Document:

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                                                                   EXHIBIT 10.04

                                                                         ANNEX B

                           EMPLOYEE BENEFITS AGREEMENT

         THIS AGREEMENT is made by and between KANEB SERVICES, INC., a Delaware
corporation ("KSI") and KANEB SERVICES LLC, a Delaware limited liability
company ("KSL").

                                   WITNESSETH

         WHEREAS, KSL will distribute to its stockholders one KSL Common Share
for each three shares of KSI Common Stock held by KSI stockholders on the record
date for the distribution (the "Distribution");

         WHEREAS, upon the Distribution, the Kaneb Services, Inc. Deferred Stock
Unit Plan account of each Kaneb Services, Inc. Deferred Stock Unit Plan
participant shall be deemed to be credited with one non-monetary unit equal to
one KSL Common Share for every three non-monetary units equal to three shares of
KSI Common Stock that is deemed to be credited to his Kaneb Services, Inc.
Deferred Stock Unit Plan account as of the record date for the Distribution;

         WHEREAS, upon the Distribution, the Kaneb Services, Inc. Non-Employee
Directors Deferred Stock Unit Plan account of each Kaneb Services, Inc.
Non-Employee Directors Deferred Stock Unit Plan participant shall be deemed to
be credited with one non-monetary unit equal to one KSL Common Share for every
three non-monetary units equal to three shares of KSI Common Stock that is
deemed to be credited to his Kaneb Services, Inc. Non-Employee Directors
Deferred Stock Unit Plan account as of the record date for the Distribution;

         WHEREAS, upon the Distribution, the Kaneb Services, Inc. 1996
Supplemental Deferred Compensation Plan account of each Kaneb Services, Inc.
1996 Supplemental Deferred Compensation Plan participant shall be deemed to be
credited with one non-monetary unit equal to one KSL Common Share for every
three non-monetary units equal to three shares of KSI Common Stock that is
deemed to be credited to his Kaneb Services, Inc. 1996 Supplemental Deferred
Compensation Plan account as of the record date for the Distribution; and

         WHEREAS, after the Distribution and through the date the participant is
paid his entire benefit due under the applicable plan, the account of each
participant in the Kaneb Services, Inc. 1996 Supplemental Deferred Compensation
Plan, the Kaneb Services, Inc. Deferred Stock Unit Plan and the Kaneb Services,
Inc. Non-Employee Directors Deferred Stock Unit Plan shall also be deemed to be
credited with additional non-monetary units equal to the number of KSL Common
Shares that could be purchased on the distribution date(s) with the cash
distribution(s) KSL would have paid to the participant had he been the owner of
such number of KSL Common Shares equal to the number of non-monetary units equal
to the number of KSL Common Shares deemed credited to his account under the plan
as of the record date(s) for the cash distribution(s);

         NOW, THEREFORE, in consideration of the promises contained herein, and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the parties hereto agree as follows:

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                                    ARTICLE I

                                   DEFINITIONS

         Whenever used in this Agreement, the following terms shall have the
meanings indicated below or in the recitals above, unless a different meaning is
plainly required by the context. The singular shall include the plural, unless
the context clearly indicates otherwise. Capitalized terms that are used in this
Agreement which are not listed in the recitals or in this Article I shall have
the respective meanings assigned to them in the Distribution Agreement.

         1.1 "Code" shall mean the Internal Revenue Code of 1986, as amended.

         1.2 "Distribution Agreement" shall mean the Distribution Agreement by
and among Kaneb Services, Inc., a Delaware corporation and Kaneb Services
L.L.C., a Delaware limited liability company, and the Tax Subsidiaries (as
defined therein).

         1.3 "Fair Market Value" shall mean the average of the high and low
sales prices of a share of KSI Common Stock or a KSL Common share, as
applicable, as quoted on the New York Stock Exchange on the relevant date.

         1.4 "KSI Common Stock" shall mean KSI's common stock, no par value.

         1.5 "KSI Company" shall mean any Subsidiary of KSI other than KSL or a
KSL Company.

         1.6 "KSI Deferred Compensation Plans" shall mean the Kaneb Services,
Inc. Deferred Stock Unit Plan, the Kaneb Services, Inc. Non-Employee Directors
Deferred Stock Unit Plan and the Kaneb Services, Inc. 1996 Supplemental Deferred
Compensation Plan.

         1.7 "KSI Employee Benefit Plan" shall mean any employee benefit plan
(within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended) or compensation arrangement that is now or was
previously maintained, sponsored or contributed to by KSI or a KSI Company,
including (but not limited to) the KSI Deferred Compensation Plans, the Kaneb
Services, Inc. Health Benefits Plan, the Kaneb Services, Inc. Group Life &
Accidental Death & Dismemberment Insurance Plan, the Kaneb Services, Inc. Group
Supplemental Death & Dismemberment Plan, the Kaneb Services, Inc. Group Long
Term Disability Benefit Plan, the Kaneb Services, Inc. Flexible Spending Account
Plan, the Kaneb Services, Inc. Non-Employee Directors Deferred Stock Unit Plan,
the Kaneb Services, Inc. Severance Benefits Plan and the KSI Savings Plan.

         1.8 "KSI Option Exercise Price Adjustment Factor" shall mean, with
respect to a given KSI Option, a fraction, the numerator of which is the
original exercise price for the KSI Option and the denominator of which is the
Fair Market Value of a share of KSI Common Stock on the last trading day prior
to the ex-distribution date.

         1.9 "KSI Option" shall mean an option to purchase shares of KSI Common
Stock that was granted by KSI prior to, and is outstanding as of, the record
date for the Distribution.

         1.10 "KSI Savings Plan" shall mean the Kaneb Services, Inc. Savings
Investment Plan.

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         1.11 "KSL Common Share" shall mean a Common Share of KSL, as defined in
the KSL Limited Liability Company Agreement.

         1.12 "KSL Company" shall mean any Subsidiary of KSL.

         1.13 "KSL Employee" shall mean a common law employee of KSL or a KSL
Company.

         1.14 "KSL Employee Benefit Plan" shall mean any employee benefit plan
(within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended) or compensation arrangement, other than a KSI Employee
Benefit Plan, that is now, is hereafter or was previously maintained, sponsored
or contributed to by KSL or a KSL Company, including (but not limited to) the
KSL Savings Plan, the KSL Health Plan, the Kaneb Services LLC 2001 Incentive
Plan and any welfare benefit plan established by KSL or a KSL Company pursuant
to Article IV of this Agreement.

         1.15 "KSL Former Employee" shall mean was previously, but is not as of
the Distribution Date, a KSL Employee.

         1.16 "KSL Health Plan" shall have the meaning set forth in Article IV.

         1.17 "KSL Savings Plan" shall have the meaning set forth in Article V.

         1.18 "KSL Option" shall mean an option to purchase KSL Common Shares.

                                   ARTICLE II

                    NONQUALIFIED DEFERRED COMPENSATION PLANS

         2.1 STATEMENT OF AMOUNTS CREDITED. After the Distribution, KSI shall
furnish to KSL a statement that indicates the number of non-monetary units equal
to one share of KSI Common Stock deemed to be credited to the accounts of each
participant and former participant under the KSI Deferred Compensation Plans as
a result of the Distribution. From time to time after the Distribution, KSI
shall furnish KSL an updated statement that indicates the number of non-monetary
units equal to those number of Common Shares deemed credited to the accounts of
each participant and former participant under the KSI Deferred Compensation
Plans.

         2.2 NOTIFICATION OF DISTRIBUTABLE EVENTS. KSI shall notify KSL when the
benefits of the participants and former participants who were employed by KSI or
any KSI Company become distributable under either of the KSI Deferred
Compensation Plans.

         2.3 ISSUANCE OF KSL COMMON SHARES. As soon as practicable after a
notification has been delivered to KSL pursuant to Section 2.2 above, KSL shall
cause to be issued directly to the participant or former participant that number
of KSL Common Shares equal to those number of non-monetary units deemed credited
to his or her account under the applicable KSI Deferred Compensation Plan as a
result of the Distribution, as adjusted under the antidilution provisions of the
applicable KSI Deferred Compensation Plan and as adjusted by cash distributions
on KSL Common Shares.

         2.4 DEDUCTIONS. The parties agree that neither KSL nor any KSL Company
is entitled to deduct any amounts paid under or with respect to either of the
KSI Deferred Compensation Plans, other than amounts paid under or with respect
to the portion of the applicable KSI Deferred Compensation Plan that is in
consideration of services performed for KSL or a KSL Company. KSL hereby agrees
that it shall not attempt

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to claim federal income taxation deductions with respect to KSL Common Shares
that are issued by KSL pursuant to this Agreement to current or former employees
of KSI or a KSI Company who are participants or former participants under either
of the KSI Deferred Compensation Plans. The parties agree that pursuant to
section 83(h) of the Code, KSI or a KSI Company, as appropriate, shall be
entitled to claim federal income taxation deductions with respect to KSL Common
Shares that are issued to current or former employees of KSI or a KSI Company
who are participants or former participants under either of the KSI Deferred
Compensation Plans pursuant to this Agreement.

                                   ARTICLE III

                        OPTIONS TO PURCHASE COMMON SHARES

         3.1 GRANT OF KSL OPTIONS. (a) Upon the Distribution, KSL will grant KSL
Options under the Kaneb Services L.L.C. 2001 Incentive Plan, the terms of which
plan shall be substantially similar to those set forth in Exhibit A hereto, to
persons who hold KSI Options. Except as specified in this Agreement, each KSL
Option granted to a KSI Option holder in compliance with this Agreement shall
contain provisions that are substantially similar to the provisions of the
holder's KSI Option.

         (b) The exercise price for each KSI Option will be reduced in
accordance with the following formula. The per share reduced exercise price
shall be an amount equal to the result of (1) the Fair Market Value of a share
of KSI Common Stock on the ex-distribution date multiplied by (2) the KSI Option
Exercise Price Adjustment Factor. The number of shares subject to the KSI Option
will not be changed as a result of the Distribution.

         (c) The per share exercise price applicable to a given KSL Option
granted as required under this Agreement shall be equal to (1) the KSI Option
Exercise Price Adjustment Factor applicable to the holder's KSI Option
multiplied by (2) the Fair Market Value of a KSL Common Share on the
ex-distribution date. The number of KSL Common Shares subject to a KSL Option
shall be such number as is necessary to produce an intrinsic value (determined
as of the ex-distribution date) that, when added to the intrinsic value of the
adjusted KSI Option (determined as of the ex-distribution date), equals the
pre-distribution intrinsic value of the KSI Option (determined as of the last
trading date prior to the ex-distribution date). However, no KSL Option shall
provide a person a right to purchase a fraction of one KSL Common Share. For
purposes of determining the intrinsic values, the fair market values of shares
of KSI Common Stock and KSL Common Shares will be based upon the average of the
high and low sales prices of the shares on the relevant date.

         (d) 30 days prior to the record date for the Distribution all KSI
Options, other than KSI Options held by persons employed in KSI's Dallas, Texas
headquarters, shall become fully exercisable.

         (e) The KSL Options that KSL grants pursuant to this Agreement to
persons who are not expected to perform services for KSL or a KSL Company
immediately after the Distribution shall provide that such KSL Options are fully
exercisable at all times prior to their expirations and shall expire after 180
days following the ex-distribution date. The KSL Options that KSL grants
pursuant to this Agreement to KSL Employees or KSL Former Employees shall be
exercisable under substantially the same terms as were applicable to such
persons' KSI Options and shall expire upon the expiration of the general terms
specified in their KSI Options (determined prior to the adjustments to the terms
made pursuant to the following paragraph).

         The KSI Options that were granted to a person who will be a KSL
Employee or a director of KSL immediately after the ex-distribution date but not
an employee or a director of KSI shall expire 180 days after the earlier of the
Distribution Date or the date on which he is no longer a KSL Employee or a KSL
director. Persons who will be KSL Employees immediately after the Distribution
will not be deemed to have incurred

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terminations of employment for purposes of their KSI Options as a result of the
Distribution to the extent that they continue to be employed by KSL or any KSL
Company following the Distribution.

         3.2 ISSUANCE OF KSL COMMON SHARES. KSL shall issue KSL Common Shares
upon the exercise of any KSL Option granted pursuant to this Agreement.

         3.3 DEDUCTIONS. The parties agree that neither KSL nor any KSL Company
is entitled to deduct any amounts with respect to the KSL Options granted
pursuant to the Distribution Agreement except to the extent that the KSI Option
that is substituted in part by such KSL Option was granted in consideration for
services performed for KSL or a KSL Company by the optionee. The parties agree
that pursuant to section 83(h) of the Code, the employer(s) for whom services
were performed in consideration for the granting of a KSI Option that is
substituted in part by a KSL Option shall be entitled to claim a federal income
taxation deduction with respect to the exercise of the KSL Option.

                                   ARTICLE IV

                   ESTABLISHMENT OF KSL WELFARE BENEFIT PLANS

         4.1 ADOPTION OF THE KSL HEALTH PLAN. Effective no later than the
Distribution Date, KSL shall adopt or cause its Subsidiaries to adopt a group
health plan for the benefit of KSL Employees and their dependents (the "KSL
Health Plan") which is substantially similar in all respects to the Kaneb
Services, Inc. Health Benefits Plan. Effective as of the Distribution Date or
the earlier effective date of the KSL Health Plan, KSL shall permit each KSL
Employee who participated in the Kaneb Services, Inc. Health Benefits Plan
immediately prior thereto and his eligible dependents to be covered under the
KSL Health Plan. The terms of the KSL Health Plan shall credit to each KSL
Employee, for the 2001 calendar year, with any duplicate deductible payments
incurred during the 2001 calendar year under the Kaneb Services, Inc. Health
Benefits Plan and shall waive any preexisting condition restrictions that were
waived or satisfied under the Kaneb Services, Inc. Health Benefits Plan.

         4.2 ADOPTION OF LIFE INSURANCE, ACCIDENTAL DEATH AND DISMEMBERMENT
INSURANCE AND LONG-TERM DISABILITY BENEFIT PLANS. Effective no later than the
Distribution Date, KSL shall adopt or cause its Subsidiaries to adopt for the
benefit of KSL Employees life insurance, accidental death and dismemberment and
long-term disability programs that are substantially similar to the Kaneb
Services, Inc. Group Life & Accidental Death & Dismemberment Insurance Plan, the
Kaneb Services, Inc. Group Supplemental Death & Dismemberment Plan and the Kaneb
Services, Inc. Long Term Disability Benefit Plan.

         4.3 ADOPTION OF MEDICAL EXPENSE REIMBURSEMENT PLAN. Effective no later
than the Distribution date, KSL shall adopt or cause its Subsidiaries to adopt
for the benefit of KSL Employees a medical expense reimbursement plan that
satisfies the requirements of section 125 of the Code and is substantially
similar to the Kaneb Services, Inc. Flexible Spending Account Plan.

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                                    ARTICLE V

                                KSL SAVINGS PLAN

         Effective as of June 1, 2001, KSL shall adopt the Kaneb Services LLC
401(k) Savings Plan, the terms of which shall be substantially similar to those
set forth in Exhibit B hereto (the "KSL Savings Plan"). To the extent required
by KSI, KSL shall take such actions as are necessary to cause the trustee of the
KSL Savings Plan to accept a transfer of assets from the trust funding the KSI
Savings Plan that are attributable to the account balances of KSL Employees and
KSL Former Employees. KSI and KSL shall cooperate to ensure that any such
transfer satisfies the requirements of section 414(1) of the Code dealing with
trust-to-trust asset transfers and section 411(d)(6) of the Code dealing with
the preservation of optional forms of payment. The parties agree that no KSL
Common Shares and no shares of KSI Common Stock shall be transferred from the
trust funding the KSI Savings Plan to the trust funding the KSL Savings Plan.

                                   ARTICLE VI

           TERMINATION OF PARTICIPATION IN KSI EMPLOYEE BENEFIT PLANS

         6.1 TERMINATION OF PARTICIPATION IN THE KSI EMPLOYEE BENEFIT PLANS
OTHER THAN THE KSI DEFERRED COMPENSATION PLANS. Effective no later than the
Distribution Date, KSL shall take such actions as are necessary to cause KSL and
its Subsidiaries to terminate KSL's and its Subsidiaries' participation in all
KSI Employee Benefit Plans other than the KSI Deferred Compensation Plans and
the KSI Savings Plan.

         6.2 TERMINATION OF PARTICIPATION IN THE KSI DEFERRED COMPENSATION
PLANS. Effective immediately upon the expiration of the compensation deferral
election period during which the Distribution occurs, KSL shall take such
actions as are necessary to cause KSL and its Subsidiaries to terminate KSL's
and its Subsidiaries' participation in the KSI Deferred Compensation Plans.

         6.3 TERMINATION OF PARTICIPATION IN THE KSI 401(k) PLAN. Effective as
of June 1, 2001, KSL shall take such actions as are necessary to cause KSL and
its Subsidiaries to terminate KSL's and its Subsidiaries' participation in the
KSI Savings Plan.

                                   ARTICLE VII

                          EMPLOYEE BENEFIT LIABILITIES

         KSL and its Subsidiaries shall be exclusively liable for any Liability
relating to any KSL Employee Benefit Plan. Further, KSL and its Subsidiaries
shall be exclusively liable for any Liability relating to any KSI Employee
Benefit Plan to the extent that the Liability relates to a KSL Employee, a KSL
Former Employee or a dependent or beneficiary of a KSL Employee or a KSL Former
Employee.

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                                  ARTICLE VIII

                                  MISCELLANEOUS

         8.1 NOTIFICATION OF ISSUANCE OF KSL COMMON SHARES. Promptly after each
issuance of KSL Common Shares pursuant to this Agreement, KSL shall furnish KSI
a notice that lists the date of the issuance, the recipient and the number of
KSL Common Shares issued to each recipient.

         8.2 INCORPORATION OF CERTAIN DISTRIBUTION AGREEMENT PROVISIONS. The
provisions of Article VII of the Distribution Agreement are incorporated by
reference herein and such provisions shall be deemed to have been separately
stated in this Agreement; provided, however, that there shall be no requirement
that copies of notifications be sent to counsel for any of the parties.

         8.3 AMENDMENTS TO AND ADOPTION OF KSL EMPLOYEE BENEFIT PLANS. Nothing
in this Agreement shall be construed to prevent KSL or its Subsidiaries from
adopting employee benefit plans after the Distribution Date that are not
described in this Agreement. Further, nothing in this Agreement shall be
construed to prevent KSL or its Subsidiaries from amending any employee benefit
plan described in this Agreement that is sponsored by KSL or any of its
Subsidiaries after the Distribution Date if the amendment is effective on or
after January 1, 2001 or is required by applicable law.

         8.4 NOTIFICATIONS TO THE TRUSTEE OF THE TRUST FUNDING THE KSI SAVINGS
PLAN. For so long as KSI Savings Plan assets are invested in KSL Common Shares,
whenever KSL files preliminary or final proxy solicitation materials with the
Securities and Exchange Commission, KSL shall cause a copy of such materials to
be simultaneously sent to the trustee of the trust funding the KSI Savings Plan
or the trustee's designee. Further, if KSI Plan assets are then invested in KSL
Common Shares, upon the commencement of a tender offer for KSL Common Shares,
KSL shall notify each KSI Savings Plan participant, former participant or
beneficiary of the tender offer and utilize its best efforts to timely
distribute or cause to be distributed to each KSI Savings Plan participant,
former participant or beneficiary the same information that is distributed to
other holders of KSL Common Shares in connection with the tender offer, and,
after consulting with the trustee of the trust funding the KSI Savings Plan,
shall provide and pay for a means by which each such participant, former
participant or beneficiary may direct the trustee of the trust funding the KSL
Savings Plan whether or not to tender the KSL Common Shares credited to his KSL
Savings Plan account.

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the _______ day of _______________________, 2001.

                              KANEB SERVICES, INC.

                              By:
                                 ----------------------------------------------
                              Title:
                                    -------------------------------------------

                              KANEB SERVICES LLC

                              By:
                                 ----------------------------------------------
                              Title:
                                    -------------------------------------------

                                      -8-<PAGE>   1
                                                                    EXHIBIT 10.F

                     FIFTEENTH AMENDMENT TO THE PENSION PLAN
                    FOR EMPLOYEES OF THE COASTAL CORPORATION

         THIS AMENDMENT is made the 29th day of September, 2000, by The Coastal
Corporation, a Delaware corporation (hereinafter referred to as the "Company").

                                   WITNESSETH:

         WHEREAS, the Pension Plan for Employees of The Coastal Corporation was
restated as of January 1, 1989, and has since been amended (such plan, as
restated and amended, is hereinafter referred to as the "Plan");

         WHEREAS, the Company wishes to amend the definition of "leased
employee" to clarify that the employee will receive credit for purposes of
vesting for the twelve-month period of service prior to achieving the status of
"leased employee;" and

         WHEREAS, the Company wishes to amend the Plan to provide for an offset
against benefits in the event of a criminal conviction under ERISA as permitted
by statute; and

         WHEREAS, the Company wishes to amend the Plan to clarify the provisions
with respect to the payment of benefits under qualified domestic relations
orders; and

         WHEREAS, the Company wishes to amend the Plan to increase the benefit
to be paid for years of service after 1998 in the Seventh Supplement - Coal
Supplement; and

         WHEREAS, the Company wishes to amend the Plan to add an Eleventh
Supplement, "Great Lakes Early Retirement Supplement," to provide for an early
retirement incentive program for individuals who were employees of Great Lakes
Gas Transmission Company on March 31, 2000;

         NOW, THEREFORE, the Plan is amended as follows:

1.       The first paragraph of Subsection 1.10(g) is amended to read in its
         entirety as follows:

                  "(g) A person who is not an employee of the Company, a
         Subsidiary or a Related Employer and who performs services for the
         Company, Subsidiary or Related Employer pursuant to an agreement
         between the Company, a Subsidiary or a Related Employer and a leasing
         organization shall be considered a "leased employee" after such person
         performs such services for a twelve-month period and the services are
         performed under the primary direction or control of the Company,
         Subsidiary or a Related Employer. A person who is considered a leased
         employee of the Company, a Subsidiary or a Related Employer shall not
         be considered an Employee for purposes of the Plan. If a leased
         employee subsequently becomes an Employee and thereafter participates
         in the Plan, he shall receive credit for vesting under Section 5.4 for
         the twelve-month period prior to his becoming a leased employee and his
         period of employment as a leased employee, except to the extent that
         Section 414(n)(5) of the Code was satisfied with respect to such
         Employee while he was a leased employee."

2.       The first sentence of Section 5.7(g) is amended to read in its entirety
         as follows:

<PAGE>   2

                  "Any Participant whose payments of Retirement Income are
         suspended pursuant to paragraph (d) of this Section, shall be notified
         (by personal delivery or first class mail) during the first calendar
         month in which payments are withheld, that his Retirement Income is
         suspended."

3.       Section 12.7 is amended to read in its entirety as follows:

         12.7     Interest Nontransferable.

                  "(a) Except as provided in this Section, no interest of any
         person or entity in, or right to receive distributions from, the Trust
         Fund shall be subject in any manner to sale, transfer, assignment,
         pledge, attachment, garnishment, or other alienation or encumbrance of
         any kind; nor may such interest or right to receive distributions be
         taken, either voluntarily or involuntarily, for the satisfaction of the
         debts of, or other obligations or claims against, such person or
         entity, including claims for alimony, support, separate maintenance and
         claims in bankruptcy proceedings.

                  (b) Notwithstanding the limitations of the provisions of
         subsection 12.7(a), a Participant's benefit under this Plan may be
         offset for an amount that the Participant is ordered or required to pay
         this Plan if the order or requirement to pay arises (i) under a
         judgment of conviction of crime involving this Plan, (ii) under a civil
         judgment (including a consent order or decree) entered by a court in an
         action brought in connection with a violation (or alleged violation) of
         the ERISA fiduciary responsibility provisions, or (iii) pursuant to a
         settlement agreement between the Internal Revenue Service or the
         Pension Benefit Guaranty Corporation and the Participant in connection
         with a violation (or alleged violation) of the ERISA fiduciary
         responsibility provisions by a fiduciary or other person. The judgment,
         order, decree or settlement agreement must expressly provide for the
         offset of all or part of the amount ordered or required to be paid to
         this Plan against the Participant's benefit.

                  (c) Notwithstanding the preceding provisions of this Section,
         all or any part of the Accrued Benefit of a Participant shall be
         subject to and payable in accordance with the applicable requirements
         of any Qualified Domestic Relations Order, as that term is defined in
         Section 414(p) of the Code, and the Administrator shall direct the
         Trustee to provide for payment in accordance with such Order and
         Section and any regulations promulgated under such Section. All such
         payments pursuant to Qualified Domestic Relations Orders shall be
         subject to reasonable rules and regulations promulgated by the
         Administrator; provided that such rules and regulations are consistent
         with Section 414(p) of the Code. If prior to the commencement of
         payment to a Participant of his Retirement Income, any amount of his
         Accrued Benefit is paid to an alternate payee or payees pursuant to a
         Qualified Domestic Relations Order, the amount of his Accrued Benefit
         shall be reduced by the Actuarial Equivalent of any such payment.

                  Notwithstanding any Plan provision to the contrary, an
         alternate payee pursuant to a Qualified Domestic Relations Order shall
         not receive any portion of an increase in benefits due to early
         retirement to which the Participant is or may be entitled. Any benefit
         received by such an alternate payee shall be Actuarial Equivalent of
         the portion of the benefit to which such alternate payee is entitled at
         Normal Retirement Age of the Participant reduced on an actuarial basis
         to reflect the payment at an earlier date should such alternate payee
         elect to receive benefits before the Normal Retirement Date of the
         Participant.

                  For purposes of this Section, if the Participant's benefit is
         to be paid in the form of a survivor annuity under the Plan, then (i)
         the Spouse of such Participant must provide a consent in writing,
         witnessed by a notary public or Plan representative), unless the
         Participant establishes to the satisfaction of the Administrator that
         such consent may not be obtained because there is no Spouse, the Spouse
         cannot be located, or because of such other

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<PAGE>   3

         circumstances as the Secretary of the Treasury may by regulations
         prescribe, (ii) such Spouse has previously provided a consent pursuant
         to Section 6.2(d), (iii) such Spouse has been ordered or required in
         such judgment, order, decree, or settlement to pay an amount to the
         Plan in connection with the ERISA fiduciary responsibility violation,
         or (iv) such Spouse retains the right to receive the survivor annuity
         in such judgment, order, decree, or settlement.

                  For purposes of this Section, the survivor annuity payable
         pursuant to Section 6.1(a) shall be determined as if (i) the
         Participant terminated employment on the date of the offset, (ii) there
         was no offset, (iii) this Plan permitted commencement of benefits only
         on or after Normal Retirement Age, (iv) this Plan provided only the
         survivor annuity described in Section 6.1(a), and the amount of the
         Preretirement Survivor Annuity described in Section 5.5(g) is equal to
         the amount of the survivor annuity payable under Section 6.1(a).

                  The provisions of this subsection are effective for judgments,
         orders, and decrees issued and settlement agreements entered into, on
         or after December 31, 1999."

4.       Effective January 1, 1999, Section 3.1(a)(iii) of the Seventh
         Supplement - Coal Supplement is revised and a new Section 3.1(a)(iv) is
         added to read as follows in their entirety:

                  "(iii) thirty-five dollars multiplied by the Participant's
         Years of Service during 1990 through 1998.

                  (iv) forty-five dollars multiplied by the Participant's Years
         of Service after 1998."

5.       A new Eleventh Supplement, is added to read in its entirety as follows:

                              "ELEVENTH SUPPLEMENT

            GREAT LAKES EARLY RETIREMENT INCENTIVE PROGRAM SUPPLEMENT

                                    ARTICLE I

                                  INTRODUCTION

                  This Supplement is referred to as the "Great Lakes ERIP
         Supplement." This Supplement includes provisions applicable only to
         Employees (as defined in this Supplement) of Great Lakes Gas
         Transmission Company.

                  The purpose of this Supplement is to provide an early
         retirement incentive program within the Plan for Participants to whom
         this Supplement applies.

                  The provisions of the Great Lakes ERIP Supplement apply in
         lieu of inconsistent or contrary provisions contained in the Plan
         (excluding this Supplement) with respect to persons to whom this
         Supplement applies.

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<PAGE>   4

                                   ARTICLE II

                                   DEFINITIONS

          Terms used in this Supplement which are defined in the Plan have the
same meaning in this Supplement unless such terms are defined differently for
purposes of this Supplement. The definition of terms defined in this Supplement
apply only to this Supplement and not to other parts of the Plan.

          2.1 "Early Retirement Incentive Program" is the modified retirement
benefits set forth in this Supplement for Employees eligible for such program
and who elect to participate.

          2.2 "Employee," for purposes of this Supplement only, has the meaning
ascribed to such term in the Plan, except that the individual must be employed
by Great Lakes on March 31, 2000.

          2.3 "Great Lakes" means Great Lakes Gas Transmission Company, a
Delaware corporation.

          2.4 "Participant," for purposes of this Supplement only, means an
Employee, as defined in this Supplement, who meets the eligibility requirements
of Section 3.1 of this Supplement.

                                   ARTICLE III

                       EARLY RETIREMENT INCENTIVE PROGRAM

         3.1 Eligibility. To be eligible to participate in the Early Retirement
Incentive Program, an Employee must have been an Employee through March 31,
2000; must have reached at least fifty-five (55) years of age on or before March
31, 2000; and must have five (5) or more Years of Service on or before March 31,
2000, for purposes of determining vesting in the Plan. To participate in the
Early Retirement Incentive Program, an Employee must make an irrevocable,
written election to retire as of March 31, 2000 and to commence receipt of
Retirement Income as of April 1, 2000. The election must be made by December 31,
1999. An Employee who has retired previous to December 31, 1999 and commenced
receiving Retirement Income under the Plan, but who has been re-employed as an
Employee on or before December 31, 1999, is eligible for the Early Retirement
Incentive Program.

                                       4
<PAGE>   5

         3.2 Retirement Benefits. The Retirement Income of each Employee
eligible for the Early Retirement Incentive Program shall be determined pursuant
to provisions of the Plan applicable to such Employee, as such provisions are
modified by the provisions of this Supplement to provide the benefit determined
pursuant to subsection (a) or subsection (b), whichever is greater, plus the
benefit determined pursuant to subsection (c) of this Section:

                  (a) The Retirement Income determined by (i) increasing the
         Years of Service of the Employee by five years and (ii) increasing the
         age of the Employee by the lesser of (A) five years or (B) the number
         of years required for the Employee to attain age sixty-five (65). Note
         that the Basic Compensation, Final Average Earnings and other
         Compensation used to calculate the Retirement Income shall not be
         altered or projected due to the age and Years of Service additions of
         this subsection (a). In addition, the optional forms of benefit which
         may be selected by the Employee shall be determined by the actual age
         of the Employee at April 1, 2000, without the addition of up to five
         years, as described in this subsection.

                  (b) The Retirement Income determined without regard to the
         reduction for commencement of payments prior to the Normal Retirement
         date of the Employee. This includes reductions specified in the Plan
         and the Supplements, including, without limitation, Section 5.3 of the
         Plan and the Third Supplement, ANR Supplement.

                  (c) (i) For Employees under age 62 on April 1, 2000. A monthly
                  amount equal to the monthly Social Security benefit the
                  Employee would be entitled to receive at age sixty-two (62),
                  assuming the Employee continued to receive Compensation at the
                  same rate as in effect at April 1, 2000, reflecting the law in
                  effect at January 1, 2000 without adjustment for cost of
                  living or other increases or decreases in the benefit amount
                  which adjustments would have been first applicable after
                  January 1, 2000.

                           (ii) For Employees age 62 or older on April 1, 2000.
                  A monthly amount equal to the monthly Social Security benefit
                  the Employee would have been entitled to on January 1, 2000,
                  assuming the Employee had elected to commence receipt of
                  Social Security benefits at age sixty-two (62), without
                  adjustment for cost of living or other increases or decreases
                  in the benefit amount which adjustments would have been first
                  applicable after January 1, 2000.

                           (iii) The monthly amount will be paid commencing on
                  April 1, 2000 for the greater of (i) twenty-four months or
                  (ii) the number of months up to and including the month the
                  Participant reaches, or would have reached, age sixty-two
                  (62).

                                       5
<PAGE>   6

                           (iv) Each Employee who has attained the age of
                  sixty-three (63) years on or before March 31, 2000 shall have
                  the option of receiving such amount in the form of a 50% Joint
                  and Survivor Annuity in lieu of the twenty-four (24) monthly
                  payments.

                  (d) The reduction in Retirement Income due to coverage under
         the Preretirement Survivor Annuity provisions of the Plan (including
         reductions pursuant to Section 5.5) and other Supplements, excluding
         this Supplement, shall apply only to the Retirement Income determined
         pursuant to provisions of the Plan, excluding this Supplement, and
         shall not apply to any additions to Retirement Income provided by this
         Supplement, including provisions of subsections 3.2 (a), (b) and (c) of
         this Supplement.

                  (e) The Retirement Income of the Participant will be the total
         of the amounts determined pursuant to subsections (a) or (b), whichever
         is greater, and (c) of this Section. There shall be no duplication of
         benefits from the Plan with respect to Years of Service taken into
         account in the Retirement Income calculations described in this
         Section.

                  (f) The limitations contained in the Plan with respect to
         qualifications of the Plan pursuant to the applicable laws and
         provisions of the Plan derived therefrom (including provisions of
         Section 5.8) shall apply to the Retirement Income determined pursuant
         to this Supplement and such Retirement Income shall be reduced as
         necessary to comply with such provisions.

                  The provisions of this Supplement shall be modified to the
         extent necessary to comply with federal laws and regulations and are
         conditioned upon the issuance of a favorable determination of
         qualification letter by the Internal Revenue Service. To the extent
         necessary to comply with requirements for qualification, provisions of
         this Supplement shall be modified to comply with such requirements, and
         such modifications shall be on a retroactive basis, if necessary.

         3.3 Effective Date. The effective date for Retirement Income to
commence for Employees electing to participate in the Early Retirement Incentive
Program is April 1, 2000."

6.       Except for the preceding, all of the terms of the Plan shall remain in
         full force and effect.

                                       6
<PAGE>   7

7.       This Amendment may be executed in any number of counterparts and by
         different parties hereto on separate counterparts, each of which, when
         so executed and delivered shall be an original, but all such
         counterparts shall together constitute one and the same instrument.

         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers and its seal to be affixed hereto as of
the date indicated above and the provisions of this Amendment shall be effective
as of the date indicated above, unless otherwise stated or required by law.

ATTEST:                                THE COASTAL CORPORATION
(Seal)

__________________________________     By: _____________________________________
Austin M. O'Toole                      David A. Arledge
Senior Vice President and Secretary    President and Chief Executive Officer

ATTEST:                                GREAT LAKES GAS TRANSMISSION
(Seal)                                    COMPANY

__________________________________     By:______________________________________
John J. Wallbillich                    Michael Durnin
Vice President - Legal and             President and Chief Executive Officer
Environmental Affairs and
Assistant Secretary

                                       7

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