Document:

<PAGE>   1
                                                                    EXHIBIT 10.1

                          Supplemental Agreement No. 8

                                       to

                           Purchase Agreement No. 1810

                                     between

                               The Boeing Company

                                       and

                             SOUTHWEST AIRLINES CO.

                    Relating to Boeing Model 737-7H4 Aircraft

         THIS SUPPLEMENTAL AGREEMENT, entered into as of March 20, 1999, by and
between THE BOEING COMPANY, a Delaware corporation with its principal offices in
Seattle, Washington, (Boeing) and SOUTHWEST AIRLINES CO., a Texas corporation
with its principal offices in City of Dallas, State of Texas (Buyer);

         WHEREAS, the parties hereto entered into Purchase Agreement No. 1810
dated January 19, 1994, relating to Boeing Model 737-7H4 aircraft (the
Agreement) and;

         WHEREAS, Buyer has agreed to exercise the option to purchase six (6)
additional Option Aircraft and to accelerate delivery of those Option Aircraft
from July 2006 (2) and October 2006 four (4) to June 2000 three (3), July 2000
one (1) and August 2000 two (2);

         NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree to amend the Agreement as follows:

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

***      PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
         OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH
         THE COMMISSION.

P.A. No. 1810                       SA-8-1
K/SWA

<PAGE>   2

1. The Table of Contents of the Agreement is deleted in its entirety and a new
Table of Contents is attached hereto and incorporated into the Agreement by this
reference.

2. Article 1, entitled "Subject Matter of Sale," paragraph 1.1 entitled "The
Aircraft" is deleted in its entirety and replaced by a new paragraph 1.1 revised
to reflect one hundred thirty-six (136) Aircraft. Such new page 1-1 is attached
hereto and incorporated into the Agreement by this reference.

3. Article 2, entitled "Delivery, Title and Risk of Loss," paragraph 2.1,
entitled "Time of Delivery," is deleted in its entirety and replaced by a new
paragraph 2.1 revised to add three (3) Block "L" Aircraft for delivery in June
2000, to add one (1) Block "L" Aircraft for delivery in July 2000 and to add two
(2) Block "L" Aircraft for delivery in August 2000. Such new pages 2-1, 2-2 and
2-3 are attached hereto and incorporated into the Agreement by this reference.

4. Article 3, entitled "Price of Aircraft", paragraph 3.4 entitled "Advance
Payment Base Price," subparagraph 3.4.1 entitled "Advance Payment Base Price" is
revised by adding Advance Payment Base Prices for the Block "L" June 2000, July
2000 and August 2000 Aircraft. Such new pages 3-1, 3-2, 3-3 and 3-4 are attached
hereto and incorporated into the Agreement by this reference.

5. Letter Agreement No. 6-1162-RLL-933R6 entitled "Option Aircraft" is deleted
in its entirety and replaced with Letter Agreement No. 6-1162-RLL-933R7 attached
hereto and incorporated herein by this reference. The third paragraph is revised
to refer to fifty-two (52) Rollover Option Aircraft. Article 2 entitled
"Delivery of Rollover Option Aircraft," paragraph 2.1 is revised to change the
quantity of Rollover Option Aircraft from eighteen (18) to twelve (12) in the
year 2009; paragraph 2.2 and subparagraphs 2.2.1 and 2.2.2 are revised by
changing the quantity of Rollover Option Aircraft from fifty-eight (58) to
fifty-two (52).

P.A. No. 1810                       SA-8-2
K/SWA

<PAGE>   3

6. All references in the Letter Agreements associated with Purchase Agreement
No. 1810 shall be deemed to refer to the purchase by Buyer of one hundred
thirty-six (136) Model 737-7H4 Aircraft, sixty-two (62) Model 737-7H4 Option
Aircraft and fifty-two (52) Model 737-7H4 Rollover Option Aircraft, to the
extent such reference is not specifically addressed herein.

7. Concurrent with execution of this Supplemental Agreement, Buyer will pay to
Boeing ***. Such amount reflects the difference in advance payments due as a
result of the exercise of the Option to purchase six Aircraft and the deposits
due for six Rollover Option Aircraft converted to Option Aircraft.

The Agreement will be deemed to be supplemented to the extent herein provided
and as so supplemented will continue in full force and effect.

EXECUTED IN DUPLICATE as of the day and year first above written.

THE BOEING COMPANY                  SOUTHWEST AIRLINES CO.

By:    /s/ DAWN S. FOSTER           By:  /s/ LAURA WRIGHT
    ------------------------           ---------------------

Its:    ATTORNEY-IN-FACT            Its:    TREASURER
     -----------------------            --------------------

P.A. No. 1810                       SA-8-3
K/SWA

<PAGE>   4

                               PURCHASE AGREEMENT

                                     between

                               THE BOEING COMPANY

                                       and

                             SOUTHWEST AIRLINES CO.

                    Relating to Boeing Model 737-7H4 Aircraft

                         Purchase Agreement Number 1810

***      PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
         OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH
         THE COMMISSION.

P.A. No. 1810                          i
K/SWA                                                                       SA-8

<PAGE>   5

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              Page            SA
                                                                            Number        Number
                                                                            ------        ------

ARTICLES
--------

<S>           <C>                                                           <C>           <C>
1.            Subject Matter of Sale..........................................1-1          SA-8

2.            Delivery, Title and Risk
              of Loss.........................................................2-1          SA-8

3.            Price of Aircraft...............................................3-1          SA-8

4.            Taxes...........................................................4-1

5.            Payment.........................................................5-1

6.            Excusable Delay.................................................6-1

7.            Changes to the Detail
              Specification...................................................7-1          SA-1

8.            Federal Aviation Requirements and
              Certificates and Export License.................................8-1

9.            Representatives, Inspection,
              Flights and Test Data...........................................9-1

10.           Assignment, Resale or Lease....................................10-1

11.           Termination for Certain Events.................................11-1

12.           Product Assurance; Disclaimer and
              Release; Exclusion of Liabilities;
              Customer Support; Indemnification
              and Insurance..................................................12-1

13.           Buyer Furnished Equipment and
              Spare Parts....................................................13-1

14.           Contractual Notices and Requests...............................14-1

15.           Miscellaneous..................................................15-1
</TABLE>

P.A. No. 1810                         ii
K/SWA                                                                       SA-8

<PAGE>   6

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           SA
                                                                       Number
                                                                       ------

EXHIBITS
--------

<S>           <C>                                                        <C>
A             Aircraft Configuration                                     SA-1

B             Product Assurance Document                                 SA-1

C             Customer Support Document

D             Price Adjustments Due to
              Economic Fluctuations - Aircraft

E             Buyer Furnished Equipment
              Provisions Document

F             Defined Terms Document

LETTER AGREEMENTS
-----------------

1810-1        Waiver of Aircraft Demonstration Flight
</TABLE>

P.A. No. 1810                         iii
K/SWA                                                                       SA-8

<PAGE>   7

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 SA
                                                                                             Number
                                                                                             ------
RESTRICTED LETTER AGREEMENTS
----------------------------

<S>                            <C>                                                          <C>
6-1162-RLL-932                 Promotional Support

6-1162-RLL-933R7               Option Aircraft                                               SA-8

6-1162-RLL-934R1               Disclosure of Confidential                                    SA-1
                               Information

6-1162-RLL-935R1               Performance Guarantees                                        SA-1

6-1162-RLL-936R4               Certain Contractual Matters                                   SA-4

6-1162-RLL-937                 Alternate Advance Payment Schedule

6-1162-RLL-938                 ***

6-1162-RLL-939R1               Certification Flight Test Aircraft                            SA-1

6-1162-RLL-940R1               Training Matters                                              SA-1

6-1162-RLL-941R1               Other Matters                                                 SA-1

6-1162-RLL-942                 Open Configuration Matters

6-1162-RLL-943R1               Substitution Rights                                           SA-6

6-1162-RLL-944                 Airframe Maintenance Material Cost
                               Protection Program

6-1162-RLL-945                 Comparison of 737-7H4 and 737-3H4
                               Block Fuel Burn

6-1162-RLL-1855R3              Additional Contractual Matters                                SA-4

6-1162-RLL-1856                ***                                                           SA-1

6-1162-RLL-1857                Service Ready Validation Program                              SA-1
                               Field Test

6-1162-RLL-1858R1              Escalation Matters                                            SA-4
</TABLE>

P.A. No. 1810                          iv
K/SWA                                                                       SA-8

<PAGE>   8

                             TABLE OF CONTENTS CON'T

<TABLE>
<CAPTION>
                                                                                                 SA
                                                                                             Number
                                                                                             ------
RESTRICTED LETTER AGREEMENTS
----------------------------

<S>                            <C>                                                          <C>
6-1162-RLL-2036                Amortization of Costs for
                               Customer Unique Changes                                       SA-1

6-1162-RLL-2037                Reconciliation of the Aircraft                                SA-1
                               Basic Price

6-1162-RLL-2073                Maintenance Training Matters                                  SA-1
</TABLE>

P.A. No. 1810                          v
K/SWA                                                                       SA-8

<PAGE>   9

                           PURCHASE AGREEMENT NO. 1810

                                   Relating to

                          BOEING MODEL 737-7H4 AIRCRAFT

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

         This Agreement is entered into as of January 19th 1994, by and between
The Boeing Company, a Delaware corporation, with its principal office in
Seattle, Washington (Boeing), and Southwest Airlines Co., a Texas corporation,
with its principal office in the City of Dallas, State of Texas (Buyer).

Accordingly, Boeing and Buyer agree as follows:

P.A. No. 1810                         1-1
K/SWA                                                                       SA-8

<PAGE>   10

ARTICLE 1. Subject Matter of Sale.

         1.1 The Aircraft. Subject to the terms and conditions of this
Agreement, Boeing will manufacture and deliver to Buyer and Buyer will purchase
and accept delivery from Boeing of one hundred thirty-six (136) Boeing Model
737-7H4 aircraft (the Aircraft) manufactured in accordance with Boeing Detail
Specification D6-38808-1, dated October 30, 1996, as described in Exhibit A, as
modified from time to time in accordance with this Agreement (Detail
Specification).

         1.2 Additional Goods and Services. In connection with the sale of the
Aircraft, Boeing will also provide to Buyer certain other things under this
Agreement, including data, documents, training and services, all as described in
this Agreement.

         1.3 Performance Guarantees. Any performance guarantees applicable to
the Aircraft will be expressly included in this Agreement. Where performance
guarantees are included in this Agreement other than within the Detail
Specification, such guarantees will be treated as being incorporated in the
Detail Specification by this reference.

         1.4 Defined Terms. For ease of use, certain terms are treated as
defined terms in this Agreement. Such terms are identified with a capital letter
and set forth and/or defined in Exhibit F.

P.A. No. 1810                         1-2
K/SWA

<PAGE>   11

ARTICLE 2. Delivery, Title and Risk of Loss.

         2.1 Time of Delivery. The Aircraft will be delivered to Buyer by
Boeing, assembled and ready for flight and Buyer will accept delivery of the
Aircraft, in accordance with the following schedule:

<TABLE>
<CAPTION>
             Month and Year
               of Delivery                           Quantity of Aircraft
             --------------                          --------------------
<S>          <C>                <C>                  <C>
                                Block A Aircraft
                                ----------------
             October 1997                                     Two (2)
             November 1997                                    Two (2)

                                Block B Aircraft
                                ----------------
             January 1998                                     Two (2)
             February 1998                                    Three (3)
             March 1998                                       Two (2)
             April 1998                                       Two (2)
             May 1998                                         Two (2)
             June 1998                                        One (1)
             July 1998                                        Two (2)
             September 1998                                   Two (2)

                                Block C Aircraft
                                ----------------
             February 1999                                    Four (4)
             May 1999                                         Four (4)
             July 1999                                        Four (4)
             August 1999                                      One (1)
             September 1999                                   Three (3)

                                Block D Aircraft
                                ----------------
             November 1999                                    Two (2)
             December 1999                                    One (1)
             January 2000                                     One (1)
             March 2000                                       Four (4)
             July 2000                                        Four (4)
             September 2000                                   Three (3)

                                Block E Aircraft
                                ----------------
             January 2001                                     Three (3)
             March 2001                                       Three (3)
             July 2001                                        Three (3)
             September 2001                                   Three (3)
</TABLE>

P.A. No. 1810                         15-1
K/SWA

<PAGE>   12

<TABLE>
<S>          <C>                <C>                  <C>
                                Block F Aircraft
                                ----------------
             October 1998                                     One (1)
             November 1998                                    Two (2)
             December 1998                                    Two (2)

                                Block G Aircraft
                                ----------------
             March 1999                                       Two (2)

                                Block H Aircraft
                                ----------------
             June 1999                                        Two (2)
             July 1999                                        One (1)
             August 1999                                      One (1)
             September 1999                                   Two (2)
             October 1999                                     One (1)
             April 2000                                       Three (3)
             October 2000                                     Three (3)
             April 2001                                       Three (3)
             October 2001                                     Three (3)

                                Block I Aircraft
                                ----------------
             January 2002                                     Four (4)
             March 2002                                       Four (4)
             April 2002                                       Two (2)
             July 2002                                        Four (4)
             October 2002                                     Four (4)

                                Block J Aircraft
                                ----------------
             January 2003                                     Four (4)
             March 2003                                       One (1)

                                Block K Aircraft
                                ----------------
             April 2004                                       Two (2)
             July 2004                                        Three (3)
</TABLE>

P.A. No. 1810                         15-2
K/SWA

<PAGE>   13

<TABLE>
<S>          <C>                <C>                  <C>
                                Block L Aircraft
                                ----------------
             October 1999                                     One (1)
             November 1999                                    Two (2)
             December 1999                                    One (1)
             June 2000                                        Three (3)
             July 2000                                        One (1)
             August 2000                                      Two (2)
             November 2000                                    Two (2)
             December 2000                                    One (1)
             July 2001                                        One (1)
             September 2001                                   One (1)
             October 2001                                     One (1)
             September 2002                                   Three (3)
</TABLE>

         2.2 Notice of Target Delivery Date. Boeing will give Buyer notice of
the Target Delivery Date of the Aircraft approximately 30 days prior to the
scheduled month of delivery.

         2.3 Notice of Delivery Date. If Boeing gives Buyer at least 7 days'
notice of the delivery date of the Aircraft, and an Aircraft delivery is delayed
beyond such delivery date due to the responsibility of Buyer, Buyer will
reimburse Boeing for all costs incurred by Boeing as a result of such delay,
including amounts for storage, insurance, Taxes, preservation or protection of
the Aircraft and interest on payments due.

         2.4 Place of Delivery. The Aircraft will be delivered at an airport
facility selected by Boeing in the State of Washington, unless mutually agreed
otherwise.

         2.5 Title and Risk of Loss. Title to and risk of loss of an Aircraft
will pass from Boeing to Buyer upon delivery of such Aircraft, but not prior
thereto.

         2.6 Bill of Sale. Upon delivery of an Aircraft Boeing will deliver to
Buyer a bill of sale conveying good title to such Aircraft, free of all liens,
claims, charges and encumbrances of every kind whatsoever, and such other
appropriate documents of title as Buyer may reasonably request.

P.A. No. 1810                         15-3
K/SWA

<PAGE>   14

ARTICLE 3. Price of Aircraft.

         3.1 Definitions.

                  3.1.1 Special Features are the features incorporated in
Exhibit A which have been selected by Buyer.

                  3.1.2 Base Aircraft Price is the Aircraft Basic Price
excluding the price of Special Features.

                  3.1.3 Aircraft Basic Price is comprised of the Base Aircraft
Price and the price of the Special Features.

                  3.1.4 Economic Price Adjustment is the adjustment to the
Aircraft Basic Price (Base Aircraft and Special Features) as calculated pursuant
to Exhibit D.

                  3.1.5 Aircraft Price is the total amount Buyer is to pay for
the Aircraft at the time of delivery.

         3.2 Aircraft Basic Price ***.

                  The Aircraft Basic Price, expressed in July 1992 dollars, is
set forth below:

<TABLE>
<CAPTION>
                                 Base                            Special                            Aircraft
                                 Aircraft Price                  Features                           Basic Price
<S>                             <C>                              <C>                                <C>
Block A, B, C,
D & E Aircraft                   ***                             ***                                ***
Block F & G
Aircraft                         ***                             ***                                ***
Block H
Aircraft                         ***                             ***                                ***
Block I
Aircraft                         ***                             ***                                ***
Block J
Aircraft                         ***                             ***                                ***
Block K
Aircraft                         ***                             ***                                ***
Block L Aircraft
                                 ***                             ***                                ***
</TABLE>

         3.3 Aircraft Price. The Aircraft Price will be established at the time
of delivery of such Aircraft to Buyer and will be the sum of:

                  3.3.1 the Aircraft Basic Price, which is *** for the Block A,
B, C, D and E Aircraft, *** for the Block F and G Aircraft, *** for the Block H
Aircraft, *** for the

P.A. No. 1810                         15-4
K/SWA

<PAGE>   15

Block I Aircraft, *** for the Block J Aircraft, *** for the Block K Aircraft and
*** for the Block L Aircraft; plus

                  3.3.2 the Economic Price Adjustments for the Aircraft Basic
Price, as calculated pursuant to the formulas set forth in Exhibit D (Price
Adjustments Due to Economic Fluctuations - Aircraft); plus

                  3.3.3 other price adjustments made pursuant to this Agreement
or other written agreements executed by Boeing and Buyer.

         3.4 Advance Payment Base Price.

                  3.4.1 Advance Payment Base Price. For advance payment
purposes, the following estimated delivery prices of the Aircraft (Advance
Payment Base Price) have been established, using currently available forecasts
of the escalation factors used by Boeing as of the date of signing this
Agreement. The Advance Payment Base Price of each Aircraft is set forth below:

<TABLE>
<CAPTION>
             Month and Year of                                Advance Payment Base
             Scheduled Delivery                               Price per Aircraft
             ------------------                               --------------------

<S>                           <C>                             <C>
                              Block A Aircraft ***
                              ----------------
             October 1997                                            ***
             November 1997                                           ***

                              Block B Aircraft ***
                              ----------------
             January 1998                                            ***
             February 1998                                           ***
             March 1998                                              ***
             April 1998                                              ***
             May 1998                                                ***
             June 1998                                               ***
             July 1998                                               ***
             September 1998                                          ***

                              Block C Aircraft ***
                              ----------------
             February 1999                                           ***
             May 1999                                                ***
             July 1999                                               ***
             August 1999                                             ***
             September 1999                                          ***

</TABLE>

P.A. No. 1810                         15-5
K/SWA

<PAGE>   16
                              Block D Aircraft ***
                              ----------------
<TABLE>
<S>                                                                  <C>
             November 1999                                           ***
             December 1999                                           ***
             January 2000                                            ***
             March 2000                                              ***
             July 2000                                               ***
             September 2000                                          ***

                              Block E Aircraft ***
                              ----------------
             January 2001                                            ***
             March 2001                                              ***
             July 2001                                               ***
             September 2001                                          ***

                              Block F Aircraft ***
                              ----------------
             October 1998                                            ***
             November 1998                                           ***
             December 1998                                           ***

                              Block G Aircraft ***
                              ----------------
             March 1999                                              ***

                              Block H Aircraft ***
                              ----------------
             June 1999                                               ***
             July 1999                                               ***
             August 1999                                             ***
             September 1999                                          ***
             October 1999                                            ***
             April 2000                                              ***
             October 2000                                            ***
             April 2001                                              ***
             October 2001                                            ***

                              Block I Aircraft ***
                              ----------------
             January 2002                                            ***
             March 2002                                              ***
             April 2002                                              ***
             July 2002                                               ***
             October 2002                                            ***

                              Block J Aircraft ***
                              ----------------
             January 2003                                            ***
             March 2003                                              ***

</TABLE>

P.A. No. 1810                         15-6
K/SWA

<PAGE>   17
                              Block K Aircraft ***
                              --------------------
<TABLE>
<S>          <C>              <C>                             <C>
             April 2004                                           ***
             July 2004                                            ***

                              Block L Aircraft ***
                              --------------------
             October 1999                                         ***
             November 1999                                        ***
             December 1999                                        ***
             June 2000                                            ***
             July 2000                                            ***
             August 2000                                          ***
             November 2000                                        ***
             December 2000                                        ***
             July 2001                                            ***
             September 2001                                       ***
             October 2001                                         ***
             September 2002                                       ***
</TABLE>

                  3.4.2 Adjustment of Advance Payment Base Prices - Long-Lead
Aircraft. For Aircraft scheduled for delivery 36 months or more after the date
of this Agreement, the Advance Payment Base Prices appearing in Article 3.4.1
will be used to determine the amount of the first advance payment to be made by
Buyer on the Aircraft. No later than 25 months before the scheduled month of
delivery of each affected Aircraft, Boeing will increase or decrease the Advance
Payment Base Price of such Aircraft as required to reflect the effects of (i)
any adjustments in the Aircraft Basic Price pursuant to this Agreement and (ii)
the then-current forecasted escalation factors used by Boeing. Boeing will
provide the adjusted Advance Payment Base Prices for each affected Aircraft to
Buyer, and the advance payment schedule will be considered amended to substitute
such adjusted Advance Payment Base Prices.

P.A. No. 1810                         15-7
K/SWA

<PAGE>   18

6-1162-RLL-933R7

Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas  75235

Subject:     Letter Agreement No. 6-1162-RLL-933R7 to
             Purchase Agreement No. 1810 -
             Option Aircraft

This Letter Agreement amends Purchase Agreement No. 1810 dated as of January 19,
1994 (the Agreement) between The Boeing Company (Boeing) and Southwest Airlines
Co. (Buyer) relating to Model 737-7H4 aircraft (Aircraft).

All terms used and not defined herein will have the same meaning as in the
Agreement.

In consideration of the purchase by Buyer of the Aircraft, Boeing hereby agrees
to manufacture and sell to Buyer sixty-two (62) additional Model 737-7H4
aircraft as described in paragraph 1 of Attachment A hereto (Option Aircraft)
and fifty-two (52) Model 737-7H4 Rollover Option Aircraft (Rollover Option
Aircraft), subject to the terms and conditions set forth below.

1.       Delivery of Option Aircraft.

         The Option Aircraft will be delivered to Buyer during or before the
months set forth in the following schedule:

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

***      PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
         OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH
         THE COMMISSION.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   19

Southwest Airlines Co.
6-1162-RLL-933R7   Page 2

<TABLE>
<CAPTION>
                                                     Number of                Option
             Month and Year                          Option                   Aircraft
             of Delivery                             Aircraft                 Block
             --------------                          --------                 --------

<S>                                                  <C>                      <C>
             March 2003                              Three  (3)                    M
             April 2003                              Two   (2)                     M
             July 2003                               Four  (4)                     M
             October 2003                            Four  (4)                     M

             January 2004                            Four (4)                      N
             March 2004                              One (1)                       N
             April 2004                              One   (1)                     N
             August 2004                             Two   (2)                     N
             September 2004                          Three (3)                     N
             October 2004                            Two   (2)                     N
</TABLE>

<TABLE>
<CAPTION>
                                                     Number of                Option
             Month and Year                          Option                   Aircraft
             of Delivery                             Aircraft                 Block
             --------------                          --------                 ------

<S>                                                  <C>                      <C>
             January 2005                            Four (4)                    O
             March 2005                              Four (4)                    O
             April 2005                              Two (2)                     O
             July 2005                               Four (4)                    O
             October 2005                            Four (4)                    O

             January 2006                            Four (4)                    P
             March 2006                              Four (4)                    P
             April 2006                              Two (2)                     P
             July 2006                               Four (4)                    P
             October 2006                            Four (4)                    P
</TABLE>

2.       Delivery of Rollover Option Aircraft.

         2.1 The Rollover Option Aircraft will be delivered to Buyer during or
before the years set forth in the following schedule:

<TABLE>
<CAPTION>
                                                                              Option
             Year of                   Number of                              Aircraft
             Delivery                  Option Aircraft                        Block
             --------                  ---------------                        --------

<S>                                    <C>                                    <C>
             2007                      Twenty (20)                                 Q
             2008                      Twenty (20)                                 R
             2009                      Twelve (12)                                 S
</TABLE>

         2.2 The fifty-two (52) Rollover Option Aircraft are offered to Buyer
subject to the following conditions:

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   20

Southwest Airlines Co.
6-1162-RLL-933R7   Page 3

                  2.2.1 Buyer can exercise any fifty-two (52) of the sixty-two
(62) Option Aircraft, and will be offered a Rollover Option Aircraft for each
option aircraft exercised up to and including fifty-two (52).

                  2.2.2 Conversely to Article 2.2.1 above, if Buyer does not
exercise a minimum of fifty-two (52) Option Aircraft, one Rollover Option
Aircraft will be deleted for each Option Aircraft not exercised by Buyer.

                  2.2.3 When Buyer exercises one or more Option Aircraft, Boeing
will offer the same quantity of Rollover Option Aircraft to Buyer in the years
identified in Article 2.1 above.

                  2.2.4 The Rollover Option Aircraft delivery month offered by
Boeing to Buyer will be at least 24 months from the Option exercise date of the
corresponding option.

                  2.2.5 When Boeing offers the Rollover Option Aircraft to
Buyer, Buyer will accept such Rollover Option Aircraft by wire transferring
$100,000 to Boeing. In the event Buyer exercises its option to purchase the
Rollover Option Aircraft, such application will be in accordance with Article
4.1 herein.

3.       Price.

         3.1 The advance payment base prices of the Option Aircraft set forth
below and in paragraph 2.1 of Attachment A represent the estimated delivery
prices of the Option Aircraft. The Option Aircraft pricing elements and
associated pricing terms and conditions are given in Attachment A.

         3.2 Price and escalation provisions for Model 737-7H4 aircraft
delivering after 2002, are not currently available. The estimated Advance
Payment Base Prices shown in paragraph 3.3 below and in paragraph 2.1 of
Attachment A are based on currently available price and escalation provisions.
As price and escalation provisions become available for Model 737-7H4 aircraft
delivering after 2002, such price and escalation provisions will be
appropriately applied to the applicable Option Aircraft.

For additional information relating to price and escalation provisions
applicable to Option Aircraft delivering after 2002 refer to paragraphs 2.2 and
3.2 of Attachment A.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   21

Southwest Airlines Co.
6-1162-RLL-933R7   Page 4

         3.3 The Advance Payment Base Prices of the Option Aircraft indicated
below do include an amount for special features in addition to those
specifically described in Attachment A but do not include any amount for items
of Buyer Furnished Equipment (BFE). An estimate for typical special features is
*** per Aircraft (expressed in 1992 STE dollars) and for BFE is *** per Aircraft
(expressed in delivery year dollars).

<TABLE>
<CAPTION>
             Month and Year                              Advance Payment Base
             of Delivery                                 Price per Option Aircraft
             --------------                              -------------------------

<S>                            <C>                       <C>
                               Block M Aircraft***
                               -------------------
             March 2003
             April 2003
             July 2003
             October 2003

                               Block N Aircraft***
                               -------------------
             January 2004
             March 2004
             April 2004
             August 2004
             September 2004
             October 2004

                               Block O Aircraft***
                               -------------------
             January 2005
             March 2005
             April 2005
             July 2005
             October 2005

                               Block P Aircraft***
                               -------------------
             January 2006
             March 2006
             April 2006
             July 2006
             October 2006
</TABLE>

         3.4 The Option Aircraft purchase price will be the applicable basic
price thereof at the time of Option Aircraft delivery adjusted in accordance
with Boeing's Aircraft escalation provisions contained in the definitive
agreement to purchase the Option Aircraft. The purchase price will include the
price for Seller Purchased Equipment (SPE) if Buyer has

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   22

Southwest Airlines Co.
6-1162-RLL-933R7   Page 5

elected to change Buyer Furnished Equipment (BFE) to SPE.

4.       Option Aircraft Payment.

         4.1 In consideration of the granting of the option as set forth herein,
on or before the date Boeing and Buyer enter into a definitive agreement to
purchase the Aircraft, Buyer will pay a deposit to Boeing of $100,000 for each
Option Aircraft (Deposit). In the event Buyer exercises its option herein, the
amount of the Deposit will be credited against the first advance payment due for
such Option Aircraft pursuant to the advance payment schedule set forth in
paragraph 3 of Attachment A. The Deposits for the Option Aircraft will be
refunded to Buyer, without interest, if the parties do not enter into a
definitive Agreement for the Aircraft.

In the event that, after the parties enter into a definitive agreement to
purchase the Aircraft, Buyer does not exercise its option to purchase the Option
Aircraft pursuant to the terms and conditions set forth herein, Boeing will be
entitled to retain the Deposits for the Option Aircraft except as provided in
paragraphs 6 herein.

         4.2 Advance payments in the amount of 30% of the advance payment base
price will be payable on the Option Aircraft in accordance with paragraph 3 of
Attachment A. The remainder of the Option Aircraft purchase price is due at the
time of delivery of the Option Aircraft.

5.       Option Exercise.

         5.1 To exercise its Option, Buyer will give written or telegraphic
notice thereof to Boeing on or before eighteen (18) months prior to the first
day of the delivery month of each Option Aircraft.

In such notice Buyer will select the Option Model type, and the applicable
delivery positions.

         5.2 It is understood and agreed that Boeing may accelerate the option
exercise dates specified above if Boeing must make production decisions which
are dependent on Buyer's decision to buy the Option Aircraft. If Boeing elects
to accelerate the option exercise dates, Boeing will do so by giving written or
telegraphic notice thereof to Buyer. Such notice will specify the revised option
exercise dates, which will not be earlier than 30 days after the date of

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   23

Southwest Airlines Co.
6-1162-RLL-933R7   Page 6

transmittal of such notice, and the Option Aircraft delivery positions affected
by such revision. If Buyer fails to exercise its option for any Option Aircraft
affected by such revised dates, the Deposit applicable to such Option Aircraft
will be promptly refunded, with interest, to Buyer. The interest rate for
calculation of the interest associated with such refund is the rate of two
percent (2%) below the Citibank base rate in effect from time to time during the
period the option deposit is held by Boeing.

6.       Contract Terms.

         It is understood that Boeing and Buyer will use their best efforts to
enter into a definitive agreement for the Option Aircraft within thirty (30)
days after Buyer exercises an option to purchase Option Aircraft pursuant to
paragraph 5 covering the detailed terms and conditions for the sale of such
Option Aircraft.

Such definitive agreement will include the terms and conditions contained herein
together with the terms and conditions, not inconsistent herewith, contained in
Boeing's then-current standard form of purchase agreement for the sale of Model
737-700 aircraft in effect as of the date of option exercise and such additional
terms and conditions as may be mutually agreed upon. In the event the parties
have not entered into such an agreement within the time period contemplated
herein, either party may, exercisable by written or telegraphic notice given to
the other within thirty (30) days after such period, terminate the purchase of
such Option Aircraft.

7.       Termination of Option to Purchase.

         Either Boeing or Buyer may terminate the option to purchase an Option
Aircraft if any of the following events are not accomplished by the respective
dates contemplated in this letter agreement, or in the Agreement, as the case
may be:

         (i) termination of the purchase of the Aircraft under the Agreement for
any reason;

         (ii) payment by Buyer of the Deposit with respect to an Option Aircraft
pursuant to paragraph 4.1 herein;

         (iii) exercise of an option to purchase an Option Aircraft pursuant to
the terms hereof. Any termination of an option to purchase by Boeing which is
based on the termination of the purchase of

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   24

Southwest Airlines Co.
6-1162-RLL-933R7   Page 7

Aircraft under the Agreement will be on a one-for-one basis, for each Aircraft
so terminated.

Any cancellation of an option to purchase which is based on failure to make the
required Deposit or to exercise the option to purchase shall only apply to the
Option Aircraft so canceled.

Termination of an option to purchase provided by this letter agreement will be
caused by either party giving written notice to the other within 10 days after
the applicable date. Upon receipt of such notice, all rights and obligations of
the parties with respect to an Option Aircraft for which the option to purchase
has been terminate will thereupon terminate.

If termination is result of a revision of an option exercise date by Boeing
pursuant to paragraph 5.2, Boeing will promptly refund to Buyer, without
interest, any payments received from Buyer, including the Deposit, with respect
to the Option Aircraft for which the option is terminated. If termination is for
any other reason, Boeing will promptly refund to Buyer, without interest, any
payments received from Buyer with respect to the affected Option Aircraft,
except the Deposit, which Buyer may apply to any model Boeing aircraft purchased
by Buyer from Boeing at a future date.

8. Confidential Treatment. Buyer understands that certain commercial and
financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees that it
will treat this Letter Agreement and the

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   25

Southwest Airlines Co.
6-1162-RLL-933R7   Page 8

information contained herein as confidential and will not, without the prior
written consent of Boeing, disclose this Letter Agreement or any information
contained herein to any other person or entity except as provided in Letter
Agreement No. 6-1162-RLL-934R1.

Very truly yours,

THE BOEING COMPANY

By:    /s/ DAWN S. FOSTER
    ------------------------

Its:    ATTORNEY-IN-FACT
     ------------------------

ACCEPTED AND AGREED TO this

date: March 30, 1999

SOUTHWEST AIRLINES CO.

By:  /s/ LAURA WRIGHT
    ------------------------

Its:   TREASURER
     ------------------------

Attachments

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   26

Attachment A to
6-1162-RLL-933R7
Page 1

Model 737-7H4 Aircraft

1. Option Aircraft Description and Changes.

         1.1 Aircraft Description. The Option Aircraft is described by Boeing
Detail Specification D6-38808-1, Dated October 30 ,1996.

         1.2 Changes. The Detail Specification will be revised to include:

                  (1) Changes applicable to the basic Model 737-700 aircraft
which are developed by Boeing between the date of the Detail Specification and
the signing of a definitive agreement to purchase the Option Aircraft.

                  (2) Changes mutually agreed upon.

                  (3) Changes required to obtain a Standard Certificate of
Airworthiness.

                  (4) To provide sufficient Option Aircraft manufacturing and
procurement lead time it is necessary for Boeing and Buyer to reach final
agreement on the Option Aircraft configuration, including BFE/SPE vendor
selection fifteen (15) months prior to delivery of each Option Aircraft. If such
items are not resolved by the indicated dates, Boeing reserves the right to
amend this letter agreement:

                           (i) to adjust the scheduled delivery of the Option
Aircraft to a later time period and,

                           (ii) to make such other changes as are appropriate
and consistent with the revised Option Aircraft deliveries.

         1.3 Effect of Changes. Changes to the Detail Specification incorporated
pursuant to the provisions of the clauses above will include the effects of such
changes upon Option Aircraft weight, balance, design and performance.
Performance guarantees for the Option Aircraft which are mutually acceptable to
the parties will be included in the definitive agreement for the Option
Aircraft.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   27

Attachment A to
6-1162-RLL-933R7
Page 2

2.       Price Description

         2.1 Price Elements Per Aircraft

<TABLE>
<CAPTION>
                    1                 2            3
                    -                 -            -

                 AIRCRAFT &                                  ADV. PMT.
AIRCRAFT      ESTIMATED SPECIAL                ESTIMATED    BASE PRICE
DELIVERY      FEATURES PRICE     ESTIMATED     ESCALATION   (Elements)
MO. & YR.      (JULY 1992$)      ESCALATION     SHARING     1 + 2 + 3
---------     -----------------  ----------   -----------   ----------

<S>           <C>                 <C>         <C>           <C>
BLOCK M
-------

March 2003          ***              ***          -***          ***
April 2003          ***              ***          -***          ***
July 2003           ***              ***          -***          ***
October 2003        ***              ***          -***          ***

BLOCK N
-------

January 2004        ***              ***          -***          ***
March 2004          ***              ***          -***          ***
April 2004          ***              ***          -***          ***
August 2004         ***              ***          -***          ***
September 2004      ***              ***          -***          ***
October 2004        ***              ***          -***          ***

BLOCK O
-------

January 2005        ***              ***          -***          ***
March 2005          ***              ***          -***          ***
April 2005          ***              ***          -***          ***
July 2005           ***              ***          -***          ***
October 2005        ***              ***          -***          ***

BLOCK P
-------

January 2006        ***              ***          -***          ***
March 2006          ***              ***          -***          ***
April 2006          ***              ***          -***          ***
July 2006           ***              ***          -***          ***
October 2006        ***              ***          -***          ***
</TABLE>

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   28

Attachment A to
6-1162-RLL-933R7
Page 3

2. Price Description. (Continued)

                  2.2 Price Adjustments For Option Aircraft Delivering From
                  March 2003 through December 2009.

                  2.2.1 Special Features. The price for Special Features
incorporated in the Option Aircraft Detail Specification will be adjusted to
Boeing's then-current prices for such features as of the date of execution of
the definitive agreement for the Option Aircraft.

                  2.2.2 Escalation Adjustments. For escalation provisions
applicable to Option Aircraft delivering after 2002, see paragraph 2.2.6 below.

                  2.2.3 Base Price Adjustments for FAA Changes. The Aircraft
Basic Price of the Option Aircraft will be adjusted for any FAA mandated changes
incorporated into the Aircraft.

                  2.2.4 Price Adjustments for Changes. Boeing may adjust the
Aircraft Basic Price and the Advance Payment Base Price for any changes mutually
agreed upon subsequent to the date that Buyer and Boeing enter into a definitive
agreement for the Option Aircraft.

                  2.2.5 Base Price Adjustments. The Aircraft Basic Price of the
Option Aircraft will be adjusted to Boeing's then-current prices as of the date
of execution of the definitive agreement for the Option Aircraft in accordance
with the agreement reached below. The Aircraft Basic Price starting point for
options delivering in 2003 is *** (July 1992 STE), for options delivering in
2004 is *** (July 1992 STE), for options delivering in 2005 through 2009 is ***
(July 1992 STE). Such Aircraft Basic Price may increase in accordance with
paragraphs 2.2.1, 2.2.2, 2.2.3 and 2.2.4. For any other changes to the Aircraft
Basic Price, Boeing may increase the Aircraft Basic Price by a maximum of ***
(July 1992 STE) for Aircraft delivering in 2005 and by a maximum of *** (July
1992 STE) per year or portion thereof starting in January 2006.

                  2.2.6 Prices for Long Lead Time Aircraft. Boeing has not
established escalation provisions for Model 737-700 aircraft for delivery 2003
and after. Such escalation provisions (i) will be incorporated into the Option
Aircraft definitive agreement when such information is available and (ii) will
be the then-current escalation provisions applicable to the same model aircraft
and engines delivering in the same time period as the Option Aircraft. The
resulting revisions to the definitive agreement will

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   29

Attachment A to
6-1162-RLL-933R7
Page 4

include but not be limited to, adjustment of the Aircraft Basic Price of the
Option Aircraft, the Advance Payment Base Price, the Aircraft escalation
provisions and the advance payment amounts due on the Option Aircraft.

                  2.2.7 BFE to SPE. An estimate of the total price for items of
Buyer Furnished Equipment (BFE) changed to Seller Purchased Equipment (SPE)
pursuant to the Configuration Specification is included in the Option Aircraft
price build-up. The purchase price of the Option Aircraft will be adjusted by
the price charged to Boeing for such items plus 10% of such price. If all BFE
except developmental avionics is converted to SPE, Boeing will waive the 10%
fee.

3. Advance Payment Schedules, Prices and Adjustments.

         3.1 Buyer will pay to Boeing advance payments for the Option Aircraft
on the dates and in the amounts determined below.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   30

Attachment A to
6-1162-RLL-933R7
Page 2

<TABLE>
<CAPTION>
                                                                 Amount Due per Aircraft
                                                                 -----------------------
                                                                    (Percentage times
Due Date of Payment                                            Advance Payment Base Price)
-------------------

<S>                                                            <C>
Deposit                                                              100,000 (if applicable)

18 months prior to the first                                         15% (less the
day of the scheduled delivery                                             Deposit if any)
month of the Aircraft

12 months prior to the first                                         5%
day of the scheduled delivery
month of the Aircraft

9 months prior to the first                                          5%
day of the scheduled delivery
month of the Aircraft

6 months prior to the first                                          5%
day of the scheduled delivery
month of the Aircraft
                                                                   ---

                    Total                                          30%
</TABLE>

Any advance payments that would be past due as of the date of signing the
definitive purchase agreement for the Option Aircraft in accordance with the
above schedule are due and payable on such date.

         3.2 Option Aircraft advance payment base prices will be increased or
decreased, as appropriate, at the time of signing of the definitive purchase
agreement for the Option Aircraft, using the then-current forecasted aircraft
escalation factors used by Boeing, to determine the amount of the advance
payments to be made by Buyer on the Option Aircraft.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   31

Attachment B to
6-1162-RLL-933R7
Page 1

                             PRICE ADJUSTMENT DUE TO
                              ECONOMIC FLUCTUATIONS
                            AIRCRAFT PRICE ADJUSTMENT
                             (July 1992 Base Price)

1. Formula.

         The Aircraft Price Adjustment will be determined at the time of
Aircraft delivery in accordance with the following formula:

         Pa = (P)(L + M - 1)

         Where:

         Pa = Aircraft Price Adjustment.

         L = .65 x  ECI
                   -----
                   116.2

         M = .35 x  ICI
                   -----
                   115.9

         P = Aircraft Basic Price (as set forth in Article 3.2 of this
             Agreement).

       ECI = A value using the "Employment Cost Index for workers in aerospace
             manufacturing" (aircraft manufacturing, standard industrial
             classification code 3721, compensation, base month and year June
             1989 = 100), as released by the Bureau of Labor Statistics, U.S.
             Department of Labor on a quarterly basis for the months of March,
             June, September and December, calculated as follows: A three-month
             arithmetic average value (expressed as a decimal and rounded to the
             nearest tenth) will be determined using the months set forth in the
             table below for the applicable Aircraft, with the released
             Employment Cost Index value described above for the month of March
             also being used for the months of January and February; the value
             for June also used for April and May; the value for September also
             used for July and August; and the value for December also used for
             October and November.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   32

Attachment B to
6-1162-RLL-933R7
Page 2

       ICI = The three-month arithmetic average of the released monthly values
             for the Industrial Commodities Index as set forth in the "Producer
             Prices and Price Index" (Base Year 1982 = 100) as released by the
             Bureau of Labor Statistics, U.S. Department of Labor values
             (expressed as a decimal and rounded to the nearest tenth) for the
             months set forth in the table below for the applicable Aircraft.

         In determining the value of L, the ratio of ECI divided by 116.2 will
be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .65 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.

         In determining the value of M, the ratio of ICI divided by 115.9 will
be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .35 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.

<TABLE>
<CAPTION>
                                Months to be Utilized
Month of Scheduled              in Determining the
Aircraft Delivery               Value of ECI and ICI
-----------------               -------------------------

<S>                             <C>
January                         June  B, July  B, Aug.  B
February                        July  B, Aug.  B, Sept. B
March                           Aug.  B, Sept. B, Oct.  B
April                           Sept. B, Oct.  B, Nov.  B
May                             Oct.  B, Nov.  B, Dec.  B
June                            Nov.  B, Dec.  B, Jan.  D
July                            Dec.  B, Jan.  D, Feb.  D
August                          Jan.  D, Feb.  D, Mar.  D
September                       Feb.  D, Mar.  D, Apr.  D
October                         Mar.  D, Apr.  D, May   D
November                        Apr.  D, May   D, June  D
December                        May   D, June  D, July  D
</TABLE>

The following definitions of B and D will apply:

             B = The calendar year before the year in which the
                 scheduled month of delivery as set forth in Paragraph 1
                 occurs.

             D = The calendar year during which the scheduled month of
                 delivery as set forth in Paragraph 1 occurs.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   33

Attachment B to
6-1162-RLL-933R7
Page 3

2. If at the time of delivery of an Aircraft Boeing is unable to determine the
Aircraft Price Adjustment because the applicable values to be used to determine
the ECI and ICI have not been released by the Bureau of Labor Statistics, then:

         2.1 The Aircraft Price Adjustment, to be used at the time of delivery
of each of the Aircraft, will be determined by utilizing the escalation
provisions set forth above. The values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Aircraft Price Adjustment. If no values have been released for an
applicable month, the provisions set forth in Paragraph 2.2 below will apply. If
prior to delivery of an Aircraft the U.S. Department of Labor changes the base
year for determination of the ECI or ICI values as defined above, such rebased
values will be incorporated in the Aircraft Price Adjustment calculation. The
payment by Buyer to Boeing of the amount of the Purchase Price for such
Aircraft, as determined at the time of Aircraft delivery, will be deemed to be
the payment for such Aircraft required at the delivery thereof.

         2.2 If prior to delivery of an Aircraft the U.S. Department of Labor
substantially revises the methodology used for the determination of the values
to be used to determine the ECI and ICI values (in contrast to benchmark
adjustments or other corrections of previously released values), or for any
reason has not released values needed to determine the applicable Aircraft Price
Adjustment, the parties will, prior to delivery of any such Aircraft, select a
substitute for such values from data published by the Bureau of Labor Statistics
or other similar data reported by non-governmental United States organizations,
such substitute to lead in application to the same adjustment result, insofar as
possible, as would have been achieved by continuing the use of the original
values as they may have fluctuated during the applicable time period.
Appropriate revision of the formula will be made as required to reflect any
substitute values. However, if within 24 months from delivery of the Aircraft
the Bureau of Labor Statistics should resume releasing values for the months
needed to determine the Aircraft Price Adjustment, such values will be used to
determine any increase or decrease in the Aircraft Price Adjustment for the
Aircraft from that determined at the time of delivery of such Aircraft.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   34

Attachment B to
6-1162-RLL-933R7
Page 4

         2.3 In the event escalation provisions are made non-enforceable or
otherwise rendered null and void by any agency of the United States Government,
the parties agree, to the extent they may lawfully do so, to equitably adjust
the Purchase Price of any affected Aircraft to reflect an allowance for
increases or decreases in labor compensation and material costs occurring since
February, 1992, which is consistent with the applicable provisions of paragraph
1 of this Exhibit D.

3. For the calculations herein, the values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Aircraft Price Adjustment.

Note:    Any rounding of a number, as required under this Exhibit D with respect
         to escalation of the airframe price, will be accomplished as follows:
         if the first digit of the portion to be dropped from the number to be
         rounded is five or greater, the preceding digit will be raised to the
         next higher number.

P.A. No. 1810
K/SWA                                                                       SA-8

<PAGE>   35
                                                                    EXHIBIT 10.1

                          Supplemental Agreement No. 9

                                       to

                           Purchase Agreement No. 1810

                                     between

                               The Boeing Company

                                       and

                             SOUTHWEST AIRLINES CO.

                    Relating to Boeing Model 737-7H4 Aircraft

         THIS SUPPLEMENTAL AGREEMENT, entered into as of April 29, 1999, by and
between THE BOEING COMPANY, a Delaware corporation with its principal offices in
Seattle, Washington, (Boeing) and SOUTHWEST AIRLINES CO., a Texas corporation
with its principal offices in City of Dallas, State of Texas (Buyer);

         WHEREAS, the parties hereto entered into Purchase Agreement No. 1810
dated January 19, 1994, relating to Boeing Model 737-7H4 aircraft (the
Agreement) and;

         WHEREAS, Buyer has agreed to exercise the option to purchase six (6)
additional Option Aircraft and to accelerate delivery of those Option Aircraft
from July 2006 (2) and October 2006 four (4) to September 2000 (1), October 2000
(1), November 2000 (1), December 2000 (1), January 2001 (1) and February 2001
(1);

         NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree to amend the Agreement as follows:

--------------------------------------------------------------------------------
***      PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
         OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH
         THE COMMISSION.

P.A. No. 1810                      SA-9-1
K/SWA

<PAGE>   36

1. The Table of Contents of the Agreement is deleted in its entirety and a new
Table of Contents is attached hereto and incorporated into the Agreement by this
reference.

2. Article 1, entitled "Subject Matter of Sale," paragraph 1.1 entitled "The
Aircraft" is deleted in its entirety and replaced by a new paragraph 1.1 revised
to reflect one hundred forty-two (142) Aircraft. Such new page 1-1 is attached
hereto and incorporated into the Agreement by this reference.

3. Article 2, entitled "Delivery, Title and Risk of Loss," paragraph 2.1,
entitled "Time of Delivery," is deleted in its entirety and replaced by a new
paragraph 2.1 revised to add six (6) Block "L" Aircraft for delivery in
September 2000 (1), October 2000 (1), November 2000 (1), December 2000 (1),
January 2001 (1) and February 2001 (1). Such new pages 2-1, 2-2 and 2-3 are
attached hereto and incorporated into the Agreement by this reference.

4. Article 3, entitled "Price of Aircraft", paragraph 3.4 entitled "Advance
Payment Base Price," subparagraph 3.4.1 entitled "Advance Payment Base Price"
is revised by adding Advance Payment Base Prices for the exercised Block "L"
September 2000, October 2000, November 2000, December 2000, January 2001 and
February 2001 Aircraft, and by revising the Advance Payment Base Prices to
reflect current escalation factors as of the date of this Supplemental
Agreement for the Block "H" April 2001 and October 2001 Aircraft and the Block
"L" November 2000, December 2000, July 2001, September 2001 and October 2001
Aircraft. Such new pages 3-1, 3-2, 3-3 and 3-4 are attached hereto and
incorporated into the Agreement by this reference.

5. Letter Agreement No. 6-1162-RLL-933R7 entitled "Option Aircraft" is deleted
in its entirety and replaced with Letter Agreement No. 6-1162-RLL-933R8 attached
hereto and incorporated herein by this reference. The third paragraph is revised
to refer to forty-six (46) Rollover Option Aircraft. Article 2 entitled
"Delivery of Rollover Option Aircraft," paragraph 2.1 is revised to change the
quantity of Rollover Option Aircraft from twelve (12) to six (6) in the year
2009; paragraph 2.2 and subparagraphs 2.2.1 and 2.2.2 are revised by changing
the quantity of Rollover Option Aircraft from fifty-two (52) to forty-six (46).

6. All references in the Letter Agreements associated with Purchase Agreement
No. 1810 shall be deemed to refer to

P.A. No. 1810                      SA-9-2
K/SWA

<PAGE>   37

the purchase by Buyer of one hundred forty-two (142) Model 737-7H4 Aircraft,
sixty-two (62) Model 737-7H4 Option Aircraft and forty-six (46) Model 737-7H4
Rollover Option Aircraft, to the extent such reference is not specifically
addressed herein.

P.A. No. 1810                      SA-9-3
K/SWA

<PAGE>   38

7. Concurrent with execution of this Supplemental Agreement, Buyer will pay to $
***. Such amount reflects the difference in advance payments due as a result of
the exercise of the Option to purchase six Aircraft, the revision in Advance
Payment Base Price for Aircraft as described above and the deposits due for six
Rollover Option Aircraft converted to Option Aircraft.

The Agreement will be deemed to be supplemented to the extent herein provided
and as so supplemented will continue in full force and effect.

EXECUTED IN DUPLICATE as of the day and year first above written.

THE BOEING COMPANY                      SOUTHWEST aIRLINES cO.

By:    /S/ DAWN S. FOSTER               By:  /S/ LAURA WRIGHT
    ------------------------               -------------------------------------

Its:    ATTORNEY-IN-FACT                Its: TREASURER
     -----------------------                ------------------------------------

P.A. No. 1810                      SA-9-4
K/SWA

<PAGE>   39

                               PURCHASE AGREEMENT

                                     between

                               THE BOEING COMPANY

                                       and

                             SOUTHWEST AIRLINES CO.

                    Relating to Boeing Model 737-7H4 Aircraft

                         Purchase Agreement Number 1810

--------------------------------------------------------------------------------
***      PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
         OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH
         THE COMMISSION.

P.A. No. 1810                         15-1
K/SWA

<PAGE>   40

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        Page            SA
                                                                      Number        Number
                                                                      ------        ------
ARTICLES
--------

<S>                                                                   <C>           <C>
1.   Subject Matter of Sale........................................     1-1          SA-9

2.   Delivery, Title and Risk
     of Loss.......................................................     2-1          SA-9

3.   Price of Aircraft.............................................     3-1          SA-9

4.   Taxes.........................................................     4-1

5.   Payment.......................................................     5-1

6.   Excusable Delay...............................................     6-1

7.   Changes to the Detail
     Specification.................................................     7-1          SA-1

8.   Federal Aviation Requirements and
     Certificates and Export License...............................     8-1

9.   Representatives, Inspection,
     Flights and Test Data.........................................     9-1

10.  Assignment, Resale or Lease...................................    10-1

11.  Termination for Certain Events................................    11-1

12.  Product Assurance; Disclaimer and
     Release; Exclusion of Liabilities;
     Customer Support; Indemnification
     and Insurance.................................................    12-1

13.  Buyer Furnished Equipment and
     Spare Parts...................................................    13-1

14.  Contractual Notices and Requests..............................    14-1

15.  Miscellaneous.................................................    15-1
</TABLE>

P.A. No. 1810                         15-2
K/SWA

<PAGE>   41

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                             SA
                                                         Number
                                                         ------

EXHIBITS
--------

<S>         <C>                                           <C>
A           Aircraft Configuration                        SA-1

B           Product Assurance Document                    SA-1

C           Customer Support Document

D           Price Adjustments Due to
            Economic Fluctuations - Aircraft

E           Buyer Furnished Equipment
            Provisions Document

F           Defined Terms Document
</TABLE>

LETTER AGREEMENTS

1810-1      Waiver of Aircraft Demonstration Flight

P.A. No. 1810                         15-3
K/SWA

<PAGE>   42

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                      SA
                                                                  Number
                                                                  ------
RESTRICTED LETTER AGREEMENTS
----------------------------

<S>                                                               <C>
6-1162-RLL-932        Promotional Support

6-1162-RLL-933R8      Option Aircraft                              SA-9

6-1162-RLL-934R1      Disclosure of Confidential                   SA-1
                      Information

6-1162-RLL-935R1      Performance Guarantees                       SA-1

6-1162-RLL-936R4      Certain Contractual Matters                  SA-4

6-1162-RLL-937        Alternate Advance Payment Schedule

6-1162-RLL-938         ***

6-1162-RLL-939R1      Certification Flight Test Aircraft           SA-1

6-1162-RLL-940R1      Training Matters                             SA-1

6-1162-RLL-941R1      Other Matters                                SA-1

6-1162-RLL-942        Open Configuration Matters

6-1162-RLL-943R1      Substitution Rights                          SA-6

6-1162-RLL-944        Airframe Maintenance Material Cost
                      Protection Program

6-1162-RLL-945        Comparison of 737-7H4 and 737-3H4
                      Block Fuel Burn

6-1162-RLL-1855R3     Additional Contractual Matters               SA-4

6-1162-RLL-1856        ***                                         SA-1

6-1162-RLL-1857       Service Ready Validation Program             SA-1
                      Field Test

6-1162-RLL-1858R1     Escalation Matters                           SA-4
</TABLE>

P.A. No. 1810                         15-4
K/SWA

<PAGE>   43

                             TABLE OF CONTENTS CON'T

<TABLE>
<CAPTION>
                                                         SA
                                                     Number
                                                     ------
RESTRICTED LETTER AGREEMENTS
----------------------------

<S>                                                  <C>
6-1162-RLL-2036   Amortization of Costs for
                  Customer Unique Changes             SA-1

6-1162-RLL-2037   Reconciliation of the Aircraft      SA-1
                  Basic Price

6-1162-RLL-2073   Maintenance Training Matters        SA-1
</TABLE>

P.A. No. 1810                         15-5
K/SWA

<PAGE>   44

                           PURCHASE AGREEMENT NO. 1810

                                   Relating to

                          BOEING MODEL 737-7H4 AIRCRAFT

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

         This Agreement is entered into as of January 19th 1994, by and between
The Boeing Company, a Delaware corporation, with its principal office in
Seattle, Washington (Boeing), and Southwest Airlines Co., a Texas corporation,
with its principal office in the City of Dallas, State of Texas (Buyer).

Accordingly, Boeing and Buyer agree as follows:

P.A. No. 1810                         15-6
K/SWA

<PAGE>   45

ARTICLE 1. Subject Matter of Sale.

         1.1 The Aircraft. Subject to the terms and conditions of this
Agreement, Boeing will manufacture and deliver to Buyer and Buyer will purchase
and accept delivery from Boeing of one hundred forty-two (142) Boeing Model
737-7H4 aircraft (the Aircraft) manufactured in accordance with Boeing Detail
Specification D6-38808-1, dated October 30, 1996, as described in Exhibit A, as
modified from time to time in accordance with this Agreement (Detail
Specification).

         1.2 Additional Goods and Services. In connection with the sale of the
Aircraft, Boeing will also provide to Buyer certain other things under this
Agreement, including data, documents, training and services, all as described in
this Agreement.

         1.3 Performance Guarantees. Any performance guarantees applicable to
the Aircraft will be expressly included in this Agreement. Where performance
guarantees are included in this Agreement other than within the Detail
Specification, such guarantees will be treated as being incorporated in the
Detail Specification by this reference.

         1.4 Defined Terms. For ease of use, certain terms are treated as
defined terms in this Agreement. Such terms are identified with a capital letter
and set forth and/or defined in Exhibit F.

P.A. No. 1810                         15-7
K/SWA

<PAGE>   46

ARTICLE 2. Delivery, Title and Risk of Loss.

         2.1 Time of Delivery. The Aircraft will be delivered to Buyer by
Boeing, assembled and ready for flight and Buyer will accept delivery of the
Aircraft, in accordance with the following schedule:

<TABLE>
<CAPTION>
Month and Year
 of Delivery                             Quantity of Aircraft
 -----------                             --------------------

                   Block A Aircraft
                   ----------------
<S>                                              <C>
October 1997                                     Two (2)
November 1997                                    Two (2)
</TABLE>

<TABLE>
<CAPTION>
                   Block B Aircraft
                   ----------------
<S>                                              <C>
January 1998                                     Two (2)
February 1998                                    Three (3)
March 1998                                       Two (2)
April 1998                                       Two (2)
May 1998                                         Two (2)
June 1998                                        One (1)
July 1998                                        Two (2)
September 1998                                   Two (2)
</TABLE>

<TABLE>
<CAPTION>
                   Block C Aircraft
                   ----------------
<S>                                              <C>
February 1999                                    Four (4)
May 1999                                         Four (4)
July 1999                                        Four (4)
August 1999                                      One (1)
September 1999                                   Three (3)
</TABLE>

<TABLE>
<CAPTION>
                   Block D Aircraft
                   ----------------
<S>                                              <C>
November 1999                                    Two (2)
December 1999                                    One (1)
January 2000                                     One (1)
March 2000                                       Four (4)
July 2000                                        Four (4)
September 2000                                   Three (3)
</TABLE>

<TABLE>
<CAPTION>
                   Block E Aircraft
                   ----------------
<S>                                              <C>
January 2001                                     Three (3)
March 2001                                       Three (3)
July 2001                                        Three (3)
September 2001                                   Three (3)
</TABLE>

P.A. No. 1810                         15-8
K/SWA

<PAGE>   47

<TABLE>
<CAPTION>
                   Block F Aircraft
                   ----------------
<S>                                              <C>
October 1998                                     One (1)
November 1998                                    Two (2)
December 1998                                    Two (2)
</TABLE>

<TABLE>
<CAPTION>
                   Block G Aircraft
                   ----------------
<S>                                              <C>
March 1999                                       Two (2)
</TABLE>

<TABLE>
<CAPTION>
                   Block H Aircraft
                   ----------------
<S>                                              <C>
June 1999                                        Two (2)
July 1999                                        One (1)
August 1999                                      One (1)
September 1999                                   Two (2)
October 1999                                     One (1)
April 2000                                       Three (3)
October 2000                                     Three (3)
April 2001                                       Three (3)
October 2001                                     Three (3)
</TABLE>

<TABLE>
<CAPTION>
                   Block I Aircraft
                   ----------------
<S>                                              <C>
January 2002                                     Four (4)
March 2002                                       Four (4)
April 2002                                       Two (2)
July 2002                                        Four (4)
October 2002                                     Four (4)
</TABLE>

<TABLE>
<CAPTION>
                   Block J Aircraft
                   ----------------
<S>                                              <C>
January 2003                                     Four (4)
March 2003                                       One (1)
</TABLE>

<TABLE>
<CAPTION>
                   Block K Aircraft
                   ----------------
<S>                                              <C>
April 2004                                       Two (2)
July 2004                                        Three (3)
</TABLE>

<TABLE>
<CAPTION>
                   Block L Aircraft
                   ----------------
<S>                                              <C>
October 1999                                     One (1)
November 1999                                    Two (2)
December 1999                                    One (1)
June 2000                                        Three (3)
July 2000                                        One (1)
August 2000                                      Two (2)
September 2000                                   One (1)
October 2000                                     One (1)
November 2000                                    Three (3)
December 2000                                    Two (2)
January 2001                                     One (1)
February 2001                                    One (1)
July 2001                                        One (1)
September 2001                                   One (1)
October 2001                                     One (1)
September 2002                                   Three (3)
</TABLE>

P.A. No. 1810                         15-9
K/SWA

<PAGE>   48

         2.2 Notice of Target Delivery Date. Boeing will give Buyer notice of
the Target Delivery Date of the Aircraft approximately 30 days prior to the
scheduled month of delivery.

         2.3 Notice of Delivery Date. If Boeing gives Buyer at least 7 days'
notice of the delivery date of the Aircraft, and an Aircraft delivery is delayed
beyond such delivery date due to the responsibility of Buyer, Buyer will
reimburse Boeing for all costs incurred by Boeing as a result of such delay,
including amounts for storage, insurance, Taxes, preservation or protection of
the Aircraft and interest on payments due.

         2.4 Place of Delivery. The Aircraft will be delivered at an airport
facility selected by Boeing in the State of Washington, unless mutually agreed
otherwise.

         2.5 Title and Risk of Loss. Title to and risk of loss of an Aircraft
will pass from Boeing to Buyer upon delivery of such Aircraft, but not prior
thereto.

         2.6 Bill of Sale. Upon delivery of an Aircraft Boeing will deliver to
Buyer a bill of sale conveying good title to such Aircraft, free of all liens,
claims, charges and encumbrances of every kind whatsoever, and such other
appropriate documents of title as Buyer may reasonably request.

P.A. No. 1810                         15-10
K/SWA

<PAGE>   49

ARTICLE 3. Price of Aircraft.

         3.1 Definitions.

                  3.1.1 Special Features are the features incorporated in
Exhibit A which have been selected by Buyer.

                  3.1.2 Base Aircraft Price is the Aircraft Basic Price
excluding the price of Special Features.

                  3.1.3 Aircraft Basic Price is comprised of the Base Aircraft
Price and the price of the Special Features.

                  3.1.4 Economic Price Adjustment is the adjustment to the
Aircraft Basic Price (Base Aircraft and Special Features) as calculated pursuant
to Exhibit D.

                  3.1.5 Aircraft Price is the total amount Buyer is to pay for
the Aircraft at the time of delivery.

         3.2 Aircraft Basic Price.

                  The Aircraft Basic Price, expressed in July 1992 dollars, is
set forth below:

<TABLE>
<CAPTION>
                     Base               Special        Aircraft
                     Aircraft Price     Features       Basic Price
<S>                  <C>                <C>            <C>
Block A, B, C,
D & E Aircraft       $ ***              $ ***          $ ***
Block F & G
Aircraft             $ ***              $ ***          $ ***
Block H
Aircraft             $ ***              $ ***          $ ***
Block I
Aircraft             $ ***              $ ***          $ ***
Block J
Aircraft             $ ***              $ ***          $ ***
Block K
Aircraft             $ ***              $ ***          $ ***
Block L Aircraft
                     $ ***              $ ***          $ ***
</TABLE>

         3.3 Aircraft Price. The Aircraft Price will be established at the time
of delivery of such Aircraft to Buyer and will be the sum of:

                  3.3.1 the Aircraft Basic Price, which is *** for the Block A,
B, C, D and E Aircraft, *** for the Block F and G Aircraft, *** for the Block H
Aircraft, *** for the

P.A. No. 1810                         15-11
K/SWA

<PAGE>   50

Block I Aircraft, *** for the Block J Aircraft, *** for the Block K Aircraft and
*** for the Block L Aircraft; plus

                  3.3.2 the Economic Price Adjustments for the Aircraft Basic
Price, as calculated pursuant to the formulas set forth in Exhibit D (Price
Adjustments Due to Economic Fluctuations - Aircraft); plus 3.3.3 other price
adjustments made pursuant to this Agreement or other written agreements executed
by Boeing and Buyer.

         3.4 Advance Payment Base Price.

                  3.4.1 Advance Payment Base Price. For advance payment
purposes, the following estimated delivery prices of the Aircraft (Advance
Payment Base Price) have been established, using currently available forecasts
of the escalation factors used by Boeing as of the date of signing this
Agreement. The Advance Payment Base Price of each Aircraft is set forth below:

<TABLE>
<CAPTION>
Month and Year of                                Advance Payment Base
Scheduled Delivery                               Price per Aircraft
------------------                               ------------------

                         Block A Aircraft ***
                         ----------------
<S>                                              <C>
October 1997
November 1997
</TABLE>

<TABLE>
<CAPTION>
                         Block B Aircraft ***
                         ----------------
<S>                                              <C>
January 1998
February 1998
March 1998
April 1998
May 1998
June 1998
July 1998
September 1998
</TABLE>

<TABLE>
<CAPTION>
                         Block C Aircraft ***
                         ----------------
<S>                                              <C>
February 1999
May 1999
July 1999
August 1999
September 1999
</TABLE>

<TABLE>
<CAPTION>
                         Block D Aircraft ***
                         ----------------
<S>                                              <C>
November 1999
December 1999
January 2000
March 2000
July 2000
September 2000
</TABLE>

P.A. No. 1810                         15-12
K/SWA

<PAGE>   51

<TABLE>
<CAPTION>
            Block E Aircraft ***
            ----------------
<S>                                              <C>
January 2001
March 2001
July 2001
September 2001
</TABLE>

<TABLE>
<CAPTION>
            Block F Aircraft ***
            ----------------
<S>                                              <C>
October 1998
November 1998
December 1998
</TABLE>

<TABLE>
<CAPTION>
            Block G Aircraft ***
            ----------------
<S>                                              <C>
March 1999
</TABLE>

<TABLE>
<CAPTION>
            Block H Aircraft ***
            ----------------
<S>                                              <C>
June 1999
July 1999
August 1999
September 1999
October 1999
April 2000
October 2000
April 2001
October 2001
</TABLE>

<TABLE>
<CAPTION>
            Block I Aircraft ***
            ----------------
<S>                                              <C>
January 2002
March 2002
April 2002
July 2002
October 2002
</TABLE>

<TABLE>
<CAPTION>
            Block J Aircraft ***
            ----------------
<S>                                              <C>
January 2003
March 2003
</TABLE>

<TABLE>
<CAPTION>
            Block K Aircraft ***
            ----------------
<S>                                              <C>
April 2004
July 2004
</TABLE>

P.A. No. 1810                         15-13
K/SWA

<PAGE>   52

<TABLE>
<CAPTION>
            Block L Aircraft ***
            ----------------
<S>                                              <C>
October 1999
November 1999
December 1999
June 2000
July 2000
August 2000
September 2000
October 2000
November 2000
December 2000
January 2001
February 2001
July 2001
September 2001
October 2001
September 2002
</TABLE>

                  3.4.2 Adjustment of Advance Payment Base Prices - Long-Lead
Aircraft. For Aircraft scheduled for delivery 36 months or more after the date
of this Agreement, the Advance Payment Base Prices appearing in Article 3.4.1
will be used to determine the amount of the first advance payment to be made by
Buyer on the Aircraft. No later than 25 months before the scheduled month of
delivery of each affected Aircraft, Boeing will increase or decrease the Advance
Payment Base Price of such Aircraft as required to reflect the effects of (i)
any adjustments in the Aircraft Basic Price pursuant to this Agreement and (ii)
the then-current forecasted escalation factors used by Boeing. Boeing will
provide the adjusted Advance Payment Base Prices for each affected Aircraft to
Buyer, and the advance payment schedule will be considered amended to substitute
such adjusted Advance Payment Base Prices.

P.A. No. 1810                         15-14
K/SWA

<PAGE>   53

6-1162-RLL-933R8

Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas  75235

Subject:  Letter Agreement No. 6-1162-RLL-933R8 to
          Purchase Agreement No. 1810 -
          Option Aircraft

This Letter Agreement amends Purchase Agreement No. 1810 dated as of January 19,
1994 (the Agreement) between The Boeing Company (Boeing) and Southwest Airlines
Co. (Buyer) relating to Model 737-7H4 aircraft (Aircraft).

All terms used and not defined herein will have the same meaning as in the
Agreement.

In consideration of the purchase by Buyer of the Aircraft, Boeing hereby agrees
to manufacture and sell to Buyer sixty-two (62) additional Model 737-7H4
aircraft as described in paragraph 1 of Attachment A hereto (Option Aircraft)
and forty-six (46) Model 737-7H4 Rollover Option Aircraft (Rollover Option
Aircraft), subject to the terms and conditions set forth below.

1.       Delivery of Option Aircraft.

         The Option Aircraft will be delivered to Buyer during or before the
months set forth in the following schedule:

--------------------------------------------------------------------------------
***      PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
         OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH
         THE COMMISSION.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   54

Southwest Airlines Co.
6-1162-RLL-933R8    Page 2

<TABLE>
<CAPTION>
                     Number of                Option
Month and Year       Option                  Aircraft
of Delivery          Aircraft                  Block
--------------       --------                --------
<S>                  <C>                      <C>
March 2003           Three  (3)                  M
April 2003           Two   (2)                   M
July 2003            Four  (4)                   M
October 2003         Four  (4)                   M

January 2004         Four (4)                    N
March 2004           One (1)                     N
April 2004           One   (1)                   N
August 2004          Two   (2)                   N
September 2004       Three (3)                   N
October 2004         Two   (2)                   N
</TABLE>

<TABLE>
<CAPTION>
                     Number of                Option
Month and Year       Option                  Aircraft
of Delivery          Aircraft                  Block
--------------       --------                --------
<S>                  <C>                     <C>
January 2005         Four (4)                    O
March 2005           Four (4)                    O
April 2005           Two (2)                     O
July 2005            Four (4)                    O
October 2005         Four (4)                    O

January 2006         Four (4)                    P
March 2006           Four (4)                    P
April 2006           Two (2)                     P
July 2006            Four (4)                    P
October 2006         Four (4)                    P
</TABLE>

2.       Delivery of Rollover Option Aircraft.

         2.1 The Rollover Option Aircraft will be delivered to Buyer during or
before the years set forth in the following schedule:

<TABLE>
<CAPTION>
                                     Option
Year of     Number of               Aircraft
Delivery    Option Aircraft           Block
--------    ---------------         --------
<S>         <C>                     <C>
2007        Twenty (20)                Q
2008        Twenty (20)                R
2009        Six (6)                    S
</TABLE>

         2.2 The forty-six (46) Rollover Option Aircraft are offered to Buyer
subject to the following conditions:

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   55

Southwest Airlines Co.
6-1162-RLL-933R8    Page 3

                  2.2.1 Buyer can exercise any forty-six (46) of the sixty-two
(62) Option Aircraft, and will be offered a Rollover Option Aircraft for each
option aircraft exercised up to and including forty-six (46).

                  2.2.2 Conversely to Article 2.2.1 above, if Buyer does not
exercise a minimum of forty-six (46) Option Aircraft, one Rollover Option
Aircraft will be deleted for each Option Aircraft not exercised by Buyer.

                  2.2.3 When Buyer exercises one or more Option Aircraft, Boeing
will offer the same quantity of Rollover Option Aircraft to Buyer in the years
identified in Article 2.1 above.

                  2.2.4 The Rollover Option Aircraft delivery month offered by
Boeing to Buyer will be at least 24 months from the Option exercise date of the
corresponding option.

                  2.2.5 When Boeing offers the Rollover Option Aircraft to
Buyer, Buyer will accept such Rollover Option Aircraft by wire transferring
$100,000 to Boeing. In the event Buyer exercises its option to purchase the
Rollover Option Aircraft, such application will be in accordance with Article
4.1 herein.

3.       Price.

         3.1 The advance payment base prices of the Option Aircraft set forth
below and in paragraph 2.1 of Attachment A represent the estimated delivery
prices of the Option Aircraft. The Option Aircraft pricing elements and
associated pricing terms and conditions are given in Attachment A.

         3.2 Price and escalation provisions for Model 737-7H4 aircraft
delivering after 2002, are not currently available. The estimated Advance
Payment Base Prices shown in paragraph 3.3 below and in paragraph 2.1 of
Attachment A are based on currently available price and escalation provisions.
As price and escalation provisions become available for Model 737-7H4 aircraft
delivering after 2002, such price and escalation provisions will be
appropriately applied to the applicable Option Aircraft.

For additional information relating to price and escalation provisions
applicable to Option Aircraft delivering after 2002 refer to paragraphs 2.2 and
3.2 of Attachment A.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   56

Southwest Airlines Co.
6-1162-RLL-933R8    Page 4

         3.3 The Advance Payment Base Prices of the Option Aircraft indicated
below do include an amount for special features in addition to those
specifically described in Attachment A but do not include any amount for items
of Buyer Furnished Equipment (BFE). An estimate for typical special features is
$ *** per Aircraft (expressed in 1992 STE dollars) and for BFE is $ *** per
Aircraft (expressed in delivery year dollars).

<TABLE>
<CAPTION>
Month and Year                   Advance Payment Base
of Delivery                   Price per Option Aircraft
-----------                   -------------------------

            Block M Aircraft
            ----------------
<S>                           <C>
March 2003                             ***
April 2003                             ***
July 2003                              ***
October 2003                           ***
</TABLE>

<TABLE>
<CAPTION>
            Block N Aircraft
            ----------------
<S>                           <C>
January 2004                           ***
March 2004                             ***
April 2004                             ***
August 2004                            ***
September 2004                         ***
October 2004                           ***
</TABLE>

<TABLE>
<CAPTION>
            Block O Aircraft
            ----------------
<S>                           <C>
January 2005                           ***
March 2005                             ***
April 2005                             ***
July 2005                              ***
October 2005                           ***
</TABLE>

<TABLE>
<CAPTION>
            Block P Aircraft
            ----------------
<S>                           <C>
January 2006                           ***
March 2006                             ***
April 2006                             ***
July 2006                              ***
October 2006                           ***
</TABLE>

         3.4 The Option Aircraft purchase price will be the applicable basic
price thereof at the time of Option Aircraft delivery adjusted in accordance
with Boeing's Aircraft escalation provisions contained in the definitive
agreement to purchase the Option Aircraft. The purchase price will include the
price for Seller Purchased Equipment (SPE) if Buyer has elected to change Buyer
Furnished Equipment (BFE) to SPE.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   57

Southwest Airlines Co.
6-1162-RLL-933R8    Page 5

4.       Option Aircraft Payment.

         4.1 In consideration of the granting of the option as set forth herein,
on or before the date Boeing and Buyer enter into a definitive agreement to
purchase the Aircraft, Buyer will pay a deposit to Boeing of $100,000 for each
Option Aircraft (Deposit). In the event Buyer exercises its option herein, the
amount of the Deposit will be credited against the first advance payment due for
such Option Aircraft pursuant to the advance payment schedule set forth in
paragraph 3 of Attachment A. The Deposits for the Option Aircraft will be
refunded to Buyer, without interest, if the parties do not enter into a
definitive Agreement for the Aircraft.

In the event that, after the parties enter into a definitive agreement to
purchase the Aircraft, Buyer does not exercise its option to purchase the Option
Aircraft pursuant to the terms and conditions set forth herein, Boeing will be
entitled to retain the Deposits for the Option Aircraft except as provided in
paragraphs 6 herein.

         4.2 Advance payments in the amount of 30% of the advance payment base
price will be payable on the Option Aircraft in accordance with paragraph 3 of
Attachment A. The remainder of the Option Aircraft purchase price is due at the
time of delivery of the Option Aircraft.

5.       Option Exercise.

         5.1 To exercise its Option, Buyer will give written or telegraphic
notice thereof to Boeing on or before eighteen (18) months prior to the first
day of the delivery month of each Option Aircraft.

In such notice Buyer will select the Option Model type, and the applicable
delivery positions.

         5.2 It is understood and agreed that Boeing may accelerate the option
exercise dates specified above if Boeing must make production decisions which
are dependent on Buyer's decision to buy the Option Aircraft. If Boeing elects
to accelerate the option exercise dates, Boeing will do so by giving written or
telegraphic notice thereof to Buyer. Such notice will specify the revised option
exercise dates, which will not be earlier than 30 days after the date of

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   58

Southwest Airlines Co.
6-1162-RLL-933R8    Page 6

transmittal of such notice, and the Option Aircraft delivery positions affected
by such revision. If Buyer fails to exercise its option for any Option Aircraft
affected by such revised dates, the Deposit applicable to such Option Aircraft
will be promptly refunded, with interest, to Buyer. The interest rate for
calculation of the interest associated with such refund is the rate of two
percent (2%) below the Citibank base rate in effect from time to time during the
period the option deposit is held by Boeing.

6.       Contract Terms.

         It is understood that Boeing and Buyer will use their best efforts to
enter into a definitive agreement for the Option Aircraft within thirty (30)
days after Buyer exercises an option to purchase Option Aircraft pursuant to
paragraph 5 covering the detailed terms and conditions for the sale of such
Option Aircraft.

Such definitive agreement will include the terms and conditions contained herein
together with the terms and conditions, not inconsistent herewith, contained in
Boeing's then-current standard form of purchase agreement for the sale of Model
737-700 aircraft in effect as of the date of option exercise and such additional
terms and conditions as may be mutually agreed upon. In the event the parties
have not entered into such an agreement within the time period contemplated
herein, either party may, exercisable by written or telegraphic notice given to
the other within thirty (30) days after such period, terminate the purchase of
such Option Aircraft.

7.       Termination of Option to Purchase.

         Either Boeing or Buyer may terminate the option to purchase an Option
Aircraft if any of the following events are not accomplished by the respective
dates contemplated in this letter agreement, or in the Agreement, as the case
may be:

         (i) termination of the purchase of the Aircraft under the Agreement for
any reason;

         (ii) payment by Buyer of the Deposit with respect to an Option Aircraft
pursuant to paragraph 4.1 herein;

         (iii) exercise of an option to purchase an Option Aircraft pursuant to
the terms hereof. Any termination of an option to purchase by Boeing which is
based on the termination of the purchase of

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   59

Southwest Airlines Co.
6-1162-RLL-933R8    Page 7

Aircraft under the Agreement will be on a one-for-one basis, for each Aircraft
so terminated.

Any cancellation of an option to purchase which is based on failure to make the
required Deposit or to exercise the option to purchase shall only apply to the
Option Aircraft so canceled.

Termination of an option to purchase provided by this letter agreement will be
caused by either party giving written notice to the other within 10 days after
the applicable date. Upon receipt of such notice, all rights and obligations of
the parties with respect to an Option Aircraft for which the option to purchase
has been terminate will thereupon terminate.

If termination is result of a revision of an option exercise date by Boeing
pursuant to paragraph 5.2, Boeing will promptly refund to Buyer, without
interest, any payments received from Buyer, including the Deposit, with respect
to the Option Aircraft for which the option is terminated. If termination is for
any other reason, Boeing will promptly refund to Buyer, without interest, any
payments received from Buyer with respect to the affected Option Aircraft,
except the Deposit, which Buyer may apply to any model Boeing aircraft purchased
by Buyer from Boeing at a future date.

8. Confidential Treatment. Buyer understands that certain commercial and
financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees that it
will treat this Letter Agreement and the

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   60

Southwest Airlines Co.
6-1162-RLL-933R8    Page 8

information contained herein as confidential and will not, without the prior
written consent of Boeing, disclose this Letter Agreement or any information
contained herein to any other person or entity except as provided in Letter
Agreement No. 6-1162-RLL-934R1.

Very truly yours,

THE BOEING COMPANY

By  /S/ DAWN S. FOSTER
  --------------------------

Its ATTORNEY-IN-FACT
    ------------------------

ACCEPTED AND AGREED TO this

date: April 29, 1999

SOUTHWEST AIRLINES CO.

By  /S/ LAURA WRIGHT
  --------------------------
Its  TREASURER
    ------------------------
Attachments

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   61

Attachment A to
6-1162-RLL-933R8
Page 1

Model 737-7H4 Aircraft

1.       Option Aircraft Description and Changes.

         1.1 Aircraft Description. The Option Aircraft is described by Boeing
Detail Specification D6-38808-1, Dated October 30 ,1996.

         1.2 Changes. The Detail Specification will be revised to include:

                  (1) Changes applicable to the basic Model 737-700 aircraft
which are developed by Boeing between the date of the Detail Specification and
the signing of a definitive agreement to purchase the Option Aircraft.

                  (2) Changes mutually agreed upon.

                  (3) Changes required to obtain a Standard Certificate of
Airworthiness.

                  (4) To provide sufficient Option Aircraft manufacturing and
procurement lead time it is necessary for Boeing and Buyer to reach final
agreement on the Option Aircraft configuration, including BFE/SPE vendor
selection fifteen (15) months prior to delivery of each Option Aircraft. If such
items are not resolved by the indicated dates, Boeing reserves the right to
amend this letter agreement:

                           (i) to adjust the scheduled delivery of the Option
Aircraft to a later time period and,

                           (ii) to make such other changes as are appropriate
and consistent with the revised Option Aircraft deliveries.

         1.3 Effect of Changes. Changes to the Detail Specification incorporated
pursuant to the provisions of the clauses above will include the effects of such
changes upon Option Aircraft weight, balance, design and performance.
Performance guarantees for the Option Aircraft which are mutually acceptable to
the parties will be included in the definitive agreement for the Option
Aircraft.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   62

Attachment A to
6-1162-RLL-933
Page 2

P.A. No. 1810
K/SWA

2.       Price Description

         2.1      Price Elements Per Aircraft

<TABLE>
<CAPTION>
                     1                2         3
                     -                -         -

                 AIRCRAFT &                             ADV. PMT.
AIRCRAFT       ESTIMATED SPECIAL             ESTIMATED  BASE PRICE
DELIVERY        FEATURES PRICE    ESTIMATED  ESCALATION (Elements)
MO. & YR.       (JULY 1992$)     ESCALATION  SHARING     1 + 2 + 3
---------       ---------------- ----------  ---------- -----------
<S>            <C>               <C>         <C>        <C>
BLOCK M
-------

March 2003      $    ***            ***        ***         ***
April 2003      $    ***            ***        ***         ***
July 2003       $    ***            ***        ***         ***
October 2003    $    ***            ***        ***         ***

BLOCK N
-------

January 2004    $    ***            ***        ***         ***
March 2004      $    ***            ***        ***         ***
April 2004      $    ***            ***        ***         ***
August 2004     $    ***            ***        ***         ***
September 2004  $    ***            ***        ***         ***
October 2004    $    ***            ***        ***         ***

BLOCK O
-------

January 2005    $    ***            ***        ***         ***
March 2005      $    ***            ***        ***         ***
April 2005      $    ***            ***        ***         ***
July 2005       $    ***            ***        ***         ***
October 2005    $    ***            ***        ***         ***

BLOCK P
-------

January 2006    $    ***            ***        ***         ***
March 2006      $    ***            ***        ***         ***
April 2006      $    ***            ***        ***         ***
July 2006       $    ***            ***        ***         ***
October 2006    $    ***            ***        ***         ***
</TABLE>

Continued Next Page...

P.A. No. 1810
K/SWA                                                                 SA-9

<PAGE>   63

Attachment A to
6-1162-RLL-933R8
Page 3

2.       Price Description. (Continued)

         2.2 Price Adjustments For Option Aircraft Delivering From March 2003
through December 2009.

         2.2.1 Special Features. The price for Special Features incorporated in
the Option Aircraft Detail Specification will be adjusted to Boeing's
then-current prices for such features as of the date of execution of the
definitive agreement for the Option Aircraft.

         2.2.2 Escalation Adjustments. For escalation provisions applicable to
Option Aircraft delivering after 2002, see paragraph 2.2.6 below.

         2.2.3 Base Price Adjustments for FAA Changes. The Aircraft Basic Price
of the Option Aircraft will be adjusted for any FAA mandated changes
incorporated into the Aircraft.

         2.2.4 Price Adjustments for Changes. Boeing may adjust the Aircraft
Basic Price and the Advance Payment Base Price for any changes mutually agreed
upon subsequent to the date that Buyer and Boeing enter into a definitive
agreement for the Option Aircraft.

         2.2.5 Base Price Adjustments. The Aircraft Basic Price of the Option
Aircraft will be adjusted to Boeing's then-current prices as of the date of
execution of the definitive agreement for the Option Aircraft in accordance with
the agreement reached below. The Aircraft Basic Price starting point for options
delivering in 2003 is $ *** (July 1992 STE), for options delivering in 2004 is $
*** (July 1992 STE), for options delivering in 2005 through 2009 is $ *** (July
1992 STE). Such Aircraft Basic Price may increase in accordance with paragraphs
2.2.1, 2.2.2, 2.2.3 and 2.2.4. For any other changes to the Aircraft Basic
Price, Boeing may increase the Aircraft Basic Price by a maximum of $ *** (July
1992 STE) for Aircraft delivering in 2005 and by a maximum of $ *** (July 1992
STE) per year or portion thereof starting in January 2006.

         2.2.6 Prices for Long Lead Time Aircraft. Boeing has not established
escalation provisions for Model 737-700 aircraft for delivery 2003 and after.
Such escalation provisions (i) will be incorporated into the Option Aircraft
definitive agreement when such information is available and (ii) will be the
then-current escalation provisions applicable to the same model aircraft and
engines delivering in the same time period as the Option Aircraft. The resulting
revisions to the definitive agreement will

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   64

Attachment A to
6-1162-RLL-933R8
Page 4

include but not be limited to, adjustment of the Aircraft Basic Price of the
Option Aircraft, the Advance Payment Base Price, the Aircraft escalation
provisions and the advance payment amounts due on the Option Aircraft.

         2.2.7 BFE to SPE. An estimate of the total price for items of Buyer
Furnished Equipment (BFE) changed to Seller Purchased Equipment (SPE) pursuant
to the Configuration Specification is included in the Option Aircraft price
build-up. The purchase price of the Option Aircraft will be adjusted by the
price charged to Boeing for such items plus 10% of such price. If all BFE except
developmental avionics is converted to SPE, Boeing will waive the 10% fee.

3.       Advance Payment Schedules, Prices and Adjustments.

         3.1 Buyer will pay to Boeing advance payments for the Option Aircraft
on the dates and in the amounts determined below.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   65

Attachment A to
6-1162-RLL-933R8
Page 5

<TABLE>
<CAPTION>
                                     Amount Due per Aircraft
                                       (Percentage times
Due Date of Payment                Advance Payment Base Price)
-------------------
<S>                                           <C>
Deposit                                        $100,000 (if applicable)

18 months prior to the first                   15% (less the
day of the scheduled delivery                       Deposit if any)
month of the Aircraft

12 months prior to the first                    5%
day of the scheduled delivery
month of the Aircraft

9 months prior to the first                     5%
day of the scheduled delivery
month of the Aircraft

6 months prior to the first                     5%
day of the scheduled delivery
month of the Aircraft
                                              ---

           Total                               30%
</TABLE>

Any advance payments that would be past due as of the date of signing the
definitive purchase agreement for the Option Aircraft in accordance with the
above schedule are due and payable on such date.

         3.2 Option Aircraft advance payment base prices will be increased or
decreased, as appropriate, at the time of signing of the definitive purchase
agreement for the Option Aircraft, using the then-current forecasted aircraft
escalation factors used by Boeing, to determine the amount of the advance
payments to be made by Buyer on the Option Aircraft.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   66

Attachment B to
6-1162-RLL-933R8
Page 1

                             PRICE ADJUSTMENT DUE TO
                              ECONOMIC FLUCTUATIONS
                            AIRCRAFT PRICE ADJUSTMENT
                             (July 1992 Base Price)

1.       Formula.

         The Aircraft Price Adjustment will be determined at the time of
Aircraft delivery in accordance with the following formula:

        Pa = (P)(L + M - 1)

         Where:

        Pa = Aircraft Price Adjustment.

         L =      .65 x  ECI
                        -----
                        116.2

         M =      .35 x  ICI
                        -----
                        115.9

         P = Aircraft Basic Price (as set forth in
             Article 3.2 of this Agreement).

       ECI = A value using the "Employment Cost Index for workers in
             aerospace manufacturing" (aircraft manufacturing, standard
             industrial classification code 3721, compensation, base month
             and year June 1989 = 100), as released by the Bureau of Labor
             Statistics, U.S. Department of Labor on a quarterly basis for
             the months of March, June, September and December, calculated
             as follows: A three-month arithmetic average value (expressed
             as a decimal and rounded to the nearest tenth) will be
             determined using the months set forth in the table below for
             the applicable Aircraft, with the released Employment Cost
             Index value described above for the month of March also being
             used for the months of January and February; the value for
             June also used for April and May; the value for September also
             used for July and August; and the value for December also used
             for October and November.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   67

Attachment B to
6-1162-RLL-933R8
Page 3

2. If at the time of delivery of an Aircraft Boeing is unable to determine the
Aircraft Price Adjustment because the applicable values to be used to determine
the ECI and ICI have not been released by the Bureau of Labor Statistics, then:

         2.1 The Aircraft Price Adjustment, to be used at the time of delivery
of each of the Aircraft, will be determined by utilizing the escalation
provisions set forth above. The values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Aircraft Price Adjustment. If no values have been released for an
applicable month, the provisions set forth in Paragraph 2.2 below will apply. If
prior to delivery of an Aircraft the U.S. Department of Labor changes the base
year for determination of the ECI or ICI values as defined above, such rebased
values will be incorporated in the Aircraft Price Adjustment calculation. The
payment by Buyer to Boeing of the amount of the Purchase Price for such
Aircraft, as determined at the time of Aircraft delivery, will be deemed to be
the payment for such Aircraft required at the delivery thereof.

         2.2 If prior to delivery of an Aircraft the U.S. Department of Labor
substantially revises the methodology used for the determination of the values
to be used to determine the ECI and ICI values (in contrast to benchmark
adjustments or other corrections of previously released values), or for any
reason has not released values needed to determine the applicable Aircraft Price
Adjustment, the parties will, prior to delivery of any such Aircraft, select a
substitute for such values from data published by the Bureau of Labor Statistics
or other similar data reported by non-governmental United States organizations,
such substitute to lead in application to the same adjustment result, insofar as
possible, as would have been achieved by continuing the use of the original
values as they may have fluctuated during the applicable time period.
Appropriate revision of the formula will be made as required to reflect any
substitute values. However, if within 24 months from delivery of the Aircraft
the Bureau of Labor Statistics should resume releasing values for the months
needed to determine the Aircraft Price Adjustment, such values will be used to
determine any increase or decrease in the Aircraft Price Adjustment for the
Aircraft from that determined at the time of delivery of such Aircraft.

P.A. No. 1810
K/SWA                                                                       SA-9

<PAGE>   68

Attachment B to
6-1162-RLL-933R8
Page 4

         2.3 In the event escalation provisions are made non-enforceable or
otherwise rendered null and void by any agency of the United States Government,
the parties agree, to the extent they may lawfully do so, to equitably adjust
the Purchase Price of any affected Aircraft to reflect an allowance for
increases or decreases in labor compensation and material costs occurring since
February, 1992, which is consistent with the applicable provisions of paragraph
1 of this Exhibit D.

3. For the calculations herein, the values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Aircraft Price Adjustment.

Note:    Any rounding of a number, as required under this Exhibit D with respect
         to escalation of the airframe price, will be accomplished as follows:
         if the first digit of the portion to be dropped from the number to be
         rounded is five or greater, the preceding digit will be raised to the
         next higher number.

<PAGE>   69

                                                                    EXHIBIT 10.1

                          Supplemental Agreement No. 10

                                       to

                           Purchase Agreement No. 1810

                                     between

                               The Boeing Company

                                       and

                             SOUTHWEST AIRLINES CO.

                    Relating to Boeing Model 737-7H4 Aircraft

         THIS SUPPLEMENTAL AGREEMENT, entered into as of August 2, 1999, by and
between THE BOEING COMPANY, a Delaware corporation with its principal offices in
Seattle, Washington, (Boeing) and SOUTHWEST AIRLINES CO., a Texas corporation
with its principal offices in City of Dallas, State of Texas (Buyer);

         WHEREAS, the parties hereto entered into Purchase Agreement No. 1810
dated January 19, 1994, relating to Boeing Model 737-7H4 aircraft (the
Agreement) and;

         WHEREAS, Buyer has agreed to accelerate one Block H Aircraft from April
2000 to March 2000;

         NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree to amend the Agreement as follows:

--------------------------------------------------------------------------------
***      PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
         OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH
         THE COMMISSION.

P.A. No. 1810                        SA-10-1
K/SWA

<PAGE>   70

1. The Table of Contents of the Agreement is deleted in its entirety and a new
Table of Contents is attached hereto and incorporated into the Agreement by this
reference.

2. Article 2, entitled "Delivery, Title and Risk of Loss," paragraph 2.1,
entitled "Time of Delivery," is deleted in its entirety and replaced by a new
paragraph 2.1 revised to add one (1) Block H Aircraft delivering in March 2000
and to change the quantity of Block H Aircraft delivering in April 2000 from
three (3) to two (2). Such new pages 2-1, 2-2 and 2-3 are attached hereto and
incorporated into the Agreement by this reference.

3. Article 3, entitled "Price of Aircraft", paragraph 3.4 entitled "Advance
Payment Base Price," subparagraph 3.4.1 entitled "Advance Payment Base Price" is
revised by adding an Advance Payment Base Price for the Block H Aircraft
delivering in March 2000. Such new pages 3-1, 3-2, 3-3 and 3-4 are attached
hereto and incorporated into the Agreement by this reference.

4. All references in the Letter Agreements associated with Purchase Agreement
No. 1810 shall be deemed to refer to the purchase by Buyer of one hundred
forty-two (142) Model 737-7H4 Aircraft, sixty-two (62) Model 737-7H4 Option
Aircraft and forty-six (46) Model 737-7H4 Rollover Option Aircraft, to the
extent such reference is not specifically addressed herein.

5. Within three (3) business days of execution of this Supplemental Agreement,
Boeing will refund to Buyer ***. Such amount reflects the difference in advance
payments due as a result of the acceleration of one (1) Block H Aircraft from
April 2000 to March 2000.

The Agreement will be deemed to be supplemented to the extent herein provided
and as so supplemented will continue in full force and effect.

P.A. No. 1810                        SA-10-2
K/SWA

<PAGE>   71

EXECUTED IN DUPLICATE as of the day and year first above written.

THE BOEING COMPANY                  SOUTHWEST AIRLINES CO.

By:    /s/ DAWN S. FOSTER           By:  /s/ LAURA WRIGHT
    ------------------------           ------------------

Its:    ATTORNEY-IN-FACT            ITS:   TREASURER
     -----------------------            -----------------

P.A. No. 1810                        SA-10-3
K/SWA

<PAGE>   72

                               PURCHASE AGREEMENT

                                     between

                               THE BOEING COMPANY

                                       and

                             SOUTHWEST AIRLINES CO.

                    Relating to Boeing Model 737-7H4 Aircraft

                         Purchase Agreement Number 1810

--------------------------------------------------------------------------------
***          PURSUANT TO 17 CFR, 240.246-2, CONFIDENTIAL INFORMATION HAS BEEN
             OMITTED AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
             EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
             APPLICATION FILED WITH THE COMMISSION.

P.A. No. 1810                         15-1
K/SWA

<PAGE>   73

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                       Page            SA
                                                                       Number         Number
                                                                       ------         ------
<S>       <C>                                                          <C>            <C>
ARTICLES

1.        Subject Matter of Sale..........................................1-1          SA-9

2.        Delivery, Title and Risk
          of Loss.........................................................2-1         SA-10

3.        Price of Aircraft...............................................3-1         SA-10

4.        Taxes...........................................................4-1

5.        Payment.........................................................5-1

6.        Excusable Delay.................................................6-1

7.        Changes to the Detail
          Specification...................................................7-1          SA-1

8.        Federal Aviation Requirements and
          Certificates and Export License.................................8-1

9.        Representatives, Inspection,
          Flights and Test Data...........................................9-1

10.       Assignment, Resale or Lease....................................10-1

11.       Termination for Certain Events.................................11-1

12.       Product Assurance; Disclaimer and
          Release; Exclusion of Liabilities;
          Customer Support; Indemnification
          and Insurance..................................................12-1

13.       Buyer Furnished Equipment and
          Spare Parts....................................................13-1

14.       Contractual Notices and Requests...............................14-1

15.       Miscellaneous..................................................15-1
</TABLE>

P.A. No. 1810                         15-2
K/SWA

<PAGE>   74

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                          SA
                                                      Number
                                                      ------
<S>          <C>                                      <C>

EXHIBITS
--------

A            Aircraft Configuration                     SA-1

B            Product Assurance Document                 SA-1

C            Customer Support Document

D            Price Adjustments Due to
             Economic Fluctuations - Aircraft

E            Buyer Furnished Equipment
             Provisions Document

F            Defined Terms Document

LETTER AGREEMENTS

1810-1       Waiver of Aircraft Demonstration Flight
</TABLE>

P.A. No. 1810                         15-3
K/SWA

<PAGE>   75

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                      SA
                                                                  Number
                                                                  ------
<S>                   <C>                                         <C>
RESTRICTED LETTER AGREEMENTS
----------------------------

6-1162-RLL-932        Promotional Support

6-1162-RLL-933R8      Option Aircraft                             SA-9

6-1162-RLL-934R1      Disclosure of Confidential                  SA-1
                      Information

6-1162-RLL-935R1      Performance Guarantees                      SA-1

6-1162-RLL-936R4      Certain Contractual Matters                 SA-4

6-1162-RLL-937        Alternate Advance Payment Schedule

6-1162-RLL-938        ***

6-1162-RLL-939R1      Certification Flight Test Aircraft          SA-1

6-1162-RLL-940R1      Training Matters                            SA-1

6-1162-RLL-941R1      Other Matters                               SA-1

6-1162-RLL-942        Open Configuration Matters

6-1162-RLL-943R1      Substitution Rights                         SA-6

6-1162-RLL-944        Airframe Maintenance Material Cost
                      Protection Program

6-1162-RLL-945        Comparison of 737-7H4 and 737-3H4
                      Block Fuel Burn

6-1162-RLL-1855R3     Additional Contractual Matters              SA-4

6-1162-RLL-1856       ***                                         SA-1

6-1162-RLL-1857       Service Ready Validation Program            SA-1
                      Field Test

6-1162-RLL-1858R1     Escalation Matters                          SA-4
</TABLE>

P.A. No. 1810                         15-4
K/SWA

<PAGE>   76

                             TABLE OF CONTENTS CON'T

<TABLE>
<CAPTION>
                                                             SA
                                                         Number
                                                         ------
<S>               <C>                                    <C>
RESTRICTED LETTER AGREEMENTS
----------------------------

6-1162-RLL-2036   Amortization of Costs for
                  Customer Unique Changes                SA-1

6-1162-RLL-2037   Reconciliation of the Aircraft         SA-1
                  Basic Price

6-1162-RLL-2073   Maintenance Training Matters           SA-1
</TABLE>

P.A. No. 1810                         15-5
K/SWA

<PAGE>   77

                           PURCHASE AGREEMENT NO. 1810

                                   Relating to

                          BOEING MODEL 737-7H4 AIRCRAFT

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

         This Agreement is entered into as of January 19th 1994, by and between
The Boeing Company, a Delaware corporation, with its principal office in
Seattle, Washington (Boeing), and Southwest Airlines Co., a Texas corporation,
with its principal office in the City of Dallas, State of Texas (Buyer).

Accordingly, Boeing and Buyer agree as follows:

P.A. No. 1810                         15-6
K/SWA

<PAGE>   78

ARTICLE 2.   Delivery, Title and Risk of Loss.

         2.1 Time of Delivery. The Aircraft will be delivered to Buyer by
Boeing, assembled and ready for flight and Buyer will accept delivery of the
Aircraft, in accordance with the following schedule:

<TABLE>
<CAPTION>
             Month and Year
               of Delivery                           Quantity of Aircraft
             --------------                          --------------------
<S>                             <C>                  <C>
                                Block A Aircraft
                                ----------------
             October 1997                                     Two (2)
             November 1997                                    Two (2)

                                Block B Aircraft
                                ----------------

             January 1998                                     Two (2)
             February 1998                                    Three (3)
             March 1998                                       Two (2)
             April 1998                                       Two (2)
             May 1998                                         Two (2)
             June 1998                                        One (1)
             July 1998                                        Two (2)
             September 1998                                   Two (2)

                                Block C Aircraft
                                ----------------

             February 1999                                    Four (4)
             May 1999                                         Four (4)
             July 1999                                        Four (4)
             August 1999                                      One (1)
             September 1999                                   Three (3)

                                Block D Aircraft
                                ----------------

             November 1999                                    Two (2)
             December 1999                                    One (1)
             January 2000                                     One (1)
             March 2000                                       Four (4)
             July 2000                                        Four (4)
             September 2000                                   Three (3)

                                Block E Aircraft
                                ----------------

             January 2001                                     Three (3)
             March 2001                                       Three (3)
             July 2001                                        Three (3)
             September 2001                                   Three (3)
</TABLE>

P.A. No. 1810                         15-7
K/SWA

<PAGE>   79

<TABLE>
<S>                             <C>                           <C>
                                Block F Aircraft
                                ----------------

             October 1998                                     One (1)
             November 1998                                    Two (2)
             December 1998                                    Two (2)

                                Block G Aircraft
                                ----------------

             March 1999                                       Two (2)

                                Block H Aircraft
                                ----------------

             June 1999                                        Two (2)
             July 1999                                        One (1)
             August 1999                                      One (1)
             September 1999                                   Two (2)
             October 1999                                     One (1)
             March 2000                                       One (1)
             April 2000                                       Two (2)
             October 2000                                     Three (3)
             April 2001                                       Three (3)
             October 2001                                     Three (3)

                                Block I Aircraft
                                ----------------

             January 2002                                     Four (4)
             March 2002                                       Four (4)
             April 2002                                       Two (2)
             July 2002                                        Four (4)
             October 2002                                     Four (4)

                                Block J Aircraft
                                ----------------

             January 2003                                     Four (4)
             March 2003                                       One (1)

                                Block K Aircraft
                                ----------------

             April 2004                                       Two (2)
             July 2004                                        Three (3)
</TABLE>

P.A. No. 1810                         15-8
K/SWA

<PAGE>   80

<TABLE>
<S>                             <C>                           <C>
                                Block L Aircraft
                                ----------------

             October 1999                                     One (1)
             November 1999                                    Two (2)
             December 1999                                    One (1)
             June 2000                                        Three (3)
             July 2000                                        One (1)
             August 2000                                      Two (2)
             September 2000                                   One (1)
             October 2000                                     One (1)
             November 2000                                    Three (3)
             December 2000                                    Two (2)
             January 2001                                     One (1)
             February 2001                                    One (1)
             July 2001                                        One (1)
             September 2001                                   One (1)
             October 2001                                     One (1)
             September 2002                                   Three (3)
</TABLE>

         2.2 Notice of Target Delivery Date. Boeing will give Buyer notice of
the Target Delivery Date of the Aircraft approximately 30 days prior to the
scheduled month of delivery.

         2.3 Notice of Delivery Date. If Boeing gives Buyer at least 7 days'
notice of the delivery date of the Aircraft, and an Aircraft delivery is delayed
beyond such delivery date due to the responsibility of Buyer, Buyer will
reimburse Boeing for all costs incurred by Boeing as a result of such delay,
including amounts for storage, insurance, Taxes, preservation or protection of
the Aircraft and interest on payments due.

         2.4 Place of Delivery. The Aircraft will be delivered at an airport
facility selected by Boeing in the State of Washington, unless mutually agreed
otherwise.

         2.5 Title and Risk of Loss. Title to and risk of loss of an Aircraft
will pass from Boeing to Buyer upon delivery of such Aircraft, but not prior
thereto.

         2.6 Bill of Sale. Upon delivery of an Aircraft Boeing will deliver to
Buyer a bill of sale conveying good title to such Aircraft, free of all liens,
claims, charges and encumbrances of every kind whatsoever, and such other
appropriate documents of title as Buyer may reasonably request.

P.A. No. 1810                         15-9
K/SWA

<PAGE>   81

ARTICLE 3.        Price of Aircraft.

         3.1      Definitions.

                  3.1.1 Special Features are the features incorporated in
Exhibit A which have been selected by Buyer.

                  3.1.2 Base Aircraft Price is the Aircraft Basic Price
excluding the price of Special Features.

                  3.1.3 Aircraft Basic Price is comprised of the Base Aircraft
Price and the price of the Special Features.

                  3.1.4 Economic Price Adjustment is the adjustment to the
Aircraft Basic Price (Base Aircraft and Special Features) as calculated pursuant
to Exhibit D.

                  3.1.5 Aircraft Price is the total amount Buyer is to pay for
the Aircraft at the time of delivery.

         3.2      Aircraft Basic Price.

                  The Aircraft Basic Price, expressed in July 1992 dollars, is
set forth below:

<TABLE>
<CAPTION>
                                 Base                            Special                            Aircraft
                                 Aircraft Price                  Features                           Basic Price
                                 --------------                  --------                           -----------
<S>                              <C>                             <C>                                <C>
Block A, B, C,
D & E Aircraft                   $***                            $***                               $***
Block F & G
Aircraft                         $***                            $***                               $***
Block H
Aircraft                         $***                            $***                               $***
Block I
Aircraft                         $***                            $***                               $***
Block J
Aircraft                         $***                            $***                               $***
Block K
Aircraft                         $***                            $***                               $***
Block L Aircraft
                                 $***                            $***                               $***
</TABLE>

         3.3      Aircraft Price. The Aircraft Price will be established at the
time of delivery of such Aircraft to Buyer and will be the sum of:

                  3.3.1 the Aircraft Basic Price, which is ($***) for the Block
A, B, C, D and E Aircraft, ($***) for the Block F and G Aircraft, ($***) for the
Block H Aircraft, ($***) for the Block I Aircraft, ($***) for the Block J

P.A. No. 1810                         15-10
K/SWA

<PAGE>   82

Aircraft, ($***) for the Block K Aircraft and ($***) for the Block L Aircraft;
plus

                  3.3.2 the Economic Price Adjustments for the Aircraft Basic
Price, as calculated pursuant to the formulas set forth in Exhibit D (Price
Adjustments Due to Economic Fluctuations - Aircraft); plus
                  3.3.3 other price adjustments made pursuant to this Agreement
or other written agreements executed by Boeing and Buyer.

         3.4      Advance Payment Base Price.

                  3.4.1 Advance Payment Base Price. For advance payment
purposes, the following estimated delivery prices of the Aircraft (Advance
Payment Base Price) have been established, using currently available forecasts
of the escalation factors used by Boeing as of the date of signing this
Agreement. The Advance Payment Base Price of each Aircraft is set forth below:

<TABLE>
<CAPTION>
             Month and Year of                                Advance Payment Base
             Scheduled Delivery                               Price per Aircraft
             ------------------                               --------------------
<S>                                     <C>                   <C>

                                        Block A Aircraft
                                        ----------------

             October 1997                                            $***
             November 1997                                           $***

                                        Block B Aircraft
                                        ----------------

             January 1998                                            $***
             February 1998                                           $***
             March 1998                                              $***
             April 1998                                              $***
             May 1998                                                $***
             June 1998                                               $***
             July 1998                                               $***
             September 1998                                          $***
</TABLE>

P.A. No. 1810                         15-11
K/SWA

<PAGE>   83

<TABLE>
<S>                                     <C>                          <C>
                                        Block C Aircraft
                                        ----------------

             February 1999                                           $***
             May 1999                                                $***
             July 1999                                               $***
             August 1999                                             $***
             September 1999                                          $***

                                        Block D Aircraft
                                        ----------------

             November 1999                                           $***
             December 1999                                           $***
             January 2000                                            $***
             March 2000                                              $***
             July 2000                                               $***
             September 2000                                          $***

                                        Block E Aircraft
                                        ----------------

             January 2001                                            $***
             March 2001                                              $***
             July 2001                                               $***
             September 2001                                          $***

                                        Block F Aircraft
                                        ----------------

             October 1998                                            $***
             November 1998                                           $***
             December 1998                                           $***

                                        Block G Aircraft
                                        ----------------

             March 1999                                              $***

                                        Block H Aircraft
                                        ----------------

             June 1999                                               $***
             July 1999                                               $***
             August 1999                                             $***
             September 1999                                          $***
             October 1999                                            $***
             March 2000                                              $***
             April 2000                                              $***
             October 2000                                            $***
             April 2001                                              $***
             October 2001                                            $***
</TABLE>

P.A. No. 1810                         15-12
K/SWA

<PAGE>   84

<TABLE>
<S>                             <C>                         <C>
                                Block I Aircraft
                                ----------------

             January 2002                                   $***
             March 2002                                     $***
             April 2002                                     $***
             July 2002                                      $***
             October 2002                                   $***

                                Block J Aircraft
                                ----------------

             January 2003                                   $***
             March 2003                                     $***

                                Block K Aircraft
                                ----------------

             April 2004                                     $***
             July 2004                                      $***

                                Block L Aircraft
                                ----------------

             October 1999                                   $***
             November 1999                                  $***
             December 1999                                  $***
             June 2000                                      $***
             July 2000                                      $***
             August 2000                                    $***
             September 2000                                 $***
             October 2000                                   $***
             November 2000                                  $***
             December 2000                                  $***
             January 2001                                   $***
             February 2001                                  $***
             July 2001                                      $***
             September 2001                                 $***
             October 2001                                   $***
             September 2002                                 $***
</TABLE>

P.A. No. 1810                         15-13
K/SWA

<PAGE>   85

                  3.4.2 Adjustment of Advance Payment Base Prices - Long-Lead
Aircraft. For Aircraft scheduled for delivery 36 months or more after the date
of this Agreement, the Advance Payment Base Prices appearing in Article 3.4.1
will be used to determine the amount of the first advance payment to be made by
Buyer on the Aircraft. No later than 25 months before the scheduled month of
delivery of each affected Aircraft, Boeing will increase or decrease the Advance
Payment Base Price of such Aircraft as required to reflect the effects of (i)
any adjustments in the Aircraft Basic Price pursuant to this Agreement and (ii)
the then-current forecasted escalation factors used by Boeing. Boeing will
provide the adjusted Advance Payment Base Prices for each affected Aircraft to
Buyer, and the advance payment schedule will be considered amended to substitute
such adjusted Advance Payment Base Prices.

P.A. No. 1810                         15-14
K/SWA<PAGE>   1
                                                                    EXHIBIT 4(d)

                               U.S. $1,400,000,000

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                          Dated as of JANUARY 24, 2000

                                      Among

                          THE WILLIAMS COMPANIES, INC.

                                   as Borrower

                             THE BANKS NAMED HEREIN

                                    as Banks

                       CANADIAN IMPERIAL BANK OF COMMERCE

                                       and

                                 COMMERZBANK AG

                            as Co-Syndication Agents

                                       and

                         CREDIT LYONNAIS NEW YORK BRANCH

                             as Documentation Agent

                                       and

                              SALOMON SMITH BARNEY

                                   as Arranger

                                       and

                                 CITIBANK, N.A.

                                    as Agent

<PAGE>   2

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                            PAGE
                                                                                                            ----
<S>                                                                                                           <C>
PRELIMINARY STATEMENTS.....................................................................................    1
ARTICLE I           DEFINITIONS AND ACCOUNTING TERMS.......................................................    2
         Section I.1       Certain Defined Terms...........................................................    2
         Section I.2       Computation of Time Periods.....................................................   14
         Section I.3       Accounting Terms................................................................   14
         Section I.4       Miscellaneous...................................................................   15
         Section I.5       Ratings.........................................................................   15

ARTICLE II          AMOUNTS AND TERMS OF THE ADVANCES......................................................   16
         Section II.1      The A Advances..................................................................   16
         Section II.2      Making the A Advances...........................................................   16
         Section II.3      Fees............................................................................   18
         Section II.4      Reduction of the Commitments....................................................   19
         Section II.5      Repayment of A Advances.........................................................   19
         Section II.6      Interest on A Advances..........................................................   19
         Section II.7      Additional Interest on Eurodollar Rate Advances.................................   20
         Section II.8      Interest Rate Determination.....................................................   20
         Section II.9      Evidence of Debt................................................................   20
         Section II.10     Prepayments.....................................................................   20
         Section II.11     Increased Costs.................................................................   21
         Section II.12     Illegality......................................................................   22
         Section II.13     Payments and Computations.......................................................   22
         Section II.14     Taxes...........................................................................   24
</TABLE>

<PAGE>   3

<TABLE>
<S>                                                                                                           <C>
         Section II.15      Sharing of Payments, Etc.........................................................   25
         Section II.16      The B Advances...................................................................   25
         Section II.17      Optional Termination.............................................................   28
         Section II.18      Extension of Termination Date....................................................   29
         Section II.19      Voluntary Conversion of Advances.................................................   29
         Section II.20      Automatic Provisions.............................................................   29

ARTICLE III         CONDITIONS...............................................................................   30
         Section III.1       Conditions Precedent to Initial Advances........................................   30
         Section III.2       Additional Conditions Precedent to Each A Borrowing.............................   31
         Section III.3       Conditions Precedent to Each B Borrowing........................................   31

ARTICLE IV          REPRESENTATIONS AND WARRANTIES...........................................................   32
         Section IV.1       Representations and Warranties of the Borrower...................................   32

ARTICLE V           COVENANTS OF THE BORROWER................................................................   35
         Section V.1       Affirmative Covenants.............................................................   35
         Section V.2       Negative Covenants................................................................   38

ARTICLE VI          EVENTS OF DEFAULT........................................................................   41
         Section VI.1       Events of Default................................................................   41

ARTICLE VII         THE AGENT, CO-SYNDICATION AGENTS AND DOCUMENTATION AGENT.................................   44
         Section VII.1       Authorization and Action........................................................   44
         Section VII.2       Agent's Reliance, Etc...........................................................   44
         Section VII.3       Citibank, CIBC, Commerzbank, Credit Lyonnais and Affiliates.....................   45
         Section VII.4       Bank Credit Decision............................................................   45
         Section VII.5       Indemnification.................................................................   45
</TABLE>

<PAGE>   4

<TABLE>
<S>                                                                                                           <C>
         Section VII.6       Successor Agent.................................................................    46
         Section VII.7       Co-Syndication Agents; Documentation Agent......................................    46

ARTICLE VIII        MISCELLANEOUS..........................................................................      46
         Section VIII.1       Amendments, Etc.................................................................   46
         Section VIII.2       Notices, Etc....................................................................   47
         Section VIII.3       No Waiver; Remedies.............................................................   47
         Section VIII.4       Costs, Expenses and Taxes.......................................................   47
         Section VIII.5       Right of Set-off................................................................   48
         Section VIII.6       Binding Effect; Transfers.......................................................   49
         Section VIII.7       Governing Law...................................................................   51
         Section VIII.8       Interest........................................................................   51
         Section VIII.9       Execution in Counterparts.......................................................   52
         Section VIII.10      Survival of Agreements, Representations and Warranties, Etc.....................   52
         Section VIII.11      Borrower's Right to Apply Deposits..............................................   52
         Section VIII.12      Confidentiality.................................................................   53
         Section VIII.13      WAIVER OF JURY TRIAL............................................................   53
</TABLE>

<PAGE>   5

                             Schedules and Exhibits

<TABLE>
<S>               <C>   <C>
Schedule I        -     Bank Information
Schedule II       -     Borrower Information
Schedule III      -     Permitted Liens
Schedule IV       -     Commitments
Schedule V        -     Rating Categories
</TABLE>

<TABLE>
<S>               <C>   <C>
Exhibit A-1       -     Form of A Note
Exhibit A-2       -     Form of B Note
Exhibit B-1       -     Notice of A Borrowing
Exhibit B-2       -     Notice of B Borrowing
Exhibit C         -     Opinion of William G. von Glahn
Exhibit D         -     Opinion of Special Counsel to Agent
Exhibit E         -     Existing Transfer Restrictions
Exhibit F         -     Form of Transfer Agreement
</TABLE>

                                       iv
<PAGE>   6

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

         This Second Amended and Restated Credit Agreement, dated as of January
24, 2000 (as may be amended, modified, supplemented, renewed, extended or
restated from time to time, this "Agreement"), is by and among THE WILLIAMS
COMPANIES, INC., a Delaware corporation (the "Borrower"); the various banks as
are or may become parties hereto (collectively, the "Banks"); CANADIAN IMPERIAL
BANK OF COMMERCE and COMMERZBANK AG ("Commerzbank"), as Co-Syndication Agents,
(in such capacity, together with any successors in such capacity, the
"Co-Syndication Agents"); CREDIT LYONNAIS NEW YORK BRANCH ("Credit Lyonnais"),
as Documentation Agent (in such capacity, together with any successors in such
capacity, the Documentation Agent); and CITIBANK, N.A., as Agent (in such
capacity, together with any successors in such capacity, the "Agent"). In
consideration of the mutual covenants and agreements contained herein, the
Borrower, the Agent and the Banks hereby agree as set forth herein.

                             PRELIMINARY STATEMENTS

         1. The Borrower, the Agent, and certain of the Banks are parties to an
Amended and Restated Credit Agreement dated as of January 26, 1999 which has
been amended by letter agreements dated May 20, 1999 and September 27, 1999 (as
so amended, the "1999 Credit Agreement"). The Banks party to the 1999 Credit
Agreement (each Bank party to such agreement an "Original Bank" and
collectively, the "Original Banks") have made certain advances pursuant to such
agreement (the "Original Advances") and the Banks, the Borrower and the Agent
intend that all Original Advances comprising A Advances, which have not
heretofore been repaid, shall, on the date of this Agreement, be continued,
amended, renewed, restated and converted into A Advances of the same Type under
this Agreement (but shall not be deemed to be repaid).

         2. The Borrower has requested that the 1999 Credit Agreement be
amended, and, as so amended, be restated in its entirety.

         3. The Borrower, the Banks and the Agent have agreed that, as part of
the restructuring of the outstanding Original Advances (if any) and a
restructuring of the Commitments of the Original Banks under the 1999 Credit
Agreement, the Original Banks shall assign, and the Original Banks do hereby
assign, portions of their Commitments and Original Advances, as necessary, such
that each Bank party hereto shall have, as of the date of this Agreement,
Commitments as shown on Schedule IV hereto.

         4. The parties hereto have agreed to restate the 1999 Credit Agreement
in its entirety and this Second Amended and Restated Credit Agreement
constitutes for all purposes an amendment to the 1999 Credit Agreement, and each
reference to an Advance or Borrowing herein shall include each Original Advance
or borrowing made heretofore under the 1999 Credit Agreement as well as each
Advance or Borrowing made hereafter under this Agreement.

<PAGE>   7

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         Section I.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

               "1999 Credit Agreement" is defined in the first recital.

               "A Advance" means an advance by a Bank to the Borrower as part of
          an A Borrowing and refers to a Base Rate Advance or a Eurodollar Rate
          Advance, each of which shall be a "Type" of A Advance.

               "A Borrowing" means a borrowing consisting of simultaneous A
          Advances of the same Type to the Borrower made by each of the Banks
          pursuant to Section 2.1.

               "A Note" means a promissory note of the Borrower payable to the
          order of any Bank, in substantially the form of Exhibit A-1 hereto,
          (as such note may be amended, endorsed or otherwise modified from time
          to time) evidencing the aggregate indebtedness of the Borrower to such
          Bank resulting from the A Advances to the Borrower owed to such Bank
          together with any other note accepted from time to time in
          substitution or replacement therefor.

               "Advance" means an A Advance or a B Advance.

               Agent" means Citibank, N.A. in its capacity as agent pursuant to
          Article VII hereof and any successor Agent pursuant to Section 7.6.

               "Agreement" has the meaning specified in the Preamble.

               "Applicable Commitment Fee Rate" means the rate per annum set
          forth on Schedule V under the heading "Applicable Commitment Fee Rate"
          for the relevant Rating Category applicable to the Borrower from time
          to time. The Applicable Commitment Fee Rate shall change when and as
          the relevant Rating Category applicable to the Borrower changes.

               "Applicable Lending Office" means, with respect to each Bank,
          such Bank's Domestic Lending Office in the case of a Base Rate Advance
          and such Bank's Eurodollar Lending Office in the case of a Eurodollar
          Rate Advance and, in the case of a B Advance, the office of such Bank
          notified by such Bank to the Agent as its Applicable Lending Office
          with respect to such B Advance.

<PAGE>   8

                    "Applicable Margin" means the rate per annum set forth in
               Schedule V under the heading "Applicable Margin" for the relevant
               Rating Category applicable to the Borrower from time to time. The
               Applicable Margin for any Eurodollar Rate Advance shall change
               when and as the relevant applicable Rating Category changes.

                    "Arranger" means Salomon Smith Barney.

                    "Attributable Obligation" of any Person means, with respect
               to any Sale and Lease-Back Transaction of such Person as of any
               particular time, the present value at such time discounted at the
               rate of interest implicit in the terms of the lease of the
               obligations of the lessee under such lease for net rental
               payments during the remaining term of the lease (including any
               period for which such lease has been extended or may, at the
               option of such Person, be extended).

                    "B Advance" means an advance by a Bank to the Borrower as
               part of a B Borrowing resulting from the auction bidding
               procedure described in Section 2.16.

                    "B Borrowing" means a borrowing consisting of simultaneous B
               Advances to the Borrower from each of the Banks whose offer to
               make one or more B Advances as part of such borrowing has been
               accepted by the Borrower under the auction bidding procedure
               described in Section 2.16.

                    "B Note" means a promissory note of the Borrower payable to
               the order of any Bank, in substantially the form of Exhibit A-2
               hereto, evidencing the indebtedness of the Borrower to such Bank
               resulting from a B Advance made to the Borrower by such Bank.

                    "B Reduction" has the meaning specified in Section 2.1.

                    "Banks" means the lenders listed on the signature pages
               hereof and each other Person that becomes a Bank pursuant to the
               last sentence of Section 8.6(a).

                    "Base Rate" means a fluctuating interest rate per annum as
               shall be in effect from time to time which rate per annum shall
               at all times be equal to the highest of:

                    (a) the rate of interest announced publicly by Citibank in
                    New York, New York, from time to time, as Citibank's base
                    rate; or

                    (b) 1/2 of one percent per annum above the latest three-week
                    moving average of secondary market morning offering rates in
                    the United States for three-month certificates of deposit of
                    major United States money market banks, such three-week
                    moving average being determined weekly on each Monday (or,
                    if any such day is not a Business Day, on the next
                    succeeding Business Day) for the three-week period ending on
                    the previous Friday by Citibank on the basis of such rates
                    reported by

                                       3
<PAGE>   9

               certificate of deposit dealers to and published by the Federal
               Reserve Bank of New York or, if such publication shall be
               suspended or terminated, on the basis of quotations for such
               rates received by Citibank from three New York certificate of
               deposit dealers of recognized standing selected by Citibank, in
               either case adjusted to the nearest 1/4 of one percent or, if
               there is no nearest 1/4 of one percent. to the next higher 1/4 of
               one percent; or

               (c) 1/2 of one percent per annum above the Federal Funds Rate in
               effect from time to time.

               "Base Rate Advance" means an A Advance which bears interest as
          provided in Section 2.6(a).

               "Borrower" means The Williams Companies, Inc., a Delaware
          corporation.

               "Borrowing" means an A Borrowing or a B Borrowing.

               "Business Day" means a day of the year on which banks are not
          required or authorized to close in New York City and, if the
          applicable Business Day relates to any Eurodollar Rate Advances or
          relates to any B Advance as to which the related Notice of B Borrowing
          is delivered pursuant to clause (B) of Section 2.16(a)(i), on which
          dealings are carried on in the London interbank market.

               "Cash Holdings" of any Person means the total investment of such
          Person at the time of determination in:

                    (a) demand deposits and time deposits maturing within one
               year with a Bank (or other commercial banking institution of the
               stature referred to in clause (d)(i));

                    (b) any note or other evidence of indebtedness, maturing not
               more than one year after such time, issued or guaranteed by the
               United States Government or by a government of another country
               which carries a long-term rating of Aaa by Moody's or AAA by S&P;

                    (c) commercial paper, maturing not more than nine months
               from the date of issue, which is issued by

                         (i) a corporation (other than the affiliate of the
                    Borrower) and rated (x) A-1 by S&P, P-1 by Moody's, F-1 by
                    Fitch or A by Duff and Phelps or (y) lower than set forth in
                    clause (x) above, provided that the value of all such
                    commercial paper shall not exceed 10% of the total value of
                    all commercial paper comprising "Cash Holdings," or

                                       4
<PAGE>   10

                         (ii) any Bank (or its holding company) with a rating on
                    its unsecured long term debt of at least AA by S&P or Aa by
                    Moody's;

                    (d) any certificate of deposit or bankers acceptance,
               maturing not more than three years after such time, which is
               issued by either

                         (i) a commercial banking institution that is a member
                    of the Federal Reserve System and has a combined capital and
                    surplus and undivided profits of not less than
                    $1,000,000,000 or

                         (ii) any Bank with a rating on its unsecured long term
                    debt of at least AA by S&P or Aa by Moody's;

                    (e) notes or other evidences of indebtedness maturing not
               more than three years after such time, issued by

                         (i) a corporation (other than an affiliate of a
                    Borrower) rated AA by S&P or Aa by Moody's; or

                         (ii) any Bank (or its holding company) with a rating on
                    its unsecured long term debt of at least AA by S&P or Aa by
                    Moody's; or

                    (f) any repurchase agreement entered into with any Bank (or
               other commercial banking institution of the stature referred to
               in clause (d)(i)) which

                         (i) is secured by a fully perfected security interest
                    in any obligation of the type described in any of clauses
                    (a) through (d); and

                         (ii) has a market value at the time such repurchase
                    agreement is entered into of not less than 100% of the
                    repurchase obligation of such Bank (or other commercial
                    banking institution) thereunder;

                    (g) money market preferred instruments by participation in a
               Dutch auction (or the equivalent) where the investment is rated
               no lower than Aa by Moody's or AA by S&P.

               "ChoiceSeat" means ChoiceSeat, L.L.C., a Delaware limited
               liability company.

               "CIBC" means Canadian Imperial Bank of Commerce.

               "Citibank" means Citibank, N.A.

                                       5
<PAGE>   11

                    "Code" means, as appropriate, the Internal Revenue Code of
               1986, as amended, or any successor federal tax code, and any
               reference to any statutory provision shall be deemed to be a
               reference to any successor provision or provisions.

                    "Commerzbank" is defined in the preface.

                    "Commitment" of any Bank means at any time the amount set
               opposite or deemed (pursuant to clause (vii) of the last sentence
               of Section 8.6(a) and as reflected in the relevant Transfer
               Agreement referred to in such sentence) to be set opposite such
               Bank's name on Schedule IV as such amount may be terminated,
               reduced or increased after the date hereof, pursuant to Section
               2.4, Section 2.17, Section 6.1 or Section 8.6(a).

                    "Consolidated" refers to the consolidation of the accounts
               of any Person and its subsidiaries in accordance with generally
               accepted accounting principles.

                    "Consolidated Net Worth" of any Person means the Net Worth
               of such Person and its Subsidiaries on a Consolidated basis plus,
               in the case of the Borrower, the Designated Minority Interests to
               the extent not otherwise included; provided that, in no event
               shall the value ascribed to Designated Minority Interests exceed
               $511,700,000 in the aggregate.

                    "Consolidated Tangible Net Worth" of any Person means the
               Tangible Net Worth of such Person and its Subsidiaries on a
               Consolidated basis.

                    "Convert", "Conversion" and "Converted" each refers to a
               conversion of Advances of one Type into Advances of the other
               Type pursuant to Section 2.2, Section 2.19 or Section 2.20.

                    "Co-Syndication Agent" means either of CIBC or Commerzbank
               AG, together with the successor and assigns of each in such
               capacity.

                    "Credit Lyonnais" is defined in the preface.

                    "Debt" means, in the case of any Person, (i) indebtedness of
               such Person for borrowed money, (ii) obligations of such Person
               evidenced by bonds, debentures or notes, (iii) obligations of
               such Person to pay the deferred purchase price of property or
               services, (iv) monetary obligations of such Person as lessee
               under leases that are, in accordance with generally accepted
               accounting principles, recorded as capital leases, (v)
               obligations of such Person under guaranties in respect of, and
               obligations (contingent or otherwise) to purchase or otherwise
               acquire, or otherwise to assure a creditor against loss in
               respect of, indebtedness or obligations of others of the kinds
               referred to in clauses (i) through (iv) or clause (vii) of this
               definition, (vi) indebtedness or obligations of others of the
               kinds referred to in clauses (i) through (v) or clause (vii) of
               this definition secured by any Lien on or in respect of any
               property of such Person, and (vii) all liabilities of such Person
               in respect of unfunded vested benefits under any Plan; provided,
               however, that Debt shall not include any obligation under

                                       6
<PAGE>   12

               or resulting from any agreement referred to in paragraph (y) of
               Schedule III or under or resulting from any sale and Lease-Back
               referred to in paragraph (aa) of Schedule III.

                    "Designated Minority Interests" of the Borrower means, as of
               any date of determination, the total of the minority interests in
               the following Subsidiaries: (i) El Furrial, (ii) PIGAP II, (iii)
               Nebraska Energy, (iv) Seminole, (v) WCG, (vi) WCS, (vii)
               ChoiceSeat, (viii) PowerTel, and (ix) other Consolidated
               Subsidiaries, as presented in the Consolidated balance sheet of
               the Borrower, in an amount not to exceed in the aggregate
               $9,000,000 for such other Consolidated Subsidiaries not referred
               to in items (i) through (viii); provided that minority interests
               which provide for a stated preferred cumulative return shall not
               be included in "Designated Minority Interests."

                    "Documentation Agent" means Credit Lyonnais, together with
               its successors and assigns in such capacity.

                    "Domestic Lending Office" means, with respect to any Bank,
               the office of such Bank specified as its "Domestic Lending
               Office" opposite its name on Schedule I hereto or pursuant to
               Section 8.6(a), or such other office of such Bank as such Bank
               may from time to time specify to the Borrower and the Agent.

                    "El Furrial" means WilPro Energy Services (El Furrial)
               Limited, a Cayman Islands corporation.

                    "Environment" shall have the meaning set forth in 42 U.S.C.
               9601(8) as defined on the date of this Agreement and
               "Environmental" shall mean pertaining or relating to the
               Environment.

                    "Environmental Protection Statute" shall mean any United
               States local, state or federal, or any foreign, law, statute,
               regulation, order, consent decree or other agreement or
               Governmental Requirement arising from or in connection with or
               relating to the protection or regulation of the Environment,
               including, without limitation, those laws, statutes, regulations,
               orders, decrees, agreements and other Governmental Requirements
               relating to the disposal, cleanup, production, storing, refining,
               handling, transferring, processing or transporting of Hazardous
               Waste, Hazardous Substances or any pollutant or contaminant,
               wherever located.

                    "ERISA" means the Employee Retirement Income Security Act of
               1974, as amended from time to time, and the regulations
               promulgated and rulings issued thereunder from time to time.

                    "ERISA Affiliate" means any trade or business (whether or
               not incorporated) which is a member of a group of which the
               Borrower is a member and which is under common control within the
               meaning of the regulations under Section 414 of the Code.

                                       7
<PAGE>   13

                    "Eurocurrency Liabilities" has the meaning assigned to that
               term in Regulation D of the Board of Governors of the Federal
               Reserve System, as in effect from time to time.

                    "Eurodollar Lending Office" means, with respect to any Bank,
               the office of such Bank specified as its "Eurodollar Lending
               Office" opposite its name on Schedule I hereto or pursuant to
               Section 8.6(a) (or, if no such office is specified, its Domestic
               Lending Office) or such other office of such Bank as such Bank
               may from time to time specify to the Borrower and the Agent.

                    "Eurodollar Rate" means, for any Interest Period for each
               Eurodollar Rate Advance comprising part of the same A Borrowing,
               an interest rate per annum (rounded upward to the nearest whole
               multiple of 1/16 of 1% per annum, if such rate is not such a
               multiple) equal to the rate per annum at which deposits in U.S.
               dollars are offered by the principal office of Citibank in
               London, England, to prime banks in the London interbank market at
               11:00 A.M. (London time) two Business Days before the first day
               of such Interest Period in an amount substantially equal to the
               amount of the Eurodollar Rate Advance of Citibank comprising part
               of such A Borrowing to be outstanding during such Interest Period
               and for a period equal to such Interest Period.

                    "Eurodollar Rate Advance" means an A Advance that bears
               interest as provided in Section 2.6(b).

                    "Eurodollar Rate Reserve Percentage" of any Bank for any
               Interest Period for any Eurodollar Rate Advance means the reserve
               percentage applicable during such Interest Period (or if more
               than one such percentage shall be so applicable, the daily
               average of such percentages for those days in such Interest
               Period during which any such percentage shall be so applicable)
               under regulations issued from time to time by the Board of
               Governors of the Federal Reserve System (or any successor) for
               determining the maximum reserve requirement (including, without
               limitation, any emergency, supplemental or other marginal reserve
               requirement) for such Bank with respect to liabilities or assets
               consisting of or including Eurocurrency Liabilities having a term
               equal to such Interest Period.

                    "Events of Default" has the meaning specified in Section
               6.1.

                    "Federal Funds Rate" means, for any period, a fluctuating
               interest rate per annum equal for each day during such period to
               the weighted average of the rates on overnight federal funds
               transactions with members of the Federal Reserve System arranged
               by federal funds brokers, as published for such day (or, if such
               day is not a Business Day, for the next preceding Business Day)
               by the Federal Reserve Bank of New York, or, if such rate is not
               so published for any day which is a Business Day, the average of
               the quotations for such day on such transactions received by the
               Agent from three federal funds brokers of recognized standing
               selected by it.

                                       8
<PAGE>   14

                    "Governmental Requirements" means all judgments, orders,
               writs, injunctions, decrees, awards, laws, ordinances, statutes,
               regulations, rules, franchises, permits, certificates, licenses,
               authorizations and the like and any other requirements of any
               government or any commission, board, court, agency,
               instrumentality or political subdivision thereof.

                    "Hazardous Substance" shall have the meaning set forth in 42
               U.S.C. 9601(14) and shall also include each other substance
               considered to be a hazardous substance under any Environmental
               Protection Statute.

                    "Hazardous Waste" shall have the meaning set forth in 42
               U.S.C. 6903(5) and shall also include each other substance
               considered to be a hazardous waste under any Environmental
               Protection Statute (including, without limitation 40 C.F.R.
               261.3).

                    "Insufficiency" means, with respect to any Plan, the amount,
               if any, by which the present value of the vested benefits under
               such Plan exceeds the fair market value of the assets of such
               Plan allocable to such benefits.

                    "Interest Period" means, for each Eurodollar Rate Advance
               comprising part of the same A Borrowing, the period commencing on
               the date of such A Advance or the date of the Conversion of any
               Base Rate Advance into a Eurodollar Rate Advance and ending on
               the last day of the period selected by the Borrower pursuant to
               the provisions below and, thereafter, each subsequent period
               commencing on the last day of the immediately preceding Interest
               Period and ending on the last day of the period selected by the
               Borrower pursuant to the provisions below. The duration of each
               Interest Period shall be one, two, three or six months, in each
               case as the Borrower may, upon notice received by the Agent not
               later than 11:00 A.M. (New York City time) on the third Business
               Day prior to the first day of such Interest Period, select (it
               being agreed that selection of a subsequent Interest Period for
               an outstanding Eurodollar Rate Advance does not require that a
               Notice of A Borrowing be given, inasmuch as no Advance is being
               requested or made as a result of such selection); provided,
               however, that:

                    (i) Interest Periods commencing on the same date for A
                    Advances comprising part of the same A Borrowing shall be of
                    the same duration;

                    (ii) whenever the last day of any Interest Period would
                    otherwise occur on a day other than a Business Day, the last
                    day of such Interest Period shall be extended to occur on
                    the next succeeding Business Day, provided that if such
                    extension would cause the last day of such Interest Period
                    to occur in the next following calendar month, the last day
                    of such Interest Period shall occur on the next preceding
                    Business Day;

                                       9
<PAGE>   15
          (iii) any Interest Period which begins on the last Business Day of a
          calendar month (or on a day for which there is no numerically
          corresponding day in the calendar month at the end of such Interest
          Period) shall end on the last Business Day of the calendar month in
          which it would have ended if there were a numerically corresponding
          day in such calendar month; and

          (iv) the Borrower may not select any Interest Period that ends after
          the Termination Date, and the Borrower may not select any Interest
          Period if any Event of Default exists.

          "Lien" means any mortgage, lien, pledge, charge, deed of trust,
     security interest, encumbrance or other type of preferential arrangement to
     secure or provide for the payment of any obligation of any Person, whether
     arising by contract, operation of law or otherwise (including, without
     limitation, the interest of a vendor or lessor under any conditional sale
     agreement, capital lease or other title retention agreement).

          "Majority Banks" means at any time Banks holding at least 66-2/3% of
     the then aggregate unpaid principal amount of the A Notes held by Banks,
     or, if no such principal amount is then outstanding, Banks having at least
     66-2/3% of the Commitments or, if no such principal amount is then
     outstanding and all Commitments have terminated, Banks holding at least
     66-2/3% of the then aggregate unpaid principal amount of the B Notes held
     by Banks (provided that for purposes of this definition and Sections 2.17,
     6.1 and 7.1 neither the Borrower nor any Subsidiary or Related Party of the
     Borrower, if a Bank, shall be included in (i) the Banks holding the A Notes
     or B Notes or (ii) determining the aggregate unpaid principal amount of the
     A Notes or the B Notes or the amount of the Commitments).

         "Moody's" means Moody's Investors Service, Inc.

          "Multiemployer Plan" means a "multiemployer plan" as defined in
     Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
     making or accruing an obligation to make contributions, or has within any
     of the preceding five plan years made or accrued an obligation to make
     contributions.

          "Multiple Employer Plan" means an employee benefit plan, other than a
     Multiemployer Plan, subject to Title IV of ERISA to which the Borrower or
     any ERISA Affiliate, and one or more employers other than the Borrower or
     an ERISA Affiliate, is making or accruing an obligation to make
     contributions or, in the event that any such plan has been terminated, to
     which the Borrower or any ERISA Affiliate made or accrued an obligation to
     make contributions during any of the five plan years preceding the date of
     termination of such plan.

          "Multiyear Williams Credit Agreement" is defined in Section 5.2(i).

                                       10
<PAGE>   16

          "Nebraska Energy" means Nebraska Energy, L.L.C., a Kansas limited
     liability company.

          "Net Debt" means for any Person, as of any date of determination, the
     excess of (x) the aggregate amount of all Debt of such Person and its
     Subsidiaries on a Consolidated basis over (y) the sum of the Cash Holdings
     of such Person and its Subsidiaries on a Consolidated basis.

          "Net Worth" of any Person means, as of any date of determination the
     excess of total assets of such Person over total liabilities of such
     Person, total assets and total liabilities each to be determined in
     accordance with generally accepted accounting principles.

          "Non-Recourse Debt" means Debt incurred by any non-material Subsidiary
     to finance the acquisition (other than any acquisition from the Borrower or
     any Subsidiary) or construction of a project, which Debt does not permit or
     provide for recourse against the Borrower or any Subsidiary of the Borrower
     (other than the Subsidiary that is to acquire or construct such project) or
     any property or asset of the Borrower of any Subsidiary of the Borrower
     (other than the property or assets of the Subsidiary that is to acquire or
     construct such project).

          "Note" means an A Note or a B Note.

          "Notice of A Borrowing" has the meaning specified in Section 2.2(a).

          "Notice of B Borrowing" has the meaning specified in Section 2.16(a).

          "NWP" means Northwest Pipeline Corporation, a Delaware corporation.

          "Original Advance" is defined in the first recital.

          "Original Bank" is defined in the first recital.

          "PBGC" means the Pension Benefit Guaranty Corporation.

          "Permitted Liens" means Liens specifically described on Schedule III.

          "Person" means an individual, partnership, corporation, limited
     liability company, business trust, joint stock company, trust,
     unincorporated association, joint venture or other entity, or a government
     or any political subdivision or agency thereof.

          "PIGAP II" means WilPro Energy Services (PIGAP II) Limited, a Cayman
     Islands corporation.

                                       11
<PAGE>   17

               "Plan" means an employee pension benefit plan (other than a
          Multiemployer Plan) as defined in Section 3(2) of ERISA currently
          maintained by, or to which contributions have been made at any time
          after December 31, 1984, by, the Borrower or any ERISA Affiliate for
          employees of the Borrower or any ERISA Affiliate and covered by Title
          IV of ERISA or subject to the minimum funding standards under Section
          412 of the Code.

               "PowerTel" means PowerTel Limited, an Australian corporation.
          "Public Filings" means the Borrower's annual report on Form 10-K for
          the year ended December 31, 1998.

               "Rating Category" means, as to the Borrower, the relevant
          category applicable to the Borrower from time to time as set forth on
          Schedule V, which is based on the ratings (or lack thereof) of the
          Borrower's senior unsecured long-term debt by S&P or Moody's. In the
          event there is a split between the ratings of the Borrower's senior
          unsecured long-term debt by S&P and Moody, "Rating Category" shall
          mean, as to the Borrower, the relevant category applicable to the
          Borrower from time to time as set forth on Schedule V, which is based
          on the higher of the ratings of the Borrower's senior unsecured
          long-term debt by S&P and Moody.

               "Related Party" of any Person means any corporation, partnership,
          joint venture or other entity of which more than 10% of the
          outstanding capital stock or other equity interests having ordinary
          voting power to elect a majority of the board of directors of such
          corporation, partnership, joint venture or other entity or others
          performing similar functions (irrespective of whether or not at the
          time capital stock or other equity interests of any other class or
          classes of such corporation, partnership, joint venture or other
          entity shall or might have voting power upon the occurrence of any
          contingency) is at the time directly or indirectly owned by such
          Person or which owns at the time directly or indirectly more than 10%
          of the outstanding capital stock or other equity interests having
          ordinary voting power to elect a majority of the board of directors of
          such Person or others performing similar functions (irrespective of
          whether or not at the time capital stock or other equity interests of
          any other class or classes of such corporation, partnership, joint
          venture or other entity shall or might have voting power upon the
          occurrence of any contingency); provided, however, that neither the
          Borrower nor any Subsidiary of the Borrower shall be considered to be
          a Related Party of the Borrower or any Subsidiary of the Borrower.

               "S&P" means Standard & Poor's Ratings Services, a division of the
          McGraw Hill Companies on the date hereof.

               "Sale and Lease-Back Transaction" of any Person means any
          arrangement entered into by such Person or any Subsidiary of such
          Person, directly or indirectly, whereby such Person or any Subsidiary
          of such Person shall sell or transfer any property, whether now owned
          or hereafter acquired, and whereby such Person or any Subsidiary of
          such Person shall

                                       12
<PAGE>   18

          then or thereafter rent or lease as lessee such property or any part
          thereof or other property which such Person or any Subsidiary of such
          Person intends to use for substantially the same purpose or purposes
          as the property sold or transferred.

               "Seminole" means Seminole Pipeline Company, a Delaware
          corporation.

               "Stated Termination Date" means January 22, 2001, or such later
          date, if any as may be agreed to by the Borrower and the Banks
          pursuant to Section 2.18.

               "Subordinated Debt" means any Debt of the Borrower which is
          effectively subordinated to the obligations of the Borrower hereunder
          and under the Notes.

               "Subsidiary" of any Person means any corporation, partnership,
          joint venture or other entity of which more than 50% of the
          outstanding capital stock or other equity interests having ordinary
          voting power to elect a majority of the board of directors of such
          corporation, partnership, joint venture or other entity or others
          performing similar functions (irrespective of whether or not at the
          time capital stock or other equity interests of any other class or
          classes of such corporation, partnership, joint venture or other
          entity shall or might have voting power upon the occurrence of any
          contingency) is at the time directly or indirectly owned by such
          Person.

               "Tangible Net Worth" of any Person means, as of any date of
          determination, the excess of total assets of such Person over total
          liabilities of such Person, total assets and total liabilities each to
          be determined in accordance with generally accepted accounting
          principles, excluding, however, from the determination of total assets
          (i) patents, patent applications, trademarks, copyrights and trade
          names, (ii) goodwill, organizational, experimental, research and
          development expense and other like intangibles, (iii) treasury stock,
          (iv) monies set apart and held in a sinking or other analogous fund
          established for the purchase, redemption or other retirement of
          capital stock or Subordinated Debt, and (v) unamortized debt discount
          and expense.

               "Termination Date" means the earlier of (i) the Stated
          Termination Date or (ii) the date of termination in whole of the
          Commitments pursuant to Section 2.4, 2.17 or 6.1.

               "Termination Event" means (i) a "reportable event", as such term
          is described in Section 4043 of ERISA (other than a "reportable event"
          not subject to the provision for 30-day notice to the PBGC or an event
          described in Section 4062(f) of ERISA, or (ii) the withdrawal of the
          Borrower or any ERISA Affiliate from a Multiple Employer Plan during a
          plan year in which it was a "substantial employer," as such term is
          defined in Section 4001(a)(2) of ERISA, or the incurrence of liability
          by the Borrower or any ERISA Affiliate under Section 4064 of ERISA
          upon the termination of a Plan or Multiple Employer Plan, or (iii) the
          distribution of a notice of intent to terminate a Plan pursuant to
          Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as a
          termination under Section 4041 of

                                       13
<PAGE>   19
          ERISA, or (iv) the institution of proceedings to terminate a Plan by
          the PBGC under Section 4042 of ERISA, or (v) any other event or
          condition which might constitute grounds under Section 4042 of ERISA
          for the termination of, or the appointment of a trustee to administer,
          any Plan.

               "TGPL" means Transcontinental Gas Pipe Line Corporation, a
          Delaware corporation.

               "TGT" means Texas Gas Transmission Corporation, a Delaware
          corporation.

               "Transfer Agreement" has the meaning specified in Section 8.6.

               "Type" has the meaning set forth in the definition herein of A
          Advance.

               "Unrated" means that no senior unsecured long-term debt of the
          Borrower is rated by S&P and no senior unsecured long-term debt of the
          Borrower is rated by Moody's.

               "WCG" means Williams Communications Group, Inc., a Delaware
          corporation.

               "WCS" means Williams Communications Solutions, LLC, a Delaware
          limited liability company.

               "WES" means Williams Energy Services, a Delaware corporation.

               "WFS" means Williams Field Services Group, Inc., a Delaware
          corporation.

               "Wholly-Owned Subsidiary" of any Person means any Subsidiary of
          such Person all of the capital stock and other equity interests of
          which is owned by such Person or any Wholly-Owned Subsidiary of such
          Person.

               "Withdrawal Liability" shall have the meaning given such term
          under Part I of Subtitle E of Title IV of ERISA.

               "WPC" means Williams Pipelines Central, Inc., a Delaware
          corporation, formerly Williams Natural Gas Company.

               "WPL" means Williams Pipe Line Company, a Delaware corporation.

         Section I.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."

         Section I.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles, and each reference herein to "generally accepted
accounting principles" shall mean generally accepted accounting principles

                                       14
<PAGE>   20

consistent with those applied in the preparation of the financial statements
referred to in Section 4.1(e).

         Section I.4 Miscellaneous. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section, Schedule and Exhibit references are to Articles and Sections
of and Schedules and Exhibits to this Agreement, unless otherwise specified.

         Section I.5 Ratings. A rating, whether public or private, by S&P or
Moody's shall be deemed to be in effect on the date of announcement or
publication by S&P or Moody's, as the case may be, of such rating or, in the
absence of such announcement or publication, on the effective date of such
rating and will remain in effect until the announcement or publication of, or in
the absence of such announcement or publication, the effective date of, any
change in, or withdrawal or termination of, such rating. In the event the
standards for any rating by Moody's or S&P are revised, or any such rating is
designated differently (such as by changing letter designations to different
letter designations or to numerical designations), the references herein to such
rating shall be deemed to refer to the revised or redesignated rating for which
the standards are closest to, but not lower than, the standards at the date
hereof for the rating which has been revised or redesignated, all as determined
by the Majority Banks in good faith. Long-term debt supported by a letter of
credit, guaranty, insurance or other similar credit enhancement mechanism shall
not be considered as senior unsecured long-term debt. If either Moody's or S&P
has at any time more than one rating applicable to senior unsecured long-term
debt of the Borrower, the lowest such rating shall be applicable for purposes
hereof. For example, if Moody's rates some senior unsecured long-term debt of
the Borrower Ba1 and other such debt of the Borrower Ba2, the senior unsecured
long-term debt of the Borrower shall be deemed to be rated Ba2 by Moody's.

                                       15
<PAGE>   21

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

         Section II.1 The A Advances. Each Bank severally agrees, on the terms
and conditions hereinafter set forth, to make A Advances to the Borrower from
time to time on any Business Day during the period from the date hereof until
the Termination Date in an aggregate amount outstanding not to exceed at any
time such Bank's Commitment; provided that the aggregate amount of the
Commitments of the Banks shall, except for purposes of Section 2.3(a), be deemed
used from time to time to the extent of the aggregate amount of the B Advances
then outstanding to the Borrower and such deemed use of the aggregate amount of
such Commitments shall be applied to the Banks ratably according to their
respective Commitments (such deemed use of the aggregate amount of the
Commitments being a "B Reduction"). Each A Borrowing shall be in an aggregate
amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof, and shall consist of A Advances of the same Type made to the Borrower
on the same day by the Banks ratably according to their respective Commitments.
Within the limits of each Bank's Commitment, the Borrower may borrow, prepay
pursuant to Section 2.10 and reborrow under this Section 2.1.

         Section II.2 Making the A Advances. (a) Each A Borrowing shall be made
on notice, given not later than (1) in the case of a proposed Borrowing
comprised of Eurodollar Rate Advances, 11:00 A.M. (New York City time) at least
three Business Days prior to the date of the proposed Borrowing, and (2) in the
case of a proposed Borrowing comprised of Base Rate Advances, 10:00 A.M. (New
York City time) on the date of the proposed Borrowing, by the Borrower to the
Agent, which shall give to each Bank prompt notice thereof by telecopy, telex or
cable. Each such notice of an A Borrowing (a "Notice of A Borrowing") shall be
by telecopy, telex or cable, confirmed immediately in writing, in substantially
the form of Exhibit B-1 hereto, executed by the Borrower and specifying therein
the requested (i) date of such A Borrowing (which shall be a Business Day), (ii)
initial Type of A Advances comprising such A Borrowing, (iii) aggregate amount
of such A Borrowing, and (iv) in the case of an A Borrowing comprised of
Eurodollar Rate Advances, initial Interest Period for each such A Advance. Each
Bank shall, before 11:00 A.M. (New York City time) on the date of such A
Borrowing, make available for the account of its Applicable Lending Office to
the Agent at its New York address referred to in Section 8.2, in same day funds,
such Bank's ratable portion of such A Borrowing. After the Agent's receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Agent will make such funds available to the Borrower at the
Agent's aforesaid address.

         (b) Anything herein to the contrary notwithstanding:

               (i) at no time shall there be outstanding to the Borrower more
          than six A Borrowings comprised of Eurodollar Rate Advances;

               (ii) the Borrower may not select Eurodollar Rate Advances for any
          Borrowing if the aggregate amount of such Borrowing is less than
          $20,000,000;

                                       16
<PAGE>   22

               (iii) if the Majority Banks shall notify the Agent that either
          (A) the Eurodollar Rate for any Interest Period for any Eurodollar
          Rate Advances will not adequately reflect the cost to such Banks of
          making or funding their respective Eurodollar Rate Advances for such
          Interest Period, or (B) that U.S. dollar deposits for the relevant
          amounts and Interest Period for their respective Advances are not
          available to them in the London interbank market, or it is otherwise
          impossible to have Eurodollar Rate Advances, the Agent shall forthwith
          so notify the Borrower and the Banks, whereupon (I) each Eurodollar
          Rate Advance will automatically, on the last day of the then existing
          Interest Period therefor, Convert into a Base Rate Advance, and (II)
          the obligations of the Banks to make, or to Convert Advances into,
          Eurodollar Rate Advances shall be suspended until the Agent, at the
          request of the Majority Banks, shall notify the Borrower and the Banks
          that the circumstances causing such suspension no longer exist, and,
          except as provided in Section 2.2(b)(v), each Advance comprising any
          requested A Borrowing shall be a Base Rate Advance;

               (iv) if the Agent is unable to determine the Eurodollar Rate for
          Eurodollar Rate Advances, the obligation of the Banks to make, or to
          Convert Advances into, Eurodollar Rate Advances shall be suspended
          until the Agent shall notify the Borrower and the Banks that the
          circumstances causing such suspension no longer exist, and, except as
          provided in Section 2.2(b)(v), each Advance comprising any requested A
          Borrowing shall be a Base Rate Advance; and

               (v) if the Borrower has requested a proposed A Borrowing
          consisting of Eurodollar Rate Advances and as a result of
          circumstances referred to in Section 2.2(b)(iii) or (iv) such A
          Borrowing would not consist of Eurodollar Rate Advances, the Borrower
          may, by notice given not later than 3:00 P.M. (New York City time) at
          least one Business Day prior to the date such proposed A Borrowing
          would otherwise be made, cancel such A Borrowing, in which case such A
          Borrowing shall be canceled and no Advances shall be made as a result
          of such requested A Borrowing, but the Borrower shall indemnify the
          Banks in connection with such cancellation as contemplated by Section
          2.2(c).

         (c) Each Notice of A Borrowing shall be irrevocable and binding on the
Borrower, except as set forth in Section 2.2(b)(v). In the case of any A
Borrowing which the related Notice of A Borrowing specifies is to be comprised
of Eurodollar Rate Advances, the Borrower shall indemnify each Bank against any
loss, cost or expense incurred by such Bank as a result of any failure to
fulfill on or before the date specified in such Notice of A Borrowing for such A
Borrowing the applicable conditions set forth in Article III, including, without
limitation, any loss (including loss of reasonably anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund the A Advance to be made by such Bank
as part of such A Borrowing when such A Advance, as a result of such failure, is
not made on such date. A certificate in reasonable detail as to the basis for
and the amount of such loss, cost or expense submitted to the Borrower and the
Agent by such Bank shall be prima facie evidence of the amount of such loss,
cost or expense. If an A Borrowing which the related Notice of A

                                       17
<PAGE>   23

Borrowing specifies is to be comprised of Eurodollar Rate Advances is not made
as an A Borrowing comprised of Eurodollar Rate Advances as a result of Section
2.2(b), the Borrower shall indemnify each Bank against any loss (excluding loss
of profits), cost or expense incurred by such Bank by reason of the liquidation
or reemployment of deposits or other funds acquired by such Bank prior to the
time such Bank is actually aware that such A Borrowing will not be so made to
fund the A Advance to be made by such Bank as part of such A Borrowing. A
certificate in reasonable detail as to the basis for and the amount of such
loss, cost or expense submitted to the Borrower and the Agent by such Bank shall
be prima facie evidence of the amount of such loss, cost or expense.

         (d) Unless the Agent shall have received notice from a Bank prior to
the date of any A Borrowing that such Bank will not make available to the Agent
such Bank's ratable portion of such A Borrowing, the Agent may assume that such
Bank has made such portion available to the Agent on the date of such A
Borrowing in accordance with subsection (a) of this Section 2.2 and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made such ratable portion available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to A Advances comprising such A Borrowing and (ii) in the case of such
Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's A
Advance as part of such A Borrowing for purposes of this Agreement.

         (e) The failure of any Bank to make the A Advance to be made by it as
part of any A Borrowing shall not relieve any other Bank of its obligation, if
any, hereunder to make its A Advance on the date of such A Borrowing, but no
Bank shall be responsible for the failure of any other Bank to make the A
Advance to be made by such other Bank on the date of any A Borrowing.

         Section II.3 Fees.

         (a) Commitment Fee. The Borrower agrees to pay to the Agent for the
account of each Bank a commitment fee on the average daily unused (for the
purposes of this Section 2.3(a), B Advances shall not, for purposes of this
Section 2.3(a), be considered to be usage of any Commitment) portion of such
Bank's Commitment to the Borrower from the date hereof until the Termination
Date at a rate per annum from time to time equal to the Applicable Commitment
Fee Rate from time to time, payable in arrears on the last day of each March,
June, September and December during the term such Bank has any Commitment and on
the Termination Date; and Borrower agrees that it shall also pay to the Agent on
the effective date hereof for the account of the Original Banks all commitment
fees which are accrued and unpaid as of the date hereof pursuant to Section
2.3(a) of the 1999 Credit Agreement.

         (b) Agent's Fees. The Borrower agrees to pay to the Agent, for its sole
account, such fees as may be separately agreed to in writing by the Borrower and
the Agent.

                                       18
<PAGE>   24

         (c) Participation and Amendment Fees. The Borrower agrees to pay on the
date of this Agreement to the Agent for the account of each Bank the
participation and amendment fee due such Bank pursuant to that certain updated
information memorandum delivered to the Banks in December, 1999.

         Section II.4 Reduction of the Commitments. The Borrower shall have the
right, upon at least five Business Days notice to the Agent, to terminate in
whole or reduce ratably in part the unused portions of the respective
Commitments of the Banks; provided that each partial reduction shall be in the
aggregate amount of at least $20,000,000; and provided further, that the
aggregate amount of the Commitments of the Banks shall not be reduced to an
amount which is less than the aggregate principal amount of the Advances then
outstanding to the Borrower.

         Section II.5 Repayment of A Advances. The Borrower shall repay, on the
Stated Termination Date or such earlier date as the Notes may be declared due
pursuant to Article VI, the unpaid principal amount of each A Advance made by
each Bank to the Borrower.

         Section II.6 Interest on A Advances. The Borrower shall pay interest on
the unpaid principal amount of each A Advance made by each Bank to the Borrower
from the date of such A Advance until such principal amount shall be paid in
full, at the following rates per annum:

         (a) Base Rate Advances. At such times as such A Advance is a Base Rate
Advance, a rate per annum equal at all times to the Base Rate in effect from
time to time, payable quarterly in arrears on the last day of each March, June,
September and December and on the date such Advance shall be Converted or paid
in full; provided that any amount of principal of any Base Rate Advance,
interest, fees and other amounts payable hereunder (other than principal of any
Eurodollar Rate Advance) which is not paid when due (whether at stated maturity,
by acceleration or otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the sum of the Base Rate in effect from time to
time plus 2% per annum. Notwithstanding the above, the Borrower shall pay on the
effective date hereof all accrued, unpaid interest on any Base Rate Advance made
pursuant to the 1999 Credit Agreement and outstanding as of the date hereof, if
any.

         (b) Eurodollar Rate Advances. At such times as such A Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such A Advance to the sum of the Eurodollar Rate for such
Interest Period plus the Applicable Margin in effect from time to time for such
A Advance, payable on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day which occurs during
such Interest Period every three months from the first day of such Interest
Period; provided that any amount of principal of any Eurodollar Rate Advance
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest, from the date on which such amount is due until
such amount is paid in full, payable on demand, at a rate per annum equal at all
times to the greater of (x) the sum of the Base Rate in effect from time to time
plus 2% per annum and (y) the sum of the rate per annum required to be paid on
such A Advance immediately prior to the date on which

                                       19
<PAGE>   25

such amount became due plus 2% per annum. Notwithstanding the above, the
Borrower shall pay on the effective date hereof any unpaid accrued interest on
any Eurodollar Rate Advance made pursuant to the 1999 Credit Agreement and
outstanding as of the date hereof, if any.

         Section II.7 Additional Interest on Eurodollar Rate Advances. The
Borrower shall pay to each Bank, so long as such Bank shall be required under
regulations of the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid principal amount of
each Eurodollar Rate Advance of such Bank, from the date of such Advance until
such principal amount is paid in full, at an interest rate per annum equal at
all times to the remainder obtained by subtracting (i) the Eurodollar Rate for
the Interest Period for such Advance from (ii) the rate obtained by dividing
such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of such Bank for such Interest Period, payable on each date
on which interest is payable on such Advance. Such additional interest shall be
determined by such Bank and notified to the Borrower through the Agent. A
certificate as to the amount of such additional interest submitted to the
Borrower and the Agent by such Bank shall be conclusive and binding for all
purposes, absent manifest error. No Bank shall have the right to recover any
additional interest pursuant to this Section 2.7 for any period more than 90
days prior to the date such Bank notifies the Borrower that additional interest
may be charged pursuant to this Section 2.7.

         Section II.8 Interest Rate Determination. The Agent shall give prompt
notice to the Borrower and the Banks of the applicable interest rate for each
Eurodollar Rate Advance determined by the Agent for purposes of Section 2.6(b).

         Section II.9 Evidence of Debt. The indebtedness of the Borrower
resulting from the A Advances owed to each Bank by the Borrower shall be
evidenced by an A Note of the Borrower payable to the order of such Bank.

         Section II.10 Prepayments.

         (a) The Borrower shall not have any right to prepay any principal
amount of any A Advance, except as provided in this Section 2.10.

         (b) The Borrower shall (i) in respect of Base Rate Advances, upon
notice to the Agent before 10:00 A.M. (New York City time) on the date of
prepayment and (ii) in respect of Eurodollar Rate Advances, upon at least three
Business Days' notice to the Agent, in each case stating the proposed date
(which shall be a Business Day) and aggregate principal amount of the
prepayment, prepay the outstanding principal amounts of the A Advances
comprising part of the same A Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the principal amount
prepaid and amounts, if any, required to be paid pursuant to Section 8.4(b) as a
result of such prepayment; provided, however, that each partial prepayment
pursuant to this Section 2.10(b) shall be in an aggregate principal amount not
less than $5,000,000 and in an aggregate principal amount such that after giving
effect thereto (1) no A Borrowing comprised of

                                       20
<PAGE>   26

Base Rate Advances shall have a principal amount outstanding of less than
$5,000,000 and (2) no A Borrowing comprised of Eurodollar Rate Advances shall
have a principal amount outstanding of less than $20,000,000.

         (c) The Borrower will give notice to the Agent, at or before the time
of each prepayment by the Borrower of Advances, pursuant to this Section 2.10
specifying the Advances which are to be prepaid and the amount of such
prepayment to be applied to such Advances. Each payment of any Advance pursuant
to this Section 2.10 or any other provision of this Agreement shall be made in a
manner such that all Advances comprising part of the same Borrowing are paid in
whole or ratably in part.

         Section II.11 Increased Costs.

         (a) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements included in
the Eurodollar Rate Reserve Percentage) in or in the interpretation, application
or applicability of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Bank of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances to the Borrower, then the Borrower shall from time to
time, upon demand by such Bank (with a copy of such demand to the Agent), pay to
the Agent for the account of such Bank additional amounts sufficient to
compensate such Bank for such increased cost. A certificate as to the amount of
such increased cost, submitted to the Borrower and the Agent by such Bank, shall
be prima facie evidence of the amount of such increased cost. No Bank shall have
the right to recover any such increased costs for any period more than 90 days
prior to the date such Bank notifies the Borrower of any such introduction,
change, compliance or proposed compliance.

         (b) If any Bank determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Bank or any
corporation controlling such Bank and that the amount of such capital is
increased by or based upon the existence of such Bank's commitment to lend to
the Borrower hereunder and other commitments of this type, then, upon demand by
such Bank (with a copy of such demand to the Agent), the Borrower shall
immediately pay to the Agent for the account of such Bank, from time to time as
specified by such Bank, additional amounts sufficient to compensate such Bank or
such corporation in the light of such circumstances, to the extent that such
Bank reasonably determines such increase in capital to be allocable to the
existence of such Bank's commitment to lend hereunder. A certificate as to the
amount of such additional amounts, submitted to the Borrower and the Agent by
such Bank, shall be prima facie evidence of the amount of such additional
amounts. No Bank shall have any right to recover any additional amounts under
this Section 2.11(b) for any period more than 90 days prior to the date such
Bank notifies the Borrower of any such compliance.

                                       21
<PAGE>   27

         (c) In the event that any Bank makes a demand for payment under Section
2.7 or this Section 2.11, the Borrower may within ninety (90) days of such
demand, if no Event of Default or event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default then exists, replace
such Bank with another commercial bank in accordance with all of the provisions
of the last sentence of Section 8.6(a) (including execution of an appropriate
Transfer Agreement); provided that (i) all obligations of such Bank to lend
hereunder shall be terminated and the Notes payable to such Bank and all other
obligations owed to such Bank hereunder shall be purchased in full without
recourse at par plus accrued interest at or prior to such replacement, (ii) such
replacement bank shall be reasonably satisfactory to the Agent and the Majority
Banks, (iii) such replacement bank shall, from and after such replacement, be
deemed for all purposes to be a "Bank" hereunder with a Commitment in the amount
of the Commitment of such Bank immediately prior to such replacement (plus, if
such replacement bank is already a Bank prior to such replacement the respective
Commitment of such Bank to the Borrower prior to such replacement), as such
amount may be changed from time to time pursuant hereto, and shall have all of
the rights, duties and obligations hereunder of the Bank being replaced, and
(iv) such other actions shall be taken by the Borrower, such Bank and such
replacement bank as may be appropriate to effect the replacement of such Bank
with such replacement bank on terms such that such replacement bank has all of
the rights, duties and obligations hereunder as such Bank (including, without
limitation, execution and delivery of new Notes to such replacement bank,
redelivery to the Borrower in due course of the Notes of the Borrower payable to
such Bank and specification of the information contemplated by Schedule I as to
such replacement bank).

         Section II.12 Illegality. Notwithstanding any other provision of this
Agreement, if any Bank shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation shall make it
unlawful, or that any central bank or other governmental authority shall assert
that it is unlawful, for any Bank or its Eurodollar Lending Office to perform
its obligations hereunder to make, or Convert a Base Rate Advance into, a
Eurodollar Rate Advance or to continue to fund or maintain any Eurodollar Rate
Advance, then, on notice thereof to the Borrower by the Agent, (i) the
obligation of each of the Banks to make, or to Convert Advances into, Eurodollar
Rate Advances shall be suspended until the Agent, at the request of the Majority
Banks, shall notify the Borrower and the Banks that the circumstances causing
such suspension no longer exist, and (ii) the Borrower shall forthwith prepay in
full all Eurodollar Rate Advances of all Banks then outstanding together with
all accrued interest thereon and all amounts payable pursuant to Section 8.4(b),
unless each Bank shall determine in good faith in its sole opinion that it is
lawful to maintain the Eurodollar Rate Advances made by such Bank to the end of
the respective Interest Periods then applicable thereto or unless the Borrower,
within five Business Days of notice from the Agent, Convert all Eurodollar Rate
Advances of all Banks then outstanding into Base Rate Advances in accordance
with Section 2.19.

         Section II.13 Payments and Computations.

         (a) The Borrower shall make each payment hereunder and under the Notes
to be made by it not later than 11:00 A.M. (New York City time) on the day when
due in U.S. dollars to the

                                       22
<PAGE>   28

Agent at its New York address referred to in Section 8.2 in same day funds,
without deduction, counterclaim or offset of any kind. The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal, interest or commitment fees ratably (other than amounts payable
pursuant to Section 2.7, 2.11, 2.14, 2.16 or 8.4(b)) to the Banks for the
account of their respective Applicable Lending Offices, and like funds relating
to the payment of any other amount payable to any Bank to such Bank for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. In no event shall any Bank be
entitled to share any fee paid to the Agent pursuant to Section 2.3(b), any
auction fee paid to the Agent pursuant to Section 2.16(a)(i) or any other fee
paid to the Agent, as such.

         (b) The Borrower hereby authorizes each Bank, if and to the extent
payment owed to such Bank by the Borrower is not made when due hereunder or
under any Note held by such Bank, to charge from time to time against any or all
of the Borrower's accounts with such Bank any amount so due.

         (c) (i) All computations of interest based on clause (a) or clause (b)
of the definition herein of Base Rate and of commitment fees shall be made by
the Agent on the basis of a year of 365 or 366 days, as the case may be, and
(ii) all computations of interest based on the Eurodollar Rate, the Federal
Funds Rate or clause (c) of the definition herein of Base Rate shall be made by
the Agent, and all computations of interest pursuant to Section 2.7 shall be
made by a Bank, on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest or commitment fees are payable. Each
determination by the Agent (or, in the case of Section 2.7, by a Bank) of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

         (d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

         (e) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due by the Borrower to any Bank hereunder
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank
hereunder. If and to the extent the Borrower shall not have so made such payment
in full to the Agent, each Bank shall repay to the Agent forthwith on demand
such amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Agent, at the Federal Funds Rate.

                                       23
<PAGE>   29

         Section II.14 Taxes.

         (a) Any and all payments by the Borrower hereunder or under the Notes
shall be made, in accordance with Section 2.13, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings with respect thereto, and all liabilities with respect
thereto, excluding in the case of each Bank and the Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Bank or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Bank or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14) such Bank or the
Agent, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

         (b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made by the Borrower hereunder or under the
Notes executed by it or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or such Notes (hereinafter referred to
as "Other Taxes").

         (c) The Borrower will indemnify each Bank and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.14) owed and paid by such Bank or the Agent, as the case may be, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
such Bank or the Agent, as the case may be, makes written demand therefore.

         (d) Within 30 days after the date of the payment of Taxes by or at the
direction of the Borrower, the Borrower will furnish to the Agent, at its
address referred to in Section 8.2, the original or a certified copy of a
receipt evidencing payment thereof. Should any Bank or the Agent ever receive
any refund, credit or deduction from any taxing authority to which such Bank or
the Agent would not be entitled but for the payment by the Borrower of Taxes as
required by this Section 2.14 (it being understood that the decision as to
whether or not to claim, and if claimed, as to the amount of any such refund,
credit or deduction shall be made by such Bank or the Agent, as the case may be,
in its sole discretion), such Bank or the Agent, as the case may be, thereupon
shall repay to the Borrower an amount with respect to such refund, credit or
deduction equal to any net reduction in taxes actually obtained by such Bank or
the Agent, as the case may be, and determined by such Bank or the Agent, as the
case may be, to be attributable to such refund, credit or deduction.

                                       24
<PAGE>   30

         (e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of principal and interest
hereunder and under the Notes.

         Section II.15 Sharing of Payments, Etc. If any Bank shall obtain any
payment (whether voluntary or involuntary, or through the exercise of any right
of set-off or otherwise) on account of the A Advances made by it (other than
pursuant to Section 2.7, 2.11, 2.14 or 8.4(b)) in excess of its ratable share of
payments on account of the A Advances obtained by all the Banks, such Bank shall
forthwith purchase from the other Banks such participations in the A Advances
owed to them as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of them, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall repay
to the purchasing Bank the purchase price to the extent of such Bank's ratable
share (according to the proportion of (i) the amount of the participation
purchased from such Bank as a result of such excess payment to (ii) the total
amount of such excess payment) of such recovery together with an amount equal to
such Bank's ratable share (according to the proportion of (i) the amount of such
Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower agrees
that any Bank so purchasing a participation from another Bank pursuant to this
Section 2.15 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.

         Section II.16 The B Advances.

         (a) Each Bank severally agrees that the Borrower may make B Borrowings
under this Section 2.16 from time to time on any Business Day during the period
from the date hereof until the earlier of (1) the Termination Date or (2) the
date occurring thirty (30) days prior to the Stated Termination Date in the
manner set forth below; provided that, following the making of each B Borrowing,
the aggregate amount of the Advances then outstanding to the Borrower shall not
exceed the aggregate amount of the Commitments of the Banks (computed without
regard to any B Reduction).

               (i) The Borrower may request a B Borrowing under this Section
          2.16 by delivering to the Agent, by telecopier, telex or cable,
          confirmed immediately in writing, a notice of a B Borrowing (a "Notice
          of B Borrowing"), in substantially the form of Exhibit B-2 hereto,
          specifying the date and aggregate amount of the proposed B Borrowing,
          the maturity date for repayment of each B Advance to be made as part
          of such B Borrowing (which maturity date may not be earlier than the
          date occurring 14 days after the date of such B Borrowing or later
          than the earlier of (x) 6 months after the date of such B Borrowing or
          (y) the Stated Termination Date), the interest payment date or dates
          relating thereto, and any other terms to be applicable to such B
          Borrowing (including, without limitation, the basis to be used by the
          Banks in determining the rate or rates of interest to be offered by
          them as

                                       25
<PAGE>   31

          provided in paragraph (ii) below and prepayment terms, if any, but
          excluding any waiver or other modification to any of the conditions
          set forth in Article III), not later than 10:00 A.M. (New York City
          time) (A) at least one (1) Business Day prior to the date of the
          proposed B Borrowing, if the Borrower shall specify in the Notice of B
          Borrowing that the rates of interest to be offered by the Banks shall
          be fixed rates per annum and (B) at least five (5) Business Days prior
          to the date of the proposed B Borrowing, if the Borrower shall instead
          specify in the Notice of B Borrowing the basis to be used by the Banks
          in determining the rates of interest to be offered by them. The Agent
          shall in turn promptly notify each Bank of each request for a B
          Borrowing received by it from the Borrower by sending such Bank a copy
          of the related Notice of B Borrowing. Each time that the Borrower
          gives a Notice of B Borrowing, the Borrower shall pay to the Agent an
          auction fee equal to $2000.

               (ii) Each Bank may, if in its sole discretion it elects to do so,
          irrevocably offer to make one or more B Advances to the Borrower as
          part of such proposed B Borrowing at a rate or rates of interest
          specified by such Bank in its sole discretion, by notifying the Agent
          (which shall give prompt notice thereof to the Borrower), before 10:00
          A.M. (New York City time) (x) on the date of such proposed B
          Borrowing, in the case of a Notice of B Borrowing delivered pursuant
          to clause (A) of paragraph (i) above, and (y) three Business Days
          before the date of such proposed B Borrowing in the case of a Notice
          of B Borrowing delivered pursuant to clause (B) of paragraph (i)
          above, of the minimum amount and maximum amount of each B Advance
          which such Bank would be willing to make as part of such proposed B
          Borrowing (which amounts may, subject to the proviso to the first
          sentence of this Section 2.16(a), exceed such Bank's Commitment to the
          Borrower), the rate or rates of interest therefor and such Bank's
          Applicable Lending Office with respect to such B Advance; provided
          that if the Agent in its capacity as a Bank shall, in its sole
          discretion, elect to make any such offer, it shall notify the Borrower
          of such offer before 9:45 A.M. (New York City time) on the date on
          which notice of such election is to be given to the Agent by the other
          Banks. If any Bank shall elect not to make such an offer, such Bank
          shall so notify the Agent, before 10:00 A.M. (New York City time) on
          the date on which notice of such election is to be given to the Agent
          by the other Banks, and such Bank shall not be obligated to, and shall
          not, make any B Advance as part of such B Borrowing; provided that the
          failure by any Bank to give such notice shall not cause such Bank to
          be obligated to make any B Advance as part of such proposed B
          Borrowing.

               (iii) The Borrower shall, in turn, before 11:00 A.M. (New York
          City time) (x) on the date of such proposed B Borrowing in the case of
          a Notice of B Borrowing delivered pursuant to clause (A) of paragraph
          (i) above and (y) three Business Days before the date of such proposed
          B Borrowing in the case of a Notice of B Borrowing delivered pursuant
          to clause (B) of paragraph (i) above, either

               (A) cancel such B Borrowing by giving the Agent notice to that
          effect, or

                                       26
<PAGE>   32

               (B) accept one or more of the offers made by any Bank or Banks
          pursuant to paragraph (ii) above, in order of the lowest to highest
          rates of interest or margins (or, if two or more Banks bid at the same
          rates of interest, and the amount of accepted offers is less than the
          aggregate amount of such offers, the amount to be borrowed from such
          Banks as part of such B Borrowing shall be allocated among such Banks
          pro rata on the basis of the maximum amount offered by such Banks at
          such rates or margin in connection with such B Borrowing), in any
          aggregate amount up to the aggregate amount initially requested by the
          Borrower in the relevant Notice of B Borrowing, by giving notice to
          the Agent of the amount of each B Advance (which amount shall be equal
          to or greater than the minimum amount, and equal to or less than the
          maximum amount, notified to the Borrower by the Agent on behalf of
          such Bank for such B Advance pursuant to paragraph ii above) to be
          made by each Bank as part of such B Borrowing, and reject any
          remaining offers made by Banks pursuant to paragraph (ii) above by
          giving the Agent notice to that effect.

               (iv) If the Borrower notifies the Agent that such B Borrowing is
          canceled pursuant to paragraph (iii)(A) above, the Agent shall give
          prompt notice thereof to the Banks and such B Borrowing shall not be
          made.

               (v) If the Borrower accepts one or more of the offers made by any
          Bank or Banks pursuant to paragraph (iii)(B) above, the Agent shall in
          turn promptly notify (A) each Bank that has made an offer as described
          in paragraph (ii) above, of the date and aggregate amount of such B
          Borrowing and whether or not any offer or offers made by such Bank
          pursuant to paragraph (ii) above have been accepted by the Borrower,
          (B) each Bank that is to make a B Advance as part of such B Borrowing,
          of the amount of each B Advance to be made by such Bank as part of
          such B Borrowing, and (C) each Bank that is to make a B Advance as
          part of such B Borrowing, upon receipt, that the Agent has received
          forms of documents appearing to fulfill the applicable conditions set
          forth in Article III. Each Bank that is to make a B Advance as part of
          such B Borrowing shall, before 12:00 noon (New York City time) on the
          date of such B Borrowing specified in the notice received from the
          Agent pursuant to clause (A) of the preceding sentence or any later
          time when such Bank shall have received notice from the Agent pursuant
          to clause (C) of the preceding sentence, make available for the
          account of its Applicable Lending Office to the Agent at its New York
          address referred to in Section 8.2 such Bank's portion of such B
          Borrowing, in same day funds. Upon fulfillment of the applicable
          conditions set forth in Article III and after receipt by the Agent of
          such funds, the Agent will make such funds available to the Borrower
          at the Agents aforesaid address. Promptly after each B Borrowing the
          Agent will notify each Bank of the amount of the B Borrowing, the
          consequent B Reduction and the dates upon which such B Reduction
          commenced and will terminate.

         (b) Each B Borrowing shall be in an aggregate amount of not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof. The Borrower
agrees that it will not request a B Borrowing unless, upon the making of such B
Borrowing, the limitations set forth in the proviso to the first sentence of
Section 2.16(a) are complied with.

                                       27
<PAGE>   33

         (c) Within the limits and on the conditions set forth in this Section
2.16, the Borrower may from time to time borrow under this Section 2.16, repay
or prepay pursuant to subsection (d) below, and reborrow under this Section
2.16; provided that a B Borrowing shall not be made by the Borrower within three
Business Days of the date of another B Borrowing.

         (d) The Borrower shall repay to the Agent for the account of each Bank
which has made a B Advance to the Borrower, or each other holder of a B Note of
the Borrower, on the maturity date of each B Advance made to the Borrower (such
maturity date being that specified by the Borrower for repayment of such B
Advance in the related Notice of B Borrowing delivered pursuant to subsection
(a)(i) above and provided in the B Note evidencing such B Advance) the then
unpaid principal amount of such B Advance. The Borrower shall not have any right
to prepay any principal amount of any B Advance unless, and then only on the
terms specified by the Borrower for such B Advance in the related Notice of B
Borrowing delivered pursuant to subsection (a)(i) above and set forth in the B
Note evidencing such B Advance.

         (e) The Borrower shall pay interest on the unpaid principal amount of
each B Advance made to the Borrower from the date of such B Advance to the date
the principal amount of such B Advance is repaid in full, at the rate of
interest for such B Advance specified by the Bank making such B Advance in its
notice with respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by the Borrower for such
B Advance in the related Notice of B Borrowing delivered pursuant to subsection
(a)(i) above, as provided in the B Note evidencing such B Advance.

         (f) The indebtedness of the Borrower resulting from each B Advance made
to the Borrower as part of a B Borrowing shall be evidenced by a separate B Note
of the Borrower payable to the order of the Bank making such B Advance.

         (g) The failure of any Bank to make the B Advance to be made by it as
part of any B Borrowing shall not relieve any other Bank of its obligation, if
any, hereunder to make its B Advance on the date of such B Borrowing, but no
Bank shall be responsible for the failure of any other Bank to make the B
Advance to be made by such other Bank on the date of any B Borrowing.

         Section II.17 Optional Termination. Notwithstanding anything to the
contrary in this Agreement, if (i) any Person (other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Borrower or
of any Subsidiary of the Borrower) or two or more Persons acting in concert
(other than any group of employees of the Borrower or of any of its
Subsidiaries) shall have acquired beneficial ownership (within the meaning of
Rule l3d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Borrower (or
other securities convertible into such securities) representing 20% or more of
the combined voting power of all securities of the Borrower entitled to vote in
the election of directors, other than securities having such power only by
reason of the happening of a contingency, or (ii) during any period of up to 24
consecutive months, commencing before or after

                                       28
<PAGE>   34

the date of this Agreement, individuals who at the beginning of such 24-month
period were directors of the Borrower or who were elected by individuals who at
the beginning of such period were such directors or by individuals elected in
accordance with this clause (ii) shall cease for any reason to constitute a
majority of the board of directors of the Borrower, or (iii) any Person (other
than the Borrower or a Wholly-Owned Subsidiary of the Borrower) or two or more
Persons acting in concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement which upon consummation will result
in its or their acquisition of, the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Borrower; then the
Agent shall at the request, or may with the consent, of the holders of at least
66-2/3% in principal amount of the A Notes then outstanding or, if no A Notes
are then outstanding, Banks having at least 66-2/3% of the Commitments, by
notice to the Borrower, declare all of the Commitments and the obligation of
each Bank to make Advances to be terminated, whereupon all of the Commitments
and each such obligation shall forthwith terminate, and the Borrower shall not
have any further right to borrow hereunder.

         Section II.18 Extension of Termination Date. By notice given to the
Agent and the Banks, at least thirty days but not more than forty-five days
before January 1 of any year after 2000, the Borrower may request the Banks to
extend the Stated Termination Date for an additional period to a date which is
364 days after the then current Stated Termination Date. Within thirty days
after receipt of such request, each Bank that agrees, in its sole and absolute
discretion, to so extend the Stated Termination Date shall notify the Borrower
and the Agent that it so agrees, and if all Banks so agree the Stated
Termination Date shall be so extended.

         Section II.19 Voluntary Conversion of Advances. The Borrower may on any
Business Day, if no Event of Default then exists, upon notice (which shall be
irrevocable) given to the Agent not later than 11:00 A.M. (x) in the case of a
proposed Conversion into Eurodollar Rate Advances, on the third Business Day
prior to the date of the proposed conversion, and (y) in the case of a proposed
Conversion into Base Rate Advances, on the date of the proposed Conversion, and
subject to the provisions of Sections 2.2 and 2.12, Convert all Advances of one
Type comprising the same A Borrowing into Advances of the other Type; provided
that (i) no Conversion of any Eurodollar Rate Advances shall occur on a day
other than the last day of an Interest Period for such Eurodollar Rate Advances,
except as contemplated by Section 2.12, and (ii) Advances may not be Converted
into Eurodollar Rate Advances if the aggregate unpaid principal amount of the
Advances is less than $20,000,000. Each such notice of a Conversion shall,
within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the A Advances to be Converted, and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the Interest Period for each such
Advance.

         Section II.20     Automatic Provisions.

         (a If the Borrower shall fail to select the duration of any Interest
Period for Eurodollar Rate Advances in accordance with the provisions contained
in the definition of "Interest Period" in Section 1.1, the Agent will forthwith
so notify the Borrower and the Banks, and such Advances will automatically, on
the last day of the then existing Interest Period therefor, Convert into Base
Rate Advances.

                                       29
<PAGE>   35

         (b On the date on which the aggregate unpaid principal amount of the
Eurodollar Rate Advances of the Borrower shall be reduced to less than
$20,000,000, all of such Eurodollar Rate Advances shall automatically Convert
into Base Rate Advances.

                                   ARTICLE III

                                   CONDITIONS

     Section III.1 Conditions Precedent to Initial Advances. The obligation
of each Bank to make its initial Advance on or after the date hereof is subject
to the condition precedent that the Agent shall have received on or before the
date hereof, each dated on or before such date, in form and substance
satisfactory to the Agent and (except for the Notes) in sufficient copies for
each Bank:

         (a The A Notes executed by the Borrower to the order of each of the
respective Banks and this Agreement executed by the Borrower.

         (b Certified copies of the resolutions of the Board of Directors, or
the Executive Committee thereof, of the Borrower authorizing the execution of
this Agreement and the Notes.

         (c A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying (i) that attached thereto are true and correct copies of the
Certificate of Incorporation and Bylaws of the Borrower and (ii) the names and
true signatures of the officers of the Borrower authorized to sign this
Agreement, Notices of A Borrowing, Notices of B Borrowing and the Notes to be
executed by the Borrower and any other documents to be delivered hereunder by
the Borrower.

         (d An opinion of William G. von Glahn, General Counsel of the Borrower,
substantially in the form of Exhibit C hereto and as to such other matters as
any Bank through the Agent may reasonably request.

         (e An opinion of Mayer, Brown & Platt, special counsel to the Agent,
substantially in the form of Exhibit D hereto.

         (f A certificate of an officer of the Borrower stating the respective
ratings by each of S&P and Moody's of the senior unsecured long-term debt of the
Borrower as in effect on the date of this Agreement.

         (g Payment for the account of the Banks of those participation fees and
amendment fees as set forth in Section 2.3(c) hereof and for the account of the
Original Banks payment of accrued, unpaid interest through the date of this
Agreement on Advances, if any, made pursuant to the 1999 Credit Agreement and
outstanding as of the date hereof, to the extent payable pursuant to Section

                                       30
<PAGE>   36

2.6 and all accrued and unpaid commitment fees due and payable to the Original
Banks on or prior to such date pursuant to Section 2.3(a).

         Section III.2 Additional Conditions Precedent to Each A Borrowing. The
obligation of each Bank to make an A Advance on the occasion of any A Borrowing
(including the initial A Borrowing) shall be subject to the further conditions
precedent that on the date of such A Borrowing (a the following statements shall
be true (and each of the giving of the applicable Notice of A Borrowing and the
acceptance by the Borrower of the proceeds of such A Borrowing shall constitute
a representation and warranty by the Borrower that on the date of such A
Borrowing such statements are true):

               (i The representations and warranties contained in Section 4.1
          pertaining to the Borrower and its Subsidiaries are correct on and as
          of the date of such A Borrowing, before and after giving effect to
          such A Borrowing and to the application of the proceeds therefrom, as
          though made on and as of such date,

               (ii No event has occurred and is, continuing, or would result
          from such A Borrowing or from the application of the proceeds
          therefrom, which constitutes an Event of Default or which would
          constitute an Event of Default but for the requirement that notice be
          given or time elapse or both, and

               (iii After giving effect to such A Borrowing and all other
          Borrowings which have been requested on or prior to such date but
          which have not been made prior to such date, the aggregate principal
          amount of all Advances will not exceed the aggregate of the
          Commitments (computed without regard to any B Reduction);

and (b) the Agent shall have received such other approvals, opinions or
documents as any Bank through the Agent may reasonably request.

         Section III.3 Conditions Precedent to Each B Borrowing. The obligation
of each Bank which is to make a B Advance to the Borrower on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance as part of
such B Borrowing is subject to the further conditions precedent that (i) at or
before the time required by paragraph (iii) of Section 2.16(a), the Agent shall
have received the written confirmatory notice of such B Borrowing contemplated
by such paragraph, (ii) on or before the date of such B Borrowing, but prior to
such B Borrowing, the Agent shall have received a B Note executed by the
Borrower payable to the order of such Bank for each of the one or more B
Advances to be made by such Bank as part of such B Borrowing, in a principal
amount equal to the principal amount of the B Advance to be evidenced thereby
and otherwise on such terms as were agreed to for such B Advance in accordance
with Section 2.16, and (iii) on the date of such B Borrowing (a) the following
statements shall be true (and each of the giving of the applicable Notice of B
Borrowing and the acceptance by the Borrower of the proceeds of such B Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such B Borrowing such statements are true):

                                       31
<PAGE>   37

               (10 The representations and warranties contained in Section 4.1
          are correct on and as of the date of such B Borrowing, before and
          after giving effect to such B Borrowing and to the application of the
          proceeds therefrom, as though made on and as of such date,

               (20 No event has occurred and is continuing, or would result from
          such B Borrowing or from the application of the proceeds therefrom,
          which constitutes an Event of Default or which would constitute an
          Event of Default but for the requirement that notice be given or time
          elapse or both,

               (30 Following the making of such B Borrowing and all other
          Borrowings to be made on the same day to the Borrower under this
          Agreement, the aggregate principal amount of all Advances to the
          Borrower then outstanding will not exceed the aggregate amount of the
          Commitments (computed without regard to any B Reduction), and

               (40 After giving effect to such B Borrowing and all other
          Borrowings which have been requested on or prior to such date but
          which have not been made prior to such date, the aggregate principal
          amount of all Advances will not exceed the aggregate of the
          Commitments of the Banks (computed without regard to any B Reduction);

and (b) the Agent shall have received such other approvals, opinions or
documents as any Bank through the Agent may reasonably request.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         Section IV.1 Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:

         (a The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all corporate
powers and all governmental licenses, authorizations, certificates, consents and
approvals required to carry on its business as now conducted in all material
respects, except for those licenses, authorizations, certificates, consents and
approvals the failure to have which could not reasonably be expected to have a
material adverse effect on the business, assets, condition or operation of the
Borrower and its Subsidiaries taken as a whole. Each Subsidiary of the Borrower
is duly organized or validly formed, validly existing and (if applicable) in
good standing under the laws of its jurisdiction of incorporation or formation,
except where the failure to be so organized, existing and in good standing could
not reasonably be expected to have a material adverse effect on the business,
assets, condition or operations of the Borrower and its Subsidiaries taken as a
whole. Each Subsidiary of the Borrower has all corporate powers and all
governmental licenses, authorizations, certificates, consents and approvals
required

                                       32
<PAGE>   38

to carry on its business as now conducted in all material respects, except for
those licenses, authorizations, certificates, consents and approvals the failure
to have which could not reasonably be expected to have a material adverse effect
on the business, assets, condition or operation of the Borrower and its
Subsidiaries taken as a whole.

         (b The execution, delivery and performance by the Borrower of this
Agreement and the Notes and the consummation of the transactions contemplated by
this Agreement are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, do not contravene (i) the
Borrower's charter or by-laws or (ii) law or any contractual restriction binding
on or affecting the Borrower and will not result in or require the creation or
imposition of any Lien prohibited by this Agreement. At the time of each
borrowing of any Advance by the Borrower, such borrowing and the use of the
proceeds of such Advance will be within the Borrower's corporate powers, will
have been duly authorized by all necessary corporate action, will not contravene
(i) the Borrower's charter or by-laws or (ii) law or any contractual restriction
binding on or affecting the Borrower and will not result in or require the
creation or imposition of any Lien prohibited by this Agreement.

         (c No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Borrower of this Agreement or the
Notes or the consummation of the transactions contemplated by this Agreement. At
the time of each borrowing of any Advance by the Borrower, no authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body will be required for such borrowing or the use of
the proceeds of such Advance.

         (d This Agreement has been duly executed and delivered by the Borrower.
This Agreement is the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally
and by general principles of equity. The A Notes are, and when executed the B
Notes will be, the legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors'
rights generally and by general principles of equity.

         (e The Consolidated balance sheet of the Borrower and its Subsidiaries
as at December 31, 1998, and the related Consolidated statement of income and
cash flows of the Borrower and its Subsidiaries for the fiscal year then ended,
copies of which have been furnished to each Bank, and the Consolidated balance
sheet of the Borrower and its Subsidiaries as at September 30, 1999, and the
related Consolidated statement of income and cash flows of the Borrower and its
Subsidiaries for the three months then ended, duly certified by an authorized
financial officer of the Borrower, copies of which have been furnished to each
Bank, fairly present, subject, in the case of such balance sheet as at September
30, 1999, and such statement of income

                                       33
<PAGE>   39

and cash flows for the three months then ended, to year-end audit adjustments,
the Consolidated financial condition of the Borrower and its Subsidiaries as at
such dates and the Consolidated results of operations of the Borrower and its
Subsidiaries for the year and three month period, respectively, ended on such
dates, all in accordance with generally accepted accounting principles
consistently applied. Since September 30, 1999, there has been no material
adverse change in the condition or operations of the Borrower or its
Subsidiaries.

         (f Except as set forth in the Public Filings or as otherwise disclosed
in writing by the Borrower to the Banks and the Agent after the date hereof and
approved by the Majority Banks, there is no pending or, to the knowledge of the
Borrower, threatened action or proceeding affecting the Borrower or any material
Subsidiary of the Borrower before any court, governmental agency or arbitrator,
which could reasonably be expected to materially and adversely affect the
financial condition or operations of the Borrower and its Subsidiaries taken as
a whole or which purports to affect the legality, validity, binding effect or
enforceability of this Agreement or any Note.

         (g No proceeds of any Advance has been or will be used for any purpose
or in any manner not permitted by Section 5.2(k).

         (h The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance will be used to purchase or carry any such margin
stock (other than purchases of common stock expressly permitted by Section
5.2(k)) or to extend credit to others for the purpose of purchasing or carrying
any such margin stock. Following the application of the proceeds of each
Advance, not more than 25% of the value of the assets of the Borrower will be
represented by such margin stock and not more than 25% of the value of the
assets of the Borrower and its Subsidiaries will be represented by such margin
stock.

         (i The Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

         (j No Termination Event has occurred or is reasonably expected to occur
with respect to any Plan for which an Insufficiency exists. Neither the Borrower
nor any ERISA Affiliate has received any notification that any Multiemployer
Plan is in reorganization or has been terminated, within the meaning of Title IV
of ERISA, and the Borrower is not aware of any reason to expect that any
Multiemployer Plan is to be in reorganization or to be terminated within the
meaning of Title IV of ERISA.

         (k The Borrower and the Subsidiaries of the Borrower have filed all
United States Federal income tax returns and all other material domestic tax
returns which are required to be filed by them and have paid, or provided for
the payment before the same become delinquent of, all taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower or any such
Subsidiary, other than those taxes contested in good faith by appropriate
proceedings. The charges,

                                       34
<PAGE>   40

accruals and reserves on the books of the Borrower and the material Subsidiaries
of the Borrower in respect of taxes are adequate.

         (l The Borrower is not a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

         (m Except as set forth in the Public Filings or as otherwise disclosed
in writing by the Borrower to the Banks and the Agent after the date hereof and
approved by the Majority Banks, the Borrower and its material Subsidiaries are
in compliance in all material respects with all Environmental Protection
Statutes to the extent material to their respective operations or financial
condition. Except as set forth in the Public Filings or as otherwise disclosed
in writing by the Borrower to the Banks and the Agent after the date hereof and
approved by the Majority Banks, the aggregate contingent and non-contingent
liabilities of the Borrower and its Subsidiaries (other than those reserved for
in accordance with generally accepted accounting principles and set forth in the
financial statements regarding the Borrower referred to in Section 4.1(e) and
delivered to each Bank) which are reasonably expected to arise in connection
with (i) the requirements of Environmental Protection Statutes or (ii) any
obligation or liability to any Person in connection with any Environmental
matters (including, without limitation, any release or threatened release (as
such terms are defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980) of any Hazardous Waste, Hazardous Substance, other
waste, petroleum or petroleum products into the Environment) does not exceed 10%
of the Consolidated Tangible Net Worth of the Borrower (excluding liabilities to
the extent covered by insurance if the insurer has confirmed that such insurance
covers such liabilities or which the Borrower reasonably expects to recover from
ratepayers).

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

       Section V.1 Affirmative Covenants. So long as any Note shall remain
unpaid or any Bank shall have any Commitment hereunder, the Borrower will,
unless the Majority Banks shall otherwise consent in writing:

         (a Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders (except where failure to comply could not
reasonably be expected to have a material adverse effect on the business,
assets, condition or operations of the Borrower and its Subsidiaries taken as a
whole), such compliance to include, without limitation, the payment and
discharge before the same become delinquent of all taxes, assessments and
governmental charges or levies imposed upon it or any of its Subsidiaries or
upon any of its property or any property of any of its Subsidiaries, and all
lawful claims which, if

                                       35
<PAGE>   41

unpaid, might become a Lien upon any property of it or any of its Subsidiaries;
provided that neither the Borrower nor any Subsidiary of the Borrower shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings and with respect to which
reserves in conformity with generally accepted accounting principles, if
required by such principles, have been provided on the books of the Borrower or
such Subsidiary, as the case may be.

         (b Reporting Requirements. Furnish to each of the Banks:

               (i as soon as possible and in any event within five days after
          the occurrence of each Event of Default or each event which, with the
          giving of notice or lapse of time or both, would constitute an Event
          of Default, continuing on the date of such statement, a statement of
          an authorized financial officer of the Borrower setting forth the
          details of such Event of Default or event and the actions, if any,
          which the Borrower has taken and proposes to take with respect
          thereto;

               (ii as soon as available and in any event not later than 60 days
          after the end of each of the first three quarters of each fiscal year
          of the Borrower, the Consolidated balance sheets of the Borrower and
          its Subsidiaries as of the end of such quarter and the Consolidated
          statements of income and cash flows of the Borrower and its
          Subsidiaries for the period commencing at the end of the previous year
          and ending with the end of such quarter, all in reasonable detail and
          duly certified (subject to year-end audit adjustments) by an
          authorized financial officer of the Borrower as having been prepared
          in accordance with generally accepted accounting principles, together
          with a certificate of said officer (a) stating that he has no
          knowledge that an Event of Default, or an event which, with notice or
          lapse of time or both, would constitute an Event of Default has
          occurred and is continuing or, if an Event of Default or such an event
          has occurred and is continuing, a statement as to the nature thereof
          and the action, if any, which the Borrower proposes to take with
          respect thereto, and (b) showing in detail the calculation supporting
          such statement in respect of Section 5.2(b);

               (iii as soon as available and in any event not later than 105
          days after the end of each fiscal year of the Borrower, a copy of the
          annual audit report for such year for the Borrower and its
          Subsidiaries, including therein Consolidated balance sheets of the
          Borrower and its Subsidiaries as of the end of such fiscal year and
          Consolidated statements of income and cash flows of the Borrower and
          its Subsidiaries for such fiscal year, in each case prepared in
          accordance with generally accepted accounting principles and certified
          by Ernst & Young, LLP or other independent certified public
          accountants of recognized standing acceptable to the Majority Banks,
          together with a certificate of such accounting firm to the Banks (a)
          stating that, in the course of the regular audit of the business of
          the Borrower and its Subsidiaries, which audit was conducted by such
          accounting firm in accordance with generally accepted auditing
          standards, such accounting firm has obtained no knowledge that an
          Event of Default or an event which, with notice or lapse of time or
          both, would constitute an Event of Default, has occurred and is
          continuing, or if, in the opinion of such accounting

                                       36
<PAGE>   42
          firm, an Event of Default or such an event has occurred and is
          continuing, a statement as to the nature thereof, and (b) showing in
          detail the calculations supporting such statement in respect of
          Section 5.2(b);

               (iv such other information respecting the business or properties,
          or the condition or operations, financial or otherwise, of the
          Borrower or any of its material Subsidiaries as any Bank through the
          Agent may from time to time reasonably request;

               (v promptly after the sending or filing thereof, copies of all
          proxy material, reports and other information which the Borrower sends
          to any of its security holders, and copies of all final reports and
          final registration statements which the Borrower or any material
          Subsidiary of the Borrower files with the Securities and Exchange
          Commission or any national securities exchange;

               (vi as soon as possible and in any event (A) within 30 Business
          Days after the Borrower or any ERISA Affiliate knows or has reason to
          know that any Termination Event described in clause (i) of the
          definition of Termination Event with respect to any Plan has occurred
          and (B) within 30 Business Days after the Borrower or any ERISA
          Affiliate knows or has reason to know that any other Termination Event
          with respect to any Plan has occurred or is reasonably expected to
          occur, a statement of the chief financial officer or chief accounting
          officer of the Borrower describing such Termination Event and the
          action, if any, which the Borrower or such ERISA Affiliate proposes to
          take with respect thereto;

               (vii promptly and in any event within 25 Business Days after
          receipt thereof by the Borrower or any ERISA Affiliate, copies of each
          notice received by the Borrower or any ERISA Affiliate from the PBGC
          stating its intention to terminate any Plan or to have a trustee
          appointed to administer any Plan;

               (viii within 30 days following request therefor by any Bank,
          copies of each Schedule B (Actuarial Information) to each annual
          report (Form 5500 Series) of the Borrower or any ERISA Affiliate with
          respect to each Plan;

               (ix promptly and in any event within 25 Business Days after
          receipt thereof by the Borrower or any ERISA Affiliate from the
          sponsor of a Multiemployer Plan, a copy of each notice received by the
          Borrower or any ERISA Affiliate concerning (A) the imposition of a
          Withdrawal Liability by a Multiemployer Plan, (B) the determination
          that a Multiemployer Plan is, or is expected to be, in reorganization
          within the meaning of Title IV of ERISA, (C) the termination of a
          Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the
          amount of liability incurred, or expected to be incurred, by the
          Borrower or any ERISA Affiliate in connection with any event described
          in clause (A), (B) or (C) above;

                                       37
<PAGE>   43

               (x not more than 60 days (or 105 days in the case of the last
          fiscal quarter of a fiscal year of the Borrower) after the end of each
          fiscal quarter of the Borrower, a certificate of an authorized
          financial officer of the Borrower stating the respective ratings, if
          any, by each of S&P and Moody's of the senior unsecured long-term debt
          of the Borrower as of the last day of such quarter; and

               (xi promptly after any withdrawal or termination of any letter of
          credit, guaranty, insurance or other credit enhancement referred to in
          the second to last sentence of Section 1.5 or any change in the
          indicated rating set forth therein or any change in, or issuance,
          withdrawal or termination of, the rating of any senior unsecured
          long-term debt of the Borrower by S&P or Moody's, notice thereof.

         (c Maintenance of Insurance. Maintain, and cause each of its material
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or its Subsidiaries operate,
provided that the Borrower or any of its Subsidiaries may self-insure to the
extent and in the manner normal for companies of like size, type and financial
condition.

         (d Preservation of Corporate Existence, Etc. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified, and cause each Subsidiary to
qualify and remain qualified, as a foreign corporation in each jurisdiction in
which qualification is necessary or desirable in view of its business and
operations or the ownership of its properties, except (1) in the case of any
Subsidiary of the Borrower, where the failure of such Subsidiary to so preserve,
maintain, qualify and remain qualified could not reasonably be expected to have
a material adverse effect on the business, assets, condition or operations of
the Borrower and its Subsidiaries taken as a whole and (2) in the case of the
Borrower, where the failure of the Borrower to preserve and maintain such
rights, franchises and privileges and to so qualify and remain qualified could
not reasonably be expected to have a material adverse effect on the business,
assets, condition or operations of the Borrower and its Subsidiaries taken as a
whole.

         Section V.2 Negative Covenants. So long as any Note shall remain unpaid
or any Bank shall have any Commitment hereunder, the Borrower will not, without
the written consent of the Majority Banks:

         (a Liens, Etc. Create, assume, incur or suffer to exist, or permit any
of its Subsidiaries to create, assume, incur or suffer to exist, any Lien on or
in respect of any of its property, whether now owned or hereafter acquired, or
assign or otherwise convey, or permit any such Subsidiary to assign or otherwise
convey, any right to receive income, in each case to secure or provide for the
payment of any Debt of any Person, except, that the Borrower may create, incur,
assume or suffer to exist Permitted Liens.

                                       38
<PAGE>   44

         (b Debt. Permit the ratio of (A) the aggregate amount of all Net Debt
of the Borrower to (B) the sum of the Consolidated Net Worth of the Borrower
plus the Net Debt of the Borrower to exceed (1) 0.7 to 1.0 at any time during
the period beginning on the date hereof through December 31, 2000, (2) 0.675 to
1.0 at any time during the period beginning January 1, 2001 through December 31,
2001 or (3) 0.65 to 1.0 at any time on or after January 1, 2002 through the term
of this Agreement.

         (c Merger and Sale of Assets. Merge or consolidate with or into any
other Person, or sell, lease or otherwise transfer all or substantially all of
its assets, or permit any of its material Subsidiaries to merge or consolidate
with or into any other Person, or sell, lease or otherwise transfer all or
substantially all of its assets, except that this Section 5.2(c) shall not
prohibit:

               (i the Borrower and its Subsidiaries from selling, leasing or
          otherwise transferring their respective assets in the ordinary course
          of business;

               (ii any merger, consolidation or sale, lease or other transfer of
          assets involving only the Borrower and its Subsidiaries; provided,
          however, that transactions under this paragraph (ii) shall be
          permitted if, and only if, (x) there shall not exist or result an
          Event of Default or an event which with notice or lapse of time or
          both would constitute an Event of Default and (y) in the case of each
          transaction referred to in this paragraph (ii) involving the Borrower
          or any of its Subsidiaries, such transaction could not reasonably be
          expected to impair materially the ability of the Borrower to perform
          its obligations hereunder and under the Notes and the Borrower shall
          continue to exist;

               (iii the Borrower and its Subsidiaries from selling, leasing or
          otherwise transferring their respective gathering assets and other
          production area facilities, or the stock of any Person substantially
          all of the assets of which are gathering assets and other production
          area facilities, to the Borrower or any Subsidiary of the Borrower for
          consideration that is not materially less than the net book value of
          such assets and facilities; provided, however, that transactions under
          this paragraph (iii) shall be permitted if, and only if, there shall
          not exist or such transaction shall not result in an Event of Default
          or an event which with notice or lapse of time or both would
          constitute an Event of Default; or

               (iv sales of receivables of any kind.

         (d Agreements to Restrict Dividends and Certain Transfers. Enter into
or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to
exist, any consensual encumbrance or restriction on the ability of any
Subsidiary of the Borrower (i) to pay, directly or indirectly, dividends or make
any other distributions in respect of its capital stock or pay any Debt or other
obligation owed to the Borrower or to any Subsidiary of the Borrower; or (ii) to
make loans or advances to the Borrower or any Subsidiary of the Borrower, except
(1) encumbrances and restrictions on any immaterial Subsidiary of the Borrower
(other than WPC and WFS), (2) those encumbrances and restrictions existing on
the date hereof and described in Exhibit E, and (3) other encumbrances and

                                       39
<PAGE>   45

restrictions now or hereafter existing of the Borrower or any of its
Subsidiaries that are not more restrictive in any material respect than the
encumbrances and restrictions with respect to the Borrower or its Subsidiaries
described in Exhibit E.

         (e Loans and Advances. Make or permit to remain outstanding any loan or
advance from the Borrower, or own, purchase or acquire any obligations or debt
securities of any Subsidiary of the Borrower, except that the Borrower may make
and permit to remain outstanding loans and advances to its Subsidiaries (and
such Subsidiaries may borrow or otherwise receive such loans and advances), if
each such loan or advance (excluding loans and advances to a Subsidiary of the
Borrower if the aggregate principal amount of all such excluded loans and
advances to such Subsidiary does not exceed $100,000) is evidenced by a written
instrument duly executed by the Subsidiary of the Borrower to which such loan or
advance is made, bears interest at the Borrower's or such Subsidiary's market
rate of interest and matures on or before the Termination Date.

         (f Maintenance of Ownership of Certain Subsidiaries. Sell, issue or
otherwise dispose of, or create, assume, incur or suffer to exist any Lien on or
in respect of, or permit any of its Subsidiaries to sell, issue or otherwise
dispose of or create, assume, incur or suffer to exist any Lien on or in respect
of, any shares of or any interest in any shares of the capital stock of or
interest in (1) WPC, WFS, WPL, TGPL, TGT, NWP, or any of their respective
material Subsidiaries or (2) any Subsidiary of the Borrower at the time it owns
any shares of or any interest in any shares of the capital stock of WFS, WPL,
TGPL, TGT or NWP or any of their respective material Subsidiaries; provided,
however, that this Section 5.2(f) shall not prohibit the sale or other
disposition of the stock of any Subsidiary of the Borrower to the Borrower or
any Wholly-Owned Subsidiary of the Borrower if, but only if, (x) there shall not
exist or result an Event of Default or an event which with notice or lapse of
time or both would constitute an Event of Default and (y) in the case of each
sale or other disposition referred to in this proviso involving the Borrower or
any of its Subsidiaries, such sale or other disposition could not reasonably be
expected to impair materially the ability of the Borrower to perform its
obligations hereunder and under the Notes and the Borrower shall continue to
exist.

         (g Compliance with ERISA. (i) Terminate, or permit any ERISA Affiliate
to terminate, any Plan so as to result in any liability of the Borrower or any
ERISA Affiliate to the PBGC in excess of $5,000,000, or (ii) permit to exist any
occurrence of any Termination Event with respect to a Plan for which there is an
Insufficiency in excess of $5,000,000.

         (h Transactions with Related Parties. Make any sale to, make any
purchase from, extend credit to, make payment for services rendered by, or enter
into any other transaction with, or permit any material Subsidiary of the
Borrower to make any sale to, make any purchase from, extend credit to, make
payment for services rendered by, or enter into any other transaction with, any
Related Party of the Borrower or of such Subsidiary unless as a whole such
sales, purchases, extensions of credit, rendition of services and other
transactions are (at the time such sale, purchase, extension of credit,
rendition of services or other transaction is entered into) on terms and
conditions reasonably fair in all material respects to the Borrower or such
Subsidiary in the good faith judgment of the Borrower.

                                       40
<PAGE>   46

         (i Guarantees. Guarantee or otherwise become contingently liable for,
or permit any of its Subsidiaries to guarantee or otherwise become contingently
liable for, Debt of any Subsidiary of the Borrower (other than guaranties of
obligations of WES and any Subsidiary of WES that is not a Borrower as defined
in and pursuant to that certain Second Amended and Restated Credit Agreement
dated July 23, 1997 among the Borrowers as named therein, certain financial
institutions party thereto (the "Banks"), certain Co-Agents identified therein,
and Citibank, N.A., as Agent for the Banks, as amended by amendments dated
January 26, 1999 and as of the date hereof, (as the same may be further amended,
supplemented, restated or modified, the "Multiyear Williams Credit Agreement"))
while an Event of Default is continuing.

         (j Sale and Lease-Back Transactions. Enter into, or permit any of its
Subsidiaries to enter into, any Sale and Lease-Back Transaction, if after giving
effect thereto the Borrower would not be permitted to incur at least $1.00 of
additional Debt secured by a Lien permitted by paragraph (z) of Schedule III.

         (k Use of Proceeds. Use any proceeds of any Advance for any purpose
other than general corporate purposes (including, without limitation, working
capital and capital expenditures) or use any such proceeds in any manner which
violates or results in a violation of law; provided, however, that no proceeds
of any Advance will be used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, (other than any purchase of common stock of any corporation, if such
purchase is not subject to Sections 13 and 14 of the Securities Exchange Act of
1934 and is not opposed, resisted or recommended against by such corporation or
its management or directors, provided that the aggregate amount of common stock
of any corporation (other than Apco Argentina Inc., a Cayman Islands
corporation) purchased during any calendar year shall not exceed 1% of the
common stock of such corporation issued and outstanding at the time of such
purchase) or in any manner which contravenes law, and no proceeds of any Advance
will be used to purchase or carry any margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System).

                                   ARTICLE VI

                                EVENTS OF DEFAULT

         Section VI.1 Events of Default. If any of the following events ("Events
of Default") shall occur and be continuing:

         (a The Borrower shall fail to pay any principal of any Note executed by
it when the same becomes due and payable, or shall fail to pay any interest on
any such Note or any fee or other amount to be paid by it hereunder within ten
days after the same becomes due and payable; or

                                       41
<PAGE>   47
         (b Any certification, representation or warranty made by the Borrower
herein or by the Borrower (or any officer of the Borrower) in writing under or
in connection with any Note or this Agreement (including, without limitation,
representations and warranties deemed made pursuant to Section 3.2 or 3.3) shall
prove to have been incorrect in any material respect when made or deemed made;
or

         (c The Borrower shall fail to perform or observe (i) any term, covenant
or agreement contained in Section 5. 1 (b) on its part to be performed or
observed and such failure shall continue for five Business Days after the
earlier of the date notice thereof shall have been given to the Borrower by the
Agent or any Bank or the date the Borrower shall have knowledge of such failure,
or (ii) any term, covenant or agreement contained in this Agreement (other than
a term, covenant or agreement contained in Section 5. 1 (b)) or any Note on its
part to be performed or observed; or

         (d The Borrower or any Subsidiary of the Borrower shall fail to pay any
principal of or premium or interest on any Debt which is outstanding in a
principal amount of at least $60,000,000 in the aggregate (excluding Debt
evidenced by the Notes) of the Borrower or such Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment or as required pursuant
to an illegality event of the type set forth in Section 2.12), prior to the
stated maturity thereof; provided, however, that the provisions of this Section
6.1(d) shall not apply to any Non-Recourse Debt of any Subsidiary of the
Borrower which is not a Borrower as defined in and pursuant to the Multiyear
Williams Credit Agreement; or

         (e The Borrower or any material Subsidiary of the Borrower shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Borrower or any material Subsidiary of the Borrower seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), shall remain undismissed or unstayed for a period of
30 days; or the Borrower or any material Subsidiary of the Borrower shall take
any action to authorize any of the actions set forth above in this subsection
(e); or

         (f Any judgment or order for the payment of money in excess of
$60,000,000 shall be rendered against the Borrower or any material Subsidiary of
the Borrower and remain unsatisfied and

                                       42
<PAGE>   48

either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or

         (g Any Termination Event with respect to a Plan shall have occurred
and, 30 days after notice thereof shall have been given to the Borrower by the
Agent, (i) such Termination Event shall still exist and (ii) the sum (determined
as of the date of occurrence of such Termination Event) of the Insufficiency of
such Plan and the Insufficiency of any and all other Plans with respect to which
a Termination Event shall have occurred and then exist (or in the case of a Plan
with respect to which a Termination Event described in clause (ii) of the
definition of Termination Event shall have occurred and then exist, the
liability related thereto) is equal to or greater than $5,000,000; or

         (h The Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount which, when aggregated with all other
amounts required to be paid to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date of such notification), exceeds
$15,000,000 in the aggregate or requires payments exceeding $10,000,000 per
annum; or

         (i The Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and the ERISA Affiliates to all Multiemployer
Plans which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years which include the date hereof by an amount exceeding
$5,000,000;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the holders of at least 66-2/3% in principal amount of the A Notes
then outstanding or, if no A Notes are then outstanding, Banks having at least
66-2/3% of the Commitments, by notice to the Borrower, declare all of the
Commitments and the obligation of each Bank to make Advances to be terminated,
whereupon all of the Commitments and each such obligation shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
holders of at least 66-2/3% in principal amount of the A Notes then outstanding
or if no A Notes are then outstanding, Banks having at least 66-2/3% of the
Commitments, or, if no A Notes are then outstanding and all Commitments have
terminated, the holders of at least 66-2/3% in principal amount of the B Notes
then outstanding, by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable by the Borrower under this Agreement to be
forthwith due and payable, whereupon such Notes, such interest and all such
amounts shall become and be forthwith due and payable, without requirement of
any presentment, demand, protest, notice of intent to accelerate, further notice
of acceleration or other further notice of any kind (other than the notice
expressly provided for above), all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of any Event of Default described
in Section 6.1(e), (A) the obligation of each Bank to make Advances shall
automatically be terminated and (B) the Notes, all such interest and all such
amounts shall

                                       43
<PAGE>   49
automatically become and be due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or any other
notice of any kind, all of which are hereby expressly waived by the Borrower.

                                   ARTICLE VII

            THE AGENT, CO-SYNDICATION AGENTS AND DOCUMENTATION AGENT

      Section VII.1 Authorization and Action. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of holders of at least 66-2/3% in
principal amount of the A Notes then outstanding or, if no A Notes are then
outstanding, Banks having at least 66-2/3% of the Commitments (or, if no A Notes
are then outstanding and all Commitments have terminated, upon the instructions
of holders of at least 66-2/3% in principal amount of the B Notes then
outstanding), and such instructions shall be binding upon all Banks and all
holders of Notes; provided, however, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to any Note, this Agreement or applicable law. The Agent agrees to give
to each Bank prompt notice of each notice given to it by the Borrower pursuant
to the terms of this Agreement.

         Section VII.2 Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with any Note or this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of any Note as the holder thereof until the Agent receives and accepts
a Transfer Agreement executed by the Borrower, the Bank which is the payee of
such Note, as assignor, and the assignee in accordance with the last sentence of
Section 8.6(a); (ii) may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Bank and shall not be responsible to
any Bank for any statements, warranties or representations (whether written or
oral) made in or in connection with any Note or this Agreement; (iv) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Note or this

                                       44
<PAGE>   50

Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Bank for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of any Note or this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of any, Note or this Agreement by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper party or
parties.

         Section VII.3 Citibank, CIBC, Commerzbank, Credit Lyonnais and
Affiliates. With respect to its Commitments, the Advances made by it and the
Notes issued to it, Citibank shall have the same rights and powers under any
Note and this Agreement as any other Bank and may exercise the same as though it
was not the Agent; with respect to its Commitments, the Advances made by it and
the Notes issued to it, each of CIBC, Commerzbank and Credit Lyonnais shall have
the rights and powers under any Note and this Agreement as any other Bank and
may exercise the same as though it was not a Co-Syndication Agent or
Documentation Agent, as the case may be. The term "Bank" or "Banks" shall,
unless otherwise expressly indicated, include each of Citibank, CIBC,
Commerzbank and Credit Lyonnais in its individual capacity. Citibank, CIBC,
Commerzbank, Credit Lyonnais and the respective affiliates of each may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower, any Subsidiary of the
Borrower, any Person who may do business with or own, directly or indirectly,
securities of the Borrower or any such Subsidiary and any other Person, all as
if Citibank were not the Agent and CIBC, Commerzbank and Credit Lyonnais were
not the Co-Syndication Agents and Credit Lyonnais were not the Documentation
Agent without any duty to account therefor to the Banks.

         Section VII.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent, any Co-Syndication Agent, the
Documentation Agent, the Arranger or any other Bank and based on the financial
statements referred to in Section 4.1(e) and such other documents and
information as it has deemed appropriate. made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent, any Co-Syndication Agent, the
Documentation Agent, the Arranger or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under any Note or this
Agreement.

         Section VII.5 Indemnification. The Banks agree to indemnify the Agent
(to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the A Notes then held by each of them (or if no
A Notes are at the time outstanding or if any A Notes are held by Persons which
are not Banks, ratably according to either (i) the respective amounts of their
Commitments, or (ii) if all Commitments have terminated, the respective amounts
of the Commitments immediately prior to the time the Commitments terminated),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of any Note or this
Agreement or any action taken or omitted by the Agent under any Note or this
Agreement, provided that no Bank shall be liable to the Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agents gross
negligence or

                                       45
<PAGE>   51

willful misconduct. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, any Note or this Agreement to the extent that the Agent
is not reimbursed for such expenses by the Borrower.

         Section VII.6 Successor Agent. The Agent may resign at any time as
Agent under this Agreement by giving written notice thereof to the Banks and the
Borrower and may be removed at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, the Majority Banks shall have the
right to appoint, with the consent the Borrower (which consent shall not be
unreasonably withheld), a successor Agent from among the Banks. If no successor
Agent shall have been so appointed by the Majority Banks with such consent, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or the Majority Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a Bank which is a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent under this Agreement by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and shall function as the Agent
under this Agreement, and the retiring Agent shall be discharged from its duties
and obligations as Agent under this Agreement. After any retiring Agents
resignation or removal hereunder as Agent, the provisions of this Article VII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.

         Section VII.7 Co-Syndication Agents; Documentation Agent. The
Co-Syndication Agents and the Documentation Agent have no duties or obligations
under this Agreement. None of the Co-Syndication Agents or the Documentation
Agent shall have, by reason of this Agreement or the Notes, a fiduciary
relationship in respect of any Bank or the holder of any Note, and nothing in
this Agreement or the Notes, express or implied, is intended or shall be so
construed to impose on any of the Co-Syndication Agents or the Documentation
Agent any obligation in respect of this Agreement or the Notes.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         Section VIII.1 Amendments, Etc. No amendment or waiver of any provision
of any Note or this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, do any of the following: (a) waive any of
the conditions specified in Article III, (b)

                                       46
<PAGE>   52

increase the Commitments of the Banks or subject the Banks to any additional
obligations, (c) reduce the principal of, or interest on, the Notes or any fees
or other amounts payable hereunder, (d) postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (e) take any action which requires the signing of all the Banks
pursuant to the terms of this Agreement, (f) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the A Notes or B
Notes, or the number of Banks, which shall be required for the Banks or any of
them to take any action under this Agreement, or (g) amend this Section 8.1; and
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Banks required above to take such
action, affect the rights or duties of the Agent under any Note or this
Agreement.

         Section VIII.2 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopy, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to any Bank, as specified opposite its name on Schedule
I hereto or specified pursuant to Section 8.6(a); if to the Borrower, as
specified opposite its name on Schedule II hereto; and if to Citibank, as Agent,
to its address at 399 Park Avenue, New York, New York 10043, (telecopier number:
(302) 894-6120), Attention: Bilal Aman, with a copy to Citicorp North America,
Inc., 1200 Smith Street, Suite 2000, Houston, Texas 77002 (telecopier number:
(713) 654-2849; telex number 127001 (Attn: Route Code HOUAA)), Attention: The
Williams Companies, Inc. Account Officer, or, as to the Borrower or the Agent,
at such other address as shall be designated by such party in a written notice
to the other parties and, as to each other party, at such other address as shall
be designated by such party in a written notice to the Borrower and the Agent.
All such notices and communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when received in the mail, sent by telecopier to
any party to the telecopier number as set forth herein or on Schedule I or
Schedule 11 or specified pursuant to Section 8.6(a) (or other telecopy number
specified by such party in a written notice to the other parties hereto),
delivered to the telegraph company, telexed to any party to the telex number set
forth herein or on Schedule I or Schedule II or specified pursuant to Section
8.6(a) (or other telex number designated by such party in a written notice to
the other parties hereto), confirmed by telex answerback, or delivered to the
cable company, respectively, except that notices and communications to the Agent
shall not be effective until received by the Agent.

         Section VIII.3 No Waiver; Remedies. No failure on the part of any Bank
or the Agent to exercise, and no delay in exercising, any right under any Note
or this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided in any Note
and this Agreement are cumulative and not exclusive of any remedies provided by
law.

         Section VIII.4 Costs, Expenses and Taxes. (a)(i) The Borrower agrees to
pay on demand all reasonable out-of-pocket costs and expenses of the Arranger
and the Agent in connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement, the Notes and the
other documents to be delivered under this Agreement, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect

                                       47
<PAGE>   53

thereto and with respect to advising the Agent as to its rights and
responsibilities under any Note and this Agreement, and (ii) the Borrower agrees
to pay on demand all costs and expenses, if any (including, without limitation,
reasonable counsel fees and expenses, which may include allocated costs of
in-house counsel), of the Agent and each Bank in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) against the
Borrower of any Note of the Borrower or this Agreement and the other documents
to be delivered by the Borrower under this Agreement.

         (b) If any payment (or purchase pursuant to Section 2.11(c) or Section
8.6(b)) of principal of, or Conversion of, any Eurodollar Rate Advance or B
Advance made to the Borrower is made other than on the last day of an Interest
Period relating to such Advance (or in the case of a B Advance, other than on
the original scheduled maturity date thereof), as a result of a payment pursuant
to Section 2.10 or 2.12 or acceleration of the maturity of the Notes pursuant to
Section 6.1 or for any other reason or as a result of any such purchase or any
Conversion, the Borrower shall, upon demand by any Bank (with a copy of such
demand to the Agent), pay to the Agent for the account of such Bank any amounts
required to compensate such Bank for any additional losses, costs or expenses
which it may reasonably incur as a result of any such payment, purchase or
Conversion, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Bank to fund or maintain such Advance.

         (c) The Borrower agrees, to the fullest extent permitted by law, to
indemnify and hold harmless the Agent, the Co-Syndication Agents, the
Documentation Agent, the Arranger and each Bank and each of their respective
directors, officers, employees and agents from and against any and all claims,
damages, liabilities and out-of-pocket expenses (including, without limitation,
reasonable fees and disbursements of counsel) for which any of them may become
liable or which may be incurred by or asserted against the Agent, the
Co-Syndication Agents, the Documentation Agent, the Arranger or such Bank or any
such director, officer, employee or agent (other than by another Bank or any
successor or assign of another Bank), in each case in connection with or arising
out of or by reason of any investigation, litigation, or proceeding, whether or
not any of the Agent, the Co-Syndication Agents, the Documentation Agent, the
Arranger, such Bank or any such director, officer, employee or agent is a party
thereto, arising out of, related to or in connection with this Agreement or the
Notes or any transaction in which any proceeds of all or any part of the
Advances are applied (other than any such claim, damage, liability or expense to
the extent attributable to the gross negligence or willful misconduct of, or
violation of any law or regulation by, either the party seeking indemnity under
this Section 8.4(c) or any of its directors, officers, employees or agents).

         Section VIII.5 Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.1 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.1,
each Bank is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter

                                       48
<PAGE>   54

existing under this Agreement and the Notes held by such Bank, irrespective of
whether or not such Bank shall have made any demand under this Agreement or such
Notes and although such obligations may be unmatured. Each Bank agrees promptly
to notify the Borrower after such set-off and application made by such Bank,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.

         Section VIII.6 Binding Effect; Transfers. (a) This Agreement shall
become effective when it shall have been executed by the Borrower, the
Co-Syndication Agents, the Documentation Agent and the Agent and when each Bank,
listed on the signature pages hereof has delivered an executed counterpart
hereof to the Agent, has sent to the Agent a facsimile copy of its signature
hereon or has notified the Agent that such Bank has executed this Agreement and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent and each Bank and their respective successors and assigns; provided that
the Borrower shall not have the right to assign any of its rights hereunder or
any interest herein without the prior written consent of all of the Banks. Each
Bank may assign to one or more banks, financial institutions or government
entities all or any part of, or may grant participations to one or more banks,
financial institutions or government entities in or to all or any part of, any
Advance or Advances owing to such Bank, any Note or Notes held by such Bank and
all or any portion of such Bank's Commitments, and to the extent of any such
assignment or participation (unless otherwise stated therein), the assignee or
purchaser of such assignment or participation shall, to the fullest extent
permitted by law, have the same rights and benefits hereunder and under such
Note or Notes as it would have if it were such Bank hereunder; provided that,
except in the case of an assignment meeting the requirements of the next
sentence hereof, (1) (i) such Bank's obligations under this Agreement,
including, without limitation, its Commitment hereunder, shall remain unchanged,
(ii) such Bank shall remain responsible for the performance thereof, (iii) such
Bank shall remain the holder of any such Note or Notes for all purposes under
this Agreement, and (iv) the Borrower, the other Banks and the Agent shall
continue to deal solely with and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement; and (2) no Bank shall assign
or grant a participation that conveys to the assignee or participant the right
to vote or consent under this Agreement, other than the right to vote upon or
consent to (i) any increase in the amount of any Commitment of such Bank; (ii)
any reduction of the principal amount of, or interest to be paid on, such Bank's
Advance or Advances or Note or Notes; (iii) any reduction of any fee or other
amount payable hereunder to such Bank; or (iv) any postponement of any date
fixed for any payment of principal of, or interest on, such Bank's Advance or
Advances or Note or Notes or any fee or other amount payable hereunder to such
Bank.

         If (I) the assignee of any Bank either (1) is another Bank or is an
affiliate of a Bank or (2) is approved in writing by the Agent and the Borrower
or (3) is approved in writing by the Agent and either an Event of Default exists
or the Borrower has relinquished the right to approve the assignment pursuant to
Section 8.6(b) and (II) such assignee assumes all or any portion (which portion
shall be a constant, and not a varying, percentage, and the amount of the
Commitment assigned, whether all or a portion, shall be in a minimum amount of
$5,000,000 or such lesser

                                       49
<PAGE>   55

amount as may be approved in writing by the Agent and the Borrower for such
assignment) of the Commitment of such assigning Bank by executing a document in
the form of Exhibit F (or with such changes thereto as have been approved in
writing by the Agent in its sole discretion as evidenced by its execution
thereof) duly executed by the Agent, the Borrower (unless an Event of Default
exists or the Borrower has relinquished the right to approve the assignment
pursuant to Section 8.6(b)), such assigning Bank and such assignee and delivered
to the Agent ("Transfer Agreement"), then upon such delivery, (i) such assigning
Bank shall be released from its obligations under this Agreement with respect to
all or such portion, as the case may be, of its Commitments; (ii) such assignee
shall become obligated for all or such portion, as the case may be, of such
Commitments and all other obligations of such assigning Bank hereunder with
respect to or arising as a result of all or such portion, as the case may be, of
such Commitments; (iii) such assignee shall be assigned the right to vote or
consent under this Agreement, to the extent of all or such portion, as the case
may be, of such Commitments; (iv) the Borrower shall deliver, in replacement of
the A Note of the Borrower to such assigning Bank then outstanding (a) to such
assignee, a new A Note of the Borrower in the amount of the Commitment of such
assigning Bank which is being so assumed by such assignee plus, in the case of
any assignee which is already a Bank hereunder, the amount of such assignee's
Commitment immediately prior to such assignment (any such assignee which is
already a Bank hereunder agrees to cancel and return to the Borrower, with
reasonable promptness following the delivery of such new A Note, the A Note
being replaced thereby), (b) to such assigning Bank, a new A Note in the amount
of the balance, if any, of the Commitment of such assigning Bank to the Borrower
(without giving effect to any B Reduction) retained by such assigning Bank (and
such assigning Bank agrees to cancel and return to the Borrower, with reasonable
promptness following delivery of such new A Notes, the A Note being replaced
thereby), and (c) to the Agent, photocopies of such new A Notes; (v) if such
assignment is of all of such assigning Bank's Commitment, all of the outstanding
A Advances made by such assigning Bank shall be transferred to such assignee;
(vi) if such assignment is not of all of such Commitments, a part of each A
Advance to the Borrower equal to the amount of such Advance multiplied by a
fraction, the numerator of which is the amount of such portion of such assigning
Bank's Commitment so assumed and the denominator of which is the amount of the
Commitment of such assigning Bank (without giving effect to any B Reduction)
immediately prior to such assumption, shall be transferred to such assignee and
evidenced by such assignee's A Note from the Borrower, and the balance of such A
Advance shall be evidenced by such assigning Bank's new A Note from the Borrower
delivered pursuant to clause (iv)(b) of this sentence; (vii) if such assignee is
not a "Bank" hereunder prior to such assignment, such assignee shall become a
party to this Agreement as a Bank and shall be deemed to be a "Bank" hereunder
and the amount of all or such portion, as the case may be, of the Commitment so
assumed shall be deemed to be the amount set opposite such assigning Bank's name
on Schedule IV for purposes of this Agreement and (viii) if such assignee is not
a Bank hereunder prior to such assignment, such assignee shall be deemed to have
specified the offices of such assignee named in the respective Transfer
Agreement as its "Domestic Lending Office" and "Eurodollar Lending Office" for
all purposes of this Agreement and to have specified for purposes of Section 8.2
the notice information set forth in such Transfer Agreement; and the Agent shall
promptly after execution of any Transfer Agreement by the Agent and the other
parties thereto notify

                                       50
<PAGE>   56

the Banks of the parties to such Transfer Agreement and the amounts of the
assigning Bank's Commitment assumed thereby.

         (b) If the Borrower does not consent to a proposed assignment by a Bank
pursuant to the last sentence of Section 8.6(a), the Borrower may, within 15
days of its receipt of a request that it consent to such assignment, nominate by
notice to the Agent and such Bank a bank which, if it is not a Bank, is
acceptable to the Agent, and which unconditionally offers in writing (with a
copy to the Agent) to purchase and assume, to the extent of the amount of such
proposed assignment, in accordance with all of the provisions of the last
sentence of Section 8.6(a) (including execution of an appropriate Transfer
Agreement), all of such Bank's rights and obligations (including, without
limitation, its Commitment) hereunder and interest in the Advances owing to such
Bank and the Notes held by such Bank without recourse at par plus interest
accrued thereon to the date of such purchase on a date therein specified (not
less than three nor greater than five Business Days after such nomination). Such
Bank at its option may elect to accept or not accept such purchase offer. If a
Bank accepts such an offer and the bank first nominated by the Borrower pursuant
to this Section 8.6(b) fails to purchase such rights and interest on such
specified date in accordance with the terms of such offer, the Borrower may,
within 15 days of such failure, repeat the process contemplated by the first
sentence of this Section 8.6(b) by nominating another bank for purposes of this
Section 8.6(b) by notice to the Agent and such Bank. If (i) the Borrower does
not so nominate such a bank, within 15 days of its receipt of such request that
it consent to such assignment, or (ii) the Borrower fails to nominate another
bank following such a failure to purchase or (iii) such second nominated bank
fails to purchase in accordance with the terms of an offer complying with the
first sentence of this Section 8.6(b), the Borrower shall be deemed to have
relinquished its right to consent to such assignment. If such Bank elects to not
accept such a purchase offer under this Section 8.6(b) as to a particular
proposed assignment, the Borrower shall not be deemed to have relinquished its
right to consent to such assignment.

         (c) The Borrower agrees to promptly execute the Transfer Agreement
pertaining to any assignment as to which approval by the Borrower of the
assignee is not required by clause (I) of the last paragraph of Section 8.6(a).

         (d) Any Bank may assign, as collateral or otherwise, any of its rights
(including, without limitation, rights to payments of principal of and/or
interest on the Notes) under this Agreement or any of the Notes to any Federal
Reserve Bank without notice to or consent of the Borrower or the Agent.

         Section VIII.7 Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.

         Section VIII.8 Interest. It is the intention of the parties hereto that
the Agent and each Bank shall conform strictly to usury laws applicable to it,
if any. Accordingly, if the transactions with the Agent or any Bank contemplated
hereby would be usurious under applicable law, then, in that event,
notwithstanding anything to the contrary in the Notes, this Agreement or any
other agreement entered

                                       51
<PAGE>   57

into in connection with or as security for this Agreement or the Notes, it is
agreed as follows: (i) the aggregate of all consideration which constitutes
interest under applicable law that is contracted for, taken, reserved, charged
or received by the Agent or such Bank, as the case may be, under the Notes, this
Agreement or under any other agreement entered into in connection with or as
security for this Agreement or the Notes shall under no circumstances exceed the
maximum amount allowed by such applicable law and any excess shall be canceled
automatically and, if theretofore paid, shall at the option of the Agent or such
Bank, as the case may be, be credited by the Agent or such Bank, as the case may
be, on the principal amount of the obligations owed to the Agent or such Bank,
as the case may be, by the Borrower or refunded by the Agent or such Bank, as
the case may be, to the Borrower, and (ii) in the event that the maturity of any
Note or other obligation payable to the Agent or such Bank, as the case may be,
is accelerated or in the event of any required or permitted prepayment, then
such consideration that constitutes interest under law applicable to the Agent
or such Bank, as the case may be, may never include more than the maximum amount
allowed by such applicable law and excess interest, if any, to the Agent or such
Bank, as the case may be, provided for in this Agreement or otherwise shall be
canceled automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall, at the option of the Agent or such Bank, as the case
may be, be credited by the Agent or such Bank, as the case may be, on the
principal amount of the obligations owed to the Agent or such Bank, as the case
may be, by the Borrower or refunded by the Agent or such Bank, as the case may
be, to the Borrower.

         Section VIII.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

         Section VIII.10 Survival of Agreements, Representations and Warranties,
Etc. All warranties, representations and covenants made by the Borrower or any
officer of the Borrower herein or in any certificate or other document delivered
in connection with this Agreement shall be considered to have been relied upon
by the Banks and shall survive the issuance and delivery of the Notes and the
making of the Advances regardless of any investigation. The indemnities and
other payment obligations of the Borrower contained in this Agreement, and the
indemnities by the Banks in favor of the Agent and its officers, directors,
employees and agents, will survive the repayment of the Advances and the
termination of this Agreement.

         Section VIII.11 Borrower's Right to Apply Deposits. In the event that
any Bank is placed in receivership or enters a similar proceeding, the Borrower
may, to the full extent permitted by law, make any payment due to such Bank
hereunder, to the extent of finally collected unrestricted deposits of the
Borrower in U.S. dollars held by such Bank, by giving notice to the Agent and
such Bank directing such Bank to apply such deposits to such indebtedness. If
the amount of such deposits is insufficient to pay such indebtedness then due
and owing in full, the Borrower shall pay the balance of such insufficiency in
accordance with this Agreement.

                                       52
<PAGE>   58
         Section VIII.12 Confidentiality. Each Bank agrees that it will use best
efforts, to the extent not inconsistent with practical business requirements,
not to disclose without the prior consent of the Borrower (other than to
employees, auditors, accountants, counsel or other professional advisors of the
Agent or any Bank) any information with respect to the Borrower or its
Subsidiaries which is furnished pursuant to this Agreement and which (i) the
Borrower in good faith considers to be confidential and (ii) is either clearly
marked confidential or is designated by the Borrower to the Agent or the Banks
in writing as confidential, provided that any Bank may disclose any such
information (a) as has become generally available to the public, (b) as may be
required or appropriate in any report, statement or testimony submitted to or
required by any municipal, state or Federal regulatory body having or claiming
to have jurisdiction over such Bank or submitted to or required by the Board of
Governors of the Federal Reserve System or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or elsewhere)
or their successors, (c) as may be required or appropriate in response to any
summons or subpoena in connection with any litigation, (d) in order to comply
with any law, order, regulation or ruling applicable to such Bank, (e) to the
prospective transferee in connection with any contemplated transfer of any of
the Notes or any interest therein by such Bank, provided that such prospective
transferee executes an agreement with or for the benefit of the Borrower
containing provisions substantially identical to those contained in this Section
8.12, and provided further that if the contemplated transfer is a grant of a
participation in a Note (and not an assignment), no such information shall be
authorized to be delivered to such participant pursuant to this clause (e)
except (i) such information delivered pursuant to Section 4.1(e) or Section
5.1(b) (other than paragraph (iv) thereof), and (ii) if prior notice of the
delivery thereof is given to the Borrower, such information as may be required
by law or regulation to be delivered, (f) in connection with the exercise of any
remedy by such Bank pertaining to this Agreement, any of the Notes or any other
document delivered in connection herewith, (g) in connection with any litigation
involving such Bank pertaining to this Agreement, any of the Notes or any other
document delivered in connection herewith, (h) to any Bank or the Agent, or (i)
to any affiliate of any Bank, provided that such affiliate executes an agreement
with or for the benefit of the Borrower containing provisions substantially
identical to those contained in this Section 8.12.

         Section VIII.13 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE
CO-SYNDICATION AGENTS, THE DOCUMENTATION AGENT AND THE BANKS HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY NOTE OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY.

                                       53
<PAGE>   59

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                             BORROWER:

                                             THE WILLIAMS COMPANIES, INC.

                                             By:
                                                --------------------------------
                                             Name:  James G. Ivey
                                             Title: Treasurer

<PAGE>   60

        [Signature page to Second Amended and Restated Credit Agreement]

                                             AGENT:

                                             CITIBANK, N.A., as Agent

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             CO-SYNDICATION AGENTS:

                                             CANADIAN IMPERIAL BANK OF
                                             COMMERCE, as Co-Syndication Agent

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             COMMERZBANK AG,
                                             as Co-Syndication Agent

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             DOCUMENTATION AGENT:

                                             CREDIT LYONNAIS NEW YORK BRANCH, as
                                             Documentation Agent

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   61

        [Signature page to Second Amended and Restated Credit Agreement]

                                             BANKS:

                                             CITIBANK, N.A.

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   62

        [Signature page to Second Amended and Restated Credit Agreement]

                                             THE CHASE MANHATTAN BANK

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   63

        [Signature page to Second Amended and Restated Credit Agreement]

                                             CIBC INC.

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   64

        [Signature page to Second Amended and Restated Credit Agreement]

                                             THE FUJI BANK, LIMITED

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   65

        [Signature page to Second Amended and Restated Credit Agreement]

                                      BANK OF AMERICA, N.A., FORMERLY KNOWN AS
                                      BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                                      ASSOCIATION

                                      By:
                                         ---------------------------------------
                                         Authorized Officer

<PAGE>   66

        [Signature page to Second Amended and Restated Credit Agreement]

                                             BANK OF MONTREAL

                                             By:
                                                --------------------------------
                                                Authorized Officer

<PAGE>   67

        [Signature page to Second Amended and Restated Credit Agreement]

                                             CREDIT LYONNAIS NEW YORK BRANCH

                                             By:
                                                --------------------------------
                                                Authorized Officer

<PAGE>   68

        [Signature page to Second Amended and Restated Credit Agreement]

                                  BANK ONE, NA (f/k/a THE FIRST NATIONAL BANK OF
                                  CHICAGO)

                                  By:
                                     -------------------------------------------
                                     Authorized Officer

<PAGE>   69

        [Signature page to Second Amended and Restated Credit Agreement]

                                             ABN AMRO BANK N.V.

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   70

        [Signature page to Second Amended and Restated Credit Agreement]

                                             THE BANK OF NEW YORK

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   71

        [Signature page to Second Amended and Restated Credit Agreement]

                                             THE BANK OF NOVA SCOTIA

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   72

        [Signature page to Second Amended and Restated Credit Agreement]

                                             THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                             HOUSTON AGENCY

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   73

        [Signature page to Second Amended and Restated Credit Agreement]

                                             BARCLAYS BANK PLC

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   74

        [Signature page to Second Amended and Restated Credit Agreement]

                                             THE INDUSTRIAL BANK OF JAPAN
                                             TRUST COMPANY

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   75

        [Signature page to Second Amended and Restated Credit Agreement]

                                             UBS AG, STAMFORD BRANCH

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   76

        [Signature page to Second Amended and Restated Credit Agreement]

                                             ROYAL BANK OF CANADA

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   77

        [Signature page to Second Amended and Restated Credit Agreement]

                                             SOCIETE GENERALE, SOUTHWEST AGENCY

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   78

        [Signature page to Second Amended and Restated Credit Agreement]

                                             THE SUMITOMO BANK, LIMITED

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   79

        [Signature page to Second Amended and Restated Credit Agreement]

                                             COMMERZBANK AG

                                             NEW YORK AND GRAND CAYMAN
                                             BRANCHES

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   80

        [Signature page to Second Amended and Restated Credit Agreement]

                                        AMSOUTH BANK OPERATING AS FIRST AMERICAN
                                        BANK

                                        By:
                                           -------------------------------------
                                            Authorized Officer

                                        By:
                                            ------------------------------------
                                             Authorized Officer

<PAGE>   81

        [Signature page to Second Amended and Restated Credit Agreement]

                                             BANQUE NATIONALE DE PARIS, HOUSTON
                                             AGENCY

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   82

        [Signature page to Second Amended and Restated Credit Agreement]

                                             ARAB BANKING CORPORATION (B.S.C.)

                                             By:
                                                --------------------------------
                                                 Stephen A. Plauche
                                                 Vice President

<PAGE>   83

        [Signature page to Second Amended and Restated Credit Agreement]

                                             BW CAPITAL MARKETS, INC.

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   84

        [Signature page to Second Amended and Restated Credit Agreement]

                                             WESTDEUTSCHE LANDESBANK
                                             GIROZENTRALE, NEW YORK BRANCH

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   85

        [Signature page to Second Amended and Restated Credit Agreement]

                                             CREDIT SUISSE FIRST BOSTON

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   86

        [Signature page to Second Amended and Restated Credit Agreement]

                                             DG BANK DEUTSCHE
                                             GENOSSENSCHAFTSBANK AG, CAYMAN
                                             ISLAND BRANCH

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   87

        [Signature page to Second Amended and Restated Credit Agreement]

                                             NATIONAL WESTMINSTER BANK PLC
                                             NEW YORK BRANCH

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

                                             NATIONAL WESTMINSTER BANK PLC
                                             NASSAU BRANCH

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

<PAGE>   88

        [Signature page to Second Amended and Restated Credit Agreement]

                                             BANK OF OKLAHOMA, N.A.

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   89

        [Signature page to Second Amended and Restated Credit Agreement]

                                             COMMERCE BANK, N.A.

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   90

        [Signature page to Second Amended and Restated Credit Agreement]

                                             CREDIT AGRICOLE INDOSUEZ

                                             By:
                                                --------------------------------
                                                 Authorized Officer

                                             By:
                                                --------------------------------
                                                 Authorized Officer

<PAGE>   91

        [Signature page to Second Amended and Restated Credit Agreement]

                             WITHDRAWING ORIGINAL BANKS:

                             The following Original Banks sign only for purposes
                             of acknowledging the assignment, without recourse
                             and without representation or warranty, of 100% of
                             their Commitments pursuant to the Original Credit
                             Agreement:

                             BANKBOSTON, N.A.

                             By:
                                ------------------------------------------------
                                 Authorized Officer

                             MELLON BANK

                             By:
                                ------------------------------------------------
                                 Authorized Officer

<PAGE>   92
                                   SCHEDULE I

                           APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
                         Domestic                                      Eurodollar
Name of Bank             Lending Office                                Lending Office
--------------           -----------------                             -----------------
<S>                      <C>                                           <C>
Citibank N.A.            Citibank N.A.                                 Citibank N.A.
                         399 Park Avenue                               399 Park Avenue
                         New York, New York 10043                      New York, New York 10043

                         Notices:                                      Notices:
                         Citibank, N.A.                                Citibank, N.A.
                         399 Park Avenue                               399 Park Avenue
                         New York, New York 10043                      New York, New York 10043
                         Telecopier:        (212) 527-1084             Telecopier:      (212) 527-1084
                         Telex:             None                       Telex:           None
                         Attn:   Christine Grundel                     Attn:    Christine Grundel
                         Dept:   Medium Term Finance                   Dept:    Medium Term Finance

                         with copies to:                               with copies to:
                         Citicorp North America, Inc.                  Citicorp North America, Inc.
                         1200 Smith Street, Suite 2000                 1200 Smith Street, Suite 2000
                         Houston, Texas  77002                         Houston, Texas  77002
                         Telecopier:        (713) 654-2849             Telecopier:      (713) 654-2849
                         Telex:             127001                     Telex:           127001
                         (Attn. Route Code HOUAA)                      (Attn. Route Code HOUAA)
                         Attn:   The Williams Companies, Inc.          Attn:    The Williams Companies, Inc.
                                 Account Officer                                Account Officer

The Chase                The Chase Manhattan Bank                      The Chase Manhattan Bank
Manhattan                270 Park Avenue, 21st Floor                   270 Park Avenue, 21st Floor
Bank                     New York, New York  10017                     New York, New York  10017
                         Telecopier:        (212) 270-3897             Telecopier:      (212) 270-3897
                         Telephone:         (212) 270-4676             Telephone:       (212) 270-4676
                         Attn:   Peter Ling                            Attn:    Peter Ling

The Fuji Bank,           The Fuji Bank, Limited                        The Fuji Bank, Limited
Limited                  (New York Branch)                             (New York Branch)
(New York Branch)        2 World Trade Center                          2 World Trade Center
                         79th Floor                                    79th Floor
                         New York, New York 10048                      New York, New York 10048
                         Telecopier:        (212) 321-9407             Telecopier:      (212) 321-9407
                         Telephone:         (212) 898-2597             Telephone:       (212) 898-2597
                         Attn:   Felix Amerasinghe                     Attn:    Felix Amerasinghe
</TABLE>

                                  SCHEDULE I-1
<PAGE>   93

<TABLE>
<CAPTION>
                         Domestic                                      Eurodollar
Name of Bank             Lending Office                                Lending Office
--------------           -----------------                             -----------------
<S>                      <C>                                           <C>
Bank of Montreal         Bank of Montreal                              Bank of Montreal
                         115 S. LaSalle St., 11W                       115 S. LaSalle St., 11W
                         Chicago, Illinois  60603                      Chicago, Illinois  60603
                         Telecopier:        (312) 750-6061             Telecopier:      (312) 750-6061
                         Telephone:         (312) 750-6047             Telephone:       (312) 750-6047
                         Attn:   Craig Reynolds - Client Services      Attn:    Craig Reynolds - Client Services

Commerzbank AG,          Commerzbank AG, Atlanta Agency                Commerzbank AG, Atlanta Agency
Atlanta Agency           1230 Peachtree St., NE                        1230 Peachtree St., NE
                         Suite 3500                                    Suite 3500
                         Atlanta, Georgia 30309                        Atlanta, Georgia 30309
                         Telephone:         (404) 888-6518             Telephone:       (404) 888-6518
                         Telecopier:        (404) 888-6539             Telecopier:      (404) 888-6539
                         Attn:   Brian Campbell                        Attn:    Brian Campbell

Credit Lyonnais          Credit Lyonnais New York Branch               Credit Lyonnais New York Branch
New York Branch          1301 Avenue of the Americas                   1301 Avenue of the Americas
                         New York, New York 10019                      New York, New York 10019
                         Telecopier:        (713) 759-9766             Telecopier:      (713) 759-9766
                         Telephone:         (713) 751-0500             Telephone:       (713) 751-0500
                         Attn:   Bernadette Archie                     Attn:    Bernadette Archie

Bank One, NA             Bank One, NA                                  Bank One, NA
                         Bank One Plaza                                Bank One Plaza
                         0634, IBOP, 10                                0634, 1BOP, 10
                         Chicago, Illinois 60670                       Chicago, Illinois 60670
                         Telephone:         (312) 732-5219             Telephone:       (312) 732-5219
                         Telecopier:        (312) 732-4840             Telecopier:      (312) 732-4840
                         Attn:   Mattie Reed                           Attn:    Mattie Reed

ABN AMRO Bank            ABN AMRO Bank, N.V.                           ABN AMRO Bank, N.V.
N.V.                     208 South LaSalle, Suite 1500                 208 South LaSalle, Suite 1500
                         Chicago, Illinois  60604-1003                 Chicago, Illinois  60604-1003
                         Telephone:         (312) 992-5110             Telephone:       (312) 992-5110
                         Facsimile:         (312) 992-5111             Facsimile:       (312) 992-5111
                         Attn:   Credit Administration                 Attn:    Credit Administration

                         with copies to:                               with copies to:
                         ABN AMRO Bank, N.V.                           ABN AMRO Bank, N.V.
                         208 South LaSalle, Suite 1500                 208 South LaSalle, Suite 1500
                         Chicago, Illinois  60604-1003                 Chicago, Illinois  60604-1003
                         Telephone:         (312) 992-5152             Telephone:       (312) 992-5152
                         Facsimile:         (312) 992-5157             Facsimile:       (312) 992-5157
                         Attn:   Loan Administration                   Attn:    Loan Administration
</TABLE>

                                  SCHEDULE I-2
<PAGE>   94

<TABLE>
<CAPTION>
                         Domestic                                      Eurodollar
Name of Bank             Lending Office                                Lending Office
--------------           -----------------                             -----------------
<S>                      <C>                                           <C>
                         ABN AMRO North America, Inc.                  ABN AMRO North America, Inc.
                         Three Riverway, Suite 1700                    Three Riverway, Suite 1700
                         Houston, Texas  77056                         Houston, Texas  77056
                         Telephone:         (713) 964-3316             Telephone:       (713) 964-3316
                         Facsimile:         (713) 621-5810             Facsimile:       (713) 621-5810
                         Attn:   Michael Nepreux                       Attn:    Michael Nepreux

The Bank of              The Bank of Toyko-Mitsubishi,                 The Bank of Toyko-Mitsubishi,
Toyko-Mitsubishi,        Ltd., Houston Agency                          Ltd., Houston Agency
Ltd., Houston            1100 Louisiana St., Suite 2800                1100 Louisiana St., Suite 2800
Agency                   Houston, Texas  77002-5216                    Houston, Texas  77002-5216
                         Telephone:         (713) 655-3845             Telephone:       (713) 655-3845
                         Telecopier:        (713) 655-3855             Telecopier:      (713) 655-3855
                         Attn:   J.M. McIntyre                         Attn:    J.M. McIntyre

Barclays Bank PLC        Barclays Bank PLC-New York Branch             Barclays Bank PLC-New York Branch
                         222 Broadway, 11th Floor                      222 Broadway, 11th Floor
                         New York, New York 10038                      New York, New York 10038
                         Telephone:         (212) 412-3702             Telephone:       (212) 412-3702
                         Telecopier:        (212) 412-5308             Telecopier:      (212) 412-5308
                         Attn:   David Barton                          Attn:    David Barton

AmSouth                  AmSouth Bank                                  AmSouth Bank
                         First American Center                         First American Center
                         Fourth & Union St. NA-0310                    Fourth & Union St. NA-0310
                         Nashville, Tennessee 37237-0310               Nashville, Tennessee 37237-0310
                         Telephone:         (615) 770-4059             Telephone:       (615) 770-4059
                         Telecopier:        (615) 748-2485             Telecopier:      (615) 748-2485
                         Attn:   Seth Butler                           Attn:    Seth Butler

Banque Nationale         Banque Nationale de Paris, Houston            Banque Nationale de Paris, Houston
de Paris, Houston        Agency                                        Agency
Agency                   333 Clay Street, Suite 3400                   333 Clay Street, Suite 3400
                         Houston, Texas 77002                          Houston, Texas 77002
                         Telephone:         (713) 951-1240             Telephone:       (713) 951-1240
                         Telecopier:        (713) 659-1414             Telecopier:      (713) 659-1414
                         Attn:   Donna Rose                            Attn:    Donna Rose
</TABLE>

                                  SCHEDULE I-3
<PAGE>   95

<TABLE>
<CAPTION>
                         Domestic                                      Eurodollar
Name of Bank             Lending Office                                Lending Office
--------------           -----------------                             -----------------
<S>                      <C>                                           <C>
Arab Banking             Arab Banking Corp.                            Arab Banking Corp. (Grand Cayman)
Corporation              277 Park Avenue, 32nd Floor                   277 Park Avenue, 32nd Floor
(B.S.C.)                 New York, New York 10172                      New York, New York 10172
                         Telephone:         (212) 583-4771             Telephone:       (212) 583-4770
                         Telecopier:        (212) 583-0932             Telecopier:      (212) 583-0932
                         Attn:   Loan Administration                   Attn:    Loan Administration

BW Capital               BW Capital Markets, Inc.                      BW Capital Markets, Inc.
Markets, Inc.            630 Fifth Avenue                              630 Fifth Avenue
                         Rockefeller Center                            Rockefeller Center
                         Suite 1919                                    Suite 1919
                         New York, New York 10111                      New York, New York 10111
                         Telecopier:        (212) 218-1810             Telecopier:      (212) 218-1810
                         Attn:   Thomas A. Lowe                        Attn:    Thomas A. Lowe

Westdeutsche             Westdeutsche Landesbank Girozentrale,         Westdeutsche Landesbank Girozentrale,
Landesbank               New York Branch                               New York Branch
Girozentrale,            1211 Avenue of the Americas                   1211 Avenue of the Americas
New York                 New York, New York 10038                      New York, New York 10038
Branch                   Telecopier:        (212) 302-7946             Telecopier:      (212) 302-7946
                         Telephone:         (212) 852-6113             Telephone:       (212) 852-6113
                         Attn:   Phil Green                            Attn:    Phil Green

Credit Suisse            Credit Suisse First Boston                    Credit Suisse First Boston
First Boston             11 Madison Avenue                             11 Madison Avenue
                         New York, New York 10010                      New York, New York 10010
                         Telephone:         (212) 325-9093             Telephone:       (212) 325-9093
                         Telecopier:        (212) 325-8314             Telecopier:      (212) 325-8314
                         Attn:   Todd Morgan                           Attn:    Todd Morgan

DG Bank                  DG Bank                                       DG Bank
                         609 Fifth Avenue                              609 Fifth Avenue
                         New York, New York 10017                      New York, New York 10017
                         Telephone:         (212) 745-1560             Telephone:       (212) 745-1560
                         Telecopier:        (212) 745-1556             Telecopier:      (212) 745-1556
                         Attn:   Mark K. Connelly                      Attn:    Mark K. Connelly

Societe Generale,        Societe Generale, Southwest Agency            Societe Generale, Southwest Agency
Southwest Agency         2001 Ross Avenue, Suite 4800                  2001 Ross Avenue, Suite 4800
                         Dallas, Texas  75201                          Dallas, Texas  75201
                         Telecopier:        (214) 754-0171             Telecopier:      (214) 754-0171
                         Telephone:         (214) 979-2767             Telex:           (214) 979-2767
                         Attn:   Tequlla English                       Attn:    Tequlla English
                                 Loan Specialist                                Loan Specialist
</TABLE>

                                  SCHEDULE I-4
<PAGE>   96

<TABLE>
<CAPTION>
                         Domestic                                      Eurodollar
Name of Bank             Lending Office                                Lending Office
--------------           -----------------                             -----------------
<S>                      <C>                                           <C>
The Sumitomo             The Sumitomo Bank, Limited                    The Sumitomo Bank, Limited
Bank, Limited            277 Park Avenue                               277 Park Avenue
                         New York, NY 10172                            New York, NY 10172
                         Telex:  SUMBK 420515/SUMBK                    Telex:   SUMBK 420515/SUMBK
                         Telecopier:        (212) 224-5188             Telecopier:      (212) 224-5188

                         with copies to:                               with copies to:
                         The Sumitomo Bank, Limited                    The Sumitomo Bank, Limited
                         277 Park Avenue                               277 Park Avenue
                         New York, NY 10172                            New York, NY 10172
                         Attn:   Ms. Andrea Wei, V.P.                  Attn:    Ms. Andrea Wei, V.P.
                                 PANA - Legal Department                        PANA - Legal Department

National                 National Westminster Bank PLC                 National Westminster Bank PLC
Westminster              New York Branch                               Nassau Branch
Bank                     65 East 55th Street, 24th Floor               65 East 55th Street, 24th Floor
                         New York, New York   10022                    New York, New York   10022
                         Telephone:         (212) 401-1494             Telephone:       (212) 401-1494
                         Telecopier:        (212) 401-1406             Telecopier:      (212) 401-1406
                         Attn:   Sheila Shaw                           Attn:    Sheila Shaw

                         with copies to:                               with copies to:
                         Greenwich NatWest                             Greenwich NatWest
                         600 Travis St., Suite 6070                    600 Travis St., Suite 6070
                         Houston, Texas 77002                          Houston, Texas 77002
                         Telecopier:        (713) 221-2430             Telecopier:      (713) 221-2430
                         Telephone:         (713) 221-2429             Telephone:       (713) 221-2429
                         Attn:   Kristi DeMaiolo                       Attn:    Kristi DeMaiolo

The Bank of Nova         The Bank of Nova Scotia                       The Bank of Nova Scotia
Scotia                   600 Peachtree St., N.E.                       600 Peachtree St., N.E.
                         Suite 2700                                    Suite 2700
                         Atlanta, Georgia  30308                       Atlanta, Georgia  30308
                         Telecopier:        (404) 888-8998             Telecopier:      (404) 888-8998
                         Telex:             00542319                   Telex:            00542319
                         Attn:   Robert L. Ahern                       Attn:    Robert L. Ahern

                         with copy to:                                 with copy to:
                         1100 Louisiana, Suite 3000                    1100 Louisiana, Suite 3000
                         Houston, Texas 77002                          Houston, Texas 77002
                         Telecopier:       (713) 752-2425              Telecopier:      (713) 752-2425
                         Telephone:        (713) 759-3440              Telephone:       (713) 759-3440
                         Attn:   Greg Smith                            Attn:    Greg Smith
</TABLE>

                                  SCHEDULE I-5
<PAGE>   97

<TABLE>
<CAPTION>
                         Domestic                                      Eurodollar
Name of Bank             Lending Office                                Lending Office
--------------           -----------------                             -----------------
<S>                      <C>                                           <C>
Bank of America,         Bank of America, N.A.                         Bank of America, N.A.
N.A.                     901 Main Street, 14th Floor                   901 Main Street, 14th Floor
                         Dallas, Texas 75202                           Dallas, Texas 75202
                         Telecopier: (214) 209-9415                    Telecopier: (214) 209-9415
                         Telephone: (214) 209-1225                     Telephone: (214) 209-1225
                         Attn: Mekedes B. Kassaye                      Attn: Mekedes B. Kassaye

                         with copy to:                                 with copy to:
                         Bank of America                               Bank of America
                         Three Allen Center, Suite 4550                Three Allen Center, Suite 4550
                         Houston, Texas 77002                          Houston, Texas 77002
                         Telecopier:        (713) 651-4807             Telecopier:      (713) 651-4807
                         Telephone:         (713) 651-4855             Telephone:       (713) 651-4855
                         Attn: Claire Liu                              Attn: Claire Liu

Bank of New York         Bank of New York                              Bank of New York
                         One Wall St., 19th Floor                      One Wall St., 19th Floor
                         New York, New York 10286                      New York, New York 10286
                         Telecopier:        (212) 635-7923             Telecopier:      (212) 635-7923
                         Telephone:         (212) 635-7834             Telephone:       (212) 635-7834
                         Attn:   Raymond Palmer (Ray)                  Attn:    Raymond Palmer (Ray)

Bank of Oklahoma,        Bank of Oklahoma, N.A.                        Bank of Oklahoma, N.A.
N.A.                     One Williams Center, 8th Floor                One Williams Center, 8th Floor
                         Tulsa, Oklahoma 74192                         Tulsa, Oklahoma 74192
                         Telecopier:        (918) 588-6880             Telecopier:      (918) 588-6880
                         Telephone:         (918) 588-6217             Telephone:       (918) 588-6217
                         Attn:   Robert Mattax (Bob)                   Attn:    Robert Mattax (Bob)

Canadian Imperial        Canadian Imperial Bank of Commerce            Canadian Imperial Bank of Commerce
Bank of Commerce         Two Paces West                                Two Paces West
                         2727 Paces Ferry Road, Suite 1200             2727 Paces Ferry Road, Suite 1200
                         Atlanta, Georgia   30339                      Atlanta, Georgia   30339
                         Telecopier:        (770) 319-4950             Telecopier       (770) 319-4950
                         Telephone:         (770) 319-4821             Telephone:       (770) 319-4821
                         Attn:   Katherine McGovern                    Attn:    Katherine McGovern

                         with a copy to:                               with a copy to:
                         1600 Smith, Ste. 3000                         1600 Smith, Ste. 3000
                         Houston, Texas 77002                          Houston, Texas 77002
                         Telecopier:        (713) 650-3727             Telecopier:      (713) 650-3727
                         Telephone:         (713) 650-2588             Telephone:       (713) 650-2588
                         Attn:   Mark Wolf                             Attn:    Mark Wolf
</TABLE>
                                  SCHEDULE I-6
<PAGE>   98

<TABLE>
<CAPTION>
                         Domestic                                      Eurodollar
Name of Bank             Lending Office                                Lending Office
--------------           -----------------                             -----------------
<S>                      <C>                                           <C>
Commerce Bank,           Commerce Bank, N.A.                           Commerce Bank, N.A.
N.A.                     1000 Walnut Street, 17th Floor                1000 Walnut Street, 17th Floor
                         Kansas City, Missouri 64106                   Kansas City, Missouri 64106
                         Telecopier:        (816) 234-7290             Telecopier:      (816) 234-7290
                         Telephone:         (816) 234-2477             Telephone:       (816) 234-2477
                         Attn:   Dennis Block                          Attn:    Dennis Block

Industrial Bank          Industrial Bank of Japan Trust                Industrial Bank of Japan Trust
of Japan Trust           1251 Avenue of the Americas                   1251 Avenue of the Americas
                         New York, New York   10020                    New York, New York   10020
                         Telecopier:        (212) 282-4480             Telecopier:      (212) 282-4480
                         Telephone:         (212) 282-4090             Telephone:       (212) 282-4090
                         Attn:   Richard Emmich                        Attn:    Richard Emmich

Credit Agricole          Credit Agricole Indosuez                      Credit Agricole Indosuez
Indosuez                 Texas Commerce Tower                          Texas Commerce Tower
                         600 Travis, Suite 2340                        600 Travis, Suite 2340
                         Houston, Texas 77002                          Houston, Texas 77002
                         Telecopier:        (713) 223-7029             Telecopier:      (713) 223-7029
                         Telephone:         (713) 223-7001             Telephone:       (713) 223-7001
                         Attn:   Brian Knezeak                         Attn:    Brian Knezeak

UBS                      UBS AG, Stamford Branch                       UBS AG, Stamford Branch
                         677 Washington Boulevard                      677 Washington Boulevard
                         Stamford, Connecticut  06901                  Stamford, Connecticut  06901
                         Telecopier:        (203) 719-3898             Telecopier:      (203) 719-3898
                         Telephone:         (203) 719-4090             Telephone:       (203) 719-4090
                         Attn:   Paul Morrison                         Attn:    Paul Morrison

Royal Bank of            Royal Bank of Canada, New York                Royal Bank of Canada, New York
Canada                   One Liberty Plaza, 4th Floor                  One Liberty Plaza, 4th Floor
                         New York, New York 10006                      New York, New York 10006
                         Telecopier:        (212) 428-2372             Telecopier:      (212) 428-2372
                         Telephone:         (212) 428-6321             Telephone:       (212) 428-6321
                         Attn:   Assistant Manager, Loan               Attn:    Assistant Manager, Loan
                                 Processing                                     Processing
</TABLE>

                                  SCHEDULE I-7
<PAGE>   99

                                   SCHEDULE II

                              BORROWER INFORMATION

                                  Schedule II-1

<PAGE>   100

                                  SCHEDULE III

                            PERMITTED BORROWER LIENS

                                 Schedule III-1
<PAGE>   101

                                   SCHEDULE IV

                                   COMMITMENTS

                             AS OF JANUARY 24, 2000

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
               BANKS                                   COMMITMENT
--------------------------------------------------------------------------------
<S>                                                    <C>
 Citibank, N.A.                                        $ 89,000,000
--------------------------------------------------------------------------------
 Arab Banking Corporation (B.S.C.)                     $ 25,000,000
--------------------------------------------------------------------------------
 BW Capital Markets, Inc.                              $ 25,000,000
--------------------------------------------------------------------------------
 The Chase Manhattan Bank                              $ 89,000,000
--------------------------------------------------------------------------------
 CIBC Inc.                                             $ 89,000,000
--------------------------------------------------------------------------------
 The Fuji Bank, Limited, New York Branch               $ 62,000,000
--------------------------------------------------------------------------------

 Bank of America, N.A.                                 $ 49,000,000
--------------------------------------------------------------------------------
 Banque Nationale de Paris                             $ 25,000,000
--------------------------------------------------------------------------------
 Commerce Bank, N.A.                                   $  5,000,000
--------------------------------------------------------------------------------
 Commerzbank AG, New York & Grand Cayman Branch        $ 89,000,000
--------------------------------------------------------------------------------
 Credit Agricole Indosuez                              $ 30,000,000
--------------------------------------------------------------------------------
 Credit Suisse First Boston                            $ 16,000,000
--------------------------------------------------------------------------------
 Westdeutsche Landesbank Girozentrale, New York Bra    $ 40,000,000
--------------------------------------------------------------------------------
 DG Bank Deutsche Genoesenschaftbank AG                $ 25,000,000
--------------------------------------------------------------------------------
 National Westminster Bank PLC                         $ 35,000,000
--------------------------------------------------------------------------------
 AmSouth Bank                                          $ 20,000,000
--------------------------------------------------------------------------------
 Bank of Oklahoma, N.A.                                $  5,000,000
--------------------------------------------------------------------------------
 Bank of Montreal                                      $ 50,000,000
--------------------------------------------------------------------------------
 Credit Lyonnais New York Branch                       $ 89,000,000
--------------------------------------------------------------------------------
 Bank One, NA                                          $ 89,000,000
--------------------------------------------------------------------------------
 UBS AG, Stamford Branch                               $2 5,000,000
--------------------------------------------------------------------------------
 ABN AMRO Bank N.V.                                    $ 70,000,000
================================================================================
</TABLE>
                                 Schedule IV-1
<PAGE>   102

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
               BANKS                                   COMMITMENT
--------------------------------------------------------------------------------
<S>                                                    <C>
 The Bank of New York                                  $   65,000,000
--------------------------------------------------------------------------------
 The Bank of Nova Scotia                               $   89,000,000
--------------------------------------------------------------------------------
 The Bank of Tokyo-Mitsubishi, Ltd. - Houston Agency   $   20,000,000
--------------------------------------------------------------------------------
 Barclays Bank PLC                                     $   65,000,000
--------------------------------------------------------------------------------
 Industrial Bank of Japan Trust Company                $   25,000,000
--------------------------------------------------------------------------------
 Royal Bank of Canada, New York                        $   45,000,000
--------------------------------------------------------------------------------
 Societe Generale, Southwest Agency                    $   40,000,000
--------------------------------------------------------------------------------
 The Sumitomo Bank, Limited                            $   10,000,000
================================================================================
 COMMITMENTS                                           $1,400,000,000
================================================================================
</TABLE>

                                  Schedule IV-2
<PAGE>   103

                                   SCHEDULE V

                                RATING CATEGORIES

<TABLE>
<CAPTION>
                                                                                                Applicable
Rating Category         S&P or Moody's ratings of the senior unsecured          Applicable      Commitment
of the Borrower                long-term debt of the Borrower*                    Margin          Fee Rate
---------------         ----------------------------------------------          ----------      -----------
<S>                     <C>                                                     <C>              <C>
         One            A or better by S&P or A2 or better by Moody's               .50%              .075%

         Two            A- by S&P or A3 by Moody's                                 .625%              .085%

        Three           BBB+ by S&P or Baa1 by Moody's                              .75%              .095%

         Four           BBB by S&P or Baa2 by Moody's                              .875%               .10%

         Five           BBB- by S&P and Baa3 by Moody's                           1.125%               .15%

         Six            BBB- by S&P or Baa3 by Moody's                              1.5%               .20%

        Seven           Borrower is Unrated or none of the above applies            2.0%               .25%
                        to Borrower
</TABLE>

*If split-rated, the higher rating will apply.

                                  Schedule V-1
<PAGE>   104

                       IN THE UNITED STATES DISTRICT COURT
                       FOR THE DISTRICT OF SOUTH CAROLINA
                               GREENWOOD DIVISION

LILLIAN A. ROBINSON, NETTIE LOU JONES        )
FRANCES R. AXTELL, MARSHAL LEE               )
ROBINSON, DONALD STEVE ROBINSON,)
BILLY PETE ROBINSON, CHARLIE    )             Civil Action No 8:00-0058-13
ROBINSON, AMEY R. HAMMOND, JANICE R.         )
TROTTER, JACKIE CECIL ROBINSON,              )
and JACKIE KAY ROBINSON                      )
                                             )
     Plaintiffs,                             )
                                             )    ANSWERS OF DEFENDANT
v.                                           )WILLIAMS ENERGY VENTURES, INC.
                                             )    TO LOCAL RULE 26.06
                                             )    INTERROGATORIES AND
COLONIAL PIPELINE COMPANY, a Delaware        )   REQUEST FOR DOCUMENTS
Corporation; BP AMOCO CORPORATION, an        )
Indiana Corporation, f/k/a Amoco Oil Company;)
B.P. EXPLORATION & OIL, INC.,                )
an Ohio Corporation; WILLIAMS ENERGY         )
VENTURES, INC., a Delaware Corporation;      )
and PHILLIPS PIPELINE COMPANY, a Delaware    )
Corporation.                                 )
                                             )
     Defendants.                             )
                                             )

     Williams Energy Ventures, Inc., through counsel, hereby respectfully
responds to Local Rule 26.06 Interrogatories and Directives to Produce as
follows:

     (1) If the defendant is improperly identified, give the proper
identification and state whether counsel will accept service of an amended
summons and pleading reflecting the correct identification.

     ANSWER: Defendant Williams Energy Ventures, Inc. (hereinafter "Williams")
             is properly identified.

<PAGE>   105

     (2) Furnish a detailed factual basis for each defense you assert in your
responsive pleading. If a contract, writing or document forms the basis of any
claim against you and/or the basis for any defense asserted, quote or attach the
relevant portions, state your construction thereof and your position with regard
thereto.

     ANSWER:

     Williams did not acquire the facilities at issue in this matter until
nearly twenty years after Plaintiffs' settled and released their claims for
alleged contamination from the facilities in 1980. Williams purchased its share
of the former Conoco petroleum storage facility identified in Paragraph 7 of the
Complaint through a series of purchase agreements dated May 10, 1996, June 18,
1998 and February 19, 1999, and purchased the former Amoco petroleum storage
facility identified in Paragraph 7 of the Complaint through a purchase agreement
dated October 29, 1998. Prior to acquiring these properties, Williams had no
control over the facilities and asserts that it cannot be held responsible for
alleged negligence or contamination of prior owners. Furthermore, Williams
contends that any releases of petroleum products that may have occurred at its
facilities subsequent to its ownership were promptly contained and have not
reached or otherwise impacted Plaintiffs' properties.

     (1) Upon information and belief, Plaintiffs' claims are barred by reason of
their failure to mitigate, minimize or avoid the damages alleged in the
Complaint. Furthermore, upon information and belief, some or all of Plaintiffs
have operated or allowed to be operated a junkyard on their property(ies), used
septic systems and engaged in other activities that may have contributed to
contamination of the Plaintiffs' property.

                                        2
<PAGE>   106

     (2) Any acts or omissions alleged in the Complaint may have occurred,
resulted from or have been proximately caused by the superseding intervention of
causes and parties outside the control of Williams. Plaintiffs previously filed
suit against Amoco Oil Company, Southern Facilities, Inc., Phillips Petroleum
Company, Gulf Oil Company and Petroleum Pipeline Company alleging damage to
their properties and other claims due to alleged environmental contamination.
Williams asserts that it cannot be held responsible for the alleged acts of the
parties to Plaintiffs' original action, current co-defendants, or other parties
allegedly responsible for the contamination and damage to Plaintiffs'
properties.

     (3) All or some of Plaintiffs' claims are barred by the applicable statutes
of limitation. Plaintiffs' Complaint purports to assert causes of action arising
after the execution of the April 11, 1980 Release between Plaintiffs and the
parties to the original action. Under applicable law, Williams asserts that some
or all of Plaintiffs' claims are therefore barred the statutes of limitation and
the doctrine of laches.

     (4) Upon information and belief, Plaintiffs have consented to the presence
of contaminants on their property. At the time Plaintiffs entered into the
Release on April 11, 1980, Plaintiffs recognized that contamination existed on
their property and would continue to remain there. Nonetheless, Plaintiffs
entered into a Release Agreement with Amoco Oil Company, Southern Facilities,
Inc., Phillips Petroleum Company, Gulf Oil Company and Petroleum Pipeline
Company with the express understanding that contamination would remain on their
properties. In addition, upon information and belief, some or all of Plaintiffs
assumed the risk by purchasing and/or moving to their property with knowledge of
the existence of contamination.

     (5) Although it was not a party to the Release agreement entered into by
Plaintiffs and the defendants in the prior litigation, Williams asserts that all
or some of Plaintiffs' claims are barred by the terms of the Release and
application of the easements granted in connection with the settlement of the

                                        3
<PAGE>   107

prior litigation. Furthermore, Plaintiffs entered into an Agreement of
Settlement, Unconditional Release of Claims, and Covenant not to Sue with Conoco
Inc. on January 27, 2000 which releases Williams from any claims based upon the
condition of the former Conoco facility now owned by Williams.

     (6) The imposition of punitive damages in an action of this nature, or
under the facts such as those alleged, would be violative of the Constitution of
the State of South Carolina and the United States of America. Williams has not
acted willfully or maliciously toward Plaintiffs and there is no basis for
Plaintiffs' punitive damages claim.

     (3) Describe by name and citation or other generally recognized
identification, decisions, statutes, ordinances, acts, codes, regulations and
legal principles, standards, and customs or usages, which you contend are
especially applicable to this action. State which jurisdiction's law applies to
each claim or defense and why.

     ANSWER:

     South Carolina law applies to Plaintiffs' common law claims and Williams'
defenses thereto. Williams contends that the following decisions and statutes
are especially applicable to this action:

Statute of Limitations:

S.C. Code Ann. Sections 15-3-530, 15-3-535

Dean v. Ruscon Corp., 321 S.C. 360, 468 S.E.2d 645 (1995)

Barr v. City of Rock Hill, 330 S.C. 640, 500 S.E.2d 157 (Ct. App. 1998)

Glenn v. School District No. Five of Anderson County, 294 S.C. 530, 366 S.E.2d
47 (Ct. App. 1988)

Assumption of Risk:

Davenport v. Cotton Hope Plantation Horizontal Property Regime, 333 S.C. 71, 508
S.E.2d 565 (1998)

Cutchin v. South Carolina Dept. of Highways and Public Transp., 301 S.C. 35, 389
S.E.2d 646 (1990)

                                        4

<PAGE>   108

Griffin v. Griffin, 282 S.C. 288, 318 S.E.2d 24 (Ct. App. 1984)

Contributory Negligence:

Nelson v. Concrete Supply Co., 303 S.C. 243, 399 S.E.2d 783 (1991)

Gruber v. Santee Frozen Foods, Inc., 309 S.C. 13, 419 S.E.2d 795 (Ct. App. 1992)

Laches:

Treadaway v. Smith, 325 S.C. 367, 479 S.E.2d 849 (Ct. App. 1996)

Mitigation of Damages:

Chastain v. Owens Carolina, Inc., 310 S.C. 417, 426 S.E.2d 834 (1993)

Du Bose v. Bultman, 215 S.C. 468, 56 S.E.2d 95 (1949)

Sullivan v. City of Anderson, 81 S.C. 178, 62 S.E.862 (1908)

Williams reserves the right to assert additional defenses and supporting
authority once discovery is conducted.

     (4) If you contend that some other person or legal entity is, in whole or
in part, liable to you or the party asserting a claim against you in this
matter, identify such person or entity and describe the basis of said liability.

     ANSWER:

     Williams has claims for indemnification against Amoco, BP Amoco, Murphy,
TOC, and Conoco arising from their prior use and operation of the facilities
currently owned by Williams. In addition, Williams may have claims against
Amoco, BP, BP Amoco and Colonial Pipeline Company with respect to the migration
of contaminants across or under Williams' property. Williams also has a claim
for indemnification against Infinger, the transportation company that caused an
approximately 20 gallon gasoline spill at the Williams facility in July 1999. By
agreement of the

                                        5
<PAGE>   109

parties, Williams is not pursuing these claims for indemnification or
contribution at this time. Williams reserves the rights to assert these claims,
and any others, once discovery is conducted.

     (5) State the full names, addresses, and telephone numbers of all lay
witnesses whose testimony you may use at the trial of this case and describe the
specific factual issues to which that testimony is expected to relate.

     ANSWER:

     Plaintiffs

     The following individuals may testify regarding operations at the former
Amoco, Southern Facilities, Conoco and current Williams facilities:

     Don Schilling
     Williams Energy Ventures
     ______ Sweetwater Road
     North Augusta, Georgia
     _______________

     Jackie Outzs
     1885 Sweet Water Road
     Edgefield, South Carolina 29284
     803-278-3070

     Tom Nelson
     (Address unknown)
     803-593-4614

     George Griffith
     728 Sage Court
     North Augusta, South Carolina 29860
     803-867-2038

     Joyce Chillingworth
     Williams Energy Services
     P.O. Box 3448
     One Williams Center
     Tulsa, Oklahoma 74101
     (918) 573-3377

                                        6
<PAGE>   110

     Lori Murtaugh
     Department of Health and Environmental Control
     Bureau of Water
     Groundwater Assessment and Development
     2600 Bull Street
     Columbia, South Carolina 29201-1708

     Fred George Harpley
     Infinger
     North Augusta, South Carolina
     803-867-2038

     Any witness listed by any other party. Williams reserves the right to name
and call additional fact witnesses once discovery is conducted.

     (6) Identify by full name, address, and telephone number each person whom
you expect to call as an expert witness at the trial of this case, and, as to
each expert so identified, state the subject matter on which he is expected to
testify, the substance of the facts and opinions to which he is expected to
testify, and a summary of the grounds for each opinion.

     ANSWER:

     Since no discovery has been conducted, Williams has not yet determined
which expert witnesses it will call in this matter and will provide the names of
any expert witnesses as soon as such determination has been made.

                                        7
<PAGE>   111

     (7) Set forth the names of all insurance companies or other insuring
entities which may be liable to satisfy part or all of a judgment centered
against you in this action, or to indemnify or reimburse for payments made to
satisfy the judgment. Set forth the insurance coverage relating to each claim
against you, the number of each policy, the amount of applicable liability
coverage provided in each policy, and the named insured in each policy. Are you
aware of any question of coverage?

     ANSWER:

     AEGIS
     Policy No. X0559A1A98
     Named Insured: The Williams Companies, Inc.
     Excess: over $2,000,000 retention
     $35,000,000 claim first made; $35,000,000 aggregate
     Williams is currently unaware of any question of coverage.

     (8) State the time you estimate it will take you to complete discovery.
Explain if appropriate.

     ANSWER:

     Since this matter involves complex factual and legal issues and will
necessarily involve expert opinion testimony, the parties are preparing a
proposed scheduling order to submit for the Court's consideration.

                                        8
<PAGE>   112

     (9) As to each claim, state whether it should be tried jury or nonjury and
why. If the answer is different with respect to any claim from the answer given
by any party, explain why your answer is different and state the basis for your
answer.

     ANSWER:

     Williams asserts that all of Plaintiffs' claims and Williams' defenses
thereto, except those for declaratory judgment and injunctive relief, should be
tried by a jury.

     (10) If the defendant is a publicly owned entity, or a partner, parent,
subsidiary or affiliate of a publicly-owned entity, identify the publicly-owned
entity and its relationship to the defendant. If there is a publicly-owned
entity not a party to the case that has a significant financial interest in the
outcome, identify such entity and the nature of the financial interest.

     ANSWER: Not applicable.

     (11) Is there any reason why this action should be transferred to another
division?

     ANSWER:

     No.

     (12) Do you want a mediation conference to be scheduled in this case? If
so, when?

     ANSWER:

     Williams asserts that a mediation conference would be appropriate in this
matter after the completion of discovery.

                                        9
<PAGE>   113

     (13) Do you, at this time, request or oppose an expedited trial under Local
Civil Rule 16.12 through 16.14? If so, include the information requested by that
local civil rule in these responses.

     ANSWER:

     Due to the complex factual and legal issues and anticipated lengthy
discovery period needed, Williams does not request an expedited trial.

     (14) If you are asserting a counterclaim or other secondary claim, provide
the information required by Local Civil Rule 26.03(e).

     ANSWER:

     Williams is not asserting a counterclaim or other secondary claim at this
time.

     Respectfully submitted this the ___ day of March, 2000.

                                             -----------------------------------
                                             Larry D. Estridge
                                             Fed. ID No. 4876
                                             Sarah E. Day
                                             Fed. ID No. 7267

WOMBLE CARLYLE SANDRIDGE & RICE
A Professional Limited Liability Company
104 South Main Street, Suite 700
P.O. Drawer 10208
Greenville, South Carolina 29603-0208
Telephone: (864) 255-5400

                                             -----------------------------------
                                             Brad A. De Vore
                                             N.C. State Bar No. 13474

                                       10
<PAGE>   114

                                             W. Clark Goodman
                                             N.C. State Bar No. 19927
                                             Lawrence B. Somers
                                             N.C. State Bar No. 22329
                                             Attorneys for Defendant
                                             Williams Energy Ventures, Inc.

WOMBLE CARLYLE SANDRIDGE & RICE
A Professional Limited Liability Company
3300 One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6025
Telephone: (704) 331-4900

                                       11
<PAGE>   115

                             CERTIFICATE OF SERVICE

     I certify that I have this day served the party in this action with a copy
of the foregoing ANSWERS OF DEFENDANT WILLIAMS ENERGY VENTURES, INC. TO LOCAL
RULE 26.06 INTERROGATORIES AND REQUEST FOR DOCUMENTS by placing said copy in the
United States mail, postage prepaid, addressed as follows to the attorneys of
record:

                                                  ------------------------------
                                                  Lawrence B. Somers

                                       12

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