access to the books and records of
         WES insofar as they relate to property, accounting and tax matters of
         WPL. Until the Closing Date, the confidentiality of any data or
         information so acquired shall be maintained by Williams GP LLC and
         Energy Partners and their representatives. Further, WES will afford to
         Williams GP LLC and Energy Partners and their authorized
         representatives reasonable access from the date hereof until the
         Closing Date, during normal business hours, to the WPL assets and
         properties; provided that such access shall be at the sole cost,
         expense and risk of Williams GP LLC and Energy Partners.

5.4      Reporting Requirements

         WES, Williams GP LLC and Energy Partners will duly and timely file all
         notices and reports required to be filed with all Governmental
         Authorities in contemplation of the consummation of the transactions
         described herein,

5.5      Reasonable Best Efforts; Further Assurances

         WES and Williams GP LLC and Energy Partners shall use their reasonable
         best efforts (a) to obtain all approvals and consents required by or
         necessary for the transactions contemplated by this Agreement, and (b)
         to ensure that all of the conditions to the obligations of Williams GP
         LLC and Energy Partners and WES contained in Sections 6.1 and 6.2,
         respectively, are satisfied timely.

         Each of the parties acknowledges that certain actions may be necessary
         with respect to the matters and actions contemplated by this Agreement
         such as making notifications and obtaining consents or approvals or
         other clearances that are material to the consummation of the
         transactions contemplated hereby, and each agrees to take all
         appropriate action and to do all things necessary, proper or advisable
         under applicable laws and regulations to make effective the
         transactions contemplated by this Agreement; provided, however, that
         nothing in this Agreement will require any party hereto to hold
         separate or make any divestiture not expressly contemplated herein of
         any asset or otherwise agree to any restriction on its operations or
         other materially burdensome condition which would in any such case be
         material to its assets, liabilities or business in order to obtain any
         consent or approval or other clearance required by this Agreement.

5.6      Casualty Loss

         If all or any material portion of the WPL facilities is damaged or
         destroyed by fire or other casualty before the Closing, either party
         may, at its option, terminate this Agreement by verbal and written
         notice to the other party prior to Closing. If neither party elects to
         terminate this Agreement as aforesaid, the parties shall proceed to
         close the transactions contemplated hereby, in which event WES shall
         assign to the Williams GP LLC and Energy Partners all of WES' right,
         title and interest in any claim under any applicable insurance policies
         in respect of such casualty. If the total amount of any such insurance
         proceeds is not sufficient to

                                       23
<PAGE>

         fully repair and/or replace the damaged facilities to return them to
         their pre-damage or destruction operating condition and repair, the
         amount of such shortfall shall, at the option of WES, either be paid by
         WES to Energy Partners or will reduce the number of New Units that
         Energy Partners is to deliver to WES under Section 2.2 by the number of
         such New Units as equal, in value, the shortfall.

         If the casualty loss does not involve all or any material portion of
         the WPL facilities, then the parties shall be obligated to close the
         transaction contemplated herein according to the terms hereof,
         notwithstanding such casualty loss, and WES shall, at the election of
         Williams GP LLC and Energy Partners, either: (a) repair the damages
         caused by such casualty loss prior to Closing, at its expense; or (b)
         pay the deductible due under the insurance policy or policies insuring
         the same and deliver or assign to the other party, at Closing, any and
         all insurance proceeds or rights to proceeds attributable to such
         casualty loss. For the purposes of this Section, a "material portion"
         means any casualty loss which is equal to or greater than Twenty
         Million Dollars ($20,000,000.00).

                                    ARTICLE 6
                              CONDITIONS TO CLOSING

6.1      Conditions to the Obligations of Williams GP LLC and Energy Partners

         The obligations of Williams GP LLC and Energy Partners to proceed with
         the Closing contemplated hereby are subject to the satisfaction on or
         prior to the Closing Date of all of the following conditions, any one
         or more of which may be waived in whole or in part, by Williams GP LLC
         and Energy Partners:

         (a)      The representations and warranties of WES made in this
                  Agreement and qualified as to materiality shall be true and
                  correct, and those not so qualified shall be true and correct
                  in all material respects, as of the date hereof and as of the
                  time of the Closing as though made as of such time, except to
                  the extent such representations and warranties expressly
                  relate to an earlier date (in which case such representations
                  and warranties qualified as to materiality shall be true and
                  correct, and those not so qualified shall be true and correct
                  in all material respects, on and as of such earlier date). WES
                  shall have performed or complied in all material respects with
                  all obligations and covenants required by this Agreement to be
                  performed or complied with by WES by the time of the Closing.
                  WES shall have delivered to Williams GP LLC and Energy
                  Partners a certificate, dated as of the Closing Date and
                  signed by an authorized officer of WES, confirming the
                  foregoing matters set forth in this Section 6.1(a).

         (b)      No action or proceeding before a court or other Governmental
                  Authority shall have been instituted or threatened challenging
                  or seeking to restrain or prohibit the consummation of the
                  transactions contemplated by this Agreement.

                                       24
<PAGE>

         (c)      All necessary consents of any third Person required for the
                  consummation of the transactions contemplated in this
                  Agreement shall have been made and obtained.

         (d)      No statute, rule, regulation, executive order, decree,
                  temporary restraining order, preliminary or permanent
                  injunction or other order enacted, entered, promulgated,
                  enforced or issued by any Governmental Authority, or other
                  legal restraint or prohibition preventing the consummation of
                  the transactions contemplated hereby shall be in effect.

         (e)      Execution and delivery by all parties thereto of the Second
                  Amendment to the Omnibus Agreement substantially in the form
                  of Exhibit 6.1(e) hereto.

         (f)      Delivery of a First Amendment, dated as of the Closing Date,
                  to the Amended and Restated Agreement of Limited Partnership
                  of Energy Partners which provides for the issuance of the New
                  Units.

         (g)      Williams GP LLC and Energy Partners shall have obtained (on
                  terms satisfactory to them) the third-Person financing
                  required to satisfy their obligations under Sections
                  2.2(c)(l)(A) and 2.2(d).

         (h)      Execution and delivery of a Blending and Storage Services
                  Agreement between WPL and Williams Terminals Holdings, L.P.,
                  on the one hand, and WES, on the other.

6.2      Conditions to the Obligation of WES

         The obligation of WES to proceed with the Closing contemplated hereby
         is subject to the satisfaction on or prior to the Closing Date of all
         of the following conditions, any one or more of which may be waived in
         writing, in whole or in part, by WES:

         (a)      The representations and warranties of both Williams GP LLC and
                  Energy Partners made in this Agreement qualified as to
                  materiality shall be true and correct, and those not so
                  qualified shall be true and correct in all material respects,
                  as of the date hereof and as of the time of the Closing as
                  though made as of such time, except to the extent such
                  representations and warranties expressly relate to an earlier
                  date (in which case such representations and warranties
                  qualified as to materiality shall be true and correct, and
                  those not so qualified shall be true and correct in all
                  material respects, on and as of such earlier date). Williams
                  GP LLC and Energy Partners shall have performed or complied in
                  all material respects with all obligations and covenants
                  required by this Agreement to be performed or complied with by
                  Williams GP LLC and Energy Partners by the time of the
                  Closing. Williams GP LLC and Energy Partners shall have
                  delivered to the WES a certificate, dated as of the Closing
                  Date and signed by an authorized officer of Williams GP LLC
                  and Energy Partners confirming the foregoing matters set forth
                  in this Section 6.2(a).

                                       25
<PAGE>
         (b)     No action or proceeding before a court or any other
                 Governmental Authority shall have been instituted or threatened
                 challenging or seeking to restrain or prohibit the consummation
                 of the transactions contemplated by this Agreement.

         (c)     All necessary consents of any Person not a party hereto
                 required for the consummation of the transactions contemplated
                 in this Agreement shall have been made and obtained.

         (d)     No statute, rule, regulation, executive order, decree,
                 temporary restraining order, preliminary or permanent
                 injunction or other order enacted, entered, promulgated,
                 enforced or issued by any Governmental Authority, or other
                 legal restraint or prohibition preventing the consummation of
                 the transactions contemplated hereby shall be in effect.

         (e)     Execution and delivery by all parties thereto of the Second
                 Amendment to the Omnibus Agreement substantially in the form of
                 Exhibit 6.1(e) hereto.

         (f)     Delivery of a First Amendment, dated as of the Closing Date, to
                 the Amended and Restated Agreement of Limited Partnership of
                 Energy Partners Which provides for the issuance of the New
                 Units.

                                    ARTICLE 7
                                   TAX MATTERS

7.1      Liability for Taxes

         (a)      For purposes of this Agreement:

                  (1)      "Tax" or "Taxes" means all taxes, however
                           denominated, including any interest, penalties or
                           other additions to tax that may become payable in
                           respect thereof, imposed by any federal, state, local
                           or foreign government or any agency or political
                           subdivision of any such government, which taxes shall
                           include, without limiting the generality of the
                           foregoing, all income or profits taxes (including,
                           but not limited to, federal income taxes and state
                           income taxes), gross receipts taxes, net proceeds
                           taxes, alternative or add-on minimum, sales taxes,
                           use taxes, real property gains or transfer taxes, ad
                           valorem taxes, property taxes, value-added taxes,
                           franchise taxes, production taxes, severance taxes,
                           windfall profit taxes, withholding taxes, payroll
                           taxes, employment taxes, excise taxes and other
                           obligations of the same or similar nature to any of
                           the foregoing;

                                       26
<PAGE>

                  (2)      "Tax Returns" means all reports, estimates,
                           declarations of estimated Tax, information statements
                           and returns relating to, or required to be filed in
                           connection with, any Taxes, including information
                           returns or reports with respect to backup withholding
                           and other payments to third parties; and

                  (3)      "Taxing Authority" means, with respect to any Tax,
                           the governmental body, entity or political
                           subdivision thereof that imposes such Tax, and the
                           agency (if any) charged with the collection of such
                           Tax for such entity or subdivision, including any
                           governmental or quasi-governmental entity or agency
                           that imposes, or is charged with collecting, social
                           security or similar charges or premiums.

         (b)      WES shall be liable for, and shall indemnify and hold Energy
                  Partners, WPL and their respective subsidiaries harmless from
                  any Taxes, together with any costs, expenses, losses or
                  damages, including reasonable expenses of investigation and
                  attorneys' and accountants' fees and expenses, arising out of
                  or incident to the determination, assessment or collection of
                  such Taxes ("Tax Losses"), (1) imposed on or incurred by WPL
                  by reason of Treasury Regulations Section 1.1502-6 or any
                  analogous state, local or foreign law or regulation which is
                  attributable to WPL or a predecessor to WPL having been a
                  member of any consolidated, combined or unitary group on or
                  prior to the Closing Date, (2) imposed on or incurred by WPL
                  with respect to all periods prior to and including the Closing
                  Date, or (3) attributable to a breach by WES of any
                  representation, warranty or covenant with respect to Taxes in
                  this Agreement.

         (c)      Energy Partners shall be liable for, and shall indemnify and
                  hold WES and its affiliates harmless from, any Tax Losses (1)
                  imposed on or incurred by WPL with respect to the period after
                  the Closing Date or (2) attributable to a breach by Energy
                  Partners of any covenant with respect to Taxes in this
                  Agreement.

         (d)      Whenever it is necessary for purposes of this Article 7 to
                  determine the amount of any Taxes imposed on or incurred by
                  WPL or a predecessor to WPL for a taxable period beginning
                  before and ending after the Closing Date which is allocable to
                  the period prior to and including the Closing Date, the
                  determination shall be made, in the case of property or ad
                  valorem taxes or franchise taxes (which are measured by, or
                  based solely upon capital, debt or a combination of capital
                  and debt), on a per diem basis and, in the case of other
                  Taxes, by assuming that such pre-Closing Date period
                  constitutes a separate taxable period of WPL or a predecessor
                  thereto and by taking into account the actual taxable events
                  occurring during such period (except that exemptions,
                  allowances and deductions for a taxable period beginning
                  before and ending after the Closing Date that are calculated
                  on an annual or periodic basis, such as the deduction for
                  depreciation,. shall be apportioned to the period prior to and
                  including the Closing Date ratably on a per diem basis).
                  Notwithstanding anything to the contrary herein, any franchise
                  Tax paid or

                                       27
<PAGE>
                  payable with respect to WPL or a predecessor to WPL shall be
                  allocated to the taxable period during which the income,
                  operations, assets or capital comprising the base of such Tax
                  is measured, regardless of whether the right to do business
                  for another taxable period is obtained by the payment of such
                  franchise Tax.

         (e)      Energy Partners agrees to pay to WES any refund received after
                  the Closing Date by it or its affiliates, including WPL, in
                  respect of any Taxes for which WES is liable under clause (b)
                  of this Section 7.1. WES agrees to pay to Energy Partners any
                  refund received by WES or their affiliates in respect of any
                  Taxes for which Williams GP LLC and Energy Partners is liable
                  under clause (c) of this Section 7.1. The parties shall
                  cooperate in order to take all steps reasonably necessary to
                  claim any such refund. Any such refund received by a party or
                  its affiliate for the account of the other party shall be paid
                  to such other pasty within 90 days after such refund is
                  received.

         (f)      Williams GP LLC and Energy Partners and WES agree not to make
                  or cause any election (including an election to ratably
                  allocate items under Treasury Regulations Section 1.1502-76(b)
                  (2) (ii)) to allocate tax items in a manner inconsistent with
                  Section 7.1(d) hereof.

7.2      Tax Returns

         (a)      WES shall cause to be included in the consolidated federal
                  income Tax Returns (and the state income Tax Returns of any
                  state that permits consolidated, combined or unitary income
                  Tax Returns, if any) of the Williams Group (as defined herein)
                  for all periods ending on or before the Closing Date, all Tax
                  items of WPL which are required to be included therein, shall
                  cause such Tax Returns to be timely filed with the appropriate
                  Taxing Authorities, and shall be responsible for the timely
                  payment (and entitled to any refund) of all Taxes due with
                  respect to the periods covered by such Tax Returns. For
                  purposes of this Agreement, "Williams Group" means the
                  affiliated group of corporations within the meaning of section
                  1504 of the Internal Revenue Code of 1986, as amended, which
                  files a consolidated federal income Tax Return and as to which
                  The Williams Companies, Inc. is the common parent, and, in the
                  case of any combined or unitary Tax Return, the group of
                  corporations filing such Tax Return that includes WPL or its
                  operations.

         (b)      With respect to any Tax Return covering a taxable period
                  ending on or before the Closing Date that is required to be
                  filed after the Closing Date with respect to WPL that is not
                  described in paragraph (a) above, WES shall cause such Tax
                  Return to be prepared, shall cause to be included in such Tax
                  Return all Tax items required to be included therein, shall
                  cause such Tax Return to be filed timely with the appropriate
                  Taxing Authority, and shall be responsible for the timely
                  payment (and entitled to any refund) of all Taxes due with
                  respect to the period covered by such Tax Return.

                                       28
<PAGE>

         (c)      With respect to any Tax Return covering a taxable period
                  beginning on or before the Closing Date and ending after the
                  Closing Date that is required to be filed after the Closing
                  Date with respect to WPL, Energy Partners shall cause such Tax
                  Return to be prepared, shall cause to be included in such Tax
                  Return all Tax items required to be included therein, shall
                  furnish a copy of such Tax Return to WES, shall file timely
                  such Tax Return with the appropriate Taxing Authority, and
                  shall be responsible for the timely payment of all Taxes due
                  with respect to the period covered by such Tax Return. Energy
                  Partners shall determine, in accordance with the provisions of
                  Section 7.1(d) of the Agreement, the amount of Tax due with
                  respect to the period prior to and including the Closing Date
                  (the "Contributor's Tax") and shall notify WES of its
                  determination of the Contributor's Tax. WES shall pay to
                  Energy Partners an amount equal to the Contributor's Tax not
                  later than five days after the filing of such Tax Return. Any
                  refund attributable to Tax Returns filed pursuant to this
                  Section 7.2(c) shall be apportioned between Energy Partners
                  and WES in a manner consistent with calculation of the
                  Contributor's Tax.

         (d)      Energy Partners shall, with respect to any Tax Return for
                  which Energy Partners is responsible under Section 7.2(c) for
                  preparing and filing, make such Tax work papers available for
                  review by WES if the Tax Return is with respect to Taxes for
                  which WES may. be liable (in whole or in part) hereunder or
                  under applicable law. Energy Partners shall make such work
                  papers available for review sufficiently in advance of the due
                  date for filing such Tax Returns to provide WES with a
                  meaningful opportunity to analyze and comment on such Tax
                  Returns and have such Tax Returns modified before filing,
                  accepting the position of Energy Partners unless such position
                  is contrary to the provisions of Section 7.2(e) hereof.

         (e)      Any Tax Return which includes or is based on the operations,
                  ownership, assets or activities of WPL for any taxable period
                  beginning before and ending after the Closing Date, and any
                  Tax Return in respect of any Taxes for which WES may be liable
                  (in whole or in part) hereunder shall be prepared in
                  accordance with past Tax accounting practices used with
                  respect to the Tax Returns in question (unless such past
                  practices are no longer permissible under the applicable law),
                  and to the extent any items are not covered by past practices
                  (or in the event such past practices are no longer permissible
                  under the applicable tax law), in accordance with reasonable
                  tax accounting practices selected by the filing party with
                  respect to such Tax Return under this Agreement with the
                  consent (not to be unreasonably withheld or delayed) of the
                  non-filing party.

                  Unless required by law, Energy Partners shall not file an
                  amended Tax Return for any period ending on or prior to the
                  Closing Date without the consent of WES.

                                       29
<PAGE>

7.3      Tax Proceedings

         If Energy Partners receives notice (the 'Proceeding Notice") of any
         examination, claim, adjustment, or other proceeding with respect to the
         liability of WPL for Taxes for any period for which WES is or may be
         liable under Section 7.1, Energy Partners shall notify WES in writing
         thereof (the "Energy Partners Notice") no later than the earlier of (a)
         thirty (30) days after the receipt by Energy Partners of the Proceeding
         Notice or (b) ten (10) days prior to the deadline for responding to the
         Proceeding Notice. Such Energy Partners Notice shall contain factual
         information describing any asserted liability for Taxes in reasonable
         detail and shall be accompanied by copies of any notice or other
         documents received from any Taxing Authority with respect to such
         matter.

         As to any such Taxes for which WES is or may be liable under Section
         7.1, WES shall be entitled at its expense to control or settle the
         contest of such examination, claim, adjustment, or other proceeding,
         provided (a) WES notifies Energy Partners in writing that it desires to
         do so no later than the earlier of (1) thirty (30) days after receipt
         of the Energy Partners Notice or (2) five (5) days prior to the
         deadline for responding to the Proceeding Notice, and (b) WES may not,
         without the consent of Energy Partners, agree to any settlement which
         would result in an increase in the amount of Taxes for which any of
         Energy Partners or WPL or any of WPL's owners is or may be liable under
         Section 7.1. WES shall pay any Taxes required to be paid in connection
         with any examination, claim, adjustment or other proceeding, including,
         without limitation, any prepayment of Tax required to obtain the
         jurisdiction of a court.

         The parties shall cooperate with each other and with their respective
         affiliates, and shall consult with each other, in the negotiation and
         settlement of any proceeding described in this Section 7.3. WES shall
         pay to Energy Partners the amount of any Tax Losses Energy Partners may
         become entitled to by reason of the provisions of this Article 7 within
         fifteen (15) days after the extent of any Tax liability has been
         determined by a final judgment or decree of a Court or a final and
         binding settlement with a governmental authority having jurisdiction
         thereof.

7.4      Cooperation and Exchange of Information

         Williams GP LLC and Energy Partners and WES shall cooperate fully, and
         shall cause WPL to cooperate fully, as and to the extent reasonably
         requested by the other party, in connection with the filing of Tax
         Returns pursuant to this Article 7 and any proceeding with respect to
         Taxes. Such cooperation shall include the retention and (upon the other
         party's request) the provision of records and information which are
         reasonably relevant to any such proceeding and making employees
         available on a mutually convenient basis to provide additional
         information and explanation of any material provided hereunder. WES,
         Williams GP LIC and Energy Partners agree to retain all books and
         records in their possession or in the possession of their respective
         affiliates with respect to Tax matters pertinent to WPL relating to any
         taxable period beginning before the Closing Date until the earlier of
         six years after the Closing Date and the expiration of the applicable
         statute of limitations of the respective taxable periods, and to abide
         by all record retention agreements entered

                                       30
<PAGE>

         into with any Taxing Authority, and thereafter, upon request, allow
         Williams GP LLC and Energy Partners to take possession of such books
         and records. Each party shall provide the cooperation and information
         required by this Section 7.4 at its own expense.

7.5      Survival.

         Anything to the contrary in this Agreement notwithstanding, the
         representations, warranties, covenants, agreements, rights and
         obligations of the parties hereto with respect to any Tax matter
         covered by this Agreement shall survive the Closing and shall not
         terminate until thirty days after the expiration of the statute of
         limitations (including extensions) applicable to such Tax matter.

7.6      Conflict

         In the event of a conflict between the provisions of this Article 7 and
         any other provisions of this Agreement, the provisions of this Article
         7 shall control.

7.7      Miscellaneous

         (a)      Any payment required under this Article 7 and not made when
                  due shall bear interest at the rate per annum determined, from
                  time to time, under the provisions of Section 6621(a)(2) or
                  6621(c) of the Code, as applicable, for each day until paid.

         (b)      The indemnification provisions of this Article 7 are in
                  addition to, and not in derogation of, any statutory,
                  equitable, or common law remedy the parties may have with
                  respect to the transactions contemplated by this Agreement.

                                    ARTICLE 8
                           INVESTIGATION; LIMITATIONS

8.1      Independent Investigation; Limitations

         The parties hereto acknowledge that in making the decision to enter
         into this Agreement and to consummate the transactions contemplated
         hereby, they have relied solely on the basis of their own independent
         investigation and analysis, and upon the express written
         representations, warranties and covenants in this Agreement. Except for
         and without limitation of the scope and effect of the express
         representations, warranties, covenants and agreements contained herein,
         the parties HEREBY EXPRESSLY DISCLAIM AND NEGATE ANY OTHER
         REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO WPL AND ITS
         ASSETS AND OPERATIONS OR TO THE TRANSACTIONS CONTEMPLATED HEREBY, AS
         APPLICABLE (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS
         WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
         CONFORMITY TO MODELS OR SAMPLES OF MATERIALS).

                                       31
<PAGE>
                                    ARTICLE 9
                                   TERMINATION

9.1      Events of Termination

         This Agreement may be terminated at any time prior to the Closing Date:

         (a)      by mutual written consent of the parties;

         (b)      by either Energy Partners or WES in writing after May 31,
                  2002, if the Closing has not occurred by such date;

         (c)      by either Energy Partners or WES in writing (provided the
                  terminating party and its affiliates are not otherwise in
                  material default or breach of this Agreement, or have not
                  failed or refused to close without justification hereunder),
                  if the other party (1) has materially failed to perform its
                  covenants or agreements contained herein required to be
                  performed on or prior to the Closing Date, or (2) has breached
                  any of its representations or warranties contained herein;
                  provided, however, that in the case of clause (1) or (2), the
                  defaulting party shall have a period of ten (10) days
                  following written notice from the nondefaulting party to cure
                  any breach of this Agreement, if such breach is curable;

         (d)      by either Energy Partners or WES in writing if there shall be
                  any order, writ, injunction or decree of any Governmental
                  Authority binding on any of the parties, which prohibits or
                  restrains them from consummating the transactions contemplated
                  hereby, provided that the parties shall have used their
                  reasonable best efforts to have any such order, writ,
                  injunction or decree lifted and the same shall not have been
                  lifted within 30 days after entry by any such Governmental
                  Authority;

         (e)      by WES if any of the conditions set forth in Section 6.2 have
                  become incapable of fulfillment, and, after 10 days following
                  notice by WES, remain incapable of fulfillment and not waived
                  by WES; or

         (1)      by Williams GP LLC and Energy Partners if any of the
                  conditions set forth in Section 6.1 have become incapable of
                  fulfillment, after 10 days following notice by Energy
                  Partners, remain incapable of fulfillment and not waived by
                  Williams GP LLC and Energy Partners.

                                       32
<PAGE>
9.2      Effect of Termination

         If a party terminates this Agreement as provided in Section 9.1 above,
         termination shall be without liability and none of the provisions of
         this Agreement will remain effective or enforceable.

                                   ARTICLE 10
                          INDEMNIFICATION UPON CLOSING

10.1     Indemnification of Williams GP LLC and Energy Partners upon Closing

         Subject to the limitations set forth in this Agreement, WES, from and
         after the Closing, shall indemnify, defend and hold Williams GP LLC,
         in its capacity as general partner of Energy Partners, and Energy
         Partners and its subsidiaries, and their respective shareholders,
         members, partners, directors, officers, and employees (the "Energy
         Partners Parties") harmless from and against any and all liabilities
         and obligations, including without limitation, all losses,
         deficiencies, costs, expenses, fines, penalties, interest,
         expenditures, investigatory costs, cleanup and remediation costs,
         governmental response costs, claims, suits, proceedings, judgments,
         settlements, damages, and reasonable attorneys' fees and reasonable
         expenses of investigating, defending and prosecuting litigation (all of
         the foregoing of which are collectively referred to as the "Damages")
         suffered or incurred by the Energy Partners Parties as a result of or
         arising out of (a) any breach of a representation or warranty of WES in
         this Agreement, or any breach of any agreement or covenant on the part
         of WES made under this Agreement or in connection with the transaction
         contemplated hereby, (b) any breach of, failure to comply with or
         liability arising under any Environmental Laws with respect to the
         ownership, operation or conduct of the businesses or affairs of WPL
         before the Closing, or (c) the Excluded Assets or the ownership or
         operation thereof.

         Nothing in this Section 10.1 or in Section 10.8 shall apply to, or
         limit, liability with respect to Taxes, for which liability shall be as
         set forth in Article 7.

10.2     Indemnification of WES

         Subject to the limitations set forth in this Agreement, Energy Partners
         shall indemnify, defend and hold WES and its Affiliates (other than
         any of the Energy Partners Parties), and their respective shareholders,
         members, partners, directors, officers, and employees (together with
         WES, the "WES Parties") harmless from and against any and all Damages
         suffered or incurred by the WES Parties as a result of or arising out
         of (a) any breach of a representation or warranty of Energy Partners
         in this Agreement and any breach of any agreement or covenant on the
         part of Energy Partners made under. this Agreement or in connection
         with the transaction contemplated hereby, (b) any breach of, failure
         to comply with or liability arising under any Environmental Laws with
         respect to the ownership, operation or conduct of the businesses or
         affairs of WPL on or after the Closing, or (c) the ownership, operation
         or conduct of the business or affairs of WPL on or after the Closing.

                                       33
<PAGE>

         Nothing in this Section 10.2 or in Section 10.8 shall apply to, or
         limit, liability with respect to Taxes, for which liability shall be as
         set forth in Article 7.

10.3     Demands

         Each indemnified party hereunder agrees that promptly upon its
         discovery of facts giving rise to a claim for indemnity under the
         provisions of this Agreement, including receipt by it of notice of any
         demand, assertion, claim, action or proceeding, judicial or otherwise,
         by any third party (such claims for indemnity involving third party
         claims being collectively referred to herein as the "Indemnity Claim"),
         with respect to any matter as to which it claims to be entitled to
         indemnity under the provisions of this Agreement, it will give notice
         thereof in writing to the indemnifying party, together with a statement
         of such information respecting any of the foregoing as it shall have.
         Such notice shall include a formal demand for indemnification under
         this Agreement.

         If the indemnified party knowingly fails to notify the indemnifying
         party thereof in accordance with the provisions of this Agreement in
         sufficient time to permit the indemnifying party or its counsel to
         defend against an Indemnity Claim and to make a timely response
         thereto, the indemnifying party's indemnity obligation relating to such
         Indemnity Claim shall be limited to the extent that such failure has
         actually prejudiced or damaged the indemnifying party with respect to
         that Indemnity Claim.

10.4     Right to Contest and Defend

         The indemnifying party shall be entitled, at its cost and expense, to
         contest and defend by all appropriate legal proceedings any Indemnity
         Claim for which it is called upon to indemnify the indemnified party
         under the provisions of this Agreement; provided, that notice of the
         intention to so contest shall be delivered by the indemnifying party to
         the indemnified party within 20 days from the date of receipt by the
         indemnifying party of notice by the indemnified party of the assertion
         of the Indemnity Claim. Any such contest may be conducted in the name
         and on behalf of the indemnifying party or the indemnified party as may
         be appropriate. Such contest shall be conducted by reputable counsel
         employed by the indemnifying party and not reasonably objected to by
         the indemnified party, but the indemnified party shall have the right
         but not the obligation to participate in such proceedings and to be
         represented by counsel of its own choosing at its sole cost and
         expense.

         The indemnifying party shall have full authority to determine all
         action to be taken with respect to any Indemnity Claim; provided,
         however, that the indemnifying party will not have the authority to
         subject the indemnified party to any obligation whatsoever, other than
         the performance of purely ministerial tasks. If the indemnifying party
         does not elect to contest any such Indemnity Claim, the indemnifying
         party shall be bound by the result obtained with respect thereto by the
         indemnified party. If the indemnifying party assumes the defense of an
         Indemnity Claim, the indemnified party shall agree to any settlement,
         compromise or

                                       34
<PAGE>

         discharge of an Indemnity Claim that the indemnifying party may
         recommend and that by its terms obligates the indemnifying party to pay
         the full amount of the liability in connection with such Indemnity
         Claim, which releases the indemnified party completely in connection
         with such Indemnity Claim and which would not otherwise adversely
         affect the indemnified party.

         Notwithstanding the foregoing, the indemnifying party shall not be
         entitled to assume the defense of any Indemnity Claim (and shall be
         liable for the reasonable fees and expenses of counsel incurred by the
         indemnified party in defending such Indemnity Claim) if the Indemnity
         Claim seeks an order, injunction or other equitable relief or relief
         for other than money damages against the indemnified party which the
         indemnified party reasonably determines, after conferring with its
         outside counsel, cannot be separated from any related claim for money
         damages. If such equitable relief or other relief portion of the
         Indemnity Claim can be so separated from that for money damages, the
         indemnifying party shall be entitled to assume the defense of the
         portion relating to money damages.

10.5     Cooperation

         If requested by the indemnifying party, the indemnified party agrees to
         cooperate with the indemnifying party and its counsel in contesting any
         Indemnity Claim that the indemnifying party elects to contest or, if
         appropriate, in making any counterclaim against the person asserting
         the Indemnity Claim, or any cross-complaint against any such person,
         and the indemnifying party will reimburse the indemnified party for any
         expenses incurred by it in so cooperating. At no cost or expense to the
         indemnified party, the indemnifying party shall cooperate with the
         indemnified party and its counsel in contesting any Indemnity Claim.

10.6     Right to Participate

         The indemnified party agrees to afford the indemnifying party and its
         counsel the opportunity to be present at, and to participate in,
         conferences with all persons, including Governmental Authorities,
         asserting any Indemnity Claim against the indemnified party or
         conferences with representatives of or counsel for such persons.

10.7     Payment of Damages

         The indemnification required hereunder shall be made by payments of the
         amount thereof during the course of the investigation or defense,
         within thirty (30) days as and when reasonably specific bills are
         received or loss, liability, claim, damage or expense is incurred and
         reasonable evidence thereof is delivered. In calculating any amount to
         be paid by an indemnifying party by reason of the provisions of this
         Agreement, the amount shall be reduced by all tax benefits and other
         reimbursements (including, without limitation, insurance proceeds)
         credited to or received by the indemnified party related to the
         Damages.

                                       35
<PAGE>
10.8     Limitations on Indemnification

         (a)      WES' indemnity obligations under this Agreement will apply
                  only to Damages which are sustained or incurred by the Energy
                  Partners Parties for which notice in accordance with the
                  provisions of this Agreement has been given within any
                  applicable survival period for such indemnity obligations.

                  (1)      WES' indemnity obligations under Section 10.1(a)
                           (other than such indemnity obligations as arise under
                           Section 3.12 (Employees and Benefits), Section 3.14
                           (Environmental), Section 3.19 (Title to Real
                           Property) and Section 3.27 (Excluded Assets)) will
                           survive the Closing for a period of one (1) year and
                           are subject to the Deductible and the Cap as set
                           forth in Sections 10.8(a)(5) and 10.8(a)(7).

                  (2)      WES' indemnity obligations under Section 10.1(a) that
                           may arise with respect to Section 3.12 (Employees and
                           Benefits) will survive the Closing for a period of
                           time equal to the applicable statute(s) of
                           limitations and are not subject to any deductible or
                           cap.

                  (3)      WES' indemnity obligations under Section 10.1(a) that
                           may arise with respect to Section 3.19 (Title to Real
                           Property) will survive the Closing for a period of
                           ten (10) years and are subject to the Deductible and
                           the Cap as set forth in Sections 10.8(a)(5) and
                           10.8(a)(7).

                  (4)      WES' indemnity obligations under Section 10.1(c) (the
                           Excluded Assets or the ownership or operation of the
                           Excluded Assets) will survive the Closing without
                           expiration and are not subject to any deductible or
                           cap.

                  (5)      WES' indemnity obligations under Section 10.1(a)
                           (other than such indemnity obligations as may arise
                           under Section 3.12 (Employees and Benefits), and
                           Section 3.14 (Environmental) and Section 3.27
                           (Excluded Assets)) will apply only to Damages which,
                           in the aggregate, exceed $6,000,000 (the
                           "Deductible").

                  (6)      WES' indemnity obligations that may arise under
                           Section 10.1(a) for breach of Section 3.14
                           (Environmental) and Section 10.1(b) will survive the
                           Closing for a period of six (6) years and will apply
                           only to such environmental Damages which exceed an
                           aggregate amount of $2,000,000 (the "Environmental
                           Deductible").

                  (7)      Except as otherwise provided in this Section 10.8, in
                           no event shall WES' liability or obligation for
                           Damages which exceed, in the aggregate, the
                           applicable Deductible or Environmental Deductible
                           under Section 10.1 exceed an aggregate amount of $125
                           million (the "Cap") determined as follows: The first
                           $110 million of Damages (if any) will be for WES'
                           sole account; WES will be obligated for fifty percent

                                       36
<PAGE>
                           (50%) of the next $30 million of Damages (if any) on
                           a dollar-for-dollar basis.

         (b)      Energy Partners indemnity obligations under this Agreement
                  will apply only to Damages sustained or incurred by the WES
                  Parties for which notice in accordance with the provisions of
                  this Agreement has been given within any applicable survival
                  period for such indemnity obligations.

                  (1)      Energy Partner's indemnity obligations under Section
                           10.2(a) will survive the Closing for a period of one
                           (1) year and shall apply only to Damages which
                           exceed, in the aggregate, the Deductible. In no event
                           shall Energy Partners' liability or obligation for
                           Damages relating to its indemnity obligations under
                           Section 10.2(a) which exceed, in the aggregate, the
                           Deductible exceed an aggregate amount of $125 million
                           determined as follows: The first $110 million of
                           Damages (if any) will be for Energy Partners' sole
                           account; Energy Partners will be obligated for fifty
                           percent (50%) of the next $30 million of Damages (if
                           any) on a dollar-for-dollar basis.

                  (2)      The indemnity obligations of Energy Partners under
                           Section 10,2(b) and Section 10.2(c) will survive the
                           Closing without expiration.

         (c)      Additionally, neither Energy Partners nor WES will be liable,
                  as an indemnitor under this Agreement for any consequential,
                  incidental, special, indirect or exemplary damages suffered or
                  incurred by the indemnified party or parties except to the
                  extent recovered against an indemnified party in an Indemnity
                  Claim.

10.9     Sole Remedy

         Should the Closing occur, no party shall have liability under this
         Agreement, any of the Constituent Documents (as hereinafter defined) or
         the transactions contemplated hereby or thereby except as is provided
         in Article 7 or this Article 10.

10.10    Addition to or Substitution of WES as Indemnitor

         If, during the term of WES' indemnification obligations under this
         Article 10, (a) the shareholder equity in WES falls below $750,000,000,
         (b) WES' ratio of Consolidated Total Debt (as defined below) to
         Consolidated EBITDA (as defined below) for the most recently completed
         12 months shall exceed 4.0 to 1.0 or (c) 50% of the equity of WES is
         sold to or acquired by any other Person (other than an Affiliate) or
         WES otherwise effects or is subject to an Extraordinary Event (as
         defined below), WES shall immediately notify Energy Partners of the
         occurrence of such event and, at its sole election, provide one or more
         of the following (or combinations thereof) to Energy Partners as
         additional assurance for the performance of WES' indemnity obligations
         under this Agreement: (x) a

                                       37
<PAGE>
performance guarantee by The Williams Companies, Inc. or (y) a standby
irrevocable bank letter of credit, in each case in an amount not to exceed the
Maximum Amount and upon standard market terms and conditions reasonably
satisfactory to Energy Partners.

For purposes of this Section 10.10:

"Capital Lease" means any capital lease or sublease which should be capitalized
on a balance sheet in accordance with GAAP.

"Consolidated EBITDA" means, for any period, for WES and its subsidiaries on a
consolidated basis, an amount equal to the sum of (a) Consolidated Net Income,
(b) Consolidated Interest Charges, (c) the amount of taxes, based on or measured
by income, used or included in the determination of such Consolidated Net
Income, and (d) the amount of depreciation and amortization expense deducted in
determining such Consolidated Net Income.

"Consolidated Interest Charges" means, for any period, for WES and its
subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses of WES and its subsidiaries in
connection with indebtedness (including capitalized interest), in each case to
the extent treated as interest in accordance with GAAP, and (b) the portion of
rent expense of WES and its subsidiaries with respect to such period under
Capital Leases that is treated as interest in accordance with GAAP.

"Consolidated Net Income" means, for any period, for WES and its subsidiaries on
a consolidated basis, the net income or net loss of WES and its subsidiaries
from continuing operations, provided that there shall be excluded from such net
income (to the extent otherwise included therein): (a) the income (or loss) of
any entity other than a subsidiary in which WES or any subsidiary has an
ownership interest, except to the extent that any such income has been actually
received by WES or such subsidiary in the form of cash dividends or similar cash
distributions, (b) net extraordinary gains and losses (other than, in the case
of losses, losses resulting from charges against net income to establish or
increase reserves for potential environmental liabilities and reserves for
exposure under rate cases), (c) any gains or losses attributable to non-cash
write-ups or write-downs of assets, and (d) proceeds of any insurance on
property, plant or equipment other than business interruption insurance.

"Consolidated Total Debt" means, at any date, the aggregate principal amount of
all indebtedness of WES and its subsidiaries at such date, determined on a
consolidated basis in accordance with OAAP.

"Extraordinary Event" means a sale, exchange or dividend or other distribution
or liquidation of all or substantially all WES' assets in one or a series of
transactions.

"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or such other principles as may be approved
by a significant

                                       38
<PAGE>

segment of the accounting profession, that are applicable to the circumstances
as of the date of determination, consistently applied.

"Maximum Amount" shall mean the lesser of (a) the remaining about of potential
indemnification obligations of WES under the Contribution Agreement or (b)
$125,000,000.

10.11    Express Negligence

         THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN
         EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND
         LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES,
         OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN
         QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE OR
         CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY
         INDEMNIFIED PARTY (EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).
         WILLIAMS GP LLC AND ENERGY PARTNERS AND WES ACKNOWLEDGE THAT THIS
         STATEMENT CONSTITUTES CONSPICUOUS NOTICE. NOTHING IN THIS CONSPICUOUS
         NOTICE IS INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF
         THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.

                                   ARTICLE 11
                                  MISCELLANEOUS

11.1     Expenses

         Regardless of whether the transactions contemplated hereby are
         consummated, each party hereto shall pay its own expenses incident to
         this Agreement and all action taken in preparation for carrying this
         Agreement into effect.

11.2     Notices

         Any notice, request, instruction, correspondence or other document to
         be given hereunder by either party to the other (herein collectively
         called "Notice") shall be in writing and delivered in person or by
         courier service requiring acknowledgment of receipt of delivery or by
         telecopier, as follows:

                  If to the WES, addressed to:

                                       39
<PAGE>

                      Williams Energy Services, LLC
                      One Williams Center, Suite 4500
                      Tulsa, Oklahoma 74172
                      Attention: President
                      Telecopy: (918) 573-4190

                      with a copy to:

                      Williams Energy Services, LLC
                      Legal Department
                      One Williams Center, Suite 4100
                      Tulsa, Oklahoma 74172
                      Attention: General Counsel
                      Telecopy: (918) 573-4190

                      If to Williams GP LLC and Energy Partners, addressed to:

                      Williams Energy Partners L.P.
                      One Williams Center, MD 35-1
                      Tulsa, Oklahoma 74172
                      Attention: President
                      Telecopy: (918) 573-3864

                      with a copy to:

                      Williams Energy Partners L.P.
                      One Williams Center, Suite 4100
                      Tulsa, Oklahoma 74172
                      Attention: General Counsel
                      Telecopy: (918) 573-8024

         Notice given by personal delivery or courier service shall be effective
         upon actual receipt. Notice given by telecopier shall, subject to
         confirmation of uninterrupted transmission by a transmission report, be
         effective upon actual receipt if received during the recipient's normal
         business hours, or at the beginning of the recipient's next business
         day after receipt if not received during the recipient's normal
         business hours. Any party may change any address to which Notice is to
         be given to it by giving Notice as provided above of such change of
         address.

11.3     No Negotiations

Until the first to occur of the Closing or termination of this Agreement
pursuant to the provisions of Article 9, WES will not initiate or participate in
discussions with, or otherwise solicit from or provide information to, any
Person not a party hereto with respect to any proposals or offers relating to
the acquisition of WPL or substantially all of its assets.

                                       40
<PAGE>

11.4     Governing Law

         This Agreement shall be governed and construed in accordance with the
         substantive laws of the State of Oklahoma without reference to
         principles of conflicts of law.

11.5     Public Statements

         The parties hereto shall consult with each other and no party shall
         issue any public announcement or statement with respect to the
         transactions contemplated hereby without the consent of the other
         party, unless the party desiring to make such announcement or
         statement, after seeking such consent from the other parties, obtains
         advice from legal counsel that a public announcement or statement is
         required by applicable law or stock exchange regulations.

11.6     Form of Payment

         All cash payments hereunder shall be made in United States dollars and,
         unless the parties making and receiving such payments shall agree
         otherwise or the provisions hereof provide otherwise, shall be made by
         wire or interbank transfer of immediately available funds by 12:00 Noon
         Tulsa, Oklahoma time on the date such payment is due to such account as
         the party receiving payment may designate at least three business days
         prior to the proposed date of payment.

11.7     Entire Agreement; Amendments and Waivers

         This Agreement and the documents and instruments and other agreements
         specifically referred to herein or delivered pursuant hereto, including
         the exhibits and Disclosure Letter hereto but excluding the Second
         Amendment to Omnibus Agreement and the First Amendment, dated as of the
         Closing Date, to the Amended and Restated Agreement of Limited
         Partnership of Energy Partners (collectively, the "Constituent
         Documents") (a) constitute the entire agreement among the parties with
         respect to the subject matter hereof and supersede all prior agreements
         and understandings, both written and oral, among the parties with
         respect to the subject matter hereof; (b) do not confer upon any other
         Person or entity any rights or remedies hereunder; and (c) shall not be
         assigned by operation of law or otherwise. Each party to this Agreement
         agrees that (1) no other party to this Agreement (including its agents
         and representatives) has made any representation, warranty, covenant or
         agreement to or with such party relating to this Agreement or the
         transactions contemplated hereby, other than those expressly set forth
         in the Constituent Documents, and (2) such party has not relied upon
         any representation, warranty, covenant or agreement relating to the
         transactions contemplated by the Constituent Documents, other than
         those referred to in clause (1) above. No supplement, modification or
         waiver of this Agreement shall be binding unless executed in writing by
         each party to be bound thereby. No waiver of any of the provisions of
         this Agreement shall be deemed or shall constitute a waiver of any
         other provision hereof (regardless of whether similar), nor shall any
         such waiver constitute a continuing waiver unless otherwise expressly
         provided.

                                       41
<PAGE>

11.8     Conflicting Provisions

         This Agreement and the other Constituent Documents, read as a whole,
         set forth the parties' rights, responsibilities and liabilities with
         respect to the transactions contemplated by this Agreement. In the
         Agreement and the Constituent Documents, and as between them, specific
         provisions prevail over general provisions. In the event of a conflict
         between this Agreement and the Constituent Documents, this Agreement
         shall control.

11.9     Binding Effect and Assignment

         This Agreement shall be binding upon and inure to the benefit of the
         parties hereto and their respective permitted successors and assigns;
         but neither this Agreement nor any of the rights, benefits or
         obligations hereunder shall be assigned or transferred, by operation of
         law or otherwise, by any party hereto without the prior written consent
         of the other parties. Nothing in this Agreement, express or implied, is
         intended to confer upon any Person or entity other than the parties
         hereto and their respective permitted successors and assigns, any
         rights, benefits or obligations hereunder. The provisions of this
         Agreement are enforceable solely by the Parties, and no limited
         partner, assignee or other Person shall have the right, separate and
         apart from Energy Partners to enforce any provision of this Agreement
         or to compel any Party to comply with the terms of this Agreement.

11.10    WES Right of First Refusal

         If, pursuant to a bona fide offer from a Person (other than a Person
         controlled by The Williams Companies, Inc.), Energy Partners desires to
         make a Transfer (as that term is defined in this section), on terms and
         conditions acceptable to Energy Partners, Energy Partners shall
         thereupon promptly give WES written notice of the proposed Transfer,
         which notice must provide: (a) a description of the assets, rights,
         ownership or other interests proposed to be Transferred (b) the
         consideration to be paid, and (c) the material terms and conditions
         upon which the proposed Transfer is to be made.

         WES will have an option for a period of sixty (60) days from the date
         of its actual receipt of such notice to elect to purchase or acquire
         the assets, rights, ownership or other interests proposed to be
         Transferred for the same consideration and subject to the same material
         terms and conditions as described in Energy Partners' written notice of
         the proposed Transfer. Additionally, if the consideration identified in
         the notice is other than cash, WES will have the right to pay the
         purchase price in the form of cash equal in amount to the reasonable
         and justified value of such non-cash consideration. Any disputes
         regarding the cash value so assigned shall be referred to an
         independent investment banker or accounting firm, who shall take into
         consideration the strategic value, if any, of the non-cash
         consideration to Energy Partners.

                                       42
<PAGE>
         Upon WES' election to make such purchase or acquisition, WES shall
         close such transaction within one hundred and twenty (120) days after
         its receipt of actual notice of the proposed Transfer, subject only to
         extensions beyond that time as are provided for in the material terms
         and conditions of the proposed Transfer being met by WES or are caused
         by any delay in obtaining required governmental approvals. WES' failure
         to respond to Energy Partners' notice within its allotted thirty-day
         period will be deemed its election not to purchase the proposed
         Transfer. If WES elects not to make such purchase, Energy Partners may
         effect such Transfer in accordance with all terms set forth in the
         written notice of the proposed Transfer previously given to WES. If
         Energy Partners fails to close such proposed Transfer within one
         hundred eighty (180) days of WES' election not to purchase (subject
         only to an extension for any delay in obtaining required governmental
         approvals) or if any material terms and conditions of the proposed
         Transfer are changed after WES' election to not make the purchase,
         Energy Partners shall be obligated to repeat the steps of this
         provision.

         As used in this Section 11.10, a "Transfer" refers to any of the
         following events (in one transaction or in a series of related
         transactions): An assignment, sale, lease, conveyance, contribution,
         exchange, transfer or other disposition of WPL (including by
         application of law and/or by consolidation or merger of WPL wherein WPL
         is not the survivor) or of a material portion of its assets.

11.11    Severability

         If any provision of the Agreement is rendered or declared illegal or
         unenforceable by reason of any existing or subsequently enacted
         legislation or by decree of a court of last resort, the WES and
         Williams GP LLC and Energy Partners shall promptly meet and negotiate
         substitute provisions for those rendered or declared illegal or
         unenforceable, but all of the remaining provisions of this Agreement
         shall remain in full force and effect.

11.12    Interpretation

         The parties agree that they have been represented by counsel during the
         negotiation and execution of this Agreement and, therefore waive the
         application of any law, regulation, holding or rule of construction
         providing that ambiguities in an agreement or other document will be
         construed against the party drafting such agreement or document.

11.13    Headings and Schedules

         The headings of the several Articles and Sections herein are inserted
         for convenience of reference only and are not intended to be a part of
         or to affect the meaning or interpretation of this Agreement. The
         schedules referred to herein are attached hereto and incorporated
         herein by this reference, and unless the context expressly requires
         otherwise, such schedules are incorporated in the definition of
         "Agreement."

                                       43
<PAGE>

11.14    Multiple Counterparts

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

EXECUTED as of the date first set forth above.

<Table>
<S>                                       <C>
WILLIAMS ENERGY SERVICES, LLC             THE WILLIAMS COMPANIES, INC.

By: /s/ P.D. Wright                       By: /s/ Mark D. Wilson
Name: P.D. Wright                         Name: Mark D. Wilson
Title: President                          Title: Vice President

WILLIAMS ENERGY PARTNERS L.P              (Executed solely with respect to its agreement
                                          under Section 10.10 of this Agreement to
By Williams GP LLC, its general partner   provide a performance guaranty pursuant to
                                          the conditions of that section in support of
By: /s/ Don R. Wellendorf                 WES' indemnity obligations hereunder.  No
Name: Don R. Wellendorf                   other rights, obligations or relationships are
Title: CFO                                created or shall be deemed to be created
                                          hereby)

WILLIAMS GP LLC

By: /s/ Don R. Wellendorf
Name: Don R. Wellendorf
Title: CFO
</Table>

                                       44<PAGE>

                                                                   EXHIBIT 10.77

                                 EXECUTION COPY

                               PURCHASE AGREEMENT

                                 by and between

        The Williams Companies, Inc., Williams Gas Pipeline Company, LLC,
     Williams Western Pipeline Company LLC, and Kern River Acquisition, LLC,
                                   as Sellers

                                       and

              MidAmerican Energy Holdings Company, KR Holding, LLC,
                KR Acquisition I, LLC and KR Acquisition 2, LLC,
                                   as Buyers,

                          for the purchase and sale of
                      all general partnership interests of

                      Kern River Gas Transmission Company,
                           a Texas general partnership

                                   Dated as of
                                  March 7, 2002

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>

                                                                                                           Page
                                                                                                           ----

                                   ARTICLE I.
                                SALE AND PURCHASE

<S>                   <C>                                                                                 <C>
SECTION 1.1.          Agreement to Sell and to Purchase                                                       2
SECTION 1.2.          Closing                                                                                 2
SECTION 1.3.          Purchase Price                                                                          2
SECTION 1.4.          Adjustment to Purchase Price                                                            2

                                   ARTICLE II.
                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

SECTION 2.1.          Corporate Organization                                                                  6
SECTION 2.2.          Capitalization; Title                                                                   6
SECTION 2.3.          Subsidiaries and Equity Interests                                                       6
SECTION 2.4.          Validity of Agreement; Authorization                                                    7
SECTION 2.5.          No Conflict or Violation                                                                7
SECTION 2.6.          Consents and Approvals                                                                  7
SECTION 2.7.          Financial Statements                                                                    7
SECTION 2.8.          Absence of Certain Changes or Events                                                    8
SECTION 2.9.          Tax Matters                                                                             8
SECTION 2.10.         Absence of Undisclosed Liabilities                                                      9
SECTION 2.11.         Real and Personal Property; Sufficiency of Assets of the
                      Company                                                                                 9
SECTION 2.12.         Regulatory Matters                                                                     11
SECTION 2.13.         Intellectual Property                                                                  11
SECTION 2.14.         Licenses, Permits and Governmental Approvals                                           14
SECTION 2.15.         Compliance with Law                                                                    14
SECTION 2.16.         Litigation                                                                             15
SECTION 2.17.         Contracts                                                                              15
SECTION 2.18.         Books and Records of the Company                                                       16
SECTION 2.19.         Expansion Projects                                                                     16
SECTION 2.20.         Employee Plans                                                                         16
SECTION 2.21.         Existing Firm Transportation Customers; Expansion
                      Customers                                                                              17
SECTION 2.22.         Insurance                                                                              17
SECTION 2.23.         Transactions with Directors, Officers and Affiliates                                   18
SECTION 2.24.         Environmental; Health and Safety Matters                                               18
SECTION 2.25.         Brokers                                                                                21
</Table>
<PAGE>

                                Table of Contents

                                   (continued)

<Table>
<Caption>

                                                                                                                Page
                                                                                                                ----

                                  ARTICLE III.
                  REPRESENTATIONS AND WARRANTIES OF THE BUYERS

<S>                         <C>                                                                                 <C>
SECTION 3.1.                Corporate Organization                                                                21
SECTION 3.2.                Validity of Agreement                                                                 21
SECTION 3.3.                No Conflict or Violation; No Defaults                                                 21
SECTION 3.4.                Consents and Approvals                                                                21
SECTION 3.5.                Brokers                                                                               22
SECTION 3.6.                Financial Ability                                                                     22

                                   ARTICLE IV.
                                    COVENANTS

SECTION 4.1.                Certain Changes and Conduct of Business                                               22
SECTION 4.2.                Access to Properties and Records                                                      24
SECTION 4.3.                Employee Matters                                                                      24
SECTION 4.4.                Consents and Approvals                                                                26
SECTION 4.5.                Further Assurances                                                                    26
SECTION 4.6.                Reasonable Best Efforts                                                               26
SECTION 4.7.                Notice of Breach                                                                      27
SECTION 4.8.                Confidential Information                                                              27
SECTION 4.9.                Non-Solicitation of Clients and Employees                                             27
SECTION 4.10.               Negotiations                                                                          29
SECTION 4.11.               Tax Covenants                                                                         29
SECTION 4.12.               Development of Migration Plan                                                         30
SECTION 4.13.               Guarantees                                                                            31
SECTION 4.14.               Bonds                                                                                 31
SECTION 4.15.               Insurance                                                                             31
SECTION 4.16.               Audited Financial Statements                                                          31
SECTION 4.17.               Master Alliance Agreement                                                             31
SECTION 4.18.               Expansion Projects                                                                    32
SECTION 4.19.               Covenant to Assign                                                                    32
SECTION 4.20.               Manuals                                                                               33
SECTION 4.21.               Trademark License                                                                     33
SECTION 4.22.               Software License                                                                      34

                                ARTICLE V.
                  CONDITIONS TO OBLIGATIONS OF THE BUYERS

SECTION 5.1.                Receipt of Documents                                                                  35
SECTION 5.2.                Representations and Warranties of the Sellers                                         35
SECTION 5.3.                Performance of the Sellers' Obligations                                               35
</Table>
<PAGE>
                                Table of Contents

                                   (continued)

<Table>
<Caption>

                                                                                                            Page
                                                                                                            ----

<S>                   <C>                                                                                   <C>
SECTION 5.4           Consents and Approvals                                                                 35
SECTION 5.5.          No Violation of Orders                                                                 35
SECTION 5.6.          No Material Adverse Change                                                             36
SECTION 5.7.          Intentionally deleted                                                                  36
SECTION 5.8.          Opinion of Counsel                                                                     36
SECTION 5.9.          Transition Services and Construction Management
                      Agreement                                                                              36
SECTION 5.10.         Resignations                                                                           36
SECTION 5.11.         Seller Parent Stock Purchase                                                           36
SECTION 5.12.         Tax Certificate                                                                        36
SECTION 5.13.         Financial Statements                                                                   37
SECTION 5.14.         Ratings                                                                                37
SECTION 5.15.         Workforce Agreement                                                                    37

                                   ARTICLE VI.
                    CONDITIONS TO OBLIGATIONS OF THE SELLERS

SECTION 6.1.          Representations and Warranties of the Buyers                                           37
SECTION 6.2.          Performance of the Buyers' Obligations                                                 37
SECTION 6.3.          Consents and Approvals                                                                 37
SECTION 6.4.          No Violation of Orders                                                                 38
SECTION 6.5.          Seller Parent Stock Purchase                                                           38
SECTION 6.6.          Opinion of Counsel                                                                     38
SECTION 6.7.          Services Agreement                                                                     38
SECTION 6.8.          Ratings                                                                                38
SECTION 6.9.          Workforce Agreement                                                                    38
SECTION 6.10.         Receipt of Documents                                                                   38

                                  ARTICLE VII.
                           TERMINATION AND ABANDONMENT

SECTION 7.1.          Methods of Termination; Upset Date                                                     38
SECTION 7.2.          Procedure Upon Termination                                                             39

                                  ARTICLE VIII.
                                 INDEMNIFICATION

SECTION 8.1.          Survival                                                                               40
SECTION 8.2.          Indemnification Coverage                                                               40
SECTION 8.3.          Procedures                                                                             42
SECTION 8.4.          Remedy                                                                                 42
</Table>

<PAGE>
                                Table of Contents

                                   (continued)

                                   ARTICLE IX.
                            MISCELLANEOUS PROVISIONS

<Table>
<S>                   <C>                                                                                   <C>
SECTION 9.1.          Common Facilities                                                                      42
SECTION 9.2.          Publicity                                                                              42
SECTION 9.3.          Successors and Assigns; No Third-Party Beneficiaries                                   43
SECTION 9.4.          Investment Bankers, Financial Advisors, Brokers and
                      Finders                                                                                43
SECTION 9.5.          Fees and Expenses                                                                      43
SECTION 9.6.          Notices                                                                                43
SECTION 9.7.          Entire Agreement                                                                       45
SECTION 9.8.          Waivers and Amendments                                                                 45
SECTION 9.9.          Severability                                                                           45
SECTION 9.10.         Titles and Headings                                                                    45
SECTION 9.11.         Signatures and Counterparts                                                            45
SECTION 9.12.         Enforcement of the Agreement                                                           45
SECTION 9.13.         Governing Law                                                                          46
SECTION 9.14.         Certain Definitions                                                                    46
SECTION 9.15.         Consent to Jurisdiction; Exclusive Forum                                               47
</Table>

<PAGE>

Disclosure Schedules
--------------------

<Table>
<S>                       <C>
Schedule 1.4              Working Capital
Schedule 2.1              Corporate Organization
Schedule 2.2              Capitalization; Title
Schedule 2.5              No Conflict or Violation
Schedule 2.6              Consents and Approvals
Schedule 2.7              Financial Statements
Schedule 2.8              Absence of Certain Changes or Events
Schedule 2.9              Tax Matters
Schedule 2.10             Absence of Undisclosed Liabilities
Schedule 2.11             Real and Personal Property; Sufficiency of Assets of the Company
Schedule 2.13             Intellectual Property
Schedule 2.14             Licenses, Permits and Governmental Approvals
Schedule 2.15             Compliance with Law
Schedule 2.16             Litigation
Schedule 2.17             Contracts
Schedule 2.19             Expansion Projects
Schedule 2.20             Employee Plans
Schedule 2.21             Existing Firm Transportation Customers; Expansion Customers
Schedule 2.22             Insurance
Schedule 2.23             Transactions with Directors, Officers and Affiliates
Schedule 2.24             Environmental; Health and Safety Matters
Schedule 2.25             Sellers' Brokers
Schedule 3.4              Consents and Approvals
Schedule 3.5              Buyers' Brokers
Schedule 4.1              Certain Changes and Conduct of Business
Schedule 4.12             Development of Migration Plan
Schedule 4.17             Master Alliance Agreement
Schedule 4.18             Expansion Projects
Schedule 5.4              Consents arid Approvals
Schedule 5.7              Discharge of Indebtedness; Release of Liens
Schedule 5.8              Opinion of Counsel
Schedule 5.9              Transition Services and Construction Management Agreement
Schedule 5.10             Resignations
Schedule 5.12             Tax Certificate
Schedule 5.15             Workforce Agreement
Schedule 6.3              Consents and Approvals
Schedule 6.6              Opinion of Counsel
Schedule 8.2              Indemnification Coverage
</Table>

<PAGE>
                             Index of Defined Terms

<Table>
<S>                                                                           <C>
1935 Act                                                                      11
1Line System                                                                  46
2000 Audited Financial Statements                                              7
2001 Financial Statements                                                      7
2002 Expansion Project                                                        47
2003 Expansion Project                                                        47
Adjusted Holdback Amount                                                       5
affiliate                                                                     46
Agreement                                                                      1
Assigned Assets                                                               13
Audited Financial Statements                                                  37
Base Statement                                                                 2
Base Statement Working Capital                                                 2
Bill of Sale                                                                   2
Bonds                                                                         31
Business Employees                                                            16
Buyer Holdco                                                                   1
Buyer Indemnified Parties                                                     40
Buyer Parent                                                                   1
Buyer1                                                                         1
Buyer2                                                                         1
Buyers                                                                         1
Buyers Savings Plan                                                           25
Cap                                                                           41
CERCLA                                                                        20
Closing                                                                        2
Closing Date                                                                   2
Closing Statement                                                              2
Code                                                                           9
COM                                                                           10
Commitment                                                                    15
Commitments                                                                   Is
Common Facilities                                                             10
Company                                                                        1
Company Customer                                                              28
CPA Firm                                                                       3
Current Assets                                                                 2
Current Liabilities                                                            2
Deductible                                                                    41
Disclosure Schedule Update                                                    27
Employee Plans                                                                16
Encumbrances                                                                   2
Environmental Claim                                                           19
Environmental Costs and Liabilities                                           20
Environmental Law                                                             20
</Table>
<PAGE>

<Table>
<S>                                                                           <C>
Environmental Permits                                                         18
ERISA                                                                         16
Expansion Certificate                                                          5
Expansion Customers                                                           17
Expansion Projects                                                            46
Fee Property                                                                  10
FERC                                                                           7
Final Closing Statement                                                        3
Financial Statements                                                           7
Firm Transportation Customers                                                 17
Governmental Authority                                                         7
Hazardous Material                                                            20
High Desert Project                                                           46
Holdback Amount                                                                4
Holdback Payment Date                                                          4
Holdco                                                                         1
HSR Act                                                                       26
Intellectual Property                                                         12
Interests                                                                      1
Legal Proceeding                                                              15
LIBOR                                                                          5
License                                                                       14
License Period                                                                33
Licensed Software                                                             34
Licenses                                                                      14
Listed Intellectual Property                                                  12
LLC1                                                                           1
LLC2                                                                           1
Loss                                                                          40
Material Adverse Effect                                                       46
Migration Plan                                                                30
Mixed Information                                                             27
NGA                                                                           11
Notes Indenture                                                               37
Objection                                                                      3
Organizational Documents                                                       6
Permitted Encumbrances                                                        10
Person                                                                        46
Pipeline                                                                      46
Policies                                                                      17
Pre-Closing Tax Period                                                        30
Property Restrictions                                                         10
Protected Information                                                         27
Purchase Price                                                                 2
RAP                                                                            7
RCRA                                                                          20
</Table>

<PAGE>

<Table>
<S>                                                                           <C>
Real Property                                                                 9
Release                                                                       20
Restricted GTC Employees                                                      25
Review Period                                                                  3
Rights of Way                                                                  9
Securities Act                                                                18
Seller Customer                                                               29
Seller Indemnified Parties                                                    40
Seller Parent                                                                  1
Seller Parent and its Other Subsidiaries                                      27
Seller Plans                                                                  16
Seller Savings Plan                                                           25
Sellers                                                                        1
Sellers Marks                                                                 33
Services Agreement                                                            36
Straddle Period                                                               30
Straddle Tax Return                                                           30
Subsidiary                                                                     6
Tax                                                                            8
Tax Returns                                                                    8
Taxes                                                                          8
Threshold                                                                     41
Transfer Date                                                                 25
Transfer Taxes                                                                30
Transferred Employees                                                         25
Workforce Agreement                                                           37
Working Capital                                                                2
</Table>

<PAGE>

                               PURCHASE AGREEMENT

                  THIS PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 7th day of March, 2002, by and between The Williams Companies,
Inc., a Delaware corporation ("Seller Parent"), Williams Gas Pipeline Company,
LLC, a Delaware limited liability Company ("Holdco"), Williams Western Pipeline
Company LLC, a Delaware limited liability company ("LLC1"), Kern River
Acquisition, LLC, a Delaware limited liability company ("LLC2", and together
with Seller Parent, Holdco and LLC1, the "Sellers"), MidAmerican Energy Holdings
Company, an Iowa corporation ("Buyer Parent"), KR Holding, LLC, a Delaware
limited liability company ("Buyer Holdco"), KR Acquisition 1, LLC, a Delaware
limited liability company ("Buyer1") and KR Acquisition 2, LLC, a Delaware
limited liability company ("Buyer2", and together with Buyer Parent, Buyer
Holdco and Buyer1, the "Buyers").

                                   WITNESSETH:

                  WHEREAS, Seller Parent owns 100% of the issued and outstanding
limited liability company interests of Holdco; and

                  WHEREAS, Holdco owns 100% of the issued and outstanding
limited liability company interests of LLC1 and 100% of the issued and
outstanding limited liability company interests of LLC2; and

                  WHEREAS, LLC1 and LLC2 each own 50% of the partnership
interests (collectively, the "Interests") of Kern River Gas Transmission
Company, a Texas general partnership (the "Company"); and

                  WHEREAS, Buyer Parent owns 100% of the issued and outstanding
limited liability company interests of Buyer Holdco; and

                  WHEREAS, Buyer Holdco owns 100% of the issued and outstanding
limited liability company interests of Buyer1 and 100% of the issued and
outstanding limited liability company interests of Buyer2; and

                  WHEREAS, Buyer1 desires to purchase all of the Interests held
by LLC1, and LLC1 desires to sell its Interests to Buyer1, in each case upon the
terms and subject to the conditions set forth in this Agreement; and

                  WHEREAS, Buyer2 desires to purchase all of the Interests held
by LLC2, and LLC2 desires to sell its Interests to Buyer2, in each case upon the
terms and subject to the conditions set forth in this Agreement; and

                  NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein, the parties hereto hereby
agree as follows:

<PAGE>

                                   ARTICLE I.
                                SALE AND PURCHASE

                  SECTION 1.1. Agreement to Sell and to Purchase. On the Closing
Date (as hereinafter defined) and upon the terms and subject to the conditions
set forth in this Agreement: (a) LLC1 shall sell, assign, transfer, convey and
deliver all of its Interests, free and clear of any pledges, restrictions on
transfer, proxies and voting or other agreements, liens, claims, charges,
mortgages, security interests or other legal or equitable encumbrances,
limitations or restrictions of any nature whatsoever ("Encumbrances" ), to
Buyer, and Buyer shall purchase and accept such Interests from LLC1; and (b)
LLC2 shall sell, assign, transfer, convey and deliver all of its Interests, free
and clear of any Encumbrances to Buyer2, and Buyer2 shall purchase and accept
such Interests from LLC2.

                  SECTION 1.2. Closing. The closings of such sales and purchases
of the Interests (together, the "Closing") shall take place at 10:00 A.M., one
day after the satisfaction of the conditions contained in Article V and VI
(other than those conditions that by their nature are to be fulfilled at
Closing), or at such other time and date as the parties hereto shall agree in
writing (the "Closing Dale"), at the offices of Willkie Farr & Gallagher, 787
Seventh Avenue, New York, New York 10019, or at such other place as the parties
hereto shall agree in writing. At the Closing, the Sellers shall deliver to the
Buyers or their designees a duly executed bill of sale, in form and substance
reasonably satisfactory to the Buyers and the Sellers, transferring the
Interests in the Company (the "Bill of Sale"). In full consideration and
exchange for the Interests, (a) Buyer I shall thereupon pay to LLC I one-half of
the Purchase Price as provided in Section 1.3 hereof; and (b) Buyer2 shall
thereupon pay to LLC2 one-half of the Purchase Price as provided in Section 1.3
hereof. Neither Buyer1 nor Buyer2 shall have any obligation to purchase, nor
LLC1 or LLC2 an obligation to sell, any Interests unless all of the Interests
are to be sold on the Closing Date.

                  SECTION 1.3. Purchase Price. The aggregate purchase price for
the Interests shall be $450,000,000 as adjusted by Section 1.4 (the "Purchase
Price").

                  SECTION 1.4. Adjustment to Purchase Price. (a) Schedule 1.4(a)
contains a statement prepared by the Sellers setting forth in reasonable detail
the amount of Working Capital of the Company as of December 31, 2001 (the "Base
Statement"). For purposes of this Agreement, "Working Capital" shall mean
Current Assets less Current Liabilities; "Current Assets" shall mean current
assets, excluding inventories, materials and supplies and prepaid amounts; and
"Current Liabilities" shall mean current liabilities, excluding the current
portion of long-term debt and any accounts payable to the Sellers or any of the
Sellers' affiliates related to the 1Line System (as defined in Section 9.14). On
the Closing Date, the Sellers shall pay to the Buyers $13,702,000, which is the
aggregate excess of the Current Liabilities over the Current Assets on the Base
Statement and is shown as a negative amount on the Base Statement ("Base
Statement Working Capital"). At least three days prior to the Closing Date, the
Sellers shall prepare and deliver to the Buyers a statement (the "Closing
Statement"), which shall set forth in reasonable detail the amount of Working
Capital of the Company as of December 31, 2001 based upon the Audited Financial
Statements (as hereinafter defined). The Base Statement shall be

                                       2
<PAGE>

prepared in accordance with RAP (as hereinafter defined) and on a basis
consistent with the 2001 Financial Statements (as defined in Section 2.7(a),
using the same accounting methods, policies, practices. procedures and
adjustments as were used in the preparation of the 2001 Financial Statements.
The Closing Statement shall be prepared in accordance with RAP and on a basis
consistent with the 2001 Financial Statements and the Audited Financial
Statements, using the same accounting methods, policies, practices, procedures
and adjustments as were used in the preparation of the 2001 Financial Statements
and the Audited Financial Statements.

                  (b) The Buyers shall have 20 days to review the Closing
Statement and to inform the Sellers in writing of any disagreement (the
"Objection") which they may have with the Closing Statement. If the Sellers do
not receive the Objection within such 20-day period, the amount of Working
Capital set forth on the Closing Statement delivered pursuant to Section 1.4(a)
shall be deemed to have been accepted by the Buyers and shall become the Final
Closing Statement. If the Buyers do timely deliver an Objection to the Sellers,
the Sellers shall then have 20 days from the date of receipt (the "Review
Period") to review and respond to the Objection. The Buyers and the Sellers
shall attempt in good faith to resolve any disagreements with respect to the
determination of the Working Capital of the Company as of December 31, 2001. If
they are unable to resolve all of their disagreements with respect to the
determination of Working Capital of the Company as of December 31, 2001, within
10 days following the expiration of the Sellers' Review Period, they may refer,
at the option of either the Buyers or the Sellers, their differences to Price
Waterhouse Coopers, or if Price Waterhouse Coopers declines to accept such
engagement, to an internationally recognized firm of independent public
accountants selected jointly by the Buyers and the Sellers, who shall determine
only with respect to the differences so submitted, whether and to what extent,
if any, the amount of Working Capital of the Company as of December 31, 2001 set
forth in the Closing Statement requires adjustment. If the Buyers and the
Sellers are unable to so select the independent public accountants within five
days of Price Waterhouse Coopers declining to accept such engagement, either the
Buyers or the Sellers may thereafter request that the American Arbitration
Association make such selection (as applicable, Price Waterhouse Coopers, the
firm selected by the Buyers and the Sellers or the firm selected by the American
Arbitration Association is referred to as the "CPA Firm"). The Buyers and the
Sellers shall direct the CPA Firm to use its reasonable best efforts to render
its determination within 30 days. The CPA Firm's determination shall be
conclusive and binding upon the Buyers and the Sellers. The fees and
disbursements of the CPA Firm shall be shared equally by the Buyers and the
Sellers. The Buyers and the Sellers shall make readily available to the CPA Firm
all relevant books and records relating to the determination of Working Capital
and all other items reasonably requested by the CPA Firm. The Closing Statement
as agreed to by the Buyers or the Sellers or as determined by the CPA firm shall
be referred to as the "Final Closing Statement."

                  (c) Within three business days after the Closing Statement
becomes the Final Closing Statement, if Working Capital on the Final Closing
Statement exceeds Base Statement Working Capital, the Buyers shall pay such
excess to the Sellers, or if Base Statement Working Capital exceeds Working
Capital on the Final Closing Statement, the Sellers shall pay such excess to the
Buyers. All amounts payable under this Section 1.4(c) shall be paid within three
business days of determination of the Final Closing Statement by wire transfer
of immediately available funds to a bank account in the United States of America
designated in writing by the recipient not less than one business day before
such payment.

                                       3
<PAGE>

                   (d) At Closing, the Sellers shall pay to the Buyers an
aggregate cash amount equal to any dividends or distributions made by the
Company after December 31, 2001 and through the Closing.

                  (e) On the Holdback Payment Date (as defined in Section
1.4(i)), the Buyers or the Company shall pay to the Sellers an aggregate cash
amount equal to any inter-company accounts payables and any inter-company notes
payables in each case of the Company, outstanding on the Closing Date; provided,
however, that any payables in accordance with The Williams Companies, Inc.
Federal and State Tax Allocation Procedure as of May 1, 1995 or any other
agreement or contractual arrangement attributable to Federal, state or local
income Taxes related to taxable income of the Company for any period after
December 31, 2001 shall be excluded from the payment required pursuant to this
Section 1.4(e).

                  (t) On the Holdback Payment Date, the Sellers or the Sellers'
affiliates shall pay to the Company an aggregate cash amount equal to any
inter-company accounts receivables and any inter-company notes receivables, in
each case of the Company, outstanding on the Closing Date.

                  (g) Prior to the Closing Date, the Sellers shall pay to the
Company an amount equal to any amounts paid by the Company to the Sellers or any
of the Sellers' affiliates after December 31, 2001 and prior to the Closing Date
for the accounts payable to the Sellers or any of the Sellers' affiliates
related to the 1Line System reflected in the Audited Financial Statements and
any remaining payable to the Sellers or any of the Sellers' affiliates related
to the 1Line System shall be cancelled. The Sellers shall separately pay to the
Buyers any amounts paid by the Company prior to December 31, 2001 for the I Line
System.

                  (h) The Sellers shall pay to the Buyers at Closing $11.5
million which represents $6 million for the portion of the January capital
expenditures for the 2003 Expansion Project agreed to be reimbursed and $5.5
million for certain payments pursuant to the Workforce Agreement, as defined in
Section 5.15.

                  (i) (A) If the Expansion Certificate (as defined below) has
not been issued by FERC on or prior to the 30th day after the Closing Date, then
on the next business day following such 30th day (the "Holdback Payment Date")
(i) LLC1 shall pay to Buyer1 an amount of cash equal to one-half of the Holdback
Amount, and (ii) LLC2 shall pay to Buyer2 an amount of cash equal to one-half of
the Holdback Amount. All amounts payable under this Section 1 .4(i)(A) shall be
paid by wire transfer of immediately available funds to a bank account in the
United States of America designated in writing by Buyers not less than one
business day before such payment. For purposes of this Agreement "Holdback
Amount" shall mean $32,500,000.

                  (B) If LLC 1 and LLC2 are required to make a payment pursuant
to Section 1 .4(i)(A) then, within three business days of the issuance by FERC
of the Expansion Certificate, (i) Buyer1 shall pay LLC1 an amount of cash equal
to one-half of the Adjusted Holdback Amount (as defined below), plus interest
accruing on such Adjusted Holdback Amount at

                                       4
<PAGE>

LIBOR from the Holdback Payment Date up and through the date Buyer1 makes such
payment and (i) Buyer2 shall pay to LLC2 an amount of cash equal to one-half of
the Adjusted Holdback Amount, plus interest accruing on such Adjusted Holdback
Amount at LIBOR from the Holdback Payment Date up and through the date Buyer2
makes such payment. The interest referred to in this paragraph is a per annum
interest rate and shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. All amounts payable under this Section 1.4(i)(5) shall be
paid by wire transfer of immediately available funds to a bank account in the
United States of America designated in writing by the Sellers not less than one
business day before such payment. For purposes of clarity, if the Expansion
Certificate is issued by FERC on or after February 1, 2003 then Buyer1 and
Buyer2 shall not be obligated to make any payment under this Section 1.4(i)(B).

                           (C) For purposes of this Section 1.4(i), the
         following terms shall have the following meanings:

                  "Adjusted Holdback Amount" shall mean (i) $32,500,000 if the
Expansion Certificate is issued by FERC prior to August 1, 2002, (ii)
$27,625,000 if the Expansion Certificate is issued by FERC on or after August 1,
2002 and prior to September 1, 2002, (iii) $22,750,000 if the Expansion
Certificate is issued by FERC on or after September 1, 2002 and prior to October
1, 2002, (iv) $17,875,000 if the Expansion Certificate is issued by FERC on or
after October 1, 2002 and prior to November 1, 2002, (v) $13,000,000 if the
Expansion Certificate is issued by FERC on or after November 1, 2002 and prior
to December 1, 2002, (vi) $8,125,000 if the Expansion Certificate is issued by
FERC on or after December 1, 2002 and prior to January 1, 2003, (vii) $3,250,000
if the Expansion Certificate is issued by FERC on or after January 1,2003 arid
prior to February 1, 2003, and (viii) $0 if the Expansion Certificate is issued
by FERC on or after February 1, 2003.

                  "Expansion Certificate" shall mean a certificate of public
necessity and convenience in the Matter of Kern River Gas Transmission Company,
Docket No. CP0l-422, authorizing the Company to construct and operate the
additional facilities needed to expand its transportation capacity as described
in the Application for Certificate of Public Convenience and Necessity filed by
the Company in such proceeding and provided that such certificate does not
contain any terms or conditions that would materially adversely affect the
ability of the Company to construct, own and operate the expansion facilities as
contemplated by the parties as of the date of this Agreement.

                  "LIBOR" shall mean the average 30-day daily closing London
Interbank Offered Rate in effect on the dates between the Holdback Payment Date
and the date the Adjusted Holdback Amount is paid.

                  (j) The Buyers will have the right to dispute all amounts
calculated by the Sellers in Sections 1.4(d), 1.4(e), 1.4(1) and 1.4(g) (other
than such amounts which were outstanding on December 31, 2001) using similar
dispute resolution provisions described in Section 1.4(b).

                                       5
<PAGE>

                                   ARTICLE II.
                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

                  The Sellers hereby jointly and severally represent and warrant
as follows:

                  SECTION 2.1. Corporate Organization. The Company is a general
partnership duly organized and validly existing under the laws of Texas. Each of
the Sellers is duly formed, validly existing and in good standing under the laws
of its jurisdiction of formation. The Company and each of its Subsidiaries (as
defined below) have all requisite power and authority and all governmental
licenses, authorizations, permits, consents and approvals to own their
respective properties and assets and to conduct their businesses as now
conducted, except for immaterial failures to have such licenses, authorizations,
permits, consents and approvals. The Company and each of its Subsidiaries are
duly qualified to do business as a foreign entity and are in good standing in
every jurisdiction where the character of the properties owned or leased by them
or the nature of the business conducted by them makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not individually or in the aggregate have a Material Adverse Effect (as defined
in Section 9.14). Schedule 2.1 sets forth all of the jurisdictions in which the
Company and its Subsidiaries are qualified to do business. Copies of the
Organizational Documents of the Company and each of its Subsidiaries with all
amendments thereto to the date hereof, have been furnished by the Sellers to the
Buyers or their representatives, and such copies are accurate and complete as of
the date hereof. "Organizational Documents" shall mean certificates of
incorporation, by-laws, certificates of formation, limited liability company
operating agreements, partnership or limited partnership agreements or other
formation or governing documents of a particular entity.

                  SECTION 2.2. Capitalization; Title. All of the outstanding
partnership interests of the Company are owned of record and beneficially by
LLC1 and LLC2. All of the outstanding limited liability company interests of
each of LLC1 and LLC2 are owned of record and beneficially by a wholly-owned
subsidiary of the Seller Parent. All of the Interests have been duly authorized
and validly issued. Except for this Agreement and as set forth on Schedule 2.2,
there are no outstanding options, warrants, agreements, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire the Interests. There are no voting trusts or other agreements or
understandings to which any of the Sellers or the Company is a party with
respect to the voting of the Interests. There is no indebtedness of the Company
having general voting rights issued and outstanding. Except for this Agreement,
there are no outstanding obligations of any person to repurchase, redeem or
otherwise acquire outstanding Interests or any securities convertible into or
exchangeable for any Interests. LLC 1 and LLC2 have valid and marketable title
to the Interests and the sale and transfer of the Interests by LLC1 and LLC2 to
Buyer1 and Buyer2 hereunder will transfer title to the Interests to such buyers
free and clear of any Encumbrances.

                  SECTION 2.3. Subsidiaries and Equity Interests. The Company
has no Subsidiaries except Kern River Funding Corp. and does not own, directly
or indirectly, any shares of capital stock, voting rights or other equity
interests or investments in any other person.

                                       6
<PAGE>

"Subsidiary" shall mean, with respect to the Company, any person of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by the Company or by
any one or more of its other Subsidiaries or (b) the Company or any other
Subsidiary is a general partner (excluding any such partnership where the
Company or any Subsidiary of such party does not have a majority of the voting
interest in such partnership). The Company or any Subsidiary does not have any
rights to acquire by any means, directly or indirectly, any capital stock,
voting rights, equity interests or investments in another person.

                  SECTION 2.4. Validity of Agreement; Authorization. The Sellers
have the power to enter into this Agreement and to carry out their obligations
hereunder. The execution and delivery of this Agreement and the performance of
their obligations hereunder have been duly authorized by the Management
Committees of LLC1, LLC2 and Holdco and the Board of Directors of Seller Parent,
and no other proceedings on the part of the Sellers are necessary to authorize
such execution, delivery and performance. This Agreement has been duly executed
by the Sellers and constitutes the Sellers' valid and binding obligation
enforceable against the Sellers in accordance with its terms (except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar law affecting the enforcement of
creditors' rights generally or by general equitable principles).

                  SECTION 2.5. No Conflict or Violation. Except as set forth on
Schedule 2.5, the execution, delivery and performance by the Sellers of this
Agreement does not and will not: (a) violate or conflict with any provision of
the Organizational Documents of the Sellers; (b) materially violate any
applicable provision of a material law, statute, judgment, order, writ,
injunction, decree, award, rule, or regulation of any foreign, federal, tribal,
state or local government, court, arbitrator, agency or commission or other
governmental or regulatory body or authority ("Governmental Authority"); (c)
materially violate, result in a material breach of, constitute (with due notice
or lapse of time or both) a material default or cause any material obligation,
penalty or premium to arise or accrue under any material contract, lease, loan
agreement, mortgage, security agreement trust indenture or other material
agreement or instrument to which the Sellers, the Company, or any of its
Subsidiaries are a party or by which any of them is bound or to which any of
their respective properties or assets is subject; or (d) result in the creation
or imposition of any Encumbrance except Permitted Encumbrances upon any of the
properties or assets of the Company or any of its Subsidiaries.

                  SECTION 2.6. Consents and Approvals. Except as set forth on
Schedule 2.6, no material consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority, or any other
person (on the part of the Sellers or the Company), is required as a condition
to the execution and delivery of this Agreement by the Sellers or the
performance of the Sellers' obligations hereunder.

                  SECTION 2.7. Financial Statements. (a) The Sellers have
heretofore furnished to the Buyers copies of the unaudited balance sheet of the
Company as of December 31, 2001, together with the related statements of income,
partners' equity and cash flow for the period then ended and the notes thereto
("2001 Financial Statements" or the "Financial Statements"). Except

                                       7
<PAGE>

as set forth on Schedule 2.7(a), the 2001 Financial Statements, including the
notes thereto: (i) were prepared in accordance with the accounting principles
("]RAF') prescribed or permitted by the Federal Energy Regulatory Commission
("FERC") applied on a consistent basis with the audited balance sheet of the
Company as of December 31, 2000, together with the related statements of income,
partners' equity and cash flow for the period then ended and the notes thereto
("2000 Audited Financial Statements"); (ii) present fairly in all material
respects the consolidated financial position, results of operations and changes
in cash flow of the Company as of such date and for the period then ended
(subject to normal year-end audit adjustments consistent with prior periods);
and (iii) are complete and correct in all material respects, and have been
prepared based upon the books of account and records of the Company.

                  (b) The Audited Financial Statements, including the notes
thereto: (i) will be prepared in accordance with RAP applied on a consistent
basis with the 2000 Audited Financial Statements; (ii) will present fairly in
all material respects the consolidated financial position, results of operations
and changes in cash flow of the Company as of such date and for the period then
ended; and (iii) will be complete and correct in all material respects, and will
be prepared based upon the books of account and records of the Company.

                  SECTION 2.8. Absence of Certain Changes or Events. Except as
set forth in Schedule 2.8. since December 31, 2001, the business of the Company
and its Subsidiaries has been conducted in the ordinary course consistent with
past practices and neither the Company nor any of its Subsidiaries has taken any
of the actions described in Section 4.l(a)(i) through (xviii), except in
connection with entering into this Agreement. Since December 31, 2001 there has
not been:

                  (a) Destruction of, damage to, or loss of, any material asset
of the Company or any Subsidiary (whether or not covered by insurance);

                  (b) Any material citation received, or to the Sellers'
knowledge, any other citation received by the Company, the Sellers or any
Subsidiary for any violations of any act, law, rule, regulation, or code of any
Governmental Authority related to the activities or business of the Company or
any of its Subsidiaries; or

                  (c) Other event or condition of any character that has had, or
would reasonably be expected to have, a Material Adverse Effect.

                  SECTION 2.9. Tax Matters. (a) For purposes of this Agreement,
"Tax Returns" shall mean returns, reports, exhibits, schedules, information
statements and other documentation (including any additional or supporting
material) filed or maintained, or required to be filed or maintained, in
connection with the calculation, determination, assessment or collection of any
Tax and shall include any amended returns required as a result of examination
adjustments made by the Internal Revenue Service or other Tax authority. For
purposes of this Agreement, "Tax" or "Taxes" shall mean any and all Federal,
state, local, foreign and other taxes, levies, fees, imposts, duties and charges
of whatever kind (including any interest, penalties or additions to the tax
imposed in connection therewith or with respect thereto), including, without
limitation, taxes imposed on, or measured by, income, franchise, profits or
gross receipts, and also ad valorem,

                                       8
<PAGE>

value added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation, premium, windfall profits, transfer and gains taxes and
customs duties.

                  (b) Except as disclosed on Schedule 2.9. (i) the Company has
filed (or joined in the filing of) when due all Tax Returns required by
applicable law to be filed with respect to the Company; (ii) all such Tax
Returns were true, correct and complete in all material respects as of the time
of such filing; (iii) all Taxes relating to periods ending on or before the
Closing Date owed by the Company (whether or not shown on any Tax Return) at any
time on or prior to the Closing Date, if required to have been paid, have been
paid (except for Taxes which are being contested in good faith inappropriate
proceedings), (iv) any liability of the Company for Taxes not yet due and
payable, or which are being contested in good faith in appropriate proceedings,
has been provided for on the financial statements of the Company in accordance
with RAP; (v) there is no action, suit, proceeding, investigation, audit or
claim now pending against, or with respect to, the Company in respect of any
material Tax or material Tax assessment, nor is any claim for additional
material Tax or material assessment asserted by any Tax authority; (vi) since
January 1, 1998, no written claim has been made by any Tax authority in a
jurisdiction where the Company (or the Sellers with respect to the Company) does
not currently file a Tax Return that it is or may be subject to Tax by such
jurisdiction, nor to the Sellers' knowledge is any such assertion threatened in
writing; (vii) the Company has no outstanding request for any extension of time
within which to pay its Taxes or file its Tax Returns; (viii) there has been no
waiver or extension of any applicable statute of limitations for the assessment
or collection of any Taxes of the Company; (ix) each of LLC1, LLC2 and the
Company have been disregarded entities for Federal income tax purposes for all
taxable periods beginning January 1, 2001 through and including the Closing
Date; (x) Seller Parent is not a "foreign person" within the meaning of Section
1445 of the United States Internal Revenue Code of 1986, as amended (the
"Code"); (xi) the Company is not a party to any agreement, whether written or
unwritten, providing for the payment of Taxes, payment for Tax losses,
entitlements to refunds or similar Tax matters; (xii) the Company has withheld
and paid all material Taxes required to be withheld by the Company in connection
with any amounts paid or owing to any employee, creditor, independent contractor
or other third party.

                  SECTION 2.10. Absence of Undisclosed Liabilities. Except as
disclosed on Schedule 2.10, the Company and its Subsidiaries have no material,
individually or in the aggregate, indebtedness or liability, absolute or
contingent, direct or indirect, which is not shown or provided for on the
consolidated balance sheets of the Company included in the 2001 Financial
Statements other than liabilities incurred or accrued in the ordinary course of
business (including liens of current taxes and assessments not in default) since
December 31, 2001.

                  SECTION 2.11. Real and Personal Property; Sufficiency of
Assets of the Company. (a) (i) Except as Set forth on Schedule 2.11(a)., the
Company or one of its Subsidiaries owns marketable fee title to, or holds a
valid leasehold, interest in or right-of-way easement (collectively, the "Rights
of Way") through, all real property ("Real Property") used or necessary for the
conduct of the Company's and its Subsidiaries' business as it is presently
conducted and as the Company's and its Subsidiaries' business is proposed to be
conducted in

                                       9
<PAGE>

connection with the 2002 Expansion Project, including, without limitation, all
real property required for the construction, operation and maintenance of the
Pipeline and have good and valid title to all of the material tangible assets
and properties which they own and which are reflected on the 2001 Financial
Statements (except for assets and properties sold, consumed or otherwise
disposed of in the ordinary course of business since the date of the 2001
Financial Statements), (ii) Schedule 2.11(a) sets forth a summary of types of
the Rights of Way obtained or to be obtained for the High Desert Project and the
2003 Expansion Project, and (iii) all such Real Property, assets and properties
(other than Rights of Way) are owned or leased free and clear of all
Encumbrances, except for (A) Encumbrances set forth on Schedule 2.11 (p), (B)
liens for current Taxes not yet due and payable or for Taxes the validity of
which is being contested in good faith, (C) Encumbrances to secure indebtedness
reflected on the 2001 Financial Statements, (D) Encumbrances which will be
discharged on or prior to the Closing Date, (E) Rights of Way, written
agreements, laws, ordinances and regulations affecting building use and
occupancy or reservations of interest in title (collectively, "Property
Restrictions") imposed or promulgated by law or any Governmental Authority with
respect to Real Property, including zoning regulations, provided they do not
materially adversely affect the current use of the applicable Real Property or
the use proposed in connection with the Expansion Projects, (F) mechanics',
carriers', workmen's and repairmen's liens and other Encumbrances, Property
Restrictions and other limitations of any kind, if any, which do not materially
detract from the value of or materially interfere with the present use or the
use proposed in connection with the Expansion Projects of any Real Property
subject thereto or affected thereby and which have arisen or been incurred in
the ordinary course of business and (G) Encumbrances that do not materially
detract from the value or materially interfere with the present use of the asset
subject thereto or the proposed use of the asset in connection with the
Expansion Projects (clauses (A) through (G) above referred to collectively as
"Permitted Encumbrances"). Schedule 2.11(a) sets forth a list of all Real
Property which the Company or one of its Subsidiaries owns in fee (such Real
Property, "Fee Property") and all Rights of Way owned by the Company or one of
its Subsidiaries. Except as set forth in Schedule 2.11(a), to the Company's
knowledge its interests in (1) the Fee Property are exclusive, indefeasible and
perpetual and (2) all Rights of Way are perpetual.

                  (b) There are no material structural defects relating to any
of the improvements to the Real Property and all tangible assets and property
owned or used by the Company or any of its Subsidiaries are in good operating
condition, ordinary wear and tear excepted. To the Company's knowledge, all
improvements to the real property owned or used by the Company or any of its
Subsidiaries do not encroach in any respect on property of others (other than
encroachments that would not materially impair the operations of the Company and
its Subsidiaries).

                  (c) Except as set forth on Schedule 2.11(c), and except for
Intellectual Property, the assets owned or licensed by the Company and its
Subsidiaries constitute all of the assets, properties and rights customarily
used by the Sellers, the Sellers' affiliates, the Company and the Subsidiaries
to conduct the business of the Company and its Subsidiaries and the operation of
its Pipeline as currently conducted.

                  (d) The Company has good and valid title to at least a 63.6%
tenancy-in-common interest in the assets comprising a certain jointly owned
segment of the Pipeline in California

                                       10
<PAGE>

(the "Common Facilities") extending from Daggett, California to Bakersfield,
California and the real estate associated therewith. After completion of the
2003 Expansion Project and pursuant to the Construction Operation and
Maintenance Agreement (the "COM") by and among the Company, Mojave Pipeline
Company and Mojave Pipeline Operation Company, dated August 29, 1989, as amended
November 30, 1990, November 1, 1993, May 30, 1995, March 27, 1996, November 27,
1996 and March 29, 1999, the Company will (i) have good and valid title to a
greater percentage interest in such Common Facilities than its current
percentage which percentage interest will be determined upon final determination
of the 2003 Expansion capital costs, (ii) be entitled to the exclusive use of
the incremental Theoretical Capacity (as defined in the COM) resulting from the
construction of the 2003 Expansion Project and (iii) be entitled to all revenues
arising from the provision of transportation services associated with its
marketing of such expanded capacity.

                  (e) Except as set forth on Schedule 2.11(e), there is no
pending or, to the Sellers' knowledge, threatened condemnation of any part of
the Real Property by any Governmental Authority which would materially adversely
affect the Company's (or its Subsidiaries') current use of the applicable Real
Property.

                  (f) With respect to those assets assigned to the Company or
the Buyers pursuant to Section 4.19, the Sellers and the Sellers' affiliates own
all right, title and interest in and to, or have valid and enforceable right to
use all equipment (including, without limitation, computer hardware, servers,
routers and PBX equipment) set forth on Schedule 2.11(c), free and clear of all
material Encumbrances (other than Permitted Encumbrances), and (ii) all such
equipment is in good operating condition, ordinary wear and tear excepted.

                  SECTION 2.12. Regulatory Matters. The Company is a "Natural
Gas Company" as that term is defined in Section 2 of the Natural Gas Act
("NGA"). The Company is not a "public utility company," "holding company" or
"subsidiary" or "affiliate" of a holding company as such terms are defined in
the Public Utility Holding Company Act of 1935 (the "1935 Act"). The Company is
in material compliance with all provisions of the NGA and all rules and
regulations promulgated by FERC pursuant thereto. The Company is in material
compliance with all orders issued by FERC that pertain to all terms and
conditions and rates charged for services. No approval of (i) the Securities and
Exchange Commission under the 1935 Act or (ii) FERC under the NGA or the Federal
Power Act is required in connection with the execution of this Agreement by the
Sellers or the transaction contemplated hereby with respect to the Sellers.

                  SECTION 2.13. Intellectual Property. (a) Except as set forth
on Schedule 2.13(a), the Company or its Subsidiaries own all right, title and
interest in and to, or have a valid license (enforceable by the Company or its
Subsidiaries in accordance with its terms (except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar law affecting the enforcement of creditors'
rights generally or by general equitable principles)) or other rights to use
(other than through the Sellers or their affiliates), all the material
Intellectual Property used by the Company, its Subsidiaries, the Sellers or the
Sellers' affiliates in connection with the Company's business, which
Intellectual Property represents all material intellectual property rights (i)
used by the Company, its Subsidiaries, the Sellers or the Sellers' affiliates to
conduct the business of the Company and its Subsidiaries and

                                       11
<PAGE>

the operation of its Pipeline as currently conducted or (ii) owned or licensed
by the Company, its Subsidiaries, the Sellers or the Sellers' affiliates and
intended to be used in connection with the Expansion Projects. All Intellectual
Property owned by the Company and its Subsidiaries is owned free and clear of
material Encumbrances other than Permitted Encumbrances. The Company and its
Subsidiaries are in compliance in all material respects with their contractual
obligations relating to the protection of such of the Intellectual Property they
use pursuant to material licenses or other material agreements. To the Sellers'
knowledge, there are no material conflicts with or infringements of any material
Intellectual Property owned by the Company or its Subsidiaries by any third
party. To the Sellers' and the Sellers' affiliates' knowledge, the conduct of
the business of the Company and its Subsidiaries as conducted does not conflict
with or infringe any intellectual property or other proprietary right of any
third party. Neither (a) the Intellectual Property owned by the Company nor (b)
the Licensed Software, as of the date of delivery, infringes any intellectual
property or other proprietary rights of any third party. There is no claim (in
writing), suit, action or proceeding pending or, to the knowledge of the Sellers
or the Sellers' affiliates or the Company or its Subsidiaries, threatened
against the Company or its Subsidiaries: (i) alleging any conflict or
infringement with any third party's intellectual property or other proprietary
rights; or (ii) challenging the Company's or any Subsidiary's ownership or use
of, or the validity or enforceability of, any material Intellectual Property.
The consummation of the transactions contemplated hereby will not alter or
impair any material Intellectual Property. As used herein, "Intellectual
Property" shall mean all of the following, to the extent owned or used by the
Company or its Subsidiaries in the business of the Company or its Subsidiaries
as of the Closing Date: (i) trademarks and service marks, logos, trade dress,
product configurations, trade names and other indications of origin,
applications or registrations in any jurisdiction pertaining to the foregoing
and all goodwill associated therewith; (ii) inventions (whether or not
patentable), discoveries, improvements, ideas, know-how, formula, methodology,
research and development, business methods, processes, technology, and patent
applications or patents in any jurisdiction pertaining to the foregoing,
including re-issues, continuations, divisions, continuations-in-part, renewals
or extensions; (iii) trade secrets, including confidential information and the
Company's and its Subsidiaries' right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs, software (including
password unprotected interpretive code or source code, object code, development
documentation, programming tools, drawings, specifications and data), mask works
or other works and applications or registrations in any jurisdiction for the
foregoing; (v) database rights; and (vi) Internet Web sites, Web pages, domain
names and applications and registrations pertaining thereto and all items in
clauses (i) - (v) above to the extent used in connection with or contained in
all versions of the Company's or any Subsidiary's Web sites.

                  (b) Schedule 2.13(b) sets forth a complete and current list of
all copyright and trademark applications and registrations and patent
applications and issued patents and material unregistered trademarks and
copyrights owned by the Company or its Subsidiaries ("Listed Intellectual
Property"). All Listed Intellectual Property is valid, subsisting, unexpired and
all renewal fees and other maintenance fees that have fallen due on or prior to
the date of this Agreement have been paid. Except as listed in Schedule 2.13(b),
no Listed Intellectual Property is the subject of any proceeding before any
governmental, registration or other authority in any jurisdiction, including any
office action or other form of preliminary or final refusal of registration.

                                       12
<PAGE>

                  (c) Schedule 2.13(c) sets forth a complete list of all
material agreements relating to the Intellectual Property or to the right of the
Company or any of its Subsidiaries to use the proprietary rights of any third
party excluding "shrink-wrap" and "off-the-shelf" software and any agreement, in
each case, with a replacement cost of less than $500. Each agreement set forth
on Schedule 2.13(c) is valid, binding and enforceable by the Company or its
Subsidiaries (except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar law affecting
the enforcement of creditors' rights generally or by general equitable
principles) in accordance with its terms on the date of this Agreement. The
Company and each Subsidiary, as the case may be, have performed all material
obligations required to be performed by them under, and are not in material
default or breach of, any agreement set forth in Schedule 2.13(c), and no event
has occurred, which with due notice or lapse of time or both, would constitute
such a material default by the Company or its Subsidiaries. To the knowledge of
the Sellers and the Company, (1) no other party to any agreement set forth in
Schedule 2.13(c) is in material default thereof, and (2) no event has occurred
which, with due notice or lapse of time or both, would constitute such a
material default by such other party.

                  (d) To the extent a representation or warranty is set forth in
this Section 2.13 and the same subject matter is covered in another
representation or warranty in this Agreement (other than with respect to the
representation regarding Licensed Software in Section 4.22), the provisions
concerning such subject matter in this Section 2.13 shall govern.

                  (e) To the Sellers' knowledge, the Company and its
Subsidiaries each take reasonable measures to protect the confidentiality of
their trade secrets. To the Sellers' knowledge, (i) none of the material
Intellectual Property has been used, disclosed or appropriated to the detriment
of the Company or any of its Subsidiaries for the benefit of any third party;
and (ii) no employee, independent contractor or agent of the Company or any
Subsidiaries has misappropriated any material trade secrets or other material
confidential information of any third party in the course of the performance of
his or her duties as an employee, independent contractor or agent of the Company
or any of its Subsidiaries.

                  (f) With respect to intellectual property assets to be
assigned to the Company or the Buyers from the Sellers or Seller's affiliates
pursuant to Section 4.19 (the "Assigned Assets"):

                           (i) The Sellers and the Sellers' affiliates are in
compliance in all material respects with their material contractual obligations.
To the Sellers' knowledge, there are no material conflicts with or infringements
by any third party of any Assigned Assets owned by the Sellers or the Sellers'
affiliates. The Assigned Assets owned by the Sellers and the Sellers' affiliates
do not infringe any intellectual property or other proprietary rights of any
third party;

                           (ii) There is no claim (in writing), suit, action or
proceeding pending or, to the knowledge of the Sellers or the Sellers'
affiliates, threatened against Sellers or the Sellers' affiliates challenging
the Sellers' or the Sellers' affiliates' ownership or use of, or the validity or
enforceability of, any Assigned Assets; and

                                       13
<PAGE>

                           (iii) Neither the Sellers nor any of their affiliates
will be, as a result of the execution and delivery of this Agreement or the
performance of their obligations under this Agreement, in breach of any
agreement set forth in Schedule 2.13(a). Each Assigned Asset that is a license
or other agreement is valid, binding and enforceable against the parties thereto
in accordance with its terms (except to the extent its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
law affecting the enforcement of creditors' rights generally or by general
equitable principles). The Sellers and the Sellers' affiliates, as the case may
be, have performed all material obligations to be performed by them under, and
are not in material default or breach of any Assigned Asset that is a license or
an agreement and no event has occurred, which with due notice or lapse of time
or both, would constitute such a material default by the Sellers or the Sellers'
affiliates. To the knowledge of the Sellers and the Sellers' affiliates, no
other party to any Assigned Asset is in material default thereof, and no event
has occurred which, with due notice or lapse of time or both, would constitute
such a material default by such other party.

                  SECTION 2.14. Licenses, Permits and Governmental Approvals.
(a) Schedule 2.14(a) sets forth a true and complete list of all material
licenses, permits, certificates, franchises, authorizations and approvals issued
or granted to the Company and any Subsidiary by any Governmental Authority
(including the date issued or applied for and the dates of any amendments
thereto) (each a "License" and, collectively, the "Licenses") necessary for the
conduct of its business presently and as proposed to be conducted in connection
with the Expansion Projects. Schedule 2.14(a) also sets forth a true and
complete list of all pending applications for Licenses necessary for the conduct
of the Company's business as proposed to be conducted in connection with the
Expansion Projects. Each License (other than Licenses proposed to be obtained in
connection with the Expansion Projects) has been issued to, and duly obtained
and fully paid for by, the holder thereof and is valid, in full force and
effect, and not subject to any pending or known threatened administrative or
judicial proceeding to suspend, revoke, cancel or declare such License invalid
in any respect.

                  (b) In the case of Licenses that have been applied for but not
yet granted, all necessary applications have been made in a timely fashion and
the Company has no knowledge as to why any License that has been applied for but
not yet granted (as indicated on Schedule 2.14(a)), will not be obtained without
undue burden and in form and substance to permit the continued lawful conduct of
the Company's business during construction of the Expansion Projects and in
connection with the operation of the Expansion Projects. No License will in any
way be cancelled or suspended or required to be modified (other than in a
ministerial manner) as a result of, or terminate or lapse by reason of, the
execution, delivery and performance of this Agreement by the Sellers.

                  SECTION 2.15. Compliance with Law. Except as relates to Tax
matters (which are provided for in Section 2.9), regulatory matters (which are
provided for in Section 2.12), or environmental, health and safety matters
(which are provided for in Section 2.24) and except as set forth on Schedule
2.15, the operations of the Company and each Subsidiary have been conducted in
material compliance since January 1, 2000 with all applicable material laws,
licenses, regulations, orders and other material requirements of all
Governmental Authorities

                                       14
<PAGE>

having jurisdiction over the Company and any Subsidiary arid their assets,
properties and operations. Except as relates to Tax matters (which are provided
for in Section 2.9), regulatory matters (which are provided for in Section 2.12)
or environmental, health and safety matters (which are provided for in Section
2.24), neither the Sellers, nor the Company or any Subsidiary have received
written notice of any material violation of any such law, license, regulation,
order or other legal requirement, or are in material default with respect to any
material order, writ, judgment, award, injunction or decree of any Governmental
Authority, applicable to the Company, the Subsidiaries or any of their assets,
properties or operations. Neither the Sellers, nor the Company or any Subsidiary
have knowledge of any proposed change in any such laws, rules or regulations
(other than laws of general applicability) or the terms of any such license that
would materially adversely affect the transactions contemplated by this
Agreement or materially adversely affect all or a substantial part of the assets
or the businesses of the Company and the Subsidiaries, individually or in the
aggregate, or the Expansion Projects.

                  SECTION 2.16. Litigation. Except as set forth on Schedule
2.16, as of the date hereof, there are no Legal Proceedings pending or, to the
knowledge of the Sellers or the Company and its Subsidiaries, threatened against
or involving any Seller, the Company or any Subsidiary that, individually or in
the aggregate, are reasonably likely to (a) have a Material Adverse Effect or
(b) materially impair or delay the ability of the Sellers to perform their
obligations under this Agreement or consummate the transactions contemplated by
this Agreement. Except as set forth on Schedule 2.16, as of the date hereof,
there is no order, judgment, injunction or decree of any Governmental Authority
outstanding against any Seller, the Company or any Subsidiary that, individually
or in the aggregate, would have any effect referred to in the foregoing clauses
(a) and (b). "Legal Proceeding" shall mean any judicial, administrative or
arbitral actions, suits, proceedings (public or private), investigations or
governmental proceedings before any Governmental Authority.

                  SECTION 2.17. Contracts. Except for Commitments (as defined
below) listed on Schedule 2.13 or Schedule 2.20, Schedule 2.17 sets forth
(subject to the dollar amount limitations of clauses (b) or (c) below) a true
and complete list of the following contracts, agreements, instruments and
commitments to which the Company or any Subsidiary is a party or otherwise
relating to or affecting any of their assets, properties or operations whether
written or oral: (a) other than those that are immaterial, any contracts,
agreements and commitments not made in the ordinary course of business; (b)
contracts calling for payments by the Company of amounts greater than $200,000;
(c) contracts, loan agreements, letters of credit, repurchase agreements,
mortgages, security agreements, guarantees, pledge agreements, trust indentures
and promissory notes and similar documents relating to the borrowing of money or
for lines of credit in any case for amounts in excess of $200,000; (d)
agreements with respect to the sharing or allocation of taxes or tax costs; (e)
agreements for the sale of any material assets, property or rights other than in
the ordinary course of business or for the grant of any options or preferential
rights to purchase any material assets, property or rights; (f) documents
granting any power of attorney with respect to the material affairs of the
Company or any Subsidiary; (g) suretyship contracts, performance bonds, working
capital maintenance, support agreements, contingent obligation agreements or
other forms of guaranty agreements; (h) other than those that are immaterial,
any contracts or commitments limiting or restraining the Company or any
Subsidiary from engaging or competing in any lines of business or with any
person; (i) other than those that

                                       15
<PAGE>

are immaterial, partnership or joint venture agreements; (j) shareholder
agreements or agreements relating to the issuance of any securities of the
Company or any Subsidiary or the granting of any registrations rights with
respect thereto; and (k) all amendments, modifications, extensions or renewals
of any of the foregoing (the foregoing contracts, agreements and documents are
hereinafter referred to collectively as the "Commitments" and individually as a
"Commitment"). Each Commitment is valid, binding and enforceable against the
parties thereto in accordance with its terms, and in full force and effect on
the date hereof. The Company and each Subsidiary, as the case may be, have
performed in all material respects all obligations required to be performed by
them under, and are not in material default or breach of in respect of, any
Commitment, and no event has occurred which, with due notice or lapse of time or
both, would constitute such a default. To the knowledge of the Sellers and the
Company or any of its Subsidiaries, no other party to any Commitment is in
default in any material respect thereof, and no event has occurred which, with
due notice or lapse of time or both, would constitute such a default. The
Sellers have made available to the Buyers or their representatives true and
complete originals or copies of all the Commitments and a copy of every material
default notice received by the Sellers or the Company or any of its Subsidiaries
during the past one year with respect to any of the Commitments.

                  SECTION 2.18. Books and Records of the Company. The books of
account, minute books, record books, and other records of the Company and each
Subsidiary, all of which have been made available to the Buyers or their
representatives, are complete and correct in all material respects.

                  SECTION 2.19. Expansion Projects. (a) The capital expenditures
set forth on Schedule 2.1 9(a) hereto are reasonably expected to be sufficient
to maintain the Company's existing facilities in good working order through
December 31, 2002.

                  (b) The Construction Budgets and Schedules of the respective
Expansion Projects are attached hereto as Schedule 2.19(b) and have been
prepared by the Company in good faith and based upon assumptions that are
believed to be reasonable, and the Sellers have no knowledge of any fact or
circumstance that will or is reasonably likely to cause the Expansion Projects
not to be completed in accordance with such Construction Budgets and Schedules.

                  SECTION 2.20. Employee Plans. (a) The Company does not
sponsor or maintain, and at any time during the past five years has not
sponsored or maintained, any "employee benefit plan," as defined under Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any other bonus, pension, stock option, stock purchase, benefit,
welfare, profit-sharing, retirement, disability, vacation, severance,
hospitalization, insurance, incentive, deferred compensation and other similar
fringe or employee benefit plans, funds, programs or arrangements, whether
written or oral ("Employee Plans" ), in each of the foregoing cases which cover,
are maintained for the benefit of, or relate to any or all current or former
employees of the Company. As of the Closing Date, the Company will have no
obligation or liability under any Employee Plans. Schedule 2.20(a) sets forth a
true and complete list of all Employee Plans which cover, are maintained for the
benefit of, or relate to any or all employees of the Sellers who are assigned to
the business of the Company (the "Business Employees," and such Employee Plans
hereinafter referred to as the "Seller Plans").

                                       16
<PAGE>

(b) The Company has no current employees, and no present or contingent liability
to any former employees. Schedule 2.20(b) sets forth a true and complete list
showing the names of all Business Employees. There are no contracts, agreements,
plans or arrangements covering any Business Employee with "change of control" or
similar provisions that would be triggered as a result of the consummation of
this Agreement or the Stock Purchase Agreement dated of even date herewith
between Seller Parent and Buyer Parent or that could otherwise result in
liability to the Company. To the Sellers' and the Company's knowledge, no
Business Employee is obligated under any contract (including licenses, covenants
or commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of such employee's efforts to promote the interests of the Company or
the Buyers or that would conflict with the Company's business as conducted or
proposed to be conducted. Except for those employees who are eligible for early
retirement benefits, neither the Sellers nor the Company have received notice
from any officer of the Company or its Subsidiaries or key Business Employee or
group of Business Employees, that such person(s) intends to terminate their
employment.

                  SECTION 2.21. Existing Firm Transportation Customers;
Expansion Customers. (a) Schedule 2.21(a) sets forth a complete and correct list
of existing firm transportation customers of the Pipeline during the last fiscal
year ("Firm Transportation Customers") and the amount of business done with each
Firm Transportation Customer in such year. As of the date of this Agreement,
except as set forth on Schedule 2.21(a), (i) the Company is not engaged in any
material dispute with any Firm Transportation Customer; (ii) there has been no
material adverse change in the business relationship of the Company with any
Firm Transportation Customer since January 1,2001; and (iii) no Firm
Transportation Customer has proposed in writing any material adverse
modification or change in the business relationship with the Company. Except as
disclosed on Schedule 2.2 1(a), since January 1,2001, the Company has not at any
time delivered to, or received from, any Firm Transportation Customer any formal
written notice or written allegation of a default or breach with respect to any
agreement, contract or other arrangement and none of such Firm Transportation
Customers has, or, to the Sellers' knowledge, intends to terminate or not
exercise any option to renew or otherwise change significantly its relationship
with the Company.

                  (b) Schedule 2.21(b) sets forth a complete arid correct list
of the expansion customers for the Expansion Projects ("Expansion Customers").
As of the date of this Agreement, the Expansion Customers set forth on Schedule
2.21(b) have signed, valid and enforceable firm transportation service
agreements or precedent agreements.

                  SECTION 2.22. Insurance. (a) Schedule 2.22 sets forth a true
and complete list of all policies of property and casualty insurance, including
crime insurance, liability and casualty insurance, property insurance, business
interruption insurance, workers' compensation, excess or umbrella liability
insurance and any other type of property and casualty insurance insuring the
properties, assets, employees and/or operations of the Company or any Subsidiary
(collectively, the "Policies"). Upon request, the Sellers will make available to
the Buyers certificates of insurance and insurance summaries from the insurance
broker evidencing the existence of the Policies. All premiums payable under such
Policies have been paid in a timely manner and the Company has complied fully
with the terms and conditions of all such Policies.

                                       17
<PAGE>

                  (b) Except as set forth on Schedule 2.22, all such Policies
are in full force and effect and except as provided in Section 4.15, coverage of
the Company and its Subsidiaries under the Policies will terminate upon the
Closing Date. The Sellers shall use their reasonable best efforts to cause the
Company and its Subsidiaries to maintain the coverage under all Policies (or
replacements thereof for Policies expiring prior to the Closing Date) in full
force and effect through the Closing Date. Neither the Company nor any
Subsidiary is in default under any provisions of the Policies, and there is no
claim by the Company, any Subsidiary or any other person pending under any of
the Policies as to which coverage has been questioned, denied or disputed by the
underwriters or issuers of such Policies. Except as set forth on Schedule 2.22,
neither the Company nor any Subsidiary has received written notice from an
insurance carrier issuing any Policies that alteration of any equipment or any
improvements located on Real Property, purchase of additional equipment, or
modification of any of the methods of doing business of the Company or any
Subsidiary, will be required or suggested after the date hereof. The Policies
maintained by the Company and each Subsidiary are adequate in accordance with
industry standards, the requirements of any applicable agreements and are in at
least the minimum amounts required by, and are otherwise sufficient for purposes
of, any currently applicable law, rule, or regulation of any Federal, state or
local government, agency or authority, including, without limitation,
environmental regulations. All Policies are of at least like character and
amount as are customarily carried by like businesses similarly situated.

                  SECTION 2.23. Transactions with Directors, Officers and
Affiliates. Except as set forth on Schedule 2.23 and for inter-company services
in the ordinary course of business, since January 1, 2001, there have been no
transactions between the Company or any Subsidiary and any director, officer,
employee, stockholder or other "affiliate" (as such term is defined in Rule 405
under the Securities Act of 1933, as amended (the "Securities Act")) of the
Company, or any Subsidiary or the Sellers, including, without limitation, loans,
guarantees or pledges to, by or for the Company or Subsidiary from, to, by or
for any of such persons. Except as set forth on Schedule 2.11(c), neither the
Sellers nor any of their "affiliates" (as such term is defined in Rule 405 under
the Securities Act) (other than the Company or any Subsidiary) owns or has any
rights in or to any of the assets, properties or rights used by the Company or
any Subsidiary in the ordinary course of their business.

                  SECTION 2.24. Environmental; Health and Safety Matters. (a)
Except as set forth on Schedule 2.24:

                           (i) the Company and each Subsidiary and their
respective operations are in material compliance with all applicable
Environmental Laws and, in the case of pipeline safety, prudent industry
practices, and have been in material compliance with Environmental Laws and, in
the case of pipeline safety, prudent industry practices, except for historical
noncompliance that would not reasonably be expected to result in the Company or
any Subsidiary incurring material Environmental Costs and Liabilities;

                           (ii) none of the Sellers, the Company or any
Subsidiary has received any written request for information, or has been
notified that it is a potentially responsible party,

                                       18
<PAGE>

under CERCLA (as hereinafter defined) or any similar state law with respect to
any on-site or off-site location for which liability is currently being asserted
against them with respect to the activities or operations of the Company or its
Subsidiaries;

                           (iii) there are no material writs, injunctions,
decrees, orders or judgments outstanding, or any actions, suits, proceedings or
investigations pending or to their knowledge threatened, involving the Company
or any Subsidiary relating to (A) their compliance with any Environmental Law,
or (B) the release, disposal, discharge, spill, treatment, storage or recycling
of Hazardous Materials into the environment at any location which would
reasonably be expected to result in the Company or any Subsidiary incurring any
material liability under Environmental Laws;

                           (iv) the Company and each Subsidiary have obtained,
currently maintain and are in material compliance with all Licenses which are
required under Environmental Laws for the operation of their respective
businesses (collectively, "Environmental Permits"), all such Environmental
Permits are in effect and no appeal nor any other action is pending to revoke
any such Environmental Permit;

                           (v) to the extent that the Company will require
additional Environmental Permits for the operation of its business during
construction of the Expansion Projects or in connection with the Expansion
Projects, all necessary applications for such Environmental Permits due as of
the Closing in accordance with the Construction Budgets and Schedules set forth
on Schedule 2.19(b) have been or will be made in a timely fashion;

                           (vi) the Company has no knowledge of any reason why
any such Environmental Permit that has been applied for, but not yet granted,
will not be obtained without undue burden and in form and substance sufficient
to permit (A) the continued lawful conduct of the Company's business during
construction of the Expansion Projects, and (B) the lawful conduct of the
Company's business with respect to the Expansion Projects as such business is
expected to be conducted;

                           (vii) the Company has no knowledge of any reason why
any Environmental Permit required for the operation of its business during
construction of the Expansion Projects or in connection with the Expansion
Projects that has not yet been applied for will not be obtained without undue
burden and in form and substance sufficient to permit the (A) continued lawful
conduct of the Company's business during construction of the Expansion Projects,
and (B) the lawful conduct of the Company's business with respect to the
Expansions Projects as such business is expected to be conducted;

                           (viii) all such Environmental Permits are
transferable and the Sellers and the Company will cooperate with the Buyers to
secure any required transfer of those Environmental Permits;

                           (ix) no cleanup, investigation or remedial action has
occurred at the properties that are currently owned, leased, operated or
otherwise used by the Company or any Subsidiary that could result in the
assertion or creation of a lien on such property by any

                                       19
<PAGE>

Governmental Authority with respect thereto and for which the Company or any
Subsidiary would be responsible, nor has any such assertion of a lien been made
by any Governmental Authority with respect thereto which has not been removed;

                           (x) there are no material Environmental Costs and
Liabilities which may arise against them based on their activities prior to the
Closing Date at the properties that are currently, or previously were, owned,
leased, operated or otherwise used by the Company or any Subsidiary;

                           (xi) there have been no Pipeline ruptures resulting
in injury, loss of life, or material property damage; and

                           (xii) to the knowledge of the Company and its
Subsidiaries, there are no defects, corrosion or other damage to the Pipeline
that would create a material risk of pipeline integrity failure.

                  (b) The following terms shall have the following meanings:

                  "Environmental Claim" shall mean any notice of violation,
action, claim, lien, demand, abatement or other order or directive (conditional
or otherwise) by any Person or Governmental Authority for personal injury
(including sickness, disease or death), tangible or intangible property damage,
damage to the environment (including natural resources), nuisance, pollution,
contamination, trespass or other adverse effects on the environment, or for
fines, penalties or restrictions resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material, odor or audible noise; (ii) the
transportation, storage, treatment or disposal of Hazardous Materials; or (iii)
the violation, or alleged violation, of any Environmental Laws or Permits issued
thereunder.

                  "Environmental Costs and Liabilities" shall mean any and all
claims (including Environmental Claims), actions, suits, proceedings,
liabilities (whether absolute or contingent), obligations, losses (including
liquidated damages or losses arising out of lender liability claims), damages
(including any penalty or punitive damages), judgments, offsets, equitable
relief granted, amounts paid in settlement, awards, demands, counterclaims,
clean-up obligations, interest, costs and expenses (including the reasonable
fees of attorneys, consultants, engineers and other experts), and court costs
(and other out-of-pocket expenses incurred in investigating, preparing, or
defending the foregoing or with respect to any appeal) arising under or pursuant
to any Environmental Law.

                  "Environmental Law" shall mean current local, county, state,
federal, and/or foreign law (including common law), statute, code, ordinance,
rule, regulation or other legal obligation relating to the protection of the
environment or natural resources, including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C.
section 9601 et seq.), as amended ("CERCLA"), the Resource Conservation and
Recovery Act (42 U.S.C. section 6901 et seq.), as amended ("RCRA"), the Federal
Water Pollution Control Act (33 U.S.C. section 1251 et seq.), as amended, the
Clean Air Act (42 U.S.C.

                                       20
<PAGE>

section 7401 et seq.), as amended, the Toxic Substances Control Act (15 U.S.C.
section 2601 et seq.), as amended, the Occupational Safety and Health Act (29
U.S.C. section 651 et seq.), as amended, the Federal Natural Gas Pipeline Safety
Act of 1968, as amended, the Hazardous Materials Transportation Act (49 U.S.C.
section 1801 et seq.), as amended, the Oil Pollution Act (33 U.S.C. section 2701
et seq.), the Safe Drinking Water Act (42 U.S.C. section 300(f) et seq.), as
amended, analogous state, tribal or local laws, and any similar, implementing or
successor law, and any amendment, rule, regulation, or directive issued
thereunder.

                  "Hazardous Material" shall mean any substance, material or
waste which is regulated by any Environmental Law as hazardous, toxic, a
pollutant, contaminant or words of similar meaning including, without
limitation, petroleum, petroleum products, asbestos, urea formaldehyde and
polychlorinated biphenyls.

                  "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of a Hazardous Material.

                  (c) To the extent a representation or warranty is set forth in
this Section 2.24 and the same subject matter is covered in another
representation or warranty in this Agreement, the provisions covering such
subject matter in this Section 2.24 shall govern.

                  SECTION 2.25. Brokers. Except as set forth on Schedule 2.25.
the Sellers have not employed the services of a broker or finder in connection
with this Agreement or any of the transactions contemplated hereby.

                                  ARTICLE III.

                  REPRESENTATIONS AND WARRANTIES OF THE BUYERS

                  The Buyers hereby jointly and severally represent and warrant
as follows:

                  SECTION 3.1. Corporate Organization. Each of Buyer Holdco,
Buyer1 and Buyer2 is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of Delaware and has
all requisite power and authority to own its properties and assets and to
conduct its business as now conducted. Buyer Parent is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Iowa and has all requisite power and authority to own its properties and assets
and to conduct its business as now conducted. Each of Buyer1 and Buyer2 is duly
qualified to do business as a foreign entity in every jurisdiction where the
character of the properties owned or leased by it or the nature of the business
conducted by it makes such qualifications necessary.

                  SECTION 3.2. Validity of Agreement. Each of the Buyers has the
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the performance of the Buyers'
obligations hereunder have been duly authorized by the Boards of Directors of
the Buyers, and no other proceedings on the part of the Buyers are necessary to
authorize such execution, delivery and performance. This Agreement has been duly
executed by the Buyers and constitutes the valid and binding obligation of the
Buyers enforceable against the Buyers in accordance with its terms (except to
the extent that its

                                       21
<PAGE>

enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar law affecting the enforcement of creditors'
rights generally or by general equitable principles).

                  SECTION 3.3. No Conflict or Violation; No Defaults. The
execution, delivery and performance by the Buyers of this Agreement does not and
will not violate or conflict with any provision of their Organizational
Documents and does not and will not violate any applicable provision of law, or
any order, judgment or decree of any Governmental Authority, nor violate or
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Buyers are a party
or by which they are bound or to which any of their properties or assets is
subject, nor result in the creation or imposition of any Encumbrance upon any of
their properties or assets where such violations, breaches or defaults in the
aggregate would have a material adverse effect on the transactions contemplated
hereby or on the assets, properties, business, operations, net income or
financial condition of the Buyers.

                  SECTION 3.4. Consents and Approvals. Except as disclosed on
Schedule 3.4, no material consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority or any other
person (on the part of the Buyers) is required as a condition to the execution
and delivery of this Agreement by the Buyers or the performance of the Buyers'
obligations hereunder.

                  SECTION 3.5. Brokers. Except as Set forth on Schedule 3.5, the
Buyers have not employed the services of an investment broker, financial
advisor, broker or finder in connection with the Agreement or any of the
transactions contemplated hereby.

                  SECTION 3.6. Financial Ability. Buyer1 and Buyer2 will have
sufficient immediately available funds, in cash, at the Closing to pay the
Purchase Price, other amounts payable pursuant to this Agreement and to effect
the transactions contemplated hereby.

                                   ARTICLE IV.
                                    COVENANTS

                   SECTION 4.1. Certain Changes and Conduct of Business. (a)
Except as expressly provided by this Agreement or Schedule 4.1, from and after
the date of this Agreement and until the Closing Date, (x) the Company shall,
and shall cause each of its Subsidiaries to, conduct and maintain its business
solely in the ordinary course consistent with past practices and, (y) without
the prior written consent of the Buyers (not to be unreasonably withheld or
delayed), the Sellers will not permit the Company or any of its Subsidiaries to:

                           (i) make any material change in the conduct of its
businesses and operations;

                           (ii) make any change in its Organizational Documents
or issue any additional equity securities or grant any option, warrant or right
to acquire any equity securities or issue any security convertible into or
exchangeable for its equity securities or alter any term of

                                       22
<PAGE>

any of its outstanding securities or make any change in its outstanding equity
securities or other ownership interests or in its capitalization, whether by
reason of a reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, stock dividend or otherwise;

                           (iii) other than inter-company advances to fund the
Expansion Projects or otherwise in the ordinary course of business, (A) incur,
assume or guarantee any indebtedness for borrowed money, issue any notes, bonds,
debentures or other corporate securities or grant any option, warrant or right
to purchase any thereof, or (B) issue any securities convertible or exchangeable
for debt securities of the Company or any Subsidiary;

                           (iv) make any sale, assignment, transfer, abandonment
or other conveyance of any of its assets or any part thereof except for
dispositions of inventory or of worn-out or obsolete equipment for fair or
reasonable value in the ordinary course of business consistent with past
practices;

                           (v) subject any of its assets, or any part thereof,
to any Encumbrance other than a Permitted Encumbrance, or permit the imposition
of any Encumbrance other than a Permitted Encumbrance;

                           (vi) redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of its equity interests or declare, set aside or pay
any dividends or other distribution in respect of such equity interests;

                           (vii) acquire any assets or properties other than in
the ordinary course of business consistent with past practices;

                           (viii) enter into any new employee benefit plan,
program or arrangement or any new employment, severance or consulting agreement,
grant any general increase in the compensation of officers or employees
(including any such increase pursuant to any bonus, pension, profit-sharing or
other plan or commitment) or grant any increase in the compensation payable or
to become payable to any employee, except in accordance with pre-existing
contractual provisions;

                           (ix) make or commit to make any capital expenditure
or to invest, advance, loan, pledge or donate any monies to any clients or other
persons or to make any similar commitments with respect to outstanding bids or
proposals except as disclosed on Schedule 4.1

                           (x) pay, except in the ordinary course of business
consistent with past practices, loan or advance any amount to, or sell, transfer
or lease any properties or assets to, or enter into any agreement or arrangement
with, any of its affiliates;

                           (xi) take any other action that would cause any of
the representations and warranties made herein not to remain true and correct in
all material respects;

                           (xii) make any loan, advance or capital contribution
to or investment in any person except as disclosed on Schedule 2.7

                                       23
<PAGE>

                           (xiii) make any change in any method of accounting or
accounting principle, method, estimate or practices except for any such change
required by reason of a concurrent change in RAP or write-down the value of any
inventory, revalue any asset or write-off as uncollectible any accounts
receivable except in the ordinary course of business consistent with past
practices;

                           (xiv) make, change or revoke, or permit to be made,
changed or revoked, any election or method of accounting with respect to Taxes
affecting or relating to the Company;

                           (xv) enter into, or permit to be entered into, any
closing or other agreement or settlement with respect to Taxes affecting or
relating to the Company;

                           (xvi) other than routine compliance filings, make any
filings or submit any documents or information to FERC without prior
consultation with the Buyers;

                           (xvii) Entry into any agreement or amendment,
modification, or termination of any contract, lease, or license to which the
Company or any Subsidiary is a party, or by which it or any of its assets or
properties are bound, except those agreements, amendments, modifications or
terminations affected in the ordinary course of business consistent with past
practices; or

                           (xviii) commit itself to do any of the foregoing.

                  (b) From and after the date hereof and until the Closing Date,
the Sellers shall cause the Company and each Subsidiary to:

                           (i) keep its books of account, records and files in
the ordinary course and in accordance with existing practices;

                           (ii) use reasonable efforts to continue to maintain
existing business~ relationships with affiliates, suppliers and customers to the
extent that such relationships are, at the same time, reasonably judged by the
Sellers to be economically beneficial to the Company acting reasonably;

                           (iii) use reasonable efforts to keep available the
services of its present officers;

                           (iv) comply in all material respects with all
Environmental Laws, and should any Seller or the Company receive notice that
there exists a material violation of any Environmental Law or a material
condition requiring removal or other remedial measures with respect to the real
properties owned, operated or leased by the Company or any Subsidiary or their
respective operations, the Sellers shall promptly notify the Buyers in writing
and unless such notice is being contested in good faith, shall promptly (and in
any event within the time permitted by the applicable Governmental Authority)
(A) as to areas over which the Sellers

                                       24
<PAGE>

exercise control, remove or remedy such violation or condition in accordance
with all Environmental Laws and (B) as to other areas, use their reasonable best
efforts to have such violation or condition removed or remedied in accordance
with all Environmental Laws; and

                           (v) comply in all material respects with its Licenses
and terms and conditions of service provided by FERC.

                  (c) From and after the date hereof and until the Closing Date,
the Sellers shall continue to provide services to the Company and its
Subsidiaries in the ordinary course of business consistent with past practices.

                  SECTION 4.2. Access to Properties and Records. The Sellers
shall afford, and shall cause the Company to afford, to the Buyers and the
Buyers' accountants, counsel and representatives full reasonable access during
normal business hours throughout the period prior to the Closing Date (or the
earlier termination of this Agreement pursuant to Article VII hereof) to all the
Company's and its Subsidiaries' properties, books, contracts, Commitments and
records (including, but not limited to, all environmental studies, reports and
other environmental records) and, during such period, shall furnish promptly to
the Buyers all information concerning the Company's and its Subsidiaries'
business, properties, liabilities and personnel as the Buyers may request,
provided that no investigation or receipt of information pursuant to this
Section 4.2 shall affect any representation or warranty of the Sellers or the
conditions to the obligations of the Buyers. At the Closing, all of the books of
accounts, minute books, record books and other records (including safety,
health, environmental, maintenance and engineering records and drawings) of the
Company and each Subsidiary will be delivered to the Buyers.

                  SECTION 4.3. Employee Matters. (a) The Buyers may offer to
employ Business Employees under such terms and conditions as the Buyers may
determine subject, however, to the terms and provisions of this Section 4.3 and
the Workforce Agreement. All Business Employees that accept the Buyers' offer of
employment shall become the Buyers' employees as of the Transfer Date and all
such Business Employees are hereinafter referred to as the "Transferred
Employees." The "Transfer Date" shall be the Closing Date for all Transferred
Employees except those Transferred Employees identified as "Restricted GTC
Employees" pursuant to the terms and provisions of the Workforce Agreement. The
Transfer Date for the Restricted GTC Employees shall be 180 days after the
Closing Date, or such other date as mutually agreed by the parties to this
Agreement.

                  (b) Transferred Employees shall participate in employee
benefit plans and programs of the Buyers on the same basis as other similarly
situated employees of the Buyers.

                  (c) Each Transferred Employee shall, without duplication of
benefits, be given credit for all service with the Sellers prior to the Transfer
Date, using the same methodology used by the Sellers as of immediately prior to
the Transfer Date for crediting service and determining levels of benefits (i)
under all employee benefit plans, programs and arrangements maintained by or
contributed to by the Buyers (including, without limitation, the Company) in
which the Transferred Employees become participants for purposes of eligibility
to participate, vesting and determination of level of benefits (excluding,
however, benefit accrual under any

                                       25
<PAGE>

defined benefit plans), and (ii) for purposes of calculating the amount of each
Transferred Employee's severance benefits, if any.

                  (d) The Buyers will, or will cause the Company to, (i) waive
all limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Transferred
Employees under any welfare benefit plans that such employees may be eligible to
participate in after the Transfer Date, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Transfer Date under any welfare plan maintained for
the Transferred Employees immediately prior to the Transfer Date, and (ii)
provide each Transferred Employee with credit for any co-payments and
deductibles paid prior to the Transfer Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Transfer Date.

                  (e) Effective as of the Transfer Date, Transferred Employees
shall become fully vested in their account balances in any defined contribution
or 401(k) Plan maintained by the Seller on behalf of such Transferred Employees
(the "Seller Savings Plan") and distributions of such account balances shall be
made available to such Transferred Employees as soon as practicable following
the Transfer Date, in accordance with, the provisions of the Seller Savings Plan
and applicable law. Except as provided in this Section 4.3(e), all such
distributions shall be in cash. Thereafter, the Buyers shall accept rollover
contributions from the Seller Savings Plan into a defined contribution or 40
1(k) Plan maintained by the Buyers (the "Buyers Savings Plan") of the account
balances distributed to the Transferred Employees from the Seller Savings Plan.
With respect to any Transferred Employee who elects to make a direct rollover to
the Buyers Savings Plan and whose account is subject to an outstanding loan as
of the Transfer Date, such employee's distribution shall include a promissory
note for the outstanding balance of the Loan as of the date of distribution.
With respect to any Transferred Employee whose account balance includes shares
of Seller Parent stock, such employee may elect to have such shares of stock
rolled over into the directed investments option under the Buyers Savings Plan.

                  (f) With respect to the transition of benefits coverage, any
Transferred Employee who is unable to participate in the health plans of the
Buyers as of the Transfer Date and elects continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, with respect
to the health plans of the Sellers, shall be reimbursed by the Buyers for the
period commencing on the Transfer Date and ending on the date health plan
coverage is made available to such Transferred Employee under the Buyers' health
plans, for the portion of the health care premium that would have been paid by
the Sellers had such Transferred Employee continued in the employment of the
Sellers during such period.

                  (g) The Buyers and the Sellers agree to cooperate as necessary
to effectuate the provisions of this Section 4.3, including such steps as may
reasonably be required to (i) service any outstanding Seller Savings Plan loans
under account balances of Transferred Employees between the date of such
employees commence employment with the Buyers and the date that such employees'
account balances are distributed, and (ii) ensure an orderly transition of
benefits coverage with respect to the Transferred Employees from the Employee
Plans to the Buyers' plans.

                                       26
<PAGE>

                  (h) Each Transferred Employee shall, without duplication of
benefits, be given credit for all accrued but unused paid-time-off under the
Sellers' paid-time-off program as of the Transfer Date, using the same
methodology used by the Sellers immediately prior to the Transfer Date for
crediting service and determining the amount of such paid-time-off benefits.

                  SECTION 4.4. Consents and Approvals. The Sellers and the
Buyers shall each use their reasonable best efforts to obtain, or, in the case
of the Sellers, cause the Company to obtain, all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities, and of all other
persons required in connection with the execution, delivery and performance by
them of this Agreement.

                  SECTION 4.5. Further Assurances. Upon the request of the
Buyers at any time after the Closing Date, the Sellers will promptly execute and
deliver such further instruments of assignment, transfer, conveyance,
endorsement, direction or authorization and other documents as the requesting
party or parties or its or their counsel may reasonably request in order to
perfect title of the Buyers and its successors and assigns to the Interests or
otherwise to effectuate the purposes of this Agreement.

                  SECTION 4.6. Reasonable Best Efforts. Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto will use
its reasonable best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable consistent
with applicable law to consummate and make effective in the most expeditious
manner practicable the transactions contemplated hereby. The Sellers and the
Buyers shall seek early termination of the waiting period under the Hart Scott
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act").

                  SECTION 4.7. Notice of Breach. Through the Closing Date, each
of the parties hereto shall promptly give to the other parties written notice
with particularity upon having knowledge of any matter that may constitute a
breach of any representation, warranty, agreement or covenant contained in this
Agreement. The Sellers shall have the right to supplement the Disclosure
Schedules with respect to any matter arising after the date hereof which would
have been required to be set forth on or described in such Disclosure Schedule
(a "Disclosure Schedule Update"). Any such supplemental disclosure will not be
deemed to have been disclosed as of the date of this Agreement for purposes of
determining whether the conditions set forth in Article V have been satisfied,
but such update shall be deemed to have cured any breach of representation,
warranty, covenant or agreement relating to the matters set forth in such update
for purposes of indemnification pursuant to Article VIII.

                  SECTION 4.8. Confidential Information. During the period
commencing on the date of this Agreement and ending on the second anniversary of
the Closing Date hereunder, except as required by law or stock exchange rule or
under its obligations pursuant to the Services Agreement (as defined in Section
5.9), the Sellers and their affiliates shall not, directly or indirectly,
disclose to any person or entity or use any information not in the public domain
or generally known in the industry, in any form, whether acquired prior to or
after the Closing Date, relating to the business and operations of the Company
or any Subsidiary, including but not

                                       27
<PAGE>

limited to information regarding customers, vendors, suppliers, trade secrets,
training programs, manuals or materials, technical information, contracts,
systems, procedures, mailing lists, know-how, trade names, improvements, price
lists, financial or other data (including the revenues, costs or profits
associated with any of the Company's services), business plans, code books,
invoices and other financial statements, computer programs, software systems,
databases, discs and printouts, plans (business, technical or otherwise),
customer and industry lists, correspondence, internal reports, personnel files,
sales and advertising material, telephone numbers, names, addresses or any other
compilation of information, written or unwritten, which is or was used by the
Company or any Subsidiary, regardless of whether such information was or is
owned on the date hereof by the Company or any Subsidiary (collectively,
"Protected Information"); provided, however, that if any of the Sellers or their
affiliates are presently in possession of Protected Information that (x) is
necessary to use in the ordinary course of business of Seller Parent or any
controlled affiliate of Seller Parent other than the Company or any of its
Subsidiaries (collectively, "Seller Parent and its Other Subsidiaries") and (y)
cannot reasonably be redacted, segregated or otherwise separated from
information about or owned by Seller Parent and its Other Subsidiaries which is
necessary to use in the ordinary course of business of Seller Parent and its
Other Subsidiaries (hereinafter, "Mixed Information"), then the Protected
Information which is so imbedded in such Mixed Information may be used by Seller
Parent and its Subsidiaries in the ordinary course of business; provided, that
Seller Parent and its Subsidiaries may not use any such Protected Information to
compete or seek to compete with the business or operations of the Company or any
of its Subsidiaries. Upon the request of the Company, Seller Parent and its
Other Subsidiaries shall reasonably cooperate with the Company in the
development of procedures intended to further implement the intent of this
Section 4.8.

                  SECTION 4.9. Non-Solicitation of Clients and Employees. (a)
During the period commencing on the date of this Agreement and ending on the
second anniversary of the Closing Date hereunder, neither the Sellers nor any
affiliate thereof shall for themselves or on behalf of or in conjunction with
any person, directly or indirectly, solicit, endeavor to entice away from the
Company, or otherwise directly or indirectly interfere with the relationship of
the Company with any person who, to the knowledge of the Sellers, is employed by
the Company; provided, however neither the Sellers nor any affiliates thereof
shall be precluded from soliciting or hiring any such employee (i) who initiates
discussions regarding such employment without any direct or indirect
solicitation by the Sellers; (ii) whose employment with the Company has been
terminated prior to commencement of employment with the Sellers; or (iii) who
responds to a general solicitation of employment not specifically addressed to
such employees. Notwithstanding the foregoing, the Sellers may continue to
employ each Business Employee until such time as such Business Employee becomes
a Transferred Employee.

                  (b) During the period commencing on the date of this Agreement
and ending on the second anniversary of the Closing Date hereunder, neither the
Buyers nor any affiliate thereof shall for themselves or on behalf of or in
conjunction with any person, directly or indirectly, solicit, endeavor to entice
away from the Sellers, or otherwise directly or indirectly interfere with the
relationship of the Sellers with any person who, to the knowledge of the Buyers,
is employed by the Sellers; provided, however, neither the Buyers nor any
affiliates thereof shall be precluded from soliciting or hiring any such
employee (i) who initiates discussions regarding such employment without any
direct or indirect solicitation by the Buyers;

                                       28
<PAGE>

(ii) whose employment with the Sellers has been terminated prior to commencement
of employment with the Buyers; or (iii) who responds to a general solicitation
of employment not specifically addressed to such employees. Notwithstanding the
foregoing, the Buyers shall be permitted to solicit, make offers of employment
to, engage in follow-up discussions with and hire Business Employees as
permitted under Section 4.3 and the Workforce Agreement.

                  (c) During the period commencing on the date of this Agreement
and ending on the second anniversary of the Closing Date hereunder, neither the
gas transportation pipeline companies owned by the Sellers on the date hereof
nor any controlled affiliate thereof shall for themselves or on behalf of or in
conjunction with any person, directly or indirectly, for purposes of providing
interstate transportation of natural gas and related services, solicit, endeavor
to entice away from the Company, or otherwise interfere with the relationship of
the Company with any person who, to the knowledge of the Sellers is, or was
within the then most recent 12 month period, a customer of the Company
(hereinafter, a "Company Customer"); provided, that, notwithstanding the
foregoing, the Sellers and their affiliates may solicit additional business from
any Company Customer who is then a customer of the Seller or any of its
affiliates if such additional business relates primarily to gas transportation
or related services to be provided by the Seller or such affiliate entirely
within the geographic area in which the Seller or such affiliate then conducts
business or if such solicitation would not otherwise compete with services which
are provided by the Company on the Closing Date to such Company Customer or any
proposed expansion or extension of such services to such Company Customer as
contemplated on the Closing Date.

                  (d) During the period commencing on the date of this Agreement
and ending on the second anniversary of the Closing Date hereunder, neither the
Company nor any controlled affiliate thereof shall for themselves or on behalf
of or in conjunction with any person, directly or indirectly, for purposes of
providing interstate transportation of natural gas and related services,
solicit, endeavor to entice away from the Sellers, or otherwise interfere with
the relationship of the Sellers with any person who, to the knowledge of the
Buyers is, or was within the then most recent 12 month period, a customer of the
Sellers (hereinafter, a "Seller Customer"); provided, that, notwithstanding the
foregoing. the Buyers and their affiliates may solicit additional business from
any Seller Customer who is then a customer of the Buyer or any of its affiliates
if such additional business relates primarily to gas transportation or related
services to be provided by the Buyers or such affiliate entirely within the
geographic area in which the Buyers or such affiliate then conducts business or
if such solicitation would not otherwise compete with services which are
provided by the Sellers on the Closing Date to such Seller Customer or any
proposed expansion or extension of such services to such Seller Customer as
contemplated on the Closing Date.

                  SECTION 4.10. Negotiations. From and after the date hereof,
neither the Sellers nor the Company, nor their officers, directors, employees,
affiliates, stockholders, representatives, agents, nor anyone acting on behalf
of them shall, directly or indirectly, encourage, solicit, engage in discussions
or negotiations with, or provide any information to, any person, firm, or other
entity or group (other than the Buyers or their representatives) concerning any
merger, sale of assets, purchase or sale of Interests or similar transaction
involving the Company or any division or Subsidiary thereof unless this
Agreement is terminated pursuant to

                                       29
<PAGE>

and in accordance with Article VII hereof. The Sellers shall promptly
communicate to the Buyers any inquiries or communications concerning any such
transaction which they may receive or of which they may become aware.

                  SECTION 4.11 Tax Covenants. (a) The Sellers shall prepare and
file all Federal, state and local income Tax Returns with the appropriate
Federal, state, local and foreign governmental agencies relating to the Company
for periods ending on or prior to the Closing Date and shall pay all Taxes due
with respect to such Tax Returns. The Sellers covenant that the Sellers shall be
responsible for (i) to the extent not reflected in the Final Closing Statement,
all liability for Federal, state or local income Taxes of the Company for all
periods ending on or before the Closing Date; (ii) to the extent not reflected
on the Final Closing Statement, all liability for other Taxes of the Company for
Pre-Closing Tax Periods (as defined herein); and (iii) all liability imposed
upon the Company or any Subsidiary for Taxes of any other person pursuant to
Treasury Regulation Section 1.1502-6 or any similar provision of state or local
law, but only to the extent such liability relates to periods ending on or prior
to the Closing Date. The Sellers shall cause the Company to prepare and file all
other Tax Returns related to the Company that are due on or prior to the Closing
Date and shall cause the Company to pay all Taxes due with respect to such Tax
Returns. For all other Tax Returns related to the Company for periods ending on
or prior to the Closing Date, but for which such Tax Returns are not due until
after the Closing Date, the Sellers shall (i) prepare such Tax Returns in
accordance with the terms and conditions set forth in the Services Agreement (as
defined herein), and (ii) submit such Tax Returns to the Buyers for signature,
filing and payment of Tax, all in accordance with the terms and conditions set
forth in the Services Agreement. The Sellers shall prepare and shall submit to
the Buyers for signature, filing and payment of Tax, all Straddle Tax Returns
required to be filed by the Company, provided, however, that the Sellers shall
promptly reimburse the Buyers for the portion of such Tax that relates to a
Pre-Closing Tax Period to the extent not reflected on the Final Closing
Statement. The Buyers will furnish to the Sellers all information and records
reasonably requested by the Sellers for use in preparation of any Tax Returns.
The Sellers shall allow the Buyers to review, comment upon and reasonably
approve without undue delay any Straddle Tax Return at any time during the
45-day period immediately preceding the filing of such Tax Return. The Buyers
and the Sellers agree to cause the Company to file all Tax Returns for any
Straddle Period on the basis that the relevant taxable period ended as of the
close of business on the Closing Date, unless the relevant Tax authority will
not accept a Tax Return filed on that basis. For purposes of this Agreement,
"Pre-Closing Tax Period" shall mean any taxable period ending on or before
December 31, 2001 and the portion ending on and including December 31, 2001 of
any Straddle Period. For purposes of this Agreement, "Straddle Period" shall
mean any taxable period that includes (but does not end on) December 31, 2001
and ends after the Closing Date. For purposes of this Agreement, "Straddle Tax
Return" shall mean any Tax Return with respect to Taxes other than income taxes
required to be filed by the Company covering a taxable period commencing prior
to December 31, 2001 and ending after the Closing Date. The Sellers' covenants
in respect of responsibility for Taxes as set forth above in this Section
4.11(a) are in no way intended to be duplicative of the adjustments reflected in
the Purchase Price pursuant to Section 1.4.

                  (b) The Sellers will cause any tax sharing agreement or
similar arrangement with respect to Taxes involving the Company or any
Subsidiary to be terminated effective as of the

                                       30
<PAGE>

Closing Date, to the extent any such agreement or arrangement relates to the
Company or any Subsidiary, and after the Closing Date neither the Company nor
any Subsidiary shall have any obligation under any such agreement or arrangement
for any past, present or future period.

                  (c) All excise, sales, use, transfer (including real property
transfer or gains), stamp, documentary, filing, recordation and other similar
taxes, together with any interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties, resulting directly
from the transactions contemplated by this Agreement (the "Transfer Taxes"),
shall be borne by the party on which such Transfer Taxes are imposed by
applicable law. Notwithstanding anything to the contrary in this Section 4.11,
any Tax Returns that must be filed in connection with Transfer Taxes shall be
prepared and filed when due by the party primarily or customarily responsible
under the applicable local law for filing such Tax Returns, and such party will
use reasonable commercial efforts to provide such Tax Returns to the other party
at least 10 days prior to the due date for such Tax Returns.

                  (d) The Sellers and the Buyers will use their reasonable best
efforts to agree on an allocation of the Purchase Price within 90 days of the
Closing Date and such agreed upon allocation of the Purchase Price shall be
binding on both the Buyers and the Sellers for Tax purposes.

                  SECTION 4.12. Development of Migration Plan. The parties agree
to negotiate in good faith to develop, document and implement a mutually agreed
upon migration plan that shall set forth the details and process for the
creation of the Company's computer technology systems (the "Migration Plan").
The Migration Plan shall include without limitation, the terms set forth in, and
be prepared consistent with the guidelines set forth on Schedule 4.12 and be
implemented by the Sellers on or before the expiration of the Service Period (as
defined in the Services Agreement). The costs for implementation of the
Migration Plan shall be as set forth in Section 3 of the Services Agreement.

                  SECTION 4.13. Guarantees. Buyer Parent guarantees performance
by Buyer Holdco, Buyer1 and Buyer2 of their obligations under this Agreement.
Seller Parent guarantees performance by Holdco, LLC1 and LLC2 of their
obligations under this Agreement.

                  SECTION 4.14. Bonds. The Sellers shall use their reasonable
best efforts to maintain the Bonds until they are released and replaced by the
Buyers. "Bonds" shall mean all surety bonds, letters of credit, guarantees,
cash collateral, performance bonds and bid bonds issued by the Seller and their
affiliates (other than the Company and its Subsidiaries) on behalf of the
Company or any Subsidiary. The Buyers shall use their reasonable best efforts to
replace and release the Bonds as promptly as reasonably practicable after the
Closing Date but in no event Later than 60 days from the Closing Date. The
Buyers shall indemnify, defend and hold harmless the Sellers and their
affiliates for any and all liability, loss, damage, cost and expense incurred on
account of such Bonds after the Closing Date.

                  SECTION 4.15. Insurance. The Sellers shall maintain coverage
of the Company and its Subsidiaries under the Property/Time Element Policy
listed on Schedule 2.22 until its scheduled expiration date at no cost to the
Buyers or the Company. The Sellers shall use their

                                       31
<PAGE>

reasonable best efforts to maintain the coverage of the Company and its
Subsidiaries under each of the other Policies set forth on Schedule 2.22 (except
the Directors and Officers Liability Policy) until their scheduled expiration
dates, for the proportionate premium cost of such Policies as set forth on
Schedule 2.22 for the period such Policies remain in effect. To the extent after
the Closing such Policies still cover the Company and its Subsidiaries, the
Company shall promptly notify the Sellers of any potential claim or loss under
such Policies and it shall be the Sellers' responsibility to notify the
insurance company of any claims or losses and to submit and diligently pursue
any claims or losses under such Policies with respect to the Company and its
Subsidiaries. The Buyers, the Company and its Subsidiaries agree that they shall
not notify the insurance company or submit any claim or loss to the insurance
company under such Policies. After the Closing, the Buyers, the Company and its
Subsidiaries shall be responsible for any deductible or retention amounts with
respect to claims or losses relating to the Company or its Subsidiaries under
such Policies.

                  SECTION 4.16. Audited Financial Statements. The Sellers shall
use their reasonable best efforts to provide the Audited Financial Statements
(as defined in Section 5.13) to the Buyers no later than March 15, 2002.

                  SECTION 4.17. Master Alliance Agreement. Prior to the
Closing, the Sellers and the Company shall use their reasonable best efforts to
seek amendments to each Master Alliance Agreement and each request for service,
contract, agreement or commitment relating thereto set forth on Schedule 4.17 to
provide that upon the Closing, the Buyers and the Company will have the right to
request and receive, and the other party thereto the obligation to perform, the
services provided therein in accordance with the terms of each request for
service and the Master Alliance Agreement; provided, however that the foregoing
shall not obligate the Sellers to incur any costs (other than nominal costs) to
amend the terms of their agreements with such parties unrelated to the Company
or otherwise agree to any non-ministerial concession or other arrangement with
such parties or any other person.

                  SECTION 4.18. Expansion Projects. Between the date of the
execution of this Agreement and the Closing Date, the Sellers shall cause the
Company to:

                  (a) develop the Expansion Projects diligently in accordance
with the applicable material contracts and permits and Budgets and Schedules for
the Expansion Projects, not make any material changes to the Budgets and
Schedules, and consult with the Buyers on a regular basis regarding
same(including cooperating with reasonable requests by the Buyers);

                  (b) promptly notify the Buyers of, and reasonably consult with
the Buyers on, any material event or circumstance that arises affecting any of
the Expansion Projects;

                  (c) promptly deliver to the Buyers copies of any notices or
correspondence received from, or provided to, any Governmental Authority or from
any party to any contract which is material to the Expansion Projects; and

                  (d) without the prior consent of the Buyers (not to be
unreasonably withheld or delayed), not enter into any material contract relating
to the Expansion Projects except those

                                       32
<PAGE>

contracts set forth on Schedule 4.18, and not grant any consent or waiver under,
terminate, or amend any contract material to the Expansion Projects.

                  SECTION 4.19. Covenant to Assign. (a) Prior to or concurrent
with Closing the Sellers shall, and shall cause the Sellers' affiliates to, at
the Sellers' sole option, either (i) assign to the Company all of their
respective right, title and interest in the Operational Assets (as defined
below), and secure any consents necessary for such assignment and for the use of
such Operational Assets by the Sellers and the Sellers' affiliates on behalf of
the Company or the Buyers as part of the Transition Services and the Migration
Plan (as applicable), or (i) obtain for the Buyers, on terms acceptable to the
Buyers (such acceptance not to be unreasonably withheld or delayed), comparable
replacements for any Operational Assets not assigned pursuant to (ii) above. All
such assignments shall be effectuated pursuant to instruments in form and
substance reasonably satisfactory to the Buyers, executed copies of which shall
be delivered to the Buyers at Closing. The "Operational Assets" shall mean each
item contained in Schedule 2.11(c) (other than the Headquarters Building located
in Salt Lake City identified on Schedule 2.11(c) and the lease related thereto),
and any other property, rights, and equipment (including without limitation,
furniture, computer hardware, servers, routers and PBX equipment) owned by,
leased or licensed to the Sellers or the Sellers' affiliates which can be
assigned prior to or concurrent with the Closing and which is (1) used by the
Sellers, the Sellers' affiliates, the Company or its Subsidiaries, to conduct
the business of the Company or the Subsidiaries, as currently conducted, or (2)
intended to be used in connection with the Expansion Projects, as well as any
Sellers or Sellers' affiliate agreements for the maintenance, support or service
of any of the foregoing listed in (1) or (2).

                  (b) On or before the expiration of the Services Period (as
defined in the Services Agreement), the Sellers shall, and shall cause the
Sellers' affiliates to, at the Sellers' sole option, either (i) assign to the
Company all of their respective right, title and interest in the Operational IT
Assets (as defined below), including license and contract rights, and secure any
consents necessary for such assignment and for the use by the Sellers and the
Sellers' affiliates on behalf of the Company or the Buyers as part of the
Transition Services and the Migration Plan (as applicable), or (ii) obtain for
the Buyers, on terms acceptable to the Buyers (such acceptance not to be
unreasonably withheld or delayed), comparable replacements for any Operational
IT Assets not assigned pursuant to (i) above. All such assignments shall be
effectuated pursuant to instruments in form and substance reasonably
satisfactory to the Buyers, executed copies of which shall be delivered to the
buyers on or before the expiration of the Services Period. The "Operational IT
Assets" shall mean each item contained in Schedule 2.13(a), other property,
rights and equipment that could not be assigned as of Closing, and all
intellectual property that, in each case, is owned by, leased or licensed to the
Sellers and the Sellers' affiliates (including through application service
providers) and (1) used by the Sellers, the Sellers' affiliates, the Company or
its Subsidiaries to conduct the business of the Company or the Subsidiaries, as
currently conducted, or (2) intended to be used in connection with the Expansion
Projects, as well as any Sellers or Sellers' affiliate agreements for the
maintenance, support or service of any of the foregoing listed in (1) or (2).

                  (c) All of the Operational Assets and Operational IT Assets
shall be assigned or replaced, as the case may be, at no cost to the Buyers or
the Company except for replacement

                                       33
<PAGE>

costs of hardware and software acquired pursuant to the Migration Plan, the
costs for which shall be borne by the parties as set forth in Section 3 of the
Services Agreement.

                  SECTION 4.20. Manuals. The Sellers shall deliver (and shall
cause the Sellers' affiliates to deliver) to the Company, and the Buyers copies
of, and hereby grant to the Company, its Subsidiaries, the Buyers and their
affiliates a nonexclusive, nontransferable (except in connection with the sale
or transfer of all or substantially all of the assets of the Company), royalty
free license, without right to sublicense, in perpetuity to use, copy, and
modify solely for their internal business purposes in connection with the
business of the Company, all manuals, user guides, standards and operating
procedures and similar documents used by the Company, the Subsidiaries, the
Sellers and/or the Sellers' affiliates in connection with the business of the
Company. All copies of the foregoing must reproduce and include all copyright
and other intellectual property rights notices provided by Sellers.

                  SECTION 4.21. Trademark License. Effective upon the Closing,
the Sellers and the Sellers' affiliates hereby grant to the Company, its
Subsidiaries and the Buyers a nonexclusive, nontransferable, royalty free
license to use, solely in the Company's and its Subsidiaries' businesses as
presently conducted or as contemplated to be conducted in connection with the
Expansion Projects, any and all trademarks, service marks, and trade names owned
by the Sellers and the Sellers' affiliates solely to the extent appearing on
existing inventory of the Company and its Subsidiaries (such as on marketing and
other materials), advertisements, or property (such as on vehicles, equipment,
pipelines and signs) (collectively "Sellers' Marks"), without right to
sublicense, for a period of one year from the Closing Date (the "License
Period"). The Buyers and the Company may use such existing inventory,
advertising and property during the License Period. The Buyers and the Company
shall not create new inventory, advertising and property using the Sellers'
Marks, and shall otherwise use commercially reasonable efforts to replace or
remove the Sellers' Marks on inventory, advertising and property, provided that,
all such use shall cease no later than the end of the License Period. The nature
and quality of all uses of the Sellers' Marks made by the Buyer, the Company and
its Subsidiaries shall conform to the Sellers' existing quality standards;
provided, that, the way in which the Sellers' Marks are currently used is hereby
deemed to meet such quality standards. Immediately upon termination of the
License Period, the Buyers, the Company and its Subsidiaries shall cease and
desist from all further use of the Sellers' Marks and will adopt new trademarks,
service marks, and trade names related thereto which are not confusingly similar
to Sellers' Marks. All rights not expressly granted in this Section 4.21 with
respect to the Sellers' Marks are hereby reserved. Any inadvertent failure of
the Buyers to comply with their obligations under this provision shall not be a
breach of this Agreement unless the Buyers fail to use commercially reasonable
efforts to promptly remedy such failure after receipt of written notice from the
Sellers or to remedy such failure within 30 days of such notice, in which case
the Sellers may terminate this trademark license upon Written notice to the
Buyers and the Company.

                  SECTION 4.22. Software License. Effective upon the Closing,
the Sellers, for themselves and on behalf of the Sellers' affiliates, hereby
grant to the Company, the Buyers and their affiliates, a nonexclusive, royalty
free, perpetual license, without right to sublicense, to use, copy, modify,
enhance, and upgrade all computer software (object code and source code) owned

                                       34
<PAGE>

by the Sellers and/or the Sellers' affiliates and used in connection with the
business of the Company as presently conducted or as contemplated to be
conducted in connection with the Expansion Projects (the "Licensed Software")
solely for their internal business purposes. The modifications, enhancements and
upgrades made to the Licensed Software by the Buyers or the Company after the
date of delivery pursuant to the Migration Plan shall not infringe any
intellectual property or other proprietary rights of any third party. All copies
of the Licensed Software and related documentation must reproduce all copyright
and other intellectual property rights notices included thereon. As specified in
the Migration Plan (and if not specified therein, at the Closing) the Sellers
shall deliver (or shall cause the Sellers' affiliates to deliver) copies of the
Licensed Software and alt manuals and documentation related thereto including
(at no charge to the Company or the Buyers) all modifications, enhancements and
upgrades made to or for the Licensed Software to the date of delivery.
Notwithstanding the foregoing, neither the Buyers nor the Company have the right
to transfer to a third party (other than an affiliate of the Buyers or the
Company for use in accordance with the restrictions of this Section) any rights
in the Licensed Software except in connection with the sale or transfer of all
or substantially all of the Company's assets. The Company and the Buyers shall
not be entitled to receive, and Sellers and the Sellers' affiliates shall have
no obligation to provide, any modifications, enhancements, or upgrades made to
the Licensed Software which they develop subsequent to the delivery date;
provided that, any such modifications, enhancement or upgrades made by the
Sellers or the Sellers' affiliates during the Service Period, as defined in the
Services Agreement, shall be delivered to the Buyers at the Buyers' request and
shall be paid for by the Buyers as Transition Services (as defined in the
Services Agreement). The parties hereby acknowledge and agree that, as between
Sellers and the Sellers' affiliates on the one hand, and the Company and the
Buyers on the other: (a) except as set forth in this section, all right, title
and interest, including all intellectual property rights, in the Licensed
Software are the exclusive property of the Sellers and the Sellers' affiliates;
(b) Sellers and the Sellers' affiliates shall at all times retain ownership of
the intellectual property rights in the Licensed Software; (c) the Company and
the Buyer have no rights in the Licensed Software except as expressly granted
herein; and (d) the Company and the Buyer will not take any action or permit any
action to be taken with respect to such intellectual property rights
inconsistent with the foregoing acknowledgment. The Sellers represent and
warrant that the Sellers or the Sellers' affiliates own all right, title and
interest in and to the Licensed Software or otherwise have the right to grant
the license granted herein and the Licensed Software does not infringe any third
party rights. Except as expressly provided in this Section 4.22, the Licensed
Software and associated materials are provided on an "as is" basis. The Sellers
and the Sellers' affiliates shall not be deemed to have made, and the Sellers
and the Sellers' affiliates hereby expressly disclaim, any implied guarantee or
implied warranty (whether arising under statute or otherwise in law or from a
course of dealing or usage of trade) as to the: (i) condition; (ii) design;
(iii) operation; (iv) performance; (v) reliability of the results generated or
output; (vi) non-infringement; (vii) merchantability; and (viii) fitness for a
particular purpose or intended use, of the Licensed Software and associated
materials. The Sellers and the Sellers' affiliates do not warrant that the
Licensed Software or associated materials provided are error-free or that the
Company's and the Buyer's use thereof will be uninterrupted.

                                       35
<PAGE>

                                   ARTICLE V.
                     CONDITIONS TO OBLIGATIONS OF The BUYERS

                  The obligations of the Buyers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Buyers in their sole discretion:

                  SECTION 5.1. Receipt of Documents. The Sellers shall have
delivered to the Buyers, a duly executed Bill of Sale and any other documents
the Buyers may reasonably require relating to the existence of the Sellers, the
Company, any Subsidiary and the authority of the Sellers and the Company for
this Agreement, all in form and substance reasonably satisfactory to the Buyers.

                  SECTION 5.2. Representations and Warranties of the Sellers.
All representations and warranties made by the Sellers in this Agreement shall
be true and correct in all material respects on and as of the Closing Date as if
again made by the Sellers on and as of such date, and, the Buyers shall have
received a certificate dated the Closing Date and signed by the President or any
Vice President of each of the Sellers to that effect.

                  SECTION 5.3. Performance of the Sellers' Obligations. Each of
the Sellers shall have performed in all material respects all obligations
required under this Agreement to be performed by it on or before the Closing
Date, and the Buyers shall have received a certificate dated the Closing Dale
and signed by the President or any Vice President of each of the Sellers to that
effect.

                  SECTION 5.4. Consents and Approvals. The consents, waivers,
authorizations and approvals set forth on Schedule 5.4 shall have been duly
obtained and shall be in full force and effect on the Closing Date. All
applicable waiting periods under the HSR Act shall have expired or been
terminated.

                  SECTION 5.5. No Violation of Orders. No preliminary or
permanent injunction or other order issued by any Governmental Authority, nor
any statute, rule, regulation, decree or executive order promulgated or enacted
by any Governmental Authority, which declares this Agreement invalid or
unenforceable in any respect or prevents the consummation of the transactions
contemplated hereby, shall be in effect; and no action or proceeding before any
Governmental Authority, shall have been instituted by a Governmental Authority
or other person or threatened by any Government Authority, which seeks to
prevent or delay the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this Agreement.

                  SECTION 5.6. No Material Adverse Change. During the period
from December 31, 2001 to the Closing Date, there shall not have been any
change, or any event which has had, or would reasonably be expected to have a
Material Adverse Effect, nor shall there have been (a) the loss of Firm
Transportation Customers that have generated in the aggregate more than 4% of
the Company's revenues in the last 12 months; (b) a general rate proceeding
initiated by the

                                       36
<PAGE>

Company under Section 4 or by FERC under Section 5 of the NGA; (c) physical
damage to the Company's Pipeline which significantly impairs the operation of
the Pipeline or causes a substantial decrease in the output of the Pipeline for
a period of more than two weeks; (d) aggregate losses to the Company in excess
of $25 million or bona fide claims for damages against the Company in aggregate
in excess of $50 million, in each case net of reasonably expected insurance
recoveries; and/or (e) a material adverse development in the Company's
application pending before the FERC for a certificate of public convenience and
necessity related to the 2003 Expansion Project that is reasonably expected to
delay commencement of project construction beyond December 31, 2002.

                  SECTION 5.7. Intentionally deleted.

                  SECTION 5.8. Opinion of Counsel. The Buyers shall have
received a favorable opinion, dated as of the Closing Date, from counsel to the
Sellers, in form and substance reasonably satisfactory to the Buyers and its
counsel, substantially in the form of Schedule 5.8 hereto.

                  SECTION 5.9. Transition Services and Construction Management
Agreement. Seller Parent shall have executed a Transition Services and
Construction Management Agreement (the "Services Agreement"), the form of which
is attached as Schedule 5.9 hereto.

                  SECTION 5.10. Resignations. The officers and directors of the
Company and its Subsidiaries set forth on Schedule 5.10 shall have delivered
letters of resignation from their respective positions to the Buyers in a form
reasonably acceptable to the Buyers.

                  SECTION 5.11. Seller Parent Stock Purchase. All conditions to
the obligations of the parties to the Stock Purchase Agreement dated of even
date herewith between Seller Parent and Buyer Parent to consummate the
transactions contemplated by such agreement shall have been satisfied or waived
(other than conditions set forth in Sections 6(g) and 7(e) of such agreement)
and Seller Parent shall be ready, willing and able to close such transaction.

                  SECTION 5.12. Tax Certificate. (a) The Sellers shall have
delivered to the Buyers a FIRPTA Certificate in the form of Schedule 5.12.

                  (b) The Sellers shall have delivered to the, Buyers any
clearance certificates or similar documents that may be required by any state
Tax authority in order to relieve the Buyers of any obligation to withhold any
portion of the Purchase Price.

                  SECTION 5.13. Financial Statements. (a) The Sellers shall have
delivered to the Buyers, at least three (3) business days prior to the Closing
Date, a true and correct copy of the audited balance sheet of the Company as of
December 31, 2001, together with the related statements of income, partners'
equity and cash flow for the period then ended and the notes thereto (the
"Audited Financial Statements").

                                       37
<PAGE>

                  (b) The Audited Financial Statements shall not reflect a
negative variance of more than 5% from any of the amounts shown as Total Assets,
Total Liabilities, Partner's Capital, Operating Revenue, Operating Expenses or
Net Income in the unaudited 2001 Financial Statements and shall not reflect any
other material change in any disclosures contained in any of the Notes thereto
or Contain any material Notes not contained in the unaudited 2001 Financial
Statements, from the unaudited 2001 Financial Statements.

                  SECTION 5.14. Ratings. After giving effect to the transactions
contemplated by this Agreement, there shall be No Ratings Downgrade (as such
term is defined in that certain Indenture, dated as of August 13, 2001, by and
among Kern River Funding Corporation, the Company and The Chase Manhattan Bank
(the "Notes Indenture").

                  SECTION 5.15. Workforce Agreement. The Sellers shall have
entered into a Workforce Agreement (the "Workforce Agreement"), the form of
which is attached as Schedule 5.15 hereto.

                                   ARTICLE VI
                    CONDITIONS TO OBLIGATIONS OF THE SELLERS

                  The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Sellers in their sole discretion:

                  SECTION 6.1. Representations and Warranties of the Buyers. All
representations and warranties made by the Buyers in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
again made by the Buyers on and as of such date, and, the Sellers shall have
received a certificate dated the Closing Date and signed by the President or any
Vice President of each of Buyer Holdco, Buyer 1 and Buyer 2 and Buyer Parent to
that effect.

                  SECTION 6.2. Performance of the Buyers' Obligations. Each of
the Buyers shall have performed in all material respects all obligations
required under this Agreement to be performed by it on or before the Closing
Date, and the Sellers shall have received a certificate dated the Closing Date
and signed by the President or any Vice President of each of Buyer Holdco, Buyer
1 and Buyer 2 and Buyer Parent to that effect.

                  SECTION 6.3. Consents and Approvals. All consents, waivers,
authorizations and approvals as set forth on Schedule 6.3 shall have been duly
obtained and shall be in full force and effect on the Closing Date. All
applicable waiting periods under the HSR Act shall have expired or been
terminated.

                   SECTION 6.4. No Violation of Orders. No preliminary or
permanent injunction or other order issued by any Governmental Authority, nor
any statute, rule, regulation, decree or executive order promulgated or enacted
by any Governmental Authority, that declares this Agreement invalid or
unenforceable in any respect or prevents the consummation of the transactions
contemplated hereby shall be in effect; and no action or proceeding before any
Governmental Authority, shall have been instituted by a Governmental Authority
or other person

                                       38
<PAGE>

or threatened by any Governmental Authority which seeks to prevent or delay the
consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement.

                   SECTION 6.5. Seller Parent Stock Purchase. All conditions to
the obligations of the Parties to the Stock Purchase Agreement dated of even
date herewith between Seller Parent and Buyer Parent to consummate the
transactions contemplated by such agreement shall have been satisfied or waived
(other than conditions set forth in Sections 6(g) and 7(e) of such agreement)
and Buyer Parent shall be ready, willing and able to close such transaction.

                   SECTION 6.6. Opinion of Counsel. The Sellers shall have
received a favorable opinion, dated as of the Closing Date, from counsel to the
Buyers, in form and substance reasonably satisfactory to the Sellers and its
counsel, substantially in the form of Schedule 6.6 hereto.

                  SECTION 6.7. Services Agreement. Buyer Parent shall have
executed the Services Agreement, the form of which is attached as Schedule 5.9
hereto.

                  SECTION 6.8. Ratings. After giving effect to the transactions
contemplated by this Agreement, there shall be No Ratings Downgrade (as such
term is defined in the Notes Indenture).

                  SECTION 6.9. Workforce Agreement. The Buyers shall have
entered into a Workforce Agreement, the form of which is attached as Schedule
5.15 hereto.

                   SECTION 6.10. Receipt of Documents. The Buyers shall have
delivered to the Sellers such duly executed documents as the Sellers may
reasonably require relating to the existence of the Buyers and the authority of
the Buyers, all in form and substance reasonably satisfactory to the Sellers.

                                  ARTICLE VII.
                           TERMINATION AND ABANDONMENT

                  SECTION 7.1. Methods of Termination; Upset Date. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time before the Closing:

                  (a) by the mutual written consent of the Sellers and the
Buyers;

                  (b) by the Sellers, in the event that the Buyers fail to
comply with any of their covenants or agreements contained herein, or breach
their representations and warranties contained herein, and such failure to
comply or breach, if curable, is not cured within 10 days after receipt by the
Buyers of notice specifying particularly such failure to comply or breach, and
such failure to comply or breach would result in a failure to satisfy the
conditions set forth in Section 6.1 and/or 6.2;

                                       39
<PAGE>

                  (c) by the Buyers, in the event that the Sellers fail to
comply with any of their covenants or agreements contained herein, or breach
their representations and warranties contained herein, and such failure to
comply or breach, if curable, is not cured within 10 days after receipt by the
Sellers of notice specifying particularly such failure to comply or breach, and
such failure to comply or breach would result in the failure to satisfy the
conditions set forth in Sections 5.2 and/or 5.3;

                  (d) by the Sellers or the Buyers, in the event that a
Governmental Authority shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
reasonable best efforts to lift), which permanently restrains, enjoins or
otherwise prohibits the transactions contemplated by this Agreement and which
order, decree, ruling or other action is not subject to appeal;

                  (e) by the Sellers or the Buyers at any time after June 15,
2002; or

                  (f) by the Sellers or the Buyers, in the event that the Stock
Purchase Agreement dated even date herewith between Seller Parent and Buyer
Parent has been terminated.

                   SECTION 7.2. Procedure Upon Termination. In the event of
termination and abandonment of this Agreement pursuant to Section 7.1, written
notice thereof shall forthwith be given to the other party hereto and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by the Sellers or the Buyers. If this
Agreement is terminated as provided herein, no party to this Agreement shall
have any liability or further obligation to any other party to this Agreement
except as provided in Sections 9.4 and 9.5 hereof; provided, however, that no
termination of this Agreement pursuant to this Article VII shall relieve any
party of liability for a grossly negligent or willful, and in either case,
material breach of any provision of this Agreement occurring before such
termination; and, provided, further, that (x) if this Agreement is terminated by
the Sellers or the Buyers pursuant to Section 7.1(e) and (y) at such time,
assuming that the specified consents under the Revolvers and the "progeny"
agreements described on Schedule 6.3 (the "Specified Consents") had been
obtained (i) all of the conditions to the obligations of the Sellers to
consummate the transactions contemplated by this Agreement set forth in Article
VI shall have been fulfilled or shall have been waived by the Sellers and (ii)
all of the conditions of the Buyers to consummate the transactions contemplated
by this Agreement set forth in Article V shall have been fulfilled or shall have
been waived by the Buyers or could reasonably have been expected to be waived by
the Buyers, then the Sellers shall pay to the Buyers the sum of $25,000,000.00
in immediately available funds on or prior to the second business day after the
date of delivery of notice of such termination. Notwithstanding the foregoing,
if all of the conditions to the obligations of both the Sellers and the Buyers
to consummate the transactions contemplated by this Agreement shall have been
fulfilled or shall have been waived and pursuant to Section 1.2 the Closing
would occur on June 16, 2002, then the date referred to in Section 7.1(e) shall
be deemed to be June 16, 2002.

                                       40
<PAGE>

                                  ARTICLE VIII.
                                 INDEMNIFICATION

                   SECTION 8.1. Survival. The respective representations and
warranties of the parties hereto contained herein or in any certificates or
other documents delivered pursuant to this Agreement on the Closing shall
survive the Closing until July 31, 2003; provided however, that the
representations and warranties set forth in Section 2.2 (Capitalization; Title)
shall survive indefinitely, the representations and warranties set forth in
Section 2.24 (Environmental; Health and Safety Matters) shall survive until the
fifth anniversary of the Closing Date and the representations and warranties in
Section 2.9 (Taxes) shall survive for a period equal to the applicable statute
of limitations.

                   SECTION 8.2. Indemnification Coverage.

                  (a) Notwithstanding the Closing or the delivery of the
Interests and regardless of any investigation at any time made by or on behalf
of the Buyers or of any knowledge or information that the Buyers may have the
Sellers shall indemnify and agree to defend, save and hold the Buyers, the
Company and each of their officers, directors, employees, agents and affiliates
(other than the Sellers) (collectively, the "Buyer Indemnified Parties")
harmless if any such Buyer Indemnified Party shall at any time or from time to
lime suffer any damage, judgment, fine, penalty, demand, settlement, liability,
loss, cost, Tax, expense (including reasonable attorneys', consultants' and
experts' fees), claim or cause of action (each, a "Loss") arising out of,
relating to or resulting from:

                           (i) any breach or inaccuracy in any representation by
the Sellers or the breach of any warranty by the Sellers contained in this
Agreement or any certificates or other documents delivered pursuant to this
Agreement on Closing;

                           (ii) any failure by the Sellers to perform or observe
any term, provision, covenant, or agreement on the part of the Sellers to be
performed or observed under this Agreement; and

                           (iii) Legal Proceedings set forth on Schedule 8.2.

                  (b) Notwithstanding the Closing or the delivery of the
Interests and regardless of any investigation at any time made by or on behalf
of the Sellers or of any knowledge or information that the Sellers may have, the
Buyers shall indemnify and agree to defend, save and hold the Sellers and their
officers, directors, employees, agents and affiliates (collectively, the "Seller
Indemnified Parties") harmless if any such Seller Indemnified Party shall at any
time or from time to time suffer any Loss arising out of, relating to, or
resulting from:

                           (i) any breach or inaccuracy in any representation by
the Buyers or the breach of any warranty by the Buyers contained in this
Agreement or any certificates or other documents delivered pursuant to this
Agreement on Closing; and

                                       41
<PAGE>

                           (ii) any failure by the Buyers to perform or observe
any term, provision, covenant, or agreement on the part of the Buyers to be
performed or observed under this Agreement.

                  (c) The foregoing indemnification obligations shall be subject
to the following limitations:

                           (i) the Sellers' aggregate liability under Section
8.2(a) and the Buyers' aggregate liability under Section 8.2(b) shall not, in
either case, exceed 75% of the Purchase Price (the "Cap"); provided, however,
that the Cap shall not be applicable to breaches under Section 2.2, 2.9 or 4.11
or Losses asserted against the Sellers under Section 8.2(a)(iii);

                           (ii) no indemnification for any Losses asserted
against the Buyers or the Sellers, as the case may be, under Section 8.2(a) or
Section 8.2(b) shall be required unless and until the cumulative aggregate
amount of such Losses exceeds $8,000,000 (the "Threshold"), at which point the
Sellers or the Buyers, as the case may be, shall be obligated to indemnify the
indemnified Party (as hereinafter defined) only as to the amount of such Losses
in excess of $1,000,000 (the "Deductible"), subject to the limitation in Section
8.2(c)(i); provided, however, that the Threshold and the Deductible shall not be
applicable to breaches under Sections 1.4, 2.2, 2.9 or 4.11 or Losses asserted
against the Sellers under Section 8.2(a)(iii);

                           (iii) no indemnification for any Losses asserted
against the Sellers under Section 8.2(a) for a breach or inaccuracy of any
representation under Section 2.9 or failure by The Sellers to perform any
covenant under Section 4.11 shall be required unless and until the cumulative
aggregate amount of such Losses exceeds $50,000, at which point the Sellers
shall be obligated to indemnify the Indemnified Party the full amount of such
Losses;

                           (iv) the amount of any Losses suffered by a Seller
Indemnified Party or a Buyer Indemnified Party, as the case may be, shall be
reduced by any third-party insurance which such party receives in respect of or
as a result of such Losses. If any Losses for which indemnification is provided
hereunder is subsequently reduced by any third-party insurance or other
indemnification benefit or recovery, the amount of the reduction shall be
remitted to the Indemnifying Party (as hereinafter defined);

                           (v) no claim may be asserted nor may any action be
commenced (A) against the Sellers for breach or inaccuracy of any representation
or breach of a warranty, unless written notice of such claim or action is
received by the Sellers describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or action on or
prior to the date on which the representation or warranty on which such claim or
action is based ceases to survive as set forth in Section 8.1 (it being agreed
and understood that if a claim for a breach of a representation or warranty is
timely made, the representation or warranty shall survive until the date on
which such claim is finally liquidated or otherwise resolved), or (B) against
the Buyers for breach or inaccuracy of any representation or breach of a
warranty, unless written notice of such claim or action is received by the
Buyers describing in reasonable detail the facts and circumstances with respect
to the subject matter of such claim or action on or prior to the date on which
the representation or warranty on which such claim or action is based ceases to

                                       42
<PAGE>

survive as set forth in Section 8.1 (it being agreed and understood that if a
claim for a breach of a representation or warranty is timely made, the
representation or warranty shall survive until the date on which such claim is
finally liquidated or otherwise resolved); and

                           (vi) an Indemnified Party shall not be entitled under
this Agreement to multiple recovery for the same Losses.

                  SECTION 8.3. Procedures. Any Indemnified Party shall notify
the Indemnifying Party (with reasonable specificity) promptly after it becomes
aware of facts supporting a claim or action for indemnification under this
Article VIII, and shall provide to the Indemnifying Party as soon as practicable
thereafter all information and documentation reasonably necessary to support and
verify any Losses associated with such claim or action. Subject to Section
8.2(v), the failure to so notify or provide information to the Indemnifying
Party shall not relieve the Indemnifying Party of any liability that it may have
to any indemnified Party, except to the extent that the Indemnifying Party
demonstrates that it has been materially prejudiced by the Indemnified Party's
failure to give such notice, in which case the Indemnifying Party shall be
relieved from its obligations hereunder to the extent of such material
prejudice. The Indemnifying Party shall defend, contest or otherwise protect the
Indemnified Party against any such claim or action by counsel of the
Indemnifying Party's choice at its sole cost and expense; provided, however,
that the Indemnifying Party shall not make any settlement or compromise without
the prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed) unless the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party. The Indemnified Party
shall have the right, but not the obligation, to participate at its own expense
in the defense thereof by counsel of the indemnified Party's choice and shall in
any event use its reasonable best efforts to cooperate with and assist the
Indemnifying Party. If the Indemnifying Party fails timely to defend, contest or
otherwise protect against such suit, action, investigation, claim or proceeding,
the Indemnified Party shall have the right to do so, including, without
limitation, the right to make any compromise or settlement thereof, and the
Indemnified Party shall be entitled to recover the entire cost thereof from the
Indemnifying Party, including, without limitation, reasonable attorneys' fees,
disbursements and amounts paid as the result of such suit, action,
investigation, claim or proceeding.

                  SECTION 8.4. Remedy. Absent fraud, and except for seeking
equitable relief, from and after the Closing the sole remedy of a party in
connection with (i) a breach or inaccuracy of the representations, or breach of
warranties, in this Agreement or any certificates or other documents delivered
pursuant to this Agreement on Closing, or (ii) any failure by a party to perform
or observe any term, provision, covenant, or agreement on the part of such party
to be performed or observed under this Agreement, shall, in each case, be as set
forth in this Article VIII.

                                   ARTICLE IX.
                            MISCELLANEOUS PROVISIONS

                  SECTION 9.1. Common Facilities. For purposes of this
Agreement, it is assumed that the Company's tenant-in-common interest in the
Common Facilities is an asset of the Company. It is also understood that any
representations (except in Section 2.11(d)) regarding such asset are limited to
the Sellers' knowledge.

                                       43
<PAGE>

                  SECTION 9.2. Publicity. On or prior to the Closing Date,
neither party shall, nor shall it permit its affiliates to, issue or cause the
publication of any press release or other announcement with respect to this
Agreement or the transactions contemplated hereby without the consent of the
other party hereto. Notwithstanding the foregoing, in the event any such press
release or announcement is required by law or stock exchange rule to be made by
the party proposing to issue the same, such party shall use its reasonable best
efforts to consult in good faith with the other party prior to the issuance of
any such press release or announcement.

                  SECTION 9.3. Successors and Assigns; No Third-Party
Beneficiaries. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective successors and assigns; provided,
however, that neither party shall assign or delegate any of the obligations
created under this Agreement without the prior written consent of the other
party. Except as contemplated by Article VIII, nothing in this Agreement shall
confer upon any person or entity not a party to this Agreement, or the legal
representatives of such person or entity, any rights or remedies of any nature
or kind whatsoever under or by reason of this Agreement.

                  SECTION 9.4. Investment Bankers, Financial Advisors, Brokers
and Finders. (a) The Sellers shall indemnify and agree to defend and hold the
Buyers and the Company harmless against and in respect of all claims, losses,
liabilities and expenses which may be asserted against the Buyers (or any
affiliate of the Buyers) by any broker or other person who claims to be entitled
to an investment banker's, financial advisor's, broker's, finder's or similar
fee or commission in respect of the execution of this Agreement or the
consummation of the transactions contemplated hereby, by reason of his acting at
the request of the Sellers or the Company.

                  (b) The Buyers shall indemnify and agree to save and hold the
Sellers harmless against and in respect of all claims, losses, liabilities,
fees, costs and expenses which may be asserted against them by any broker or
other person who claims to be entitled to an investment banker's, financial
advisor's, broker's, finder's or similar fee or commission in respect of the
execution of this Agreement or the consummation of the transactions contemplated
hereby, by reason of his acting at the request of the Buyers.

                  SECTION 9.5. Fees and Expenses. Except as otherwise expressly
provided in this Agreement, all legal, accounting and other fees, costs and
expenses of a party hereto incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs or expenses; provided, however that the Sellers shall be solely
responsible for all legal, accounting and other fees, costs and expenses
incurred by the Sellers and the Company. The Sellers, as a group, and the
Buyers, as a group, shall each bear one-half of the costs of HSR Act filing
fees.

                                       44
<PAGE>

                  Section 9.6. Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if delivered personally or sent by overnight courier or
sent by facsimile (with evidence of confirmation of receipt) to the parties at
the following addresses:

                   (a) If to the Buyers, to:

                   MidAmerican Energy Holdings Company,
                   KR Holding, LLC, KR Acquisition 1, LLC and KR Acquisition 2,
                   LLC
                   c/o MidAmerican Energy Holdings Company 320 South 36th St.
                   Suite 400
                   Omaha, NE 68131
                   Facsimile:  (402) 231-1658
                   Attention:  Douglas L. Anderson, Esq.

                   with a copy to:

                   Willkie Farr & Gallagher
                   787 Seventh Avenue
                   New York, New York 10019
                   Facsimile:  (212)728-8111
                   Attention:  Peter J. Hanlon, Esq.

                   LeBoeuf, Lamb, Greene & MacRae, L.L.P.
                   125 West 55th St.
                   New York, New York 10019
                   Facsimile:  (212) 424-8500
                   Attention:  William S. Lamb, Esq.

                   (b) If  to the Sellers, to:

                   The Williams Companies, Inc., Williams Gas Pipeline
                   Company, LLC, Williams Western Pipeline Company
                   LLC and Kern River Acquisition, LLC
                   One Williams Center
                   Tulsa, Oklahoma 74172
                   Facsimile:  (918) 573-5942
                   Attention:  William von Glen, Esq.

                   Skadden, Arps, Slate, Meagher & Flom LLP
                   4 Times Square
                   New York, NY 10036
                   Facsimile:  (212) 735-2000
                   Attention:  Nancy A. Lieberman, Esq.

                                       45
<PAGE>

or to such other persons or at such other addresses as shall be furnished by
either party by like notice to the other, and such notice or communication shall
be deemed to have been given or made as of the date so delivered or mailed. No
change in any of such addresses shall be effective insofar as notices under this
Section 9.6 are concerned unless such changed address is located in the United
States of America and notice of such change shall have been given to such other
party hereto as provided in this Section 9.6.

                  SECTION 9.7. Entire Agreement. This Agreement, together with
the Disclosure Schedules and the exhibits hereto, represent the entire agreement
and understanding of the parties with reference to the transactions set forth
herein and no representations or warranties have been made in connection with
this Agreement other than those expressly set forth herein or in the Disclosure
Schedules, exhibits, certificates and other documents delivered in accordance
herewith. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement and all prior drafts of
this Agreement, all of which are merged into this Agreement. No prior drafts of
this Agreement and no words or phrases from any such prior drafts shall be
admissible into evidence in any action or suit involving this Agreement.

                  SECTION 9.8. Waivers and Amendments. The Sellers, as a group,
or the Buyers, as a group, may by written notice to the other: (a) extend the
time for the performance of any of the obligations or other actions of the
other; (b) waive any inaccuracies in the representations or warranties of the
other contained in this Agreement or in any document delivered pursuant to this
Agreement by the other party; (c) waive compliance with any of the covenants of
the other contained in this Agreement; (d) waive performance of any of the
obligations of the other created under this Agreement; or (e) waive fulfillment
of any of the conditions to its own obligations under this Agreement or in any
documents delivered pursuant to this Agreement by the other party. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach, whether or riot
similar, unless such waiver specifically states that it is to be construed as a
continuing waiver. This Agreement may be amended, modified or supplemented only
by a written instrument executed by the parties hereto,

                  SECTION 9.9. Severability. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.

                  SECTION 9.10. Titles and Headings. The Article and Section
headings and any table of contents contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation of
this Agreement or of any term or provision hereof.

                  SECTION 9.11. Signatures and Counterparts. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission shall be the same as delivery of an original. At the
request of the Buyers or the Sellers, the parties will confirm facsimile
transmission by signing a duplicate original document. This Agreement may

                                       46
<PAGE>

be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall be considered one and the same
agreement.

                  SECTION 9.12. Enforcement of the Agreement. The parties hereto
agree that irreparable damage would occur if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereto, this being in addition to
any other remedy to which they are entitled at law or in equity. In no event
shall any party hereto be entitled to any punitive, incidental, indirect,
special or consequential damages resulting from or arising out of this Agreement
or the transactions contemplated hereby.

                  SECTION 9.13. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal and substantive laws of
Delaware and without regard to any conflicts of laws concepts which would apply
the substantive law of some other jurisdiction.

                  SECTION 9.14. Certain Definitions. For purposes of this
Agreement, the term:

                  (a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;

                  (b) "Expansion Projects" means the 2002 Expansion Project, the
2003 Expansion Project and the High Desert Project.

                  (c) "High Desert Project" means the design, construction and
placing in service of the additional lateral facilities to the Pipeline
described in the Application for Public Convenience and Necessity filed by the
Company with the FERC on July 18, 2001 for authority to construct, own and
operate the High Desert Lateral, Docket CP 01-405-000.

                  (d) "Material Adverse Effect" means a material adverse effect
on the assets, properties, business, operations, net income or financial
condition of the Company and its Subsidiaries taken as a whole, or the prospects
of the Company and its Subsidiaries taken as a whole as such prospects relate to
the Expansion Projects, it being understood that none of the following shall be
deemed to constitute a Material Adverse Effect: (i) any effect resulting from
entering into this Agreement or the announcement of the transactions
contemplated by this Agreement; and (ii) any effect resulting from changes in
the United States or global economy as a whole, except for such effects which
disproportionately impact the Company and its Subsidiaries.

                  (e) "1 Line System" means the nomination and scheduling system
software developed internally by the Sellers to replace the Rapids II system.

                  (f) "person" means an individual, corporation, association,
trust, limited liability company, limited partnership, limited liability
partnership, partnership, incorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934).

                                       47
<PAGE>

                  (g) "Pipeline" means the natural gas pipelines, lateral lines,
Rights of Way, easements, compressors, compressor stations and other related
machinery and equipment owned by the Company and used by the Company in the
conduct of its business.

                  (h) "2002 expansion Project" means the design, construction
and placing in service of the facilities to expand the transportation capacity
of the Pipeline as described in the Application for Certificate of Public
Convenience and Necessity filed by the Company with the FERC on November 24,
2000 and now pending in Docket CP 01-31-000 for authority to construct, own and
operate the 2002 Expansion Project facilities.

                  (i) "2003 Expansion Project" means the design, construction
and placing in service of the facilities to expand the transportation capacity
of the Pipeline as described in the Application for Certificate of Public
Convenience and Necessity filed by the Company with the FERC on August 1, 2001,
and now pending in Docket No. CPOI-422-000, for authority to construct, own and
operate the 2003 Expansion Project facilities.

                  SECTION 9.15. Consent to Jurisdiction; Exclusive Forum. With
respect to any suit, action or proceeding initiated by a party to this
Agreement arising out of, under or in connection with this Agreement or the
transactions contemplated hereby, each of the Sellers and the Buyers hereby
submit to the exclusive jurisdiction of any state or federal court sitting in
the State of Delaware and irrevocably waive, to the fullest extent permitted by
law, any objection that they may now have or hereafter obtain to the laying of
venue in any such court in any such suit, action or proceeding.

                                       48
<PAGE>

                                      MIDAMERICAN ENERGY HOLDINGS COMPANY

                                      By:  Signature Illegible
                                      Title:

                                      KR HOLDINGS, LLC

                                      By:  Signature Illegible
                                      Title:

                                      KR ACQUISITION 1, LLC

                                      By:  Signature Illegible
                                      Title:

                                      KR ACQUISITION 2, LLC

                                      By:  Signature Illegible
                                      Title:

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