Document:

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                                                                    EXHIBIT 10.4

                                                                  EXECUTION COPY

                               SECURITY AGREEMENT

                            Dated as of June 6, 2003

                                      Among

                          THE WILLIAMS COMPANIES, INC.

                                   as Grantor

                                 CITIBANK, N.A.

                               as Collateral Agent

                                       and

                                 CITIBANK, N.A.

                           as Securities Intermediary

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                        T A B L E  O F  C O N T E N T S

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SECTION                                                                                                PAGE
<S>                                                                                                    <C>
Section 1.   Grant of Security.................................................................          2

Section 2.   Security for Obligations..........................................................          2

Section 3.   The Collateral Account............................................................          3

Section 4.   Maintaining the Collateral........................................................          4

Section 5.   Investing of Amounts in the Collateral Account....................................          4

Section 6.   Release of Amounts................................................................          5

Section 7.   Representations and Warranties....................................................          5

Section 8.   Further Assurances................................................................          6

Section 9.   Post-Closing Changes..............................................................          7

Section 10.  Other Liens.......................................................................          7

Section 11.  Collateral Agent Appointed Attorney-in-Fact.......................................          7

Section 12.  The Collateral Agent's Duties.....................................................          7

Section 13.  Remedies..........................................................................          8

Section 14.  Indemnity and Expenses............................................................          8

Section 15.  Amendments; Waivers...............................................................          9

Section 16.  Notices, Etc......................................................................          9

Section 17.  Continuing Security Interest; Assignments under the Credit Agreement..............          9

Section 18.  Termination.......................................................................         10

Section 19.  Execution in Counterparts.........................................................         10

Section 20.  Governing Law.....................................................................         10
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Schedules I      -   Chief Executive Office, Type Of Organization, Jurisdiction
                     Of Organization And Organizational Identification Number

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                               SECURITY AGREEMENT

                  SECURITY AGREEMENT dated as of June 6, 2003 (as may be
amended, modified, supplemented, renewed, extended or restated from time to
time, this "AGREEMENT") among THE WILLIAMS COMPANIES, INC., a Delaware
corporation (the "GRANTOR"), CITIBANK, N.A., as collateral agent (in such
capacity, together with any successor collateral agent appointed pursuant to
Article VII of the Credit Agreement (as hereinafter defined), the "COLLATERAL
AGENT") for the Banks, the Issuing Banks, the Agent (each as defined in the
Credit Agreement) and the Collateral Agent (the "SECURED PARTIES") and CITIBANK,
N.A., as securities intermediary of Grantor (in such capacity, the "SECURITIES
INTERMEDIARY").

PRELIMINARY STATEMENTS.

                  (1)      The Grantor, Transcontinental Gas Pipe Line
Corporation and Northwest Pipeline Corporation have entered into a Credit
Agreement dated as of June 6, 2003 (said Agreement, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "CREDIT AGREEMENT") with the Secured Parties.

                  (2)      Pursuant to the Credit Agreement, the Grantor is
entering into this Agreement in order to grant to the Collateral Agent for the
ratable benefit of the Secured Parties a security interest (the "SECURITY
INTEREST") in the Collateral (as hereinafter defined) to secure the Secured
Obligations (as hereinafter defined).

                  (3)      The Grantor has opened Account No. 795241 (the
"COLLATERAL ACCOUNT"), with the Securities Intermediary at its office at 111
Wall Street, 14th Floor, New York, NY 10005, in the name of the Grantor but
under the control (within the meaning of Section 8-106 of the UCC (as defined
below)) of the Collateral Agent and subject to the terms of this Agreement.

                  (4)      The Securities Intermediary has agreed to calculate,
on a daily basis, the mark-to-market value of the securities held in the
Collateral Account and to provide such calculations to any Secured Party, as
such Secured Party may reasonably request from time to time.

                  (5)      It is a condition precedent to the making of
Revolving Credit Advances by the Banks and the issuance of Letters of Credit by
the Issuing Banks under the Credit Agreement that the Grantor shall have granted
the assignment and security interest and made the pledge and assignment
contemplated by this Agreement.

                  (6)      The Grantor will derive substantial direct and
indirect benefit from the transactions contemplated herein and by the other
Credit Documents.

                  (7)      Terms defined in the Credit Agreement and not
otherwise defined in this Agreement are used in this Agreement as defined in the
Credit Agreement. Further, unless otherwise defined in this Agreement or in the
Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined below)
and/or in the Federal Book Entry Regulations (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9 and/or the Federal
Book Entry Regulations. "UCC" means the Uniform Commercial Code as in effect,
from time

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to time, in the State of New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. The term "FEDERAL BOOK ENTRY
REGULATIONS" means (a) the federal regulations contained in Subpart B
("Treasury/Reserve Automated Debt Entry System (TRADES)") governing book-entry
securities consisting of U.S. Treasury bonds, notes and bills and Subpart D
("ADDITIONAL PROVISIONS") of 31 C.F.R. Part 357, 31 C.F.R. Section 357.2,
Section 357.10 through Section 357.14 and Section 357.41 through Section 357.44
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.

                  NOW, THEREFORE, in consideration of the premises and in order
to induce the Banks to make Revolving Advances and the Issuing Banks to issue
Letters of Credit under the Credit Agreement, the Grantor hereby agrees with the
Collateral Agent for the ratable benefit of the Secured Parties as follows:

                  Section 1. Grant of Security. The Grantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in the Grantor's right, title and interest in and to the following
(collectively, the "COLLATERAL"):

                  (a) the Collateral Account and all funds and financial assets
         from time to time credited thereto (including, without limitation,
         Government Securities (as hereinafter defined)), all interest,
         dividends, distributions, cash, instruments and other property from
         time to time received, receivable or otherwise distributed in respect
         of or in exchange for any or all of such funds and financial assets,
         and all certificates and instruments, if any, from time to time
         representing or evidencing the Collateral Account;

                  (b) all interest, dividends, distributions, cash, instruments
         and other property from time to time received, receivable or otherwise
         distributed in respect of or in exchange for any or all of the then
         existing Collateral.

                  "GOVERNMENT SECURITIES" means any of the following and each
having a maturity of not greater than 2 years from the date of acquisition
thereof: (i) United States treasury securities, including bills, notes and
bonds; and (ii) securities of any agency of the Government of the United States
that are explicitly guaranteed by the full faith and credit of the Government of
the United States.

                  Section 2. Security for Obligations. This Agreement secures
the payment of all obligations of the Grantor and the Borrowers, now or
hereafter existing under the Credit Documents, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such obligations being the "SECURED
OBLIGATIONS"). Without limiting the generality of the foregoing, this Agreement
secures, as to each Borrower, the payment of all amounts that constitute part of
the Secured Obligations and would be owed by such Borrower to any Secured Party
under the Credit Documents but for the fact that they are

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unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Borrower.

                  Section 3. The Collateral Account. The Securities Intermediary
represents to and agrees with the Grantor and the Collateral Agent that:

                  (a) The Securities Intermediary maintains the Collateral
         Account in the name of, and for the benefit of, the Grantor, and all
         property held by the Securities Intermediary for the account of the
         Grantor is, and will continue to be, credited to the Collateral Account
         and maintained therein from time to time.

                  (b) The Collateral Account is a "securities account" as such
         term is used in Section 8-501(a) of the UCC and, in accordance
         therewith, (i) the Securities Intermediary is the securities
         intermediary with respect to the property credited from time to time to
         the Collateral Account, (ii) the Grantor is the entitlement holder with
         respect to the property credited from time to time to the Collateral
         Account and (iii) the Securities Intermediary agrees to treat the
         Grantor as entitled to exercise the rights that comprise the financial
         assets credited to the Collateral Account.

                  (c) The Securities Intermediary will comply with all
         notifications it receives directing it to invest, withdraw, transfer or
         redeem any property in the Collateral Account (each, an "ENTITLEMENT
         ORDER") originated by the Collateral Agent without further consent by
         the Grantor or any other person; provided that, without limiting the
         absolute obligation of the Securities Intermediary to comply with any
         Entitlement Order originated by the Collateral Agent, the Collateral
         Agent agrees with the Grantor that the Collateral Agent will not
         originate any Entitlement Order except in accordance with the terms of
         this Agreement; provided, further, that promptly thereafter, the
         Securities Intermediary shall give the Grantor written notice of the
         same at its address specified in the Credit Agreement.

                  (d) The Securities Intermediary shall comply with Entitlement
         Orders originated by the Grantor (subject to the terms of this
         Agreement); provided, however, if the Securities Intermediary receives
         a notice from the Collateral Agent that it will exercise exclusive
         control over the Collateral Account upon a Specified Event of Default
         (as hereinafter defined), the Securities Intermediary shall cease
         complying with Entitlement Orders or other directions concerning the
         Collateral Account, originated by the Grantor; provided, further, that
         in the event of any conflict between any Entitlement Order originated
         by the Grantor and any Entitlement Order originated by the Collateral
         Agent, the Entitlement Order originated by the Collateral Agent will
         prevail.

                  (e) The Securities Intermediary will treat all cash,
         securities and other property credited to the Collateral Account as
         "financial assets" as such term is defined in Section 8-102(a)(9) of
         the UCC.

                  (f) The State of New York is, and will continue to be, the
         Securities Intermediary's jurisdiction for purposes of Section
         8-110(e)(2) of the UCC so long as the Security Interest shall remain in
         effect.

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                  Section 4. Maintaining the Collateral. So long as any
Revolving Credit Advance or any other obligation of the Grantor or any Borrower
under any Credit Document shall remain unpaid, any Letter of Credit or Letter of
Credit Liability shall be outstanding or any Bank shall have any Commitment:

                  (a) The Grantor will maintain all Collateral only with the
         Collateral Agent or the Securities Intermediary (or such other Person
         acceptable to the Collateral Agent and the Grantor that complies with
         the provisions herein which has agreed, in a record authenticated by
         the Grantor, the Collateral Agent and such Person, to (i) comply with
         instructions originated by the Collateral Agent directing the
         disposition of funds in the Collateral Account without the further
         consent of the Grantor and (ii) waive or subordinate in favor of the
         Collateral Agent all claims of such Person (including, without
         limitation, claims by way of a security interest, lien or right of
         setoff or right of recoupment) to the Collateral, which authenticated
         record shall be in form and substance satisfactory to the Collateral
         Agent and the Grantor).

                  (b) The Collateral Agent shall, at the direction of the
         Grantor, at any time and without notice to, or consent from, any Bank,
         and notwithstanding the occurrence or continuance of any Event of
         Default, transfer, or direct the transfer of, funds from the Collateral
         Account to the Agent to satisfy any Borrower's Obligations under the
         Credit Agreement whether or not such Obligations are then due and
         payable.

                  (c) The Collateral Agent shall, at the request of the Agent,
         at any time and without consent from the Grantor or any Borrower,
         transfer, or direct the transfer of, funds from the Collateral Account
         to satisfy any Borrower's obligations under the Credit Documents which
         are then due and payable (provided that promptly thereafter the
         Collateral Agent shall give the Grantor written notice of the same) if
         an Event of Default shall have occurred and be continuing.

                  (d) Subject to Sections 4(b) and 6(d) hereof, upon the
         occurrence and continuance of an Event of Default under Section 6.1(d)
         or (f) of the Credit Agreement (each a "SPECIFIED EVENT OF DEFAULT"),
         the Collateral Agent shall have sole right to direct the investment and
         disposition of funds with respect to the Collateral Account and it
         shall be a term and condition of the Collateral Account,
         notwithstanding any term or condition to the contrary in any other
         agreement relating to the Collateral Account that no amount (including,
         without limitation, interest credited thereto) will be paid or released
         to or for the account of, or withdrawn by or for the account of, the
         Grantor, any Borrower or any other Person from the Collateral Account.

                  (e) Contemporaneously herewith, the Grantor shall cause a
         certificate of incumbency to be executed in the form of Exhibit A
         hereto (such certificate may be amended or modified by the Grantor from
         time to time by adding or deleting the names of persons authorized to
         act on behalf of the Grantor with respect to the Collateral Account).

                  Section 5. Investing of Amounts in the Collateral Account. So
long as no Specified Event of Default shall have occurred and be continuing and
subject to the provisions of

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Sections 4, 6 and 18 hereof, the Grantor will be permitted to (a) invest, or
direct the Securities Intermediary to invest, amounts received with respect to
the Collateral Account in Government Securities, and only Government Securities,
and credited to the Collateral Account, as the Grantor may select and (b) invest
interest paid on the Government Securities referred to in clause (a) above, and
reinvest other proceeds of any such Government Securities that may mature or be
sold, in each case in such Government Securities credited in the same manner.
Interest and proceeds that are not invested or reinvested in Government
Securities as provided above shall be deposited and held in the Collateral
Account (such uninvested amounts shall not earn or accrue interest thereon). In
addition, so long as no Specified Event of Default shall have occurred and be
continuing, the Grantor shall have the right at any time to exchange, or direct
the Securities Intermediary to exchange, such Government Securities for similar
Government Securities of smaller or larger determinations, or for other
Government Securities, credited to the Collateral Account.

                  Section 6. Release of Amounts. So long as (x) no Specified
Event of Default shall have occurred and be continuing, and (y) the
mark-to-market value of the Collateral shall exceed the Collateral Coverage
Requirement (i) by not less than $1,000,000 at any time, and upon two Business
Days prior written notice by the Grantor to the Collateral Agent, or (ii) on the
last Business Day of each month, if requested by the Grantor, then the
Collateral Agent shall immediately transfer, or direct the Securities
Intermediary to transfer, such excess amount, or a portion thereof as may be
requested by the Grantor, to the Grantor or at its order.

                  (a) So long as (x) no Specified Event of Default shall have
occurred and be continuing, and (y) upon two Business Days prior written notice
by the Grantor to the Collateral Agent that (i) any outstanding Revolving Credit
Advance has been repaid or (ii) any outstanding Letter of Credit has expired and
is undrawn, then the Collateral Agent shall immediately transfer, or direct the
Securities Intermediary to transfer, such amount in excess of the Collateral
Coverage Requirement, or a portion thereof as may be requested by the Grantor,
as is then on deposit in the Collateral Account to the Grantor or at its order.

                  (b) Upon the occurrence of a Mandatory Prepayment Event and
unless the Grantor has otherwise paid all then outstanding obligations of the
Grantor with respect to the Revolving Credit Advances, the Collateral Agent
shall, at the direction of the Agent, pay and release, or direct the Securities
Intermediary to pay and release, to the Agent to be applied to all then
outstanding obligations of the Grantor or any Borrower with respect to the
Revolving Credit Advances, such amount as is then on deposit in the Collateral
Account.

                  (c) Notwithstanding Sections 6(a) and 6(b), and whether or not
an Event of Default has occurred and is continuing, upon two Business Days prior
written notice by the Grantor to the Collateral Agent, the Collateral Agent
shall immediately transfer, or direct the Securities Intermediary to transfer,
such amount in excess of 107.5% of the Total Credit Exposure, or a portion
thereof as may be requested by the Grantor, as is then on deposit in the
Collateral Account to the Grantor or at its order.

                  Section 7. Representations and Warranties. The Grantor
represents and warrants as follows:

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                  (a) The Grantor's exact legal name, as defined in Section
         9-503(a) of the UCC, is correctly set forth in Schedule 1 hereto. The
         Grantor is located (within the meaning of Section 9-307 of the UCC) and
         has its chief executive office in the state or jurisdiction set forth
         in Schedule I hereto. The information set forth in Schedule I hereto
         with respect to the Grantor is true and accurate in all respects. The
         Grantor has not previously changed its name, location, chief executive
         office, type of organization, jurisdiction of organization or
         organizational identification number from those set forth in Schedule I
         within the previous five years of the date hereof.

                  (b) The Grantor is the legal and beneficial owner of the
         Collateral free and clear of any lien, claim, option or right of
         others, except for the security interest created under this Agreement.
         No effective financing statement or other instrument similar in effect
         covering all or any part of such Collateral or listing the Grantor or
         any trade name of the Grantor as debtor is on file in any recording
         office, except such as may have been filed in favor of the Collateral
         Agent relating to the Credit Documents.

                  (c) All filings and other actions necessary to perfect the
         security interest in the Collateral of the Grantor created under this
         Agreement have been duly made or taken and are in full force and
         effect, and this Agreement creates in favor of the Collateral Agent for
         the benefit of the Secured Parties a valid and, together with such
         filings and other actions, perfected first priority security interest
         in the Collateral of the Grantor, securing the payment of the Secured
         Obligations.

                  (d) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         or any other third party is required for (i) the grant by the Grantor
         of the security interest granted hereunder or for the execution,
         delivery or performance of this Agreement by the Grantor, or (ii) the
         perfection or maintenance of the security interest created hereunder
         (including the first priority nature of such security interest), except
         for the filing of financing and continuation statements under the UCC,
         which financing statements have been duly filed and are in full force
         and effect.

                  (e) The aggregate mark-to-market value of all Collateral in
         the Collateral Account for which the Collateral Agent has a
         first-priority perfected security interest is equal to or greater than
         the Collateral Coverage Requirement as of the date hereof.

                  Section 8. Further Assurances. The Grantor agrees that from
time to time, at the expense of the Grantor, it will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to perfect and protect the
security interest granted or purported to be granted by the Grantor hereunder or
to enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the generality of the
foregoing, the Grantor will promptly with respect to Collateral: (i) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Collateral Agent may reasonably request, in order to
perfect and preserve the security interest granted or purported to be granted by
the Grantor hereunder; and (ii) deliver to the Collateral

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Agent evidence that all other action that the Collateral Agent may deem
reasonably necessary or desirable in order to perfect and protect the security
interest created by the Grantor under this Agreement has been taken.

                  (a) The Grantor hereby authorizes the Collateral Agent to file
one or more financing or continuation statements, and amendments thereto,
including, without limitation, one or more financing statements indicating that
such financing statements cover the Collateral (or words of similar effect) of
the Grantor, in each case without the signature of the Grantor. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. The Grantor ratifies its authorization for the
Collateral Agent to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.

                  (b) The Grantor will furnish to the Collateral Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request in writing, all in reasonable detail.

                  Section 9. Post-Closing Changes. The Grantor will not change
its name, type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section 7(a) of this
Agreement without first giving at least 15 Business Days' prior written notice
to the Collateral Agent and taking all action required by the Collateral Agent
for the purpose of perfecting or protecting the security interest granted by
this Agreement. If the Grantor does not have an organizational identification
number and later obtains one, it will forthwith notify the Collateral Agent of
such organizational identification number.

                  Section 10. Other Liens. The Grantor agrees that it will not
create or permit to suffer to exist any lien upon or with respect to any of the
Collateral except for the pledge, assignment and security interest created under
this Agreement.

                  Section 11. Collateral Agent Appointed Attorney-in-Fact. The
Grantor hereby irrevocably appoints the Collateral Agent the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time upon the occurrence
and during the continuance of an Event of Default, in the Collateral Agent's
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary to accomplish the purposes of this Agreement.

                  Section 12. The Collateral Agent's Duties. The powers
conferred on the Collateral Agent hereunder are solely to protect the Secured
Parties' interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral, as to ascertaining or
taking action with respect to exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not any Secured Party has or is deemed to
have knowledge of such matters. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.

<PAGE>

                  Section 13. Remedies. If any Event of Default shall have
occurred and be continuing:

                  (a) The Collateral Agent may exercise in respect of the
         Collateral, in addition to other rights and remedies provided for
         herein or otherwise available to it, all the rights and remedies of a
         secured party upon default under the UCC (whether or not the UCC
         applies to the affected Collateral) and also may: (i) subject to
         Section 13(b), exercise any and all rights and remedies of the Grantor
         under or in connection with the Collateral, or otherwise in respect of
         the Collateral, including, without limitation, withdraw, or cause or
         direct the withdrawal, of all funds with respect to the Collateral and
         (ii) exercise all other rights and remedies with respect to the other
         Collateral, including, without limitation, those set forth in Section
         9-607 of the UCC.

                  (b) Any cash held by or on behalf of the Collateral Agent and
         all cash proceeds received by or on behalf of the Collateral Agent in
         respect of any collection from, or other realization upon all or any
         part of the Collateral shall be held by the Collateral Agent as
         collateral for, and/or then or at any time thereafter applied (after
         payment of any amounts payable to the Collateral Agent pursuant to
         Section 3 hereof) in whole or in part by the Collateral Agent for the
         ratable benefit of the Secured Parties against, all or any part of the
         Secured Obligations, in the following manner:

                           (i)      first, paid to the Collateral Agent, the
                  Securities Intermediary and the Agent for any amounts then
                  owing to the Collateral Agent, the Securities Intermediary and
                  the Agent pursuant to Section 8.4 of the Credit Agreement or
                  otherwise under the Credit Documents, ratably in accordance
                  with such respective amounts then owing to the Collateral
                  Agent, the Securities Intermediary and the Agent; and

                           (ii)     second, ratably paid to the Banks and the
                  Issuing Banks or any amounts then owing to them under the
                  Credit Documents ratably in accordance with such respective
                  amounts then owing to such Banks and Issuing Banks.

         Any surplus of such cash or cash proceeds held by or on the behalf of
         the Collateral Agent and remaining after payment in full of all the
         Secured Obligations shall be paid over to the Grantor or to whomsoever
         may be lawfully entitled to receive such surplus.

                  (c) The Collateral Agent may, without notice to the Grantor
         except as required by law and at any time or from time to time, charge,
         set-off and otherwise apply all or any part of the Secured Obligations
         against any funds held with respect to the Collateral.

                  Section 14. Indemnity and Expenses. The Grantor agrees to
indemnify, defend and save and hold harmless each Secured Party and the
Securities Intermediary and each of their affiliates and their respective
officers, directors, employees, agents and advisors (each, an "INDEMNIFIED
PARTY") from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or
resulting from this Agreement (including, without

<PAGE>

limitation, enforcement of this Agreement), except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct or the gross negligence or
willful misconduct of such Indemnified Party's affiliates, officers, directors,
employees, agents or advisors.

                  (a) The Grantor will upon demand pay to the Collateral Agent
and the Securities Intermediary the amount of any and all reasonable expenses,
including, without limitation, the reasonable fees and expenses of its counsel,
that the Collateral Agent and the Securities Intermediary may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent or the other Secured Parties hereunder
or (iv) the failure by the Grantor to perform or observe any of the provisions
hereof.

                  Section 15. Amendments; Waivers. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent and the Securities Intermediary, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No failure on the part of the Collateral
Agent or any other Secured Party or the Securities Intermediary to exercise, and
no delay in exercising any right hereunder, 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.

                  Section 16. Notices, Etc. All notices and other communications
provided for hereunder shall be either (i) in writing (including telegraphic,
telecopier or telex communication) and mailed, telegraphed, telecopied, telexed
or otherwise delivered or (ii) by electronic mail (if electronic mail addresses
are designated as provided below) confirmed immediately in writing, in the case
of the Borrowers or the Collateral Agent, addressed to it at its address
specified in the Credit Agreement, if to the Securities Intermediary, at its
address specified on its signature page hereto or, as to any party, at such
other address as shall be designated by such party in a written notice to the
other parties. All such notices and other communications shall, when mailed,
telegraphed, telecopied, telexed, sent by electronic mail or otherwise, be
effective when deposited in the mails, delivered to the telegraph company,
telecopied, confirmed by telex answerback, sent by electronic mail and confirmed
in writing, or otherwise delivered (or confirmed by a signed receipt),
respectively, addressed as aforesaid; except that notices and other
communications to the Collateral Agent or the Securities Intermediary shall not
be effective until received by the Collateral Agent or the Securities
Intermediary, as the case may be. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or
Schedule hereto shall be effective as delivery of an original executed
counterpart thereof.

                  Section 17. Continuing Security Interest; Assignments under
the Credit Agreement. This Agreement shall create a continuing security interest
in the Collateral and shall (a) remain in full force and effect until the latest
of (i) the payment in full in cash of the Secured Obligations, (ii) the
Termination Date and (iii) the termination or expiration of all Letters of

<PAGE>

Credit, (b) be binding upon the Grantor, its successors and assigns and (c)
inure, together with the rights and remedies of the Collateral Agent hereunder,
to the benefit of the Secured Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Bank may assign or otherwise transfer all or any portion of its rights
and obligations under the Credit Agreement in accordance therewith (including,
without limitation, all or any portion of its Commitments, the Revolving Credit
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Bank herein or otherwise, in each
case as provided in Section 8.6 of the Credit Agreement.

                  Section 18. Termination. Upon the latest of (i) the payment in
full in cash of the Secured Obligations, (ii) the Termination Date and (iii) the
termination or expiration of all Letters of Credit, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the applicable Grantor. Upon any such termination, the Collateral Agent will, at
the Grantor's expense, execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination.

                  Section 19. Execution in Counterparts. This Agreement may be
executed in any number of 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. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.

                  Section 20. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.

                              [Signatures follow.]

<PAGE>

     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.

                                THE WILLIAMS COMPANIES, INC., as Grantor

                                By: /s/  Steven J. Malcolm
                                Name:  Steven J. Malcolm
                                Title: Chairman of the Board

                                CITIBANK, N.A., as Collateral Agent and Secured
                                Party

                                By: /s/  Gordon H. DeKuyper
                                Name:  Gordon H. DeKuyper
                                Title: Vice President

                                CITIBANK, N.A., as Securities Intermediary
                                By: /s/ Camille Tomao
                                Name: Camille Tomao
                                Title: Vice President

                                Address:
                                       111 Wall Street, 14th Floor
                                       New York, New York  10055

<PAGE>

                                                               SCHEDULE I TO THE
                                                              SECURITY AGREEMENT

          CHIEF EXECUTIVE OFFICE, TYPE OF ORGANIZATION, JURISDICTION OF
              ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION NUMBER

<TABLE>
<CAPTION>
                    CHIEF EXECUTIVE           TYPE OF         JURISDICTION OF   ORGANIZATIONAL
   GRANTOR              OFFICE              ORGANIZATION        ORGANIZATION       I.D. NO.
---------------   -------------------       ------------      ---------------   --------------
<S>               <C>                       <C>               <C>               <C>
The Williams      One Williams Center
Companies, Inc.   Tulsa, OK  74172          Corporation           Delaware          2116534
</TABLE>

<PAGE>

                                                                EXHIBIT A TO THE
                                                              SECURITY AGREEMENT

                            CERTIFICATE OF INCUMBENCY

                  Reference is made to (i) the credit agreement, dated as of
June 6, 2003 (as may be further amended, modified, supplemented, renewed,
extended or restated from time to time, the "CREDIT AGREEMENT"), by and among
The Williams Companies, Inc. (the "COMPANY"), Northwest Pipeline Corporation,
Transcontinental Gas Pipe Line Corporation, each a Delaware corporation, as
borrowers, the banks, issuing banks, financial institutions and other
institutional lenders party thereto, and Citibank, N.A., as agent and collateral
agent ("CITIBANK"), and (ii) the security agreement, dated as of June 6, 2003
(the "SECURITY AGREEMENT"), made by the Company to Citibank.

                  The undersigned certifies that s/he is the [INSERT TITLE] of
the Company, and as such s/he is authorized to execute this certificate and
further certifies that the following persons have been elected or appointed, are
qualified, and are now acting in the capacity or capacities indicated below, and
that the signatures set forth opposite their respective names are their true and
genuine signatures. S/he further certifies that any of the persons listed below
is authorized [CHOOSE ONE: INDIVIDUALLY OR JOINTLY WITH ONE OTHER PERSON] to
execute agreements and give written instructions with regard to any matters
pertaining to the Collateral Account (as defined in the Security Agreement);
provided, that, in all respects, such execution of agreements and giving of
written instructions shall be subject to the provisions of the Credit Agreement
and the Security Agreement:

<TABLE>
<CAPTION>
             Name                                Title / Phone                                Signature
             ----                                -------------                                ----------
<S>                                  <C>                                          <C>
                                                        /
_______________________________      _______________________________________      ___________________________________
                                                       /
_______________________________      _______________________________________      ___________________________________
                                                       /
_______________________________      _______________________________________      ___________________________________
</TABLE>

                  IN WITNESS WHEREOF, I have caused this certificate to be duly
executed and delivered as of the ___ day of ______, 200__.

                                                THE WILLIAMS COMPANIES, INC.

                                                [TO BE SIGNED BY AN OFFICER
                                                OTHER THAN ONE LISTED ABOVE]

                                                By __________________________
                                                   Name:
                                                   Title:<PAGE>

                                                                    EXHIBIT 10.5

                            STOCK PURCHASE AGREEMENT

                  STOCK PURCHASE AGREEMENT, dated as of May 19, 2003 (this
"Agreement"), between MEHC Investment, Inc., a South Dakota corporation (the
"Seller"), MidAmerican Energy Holdings Company, an Iowa corporation
("MidAmerican"), and The Williams Companies, Inc., a Delaware corporation (the
"Purchaser").

                              W I T N E S S E T H:

                  WHEREAS, the Seller is the owner of 1,466,667 shares (the
"Shares") of 9-7/8% Cumulative Convertible Preferred Stock, par value $1.00 per
share, of the Purchaser (the "Preferred Stock"), purchased pursuant to the Stock
Purchase Agreement, dated as of March 7, 2002 (the "Purchase Agreement"), by and
among the Purchaser, the Seller and MidAmerican;

                  WHEREAS, the Purchaser desires to repurchase the Shares from
the Seller and the Seller desires to sell the Shares to the Purchaser; and

                  WHEREAS, the Seller is a wholly owned subsidiary of
MidAmerican.

                  NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:

SECTION 1.        PURCHASE AND SALE

                  (a)      Subject to the terms and conditions set forth in this
Agreement and in reliance upon the Purchaser's and Seller's respective
representations and warranties set forth below, on the Closing Date, the Seller
shall sell to the Purchaser, and the Purchaser shall purchase from the Seller,
the Shares for an aggregate purchase price of $288,750,000 (the "Purchase
Price"). Such sale and purchase shall be effected on the Closing Date by the
Seller delivering to the Purchaser the stock certificate evidencing the Shares
together with a duly executed stock power, against delivery by the Purchaser to
the Seller of the Purchase Price by wire transfer of immediately available
United States dollars to such account as the Seller shall designate prior to the
Closing Date.

                  (b)      The closing of such sale and purchase (the "Closing")
shall take place at 10:00 a.m. on the first business day after the satisfaction
or waiver of the conditions set forth in Sections 5(c) and 6(c) (provided that
if, on the first date that such conditions are satisfied, all necessary
consents, waivers, authorizations and approvals are by their express terms
irrevocable, then the Closing shall be on such business day thereafter as may be
specified by Purchaser to Seller in a notice delivered at least two business
days prior to such closing date but in no event

<PAGE>

shall such closing date be later than July 15, 2003), or at such other time as
the Purchaser and the Seller shall agree in writing (the "Closing Date"), at the
offices of Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York
10019, or such other location as the Purchaser and the Seller shall mutually
select.

SECTION 2.        REPRESENTATIONS AND WARRANTIES OF THE SELLER AND MIDAMERICAN

                  The Seller and MidAmerican represent and warrant to the
Purchaser that:

                  2.1.     Organization, Good Standing, Qualification, Etc.

                  (a)      The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of South
Dakota, and it has the requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement. MidAmerican
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Iowa, and it has the requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement. No other action on the part of the Seller or MidAmerican is
necessary to authorize the execution, delivery and performance of this Agreement
by the Seller or MidAmerican and each of the transactions contemplated hereby.

                  (b)      This Agreement constitutes a valid and binding
obligation of the Seller and MidAmerican, enforceable against the Seller and
MidAmerican in accordance with its terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.

                  (c)      The execution and delivery by the Seller and
MidAmerican of this Agreement do not, and the fulfillment of the terms hereof by
the Seller and MidAmerican will not:

                  (i)      require the Seller or MidAmerican or any of their
                           Affiliates to obtain any consent, approval or action
                           of, or make any filing with or give any notice to,
                           any Person the failure of which to obtain, make or
                           give would, individually or in the aggregate,
                           reasonably be expected to delay or prevent the
                           fulfillment of the terms of this Agreement or have a
                           material adverse effect on the assets, properties,
                           business, net income or financial condition of the
                           Seller and its subsidiaries, taken as a whole; or

                  (ii)     result in a breach of any of the terms, conditions or
                           provisions of, or constitute a default under, or
                           permit the acceleration of rights under or
                           termination of, the Seller's or MidAmerican's
                           organizational documents, any agreement, lease,
                           contract, note, mortgage, indenture, arrangement or
                           other obligations to which the Seller or MidAmerican
                           or any of their

                                       2
<PAGE>

                           Affiliates is a party, or any order, judgment, rule
                           or regulation of any Governmental Entity having
                           jurisdiction over the Seller or MidAmerican or any of
                           their Affiliates or over their respective assets,
                           properties or businesses, except for such breaches,
                           defaults, accelerations and terminations that would
                           not, individually or in the aggregate, reasonably be
                           expected to delay or prevent the fulfillment of terms
                           of this Agreement or have a material adverse effect
                           on the assets, properties, business, net income or
                           financial condition of MidAmerican and its
                           subsidiaries, taken as a whole.

                  2.2.     Shares

                  The Seller is the sole beneficial owner of the Shares and owns
the Shares free and clear of adverse claims, liens or restrictions on transfer,
except as set forth in Section 5.3 of the Purchase Agreement, and, upon delivery
of the Shares and payment therefore pursuant hereto, the Purchaser will have
acquired all legal and beneficial ownership of the Shares, free and clear of
such adverse claims, liens or restrictions on transfer (except as set forth in
Section 5.3 of the Purchase Agreement).

SECTION 3.        REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

                  The Purchaser represent and warrant to the Seller as follows:

                  (a)      The Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and it has the requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement. No other
action on the part of the Purchaser is necessary to authorize the execution,
delivery and performance of this Agreement by the Purchaser and each of the
transactions contemplated hereby.

                  (b)      This Agreement constitutes a valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.

                  (c)      Except as set forth on Schedule 3(c), the execution
and delivery by the Purchaser of this Agreement do not, and the fulfillment of
the terms hereof by the Purchaser will not:

                  (i)      require the Purchaser or any of its Affiliates to
                           obtain any consent, approval or action of, or make
                           any filing with or give any notice to, any Person the
                           failure of which to obtain, make or give would,
                           individually or in the aggregate, reasonably be
                           expected to delay or prevent the fulfillment of the
                           terms of this Agreement or have a material adverse
                           effect on the assets, properties, business, net
                           income or financial condition of the Purchaser and
                           its subsidiaries, taken as a whole; or

                                       3
<PAGE>

                  (ii)     result in a breach of any of the terms, conditions or
                           provisions of, or constitute a default under, or
                           permit the acceleration of rights under or
                           termination of, the Purchaser's organizational
                           documents, any agreement, lease, contract, note,
                           mortgage, indenture, arrangement or other obligation
                           to which the Purchaser or any of its Affiliates, is a
                           party, or any order, judgment, rule or regulation of
                           any Governmental Entity having jurisdiction over the
                           Purchaser or any of its Affiliates or over their
                           respective assets, properties or businesses, except
                           for such breaches, defaults, accelerations and
                           terminations that would not, individually or in the
                           aggregate, reasonably be expected to delay or prevent
                           the fulfillment of the terms of this Agreement or
                           have a material adverse effect on the assets,
                           properties, business, net income or financial
                           condition of the Purchaser and its subsidiaries,
                           taken as a whole.

                  (d)      The Purchaser has accumulated "earning and profits"
as of the taxable year ended December 31, 2002 which, when added to the current
"earnings and profits" for the taxable year ended December 31, 2003, will be
sufficient in the aggregate to qualify any dividends declared on the Shares
through the Closing Date as a "dividend" within the meaning of Section 316(a) of
the Internal Revenue Code of 1986, as amended.

                  (e)      The Purchaser is and, after giving effect to the
purchase of the Shares and the other obligations being incurred in connection
with this Agreement, will be "Solvent". As used herein, the term "Solvent"
means, as of any date of determination, that (a) the amount of the "present fair
saleable value" of the assets of the Purchaser will, as of such date, exceed the
amount of all "liabilities" of the Purchaser, "contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors of
debtors, (b) the Purchaser will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, (c) the Purchaser will be
able to pay its debts as they mature, and (d) the Purchaser is not insolvent
within the meaning of any applicable requirements of law in the jurisdictions
where Purchaser is located or where the transactions contemplated by this
Agreement are occurring. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any (x) right to payment, whether
or not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.

                  (f)      The Purchaser currently has sufficient immediately
available funds in cash or cash equivalents and will on the Closing Date have
sufficient immediately available funds, in cash, to pay the Purchase Price and
to pay any other amounts payable pursuant to this Agreement and to effect the
transactions contemplated hereby.

                                       4
<PAGE>

SECTION 4.        COVENANTS

                  4.1.     Covenants of the Seller and the Purchaser

                  Subject to the terms and conditions of this Agreement, each of
the parties shall use reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary or desirable under
applicable legal requirements, to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing Date, any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall use their reasonable best efforts to take or
cause to be taken all such necessary or desirable action and execute, deliver
and file, or cause to be executed, delivered and filed, all necessary or
desirable documentation.

                  4.2.     Covenants of the Seller

                  After the date hereof and prior to the Closing Date, except as
(i) expressly provided for in this Agreement, or (ii) consented to in writing by
the Purchaser, the Seller will not:

                  (i)      take any action, or knowingly omit to take any
                           action, that would, or that would reasonably be
                           expected to, result in (A) any of the representations
                           and warranties of the Seller set forth in Section 2
                           becoming untrue, or (B) any of the conditions to the
                           obligations of the Purchaser set forth in Section 5
                           not being satisfied; or

                  (ii)     enter into any agreement or commitment to do any of
                           the foregoing.

                  4.3.     Covenants of the Purchaser

                  (a)      After the date hereof and prior to the Closing Date,
except as (i) expressly provided for in this Agreement, or (ii) consented to in
writing by the Seller, the Purchaser will not:

                  (i)      take any action, or knowingly omit to take any
                           action, that would, or that would reasonably be
                           expected to, result in (A) any of the representations
                           and warranties of the Purchaser set forth in Section
                           3 becoming untrue, or (B) any of the conditions to
                           the obligations of the Seller set forth in Section 6
                           not being satisfied; or

                  (ii)     enter into any agreement or commitment to do any of
                           the foregoing.

                  (b)      The Purchaser shall use its commercially reasonable
efforts to validly obtain all consents, authorizations, waivers and approvals
required to be obtained by the Purchaser or its Affiliates to perform its
obligations under this Agreement. The Purchaser shall provide the Seller with
such current and full updates with respect to the status of such consents,
authorizations, waivers and approvals as the Seller may reasonably request from
time to time.

                                       5
<PAGE>

SECTION 5.        CLOSING CONDITIONS OF THE PURCHASER

                  The obligations of the Purchaser to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the Closing Date of the following conditions, any one or more of which may be
waived by the Purchaser in accordance with Section 7.4:

                  (a)      All representations and warranties made by the Seller
in this Agreement shall be true and correct in all material respects (except
that the representations and warranties made in Section 2.1(c) and Section 2.2
shall be true and correct in all respects) on and as of the Closing Date as if
again made by the Seller on and as of such date.

                  (b)      The Seller shall have performed in all material
respects all obligations required under this Agreement to be performed by it on
or before the Closing Date.

                  (c)      The Purchaser shall have received a certificate,
dated the Closing Date, signed by the Chief Executive Officer or the Chief
Financial Officer of the Seller, certifying that the conditions specified in the
foregoing paragraphs (a) and (b) of this Section 5 have been satisfied.

                  (d)      The consents, waivers, authorizations and approvals
set forth on Schedule 3(c) shall have been obtained and shall be in full force
and effect on the Closing Date.

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

SECTION 6.        CLOSING CONDITIONS OF THE SELLER

                  The obligations of the Seller to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the Closing Date of the following conditions, any one or more of which may be
waived by the Seller in accordance with Section 7.4:

                  (a)      All representations and warranties made by the
Purchaser in this Agreement shall be true and correct in all material respects
(except that the representations and warranties made in Sections 3(c), 3(d) and
3(e) shall be true and correct in all respects and the representations and
warranties made in Section 3(f) shall be true and correct in all respects as of
the Closing Date) on and as of the Closing Date as if again made by the
Purchaser on and as of such date.

                                       6
<PAGE>

                  (b)      The Purchaser shall have performed in all material
respects all obligations required under this Agreement to be performed by it on
or before the Closing Date.

                  (c)      To the extent that the agreements set forth on
Schedule 3(c) have not been terminated and have no further force and effect as
of the Closing Date (as demonstrated by evidence reasonably satisfactory to
Seller and MidAmerican), the consents, waivers, authorizations and approvals set
forth on Schedule 3(c), except for the consent required under the transaction
described in paragraph 6 of such Schedule, shall have been validly obtained and
shall be in full force and effect on the Closing Date.

                  (d)      The Seller shall have received a certificate, dated
the Closing Date, signed by the Chief Executive Officer or the Chief Financial
Officer of the Purchaser, certifying that the conditions specified in the
foregoing paragraphs (a), (b) and (c) of this Section 6 have been satisfied.

                  (e)      The Seller shall have received the opinion of White &
Case, LLP, dated the Closing Date and addressed to the Seller, in form and
substance reasonably satisfactory to the Seller, that, to the extent that the
agreements set forth in Schedule 3(c) have not been terminated and have no
further force and effect as of the Closing Date, the execution, delivery and
performance by the Purchaser of this Agreement does not violate the agreements
set forth on Schedule 3(c), with the exception of the agreement listed in
paragraph 6 of Schedule 3(c).

                  (f)      (A) If the Closing Date occurs on or prior to July 1,
2003, then (i) at least ten days prior to the dividend payment date and before
seeking any of the third party consents required to consummate the transactions
contemplated hereby, the Purchaser shall have declared the regular quarterly
dividend on the Preferred Stock for the period ending June 30, 2003 and it shall
be payable on the earlier of the Closing Date or July 1, 2003 to holders of
record of the Shares on May 19, 2003 and (ii) such dividend shall have been paid
to such record holder on or prior to the Closing Date; provided that, if the
Closing Date occurs before July 1, 2003, then the Purchaser shall only be
required to have paid a dividend on the Shares in an aggregate amount equal to
the product of the regular quarterly dividend amount of $6,789,062.50 multiplied
by a fraction the numerator of which is the number of days elapsed in the second
quarter of 2003 from and including April 1, 2003 through the day preceding the
Closing Date and the denominator of which is 90; or (B) if the Closing Date
occurs after July 1, 2003, then (i) the Purchaser shall have declared and paid
the regular quarterly dividend on the Preferred Stock for the period ended June
30, 2003, (ii) at least ten days prior to the Closing Date the Purchaser shall
have declared the regular quarterly dividend on the Preferred Stock for the
period ending September 30, 2003 and it shall be payable on the Closing Date to
holders of record of the Shares on May 19, 2003 and (iii) such dividend shall
have been paid to such record holder on or prior to the Closing Date; provided
that the Purchaser shall only be required to have paid a dividend on the Shares
in an amount equal to the product of the regular quarterly dividend amount of
$6,789,062.50 multiplied by a fraction the numerator of which is the number of
days elapsed in the third quarter of 2003 from and including July 1, 2003
through the day preceding the Closing Date and the denominator of which is 90.

                  (g)      No preliminary or permanent injunction or other order
issued by any Governmental Entity, nor any statute, rule, regulation, decree or
executive order promulgated or

                                       7
<PAGE>

enacted by any Governmental Entity, which declares this Agreement or the
Preferred Stock invalid or unenforceable in any respect or which prevents the
consummation of the transactions contemplated hereby or thereby, shall be in
effect; and no action or proceeding before any Governmental Entity shall have
been instituted by a Governmental Entity or threatened by any Governmental
Entity which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of the Transaction Documents or the Preferred Stock.

SECTION 7.        TERMINATION, AMENDMENT AND WAIVER

                  7.1.     Termination

                  (a)      This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:

                  (i)      by mutual written consent of the Seller and the
                           Purchaser;

                  (ii)     by the Seller, in the event that the Purchaser fails
                           to comply with any of its covenants or agreements
                           contained herein, or breaches its representations and
                           warranties contained herein, such failure to comply
                           or breach, if curable, is not cured within five
                           business days after receipt by the Purchaser of
                           notice specifying particularly such failure to comply
                           or breach, and such failure to comply or breach would
                           result in the failure to satisfy the conditions set
                           forth in Sections 6(a), 6(b), 6(c) and/or 6(f) on or
                           before July 15, 2003;

                  (iii)    by the Purchaser, in the event that the Seller fails
                           to comply with any of its covenants or agreements
                           contained herein, or breaches its representations and
                           warranties contained herein, such failure to comply
                           or breach, if curable, is not cured within five
                           business days after receipt by the Seller of notice
                           specifying particularly such failure to comply or
                           breach, and such failure to comply or breach would
                           result in a failure to satisfy the conditions set
                           forth in Section 5(a) and/or 5(b) on or before July
                           15, 2003;

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

                  (b)      This Agreement shall terminate automatically if the
Closing Date has not occurred by July 15, 2003.

                  7.2.     Effect of Termination

                  In the event of termination and abandonment of this Agreement
pursuant to Section 7.1(a), written notice thereof shall forthwith be given to
the other party hereto and this

                                       8
<PAGE>

Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by the Seller or the Purchaser. If (x) this
Agreement is terminated as provided herein by the Seller pursuant to Section
7.1(a)(ii) or (y) this Agreement is terminated pursuant to Section 7.1(b) and,
on July 15, 2003, all consents, waivers, authorizations and approvals set forth
on Schedule 3(c) have not been obtained or are not in full force and effect or
the failure to consummate the transaction on or prior to July 15, 2003 was
otherwise not due solely to a failure of the conditions set forth in Section
5(a), Section 5(b) or Section 5(c) to be satisfied, then the Purchaser shall pay
the Seller a cash termination fee (the "Termination Fee") of $13,750,000,
payable within three business days of the date of the termination of this
Agreement. If (x) this Agreement is terminated as provided herein by the
Purchaser pursuant to Section 7.1(a)(iii) or (y) this Agreement is terminated
pursuant to Section 7.1(b) and, on July 15, 2003, all consents, waivers,
authorizations and approvals set forth on Schedule 3(c) have been validly
obtained and are in full force and effect and the failure to consummate the
closing on or prior to July 15, 2003 was due solely to a failure of the
conditions set forth in Section 5(a), 5(b) or 5(c), then the Seller shall pay
the Purchaser a cash termination fee (the "Seller Fee") of $13,750,000, payable
within three business days of the date of such termination of this Agreement. If
this Agreement is otherwise terminated as provided herein, no party to this
Agreement shall have any liability or further obligation to any other party to
this Agreement. Notwithstanding the foregoing, no termination of this Agreement
pursuant to this Section 7 shall relieve any party of liability for
misrepresentation or breach of any provision of this Agreement occurring before
such termination, provided that (x) the sole liability of the Purchaser for any
breach or misrepresentation by it hereunder upon termination of this Agreement
shall be the payment of the Termination Fee and (y) the sole liability of the
Seller or the Guarantor for any breach or misrepresentation hereunder upon
termination of this Agreement shall be the payment of the Seller Fee.

                  7.3.     Amendment

                  This Agreement may be amended, modified or supplemented only
by a written instrument executed by the parties hereto.

                                       9
<PAGE>

                  7.4.     Waiver

                  The Purchaser or the Seller may, by written notice to the
other party (i) extend the time for the performance of any of the obligations or
other actions of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any documents delivered pursuant to this Agreement by the other party, (iii)
waive compliance with any of the covenants of the other party contained in this
Agreement, (iv) waive performance of any of the obligations of the other party
or (v) waive fulfillment of any of the conditions to its own obligations under
this Agreement or in any documents delivered pursuant to this Agreement by the
other party. The waiver by either party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach, whether or not similar, unless such waiver specifically states that it
is to be construed as a continuing waiver.

SECTION 8.        INTERPRETATION OF THIS AGREEMENT

                  8.1.     Certain Terms Defined

                  As used in this Agreement, the following terms have the
respective meanings set forth below:

                  Affiliate: shall mean a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person.

                  Governmental Entity: shall mean any U.S. or non-U.S. (a)
federal, state, county, local or municipal governmental, administrative or
regulatory authority, agency, commission, tribunal, body or political
subdivision thereof, (b) other governmental, quasi-governmental, regulatory or
self-regulatory entity, (c) court or administrative tribunal, or (d) arbitration
tribunal or other non-Governmental Entity with applicable jurisdiction.

                  Person: shall mean an individual, corporation, association,
trust, limited liability company, limited partnership, limited liability
partnership, partnership, incorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934), and a
Governmental Entity.

                  8.2.     Governing Law

                  This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of New York and without regard
to any conflicts of laws concepts, which would apply the substantive law of some
other jurisdiction.

                  8.3.     Paragraph and Section Headings

                  The headings of the sections and subsections and any table of
contents of this Agreement are solely for convenience of reference and shall not
affect the meaning or interpretation of this Agreement or any term or provision
hereof.

                                       10
<PAGE>

SECTION 9.        SURVIVAL

                  The respective representations and warranties of the parties
hereto contained herein or in any certificates or other documents delivered
pursuant to this Agreement on the Closing shall survive the Closing.

SECTION 10.       MISCELLANEOUS

                  10.1. Notices

                  (a)      All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly made or delivered, if delivered personally or sent by overnight courier or
facsimile (with evidence of confirmation of receipt), in each case to the
parties at the following addresses:

                  (1)    if to the Seller:

                         MEHC Investment, Inc.
                         C/o MidAmerican Capital
                         335 Sioux Point Road
                         Suite 100
                         Dakota Dunes, SD 57049

                         Attention:  Dennis Melstad
                         Facsimile:  (605) 232-5925

                         With a copy to:

                         MidAmerican Energy Holdings Company
                         320 South 36th St.
                         Suite 400
                         Omaha, NE  68131

                         Attention:  Douglas L. Anderson, Esq.
                         Facsimile: (402) 231-1658

                         With a copy to:

                         Willkie Farr & Gallagher
                         787 Seventh Avenue
                         New York, New York 10019-6009

                         Attention: Peter J. Hanlon, Esq. / William N. Dye, Esq.
                         Facsimile: (212) 728-8111

                                       11
<PAGE>

                  (2)    if to the Purchaser:

                         The Williams Companies, Inc.
                         One Williams Center
                         Tulsa, Oklahoma 74172

                         Attention: Debbie Fleming
                         Facsimile: (918) 573-2065

                         With a copy to:

                         The Williams Companies, Inc.
                         One Williams Center
                         Tulsa, Oklahoma 74172

                         Attention: James J. Bender, Esq.
                         Facsimile: (918) 573-5942

                         With a copy to:

                         White & Case LLP
                         1155 Avenue of the Americas
                         New York, New York 10036

                         Attention:  David E. Joyce
                         Facsimile:  (212) 354-8113

or such other persons or at such other addresses as shall be furnished by either
party by like notice to the other, and such notice or communication shall be
deemed to have been given or made as of the date so delivered or mailed. No
change in any of such addresses shall be effective insofar as notices under this
Section 10.1 are concerned unless such changed address is located in the United
States of America and notice of such change shall have been given to such other
party hereto as provided in this Section 10.1.

                  10.2.    Expenses

                  All legal, accounting, financial advisory and other fees,
costs and expenses of a party hereto incurred in connection with this Agreement
and the performance of the transactions contemplated hereby shall be paid by the
party incurring such fees, costs and expenses.

                  10.3.    Publicity

                  On or prior to the Closing Date, neither party shall, nor
shall it permit its Affiliates to, issue or cause the publication of any press
release or other announcement with respect to this Agreement or the transactions
contemplated hereby without the consent of the other party hereto.
Notwithstanding the foregoing, in the event any such press release or
announcement is required (in the reasonable judgment of either party after
consulting with outside counsel experienced in such matters) by law or stock
exchange rule to be made by the

                                       12
<PAGE>

party proposing to issue the same, such party shall use its reasonable best
efforts to consult in good faith with the other party prior to the issuance of
any such press release or announcement.

                  10.4.    Confidentiality

                  The Seller and MidAmerican agree to keep the material
non-public information with respect to the Purchaser and its subsidiaries
provided to Seller or MidAmerican in connection with the transactions
contemplated by this Agreement (the "Confidential Information") strictly
confidential and not to disclose any of it to anyone without the prior written
consent of the Purchaser, provided that the Seller and MidAmerican may disclose
such information to (a) the Seller's or MidAmerican's auditors, accountants,
attorneys and other professional advisors in connection with such auditors',
accountants', attorneys' and advisors' performance of professional services for
the Seller, if the Seller or MidAmerican (i) advises such auditors, accountants,
attorneys and advisors, as the case may be, of the confidential nature of such
Confidential Information and (ii) imposes on such auditors, accountants,
attorneys and advisors (or they are otherwise subject to) confidentiality
obligations in respect of the Confidential Information comparable to those which
MidAmerican ordinarily imposes with respect to its own confidential information,
and (b) to any regulatory authorities or examiners or any rating agencies in
connection with their supervision, examination or ratings of the Seller or
MidAmerican or any affiliate thereof or as required in any reports filed by the
Seller or such affiliate with such regulatory authorities or as may otherwise be
required by applicable laws. The confidentiality obligations imposed by the
foregoing sentence shall not apply, or shall cease to apply, to any such
information (a) which was or becomes generally available to the public other
than as a result of a disclosure by the Seller or MidAmerican (or any of their
respective employees, officers, directors, representatives, agents or advisors)
in violation of the terms of this Agreement, (b) which was available, or becomes
available, to the Seller or MidAmerican on a non-confidential basis prior to its
disclosure by the Purchaser or (c) becomes known to the Seller or MidAmerican
from a source other than the Purchaser under circumstances not involving a
breach known to the Seller or MidAmerican of a confidentiality obligation of
such source to the Purchaser. The obligations of Seller and MidAmerican under
this Section 10.4 shall terminate on, and be of no further effect from and
after, the first anniversary of the date of this Agreement.

                  10.5.    Submission to Jurisdiction

                  With respect to any suit, action or proceeding initiated by a
party to this Agreement arising out of, under or in connection with this
Agreement or the transactions contemplated hereby, the Seller and the Purchaser
each hereby submit to the exclusive jurisdiction of any state or federal court
sitting in the State of New York and irrevocably waive, to the fullest extent
permitted by law, any objection that they may now have or hereafter obtain to
the laying of venue in any such court in any such suit, action or proceeding.

                  10.6.    Successors and Assigns

                  The rights and obligations of the parties hereto shall inure
to the benefit of and shall be binding upon the authorized successors and
permitted assigns of each party. Neither party hereto may assign its rights or
obligations under this Agreement or designate another

                                       13
<PAGE>

person (i) to perform all or part of its obligations under this Agreement or
(ii) to have all or part of its rights and benefits under this Agreement, in
each case without the prior written consent of the other party.

                  10.7. Entire Agreement

                  This Agreement represents the entire agreement and
understanding of the parties with reference to the transactions set forth herein
and therein and no representations or warranties have been made in connection
with this Agreement other than those expressly set forth herein or in the
certificates and other documents delivered in accordance herewith. This
Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the parties relating to
the subject matter of this Agreement and all prior drafts of this Agreement, all
of which are merged into the final executed versions of this Agreement.

                  10.8. Severability

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

                  10.9. Counterparts

                  Facsimile transmission of any signed original document and/or
retransmission of any signed facsimile transmission shall be the same as
delivery of an original. At the request of the Seller or the Purchaser, the
parties will confirm facsimile transmission by signing a duplicate original
document. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.

                  10.10. Guarantee

                  MidAmerican guarantees performance by the Seller of the
Seller's obligations under this Agreement.

                  10.11. Indemnity.

                                       14
<PAGE>

                  From and after the Closing Date, notwithstanding the Closing
or the delivery of the Shares and regardless of any investigation at any time
made by or on behalf of the Seller or MidAmerican or of any knowledge or
information that the Seller or MidAmerican may have, the Purchaser shall
indemnify and agree to defend, save and hold the Seller and MidAmerican and
their officers, directors, employees, agents and affiliates (collectively, the
"INDEMNIFIED PARTIES") harmless if any such Indemnified Party shall at any time
or from time to time suffer any damage, judgment, fine, penalty, demand,
settlement, liability, loss, cost, Tax, expense (including reasonable
attorneys', consultants' and experts' fees), claim or cause of action (each, a
"LOSS") arising out of, relating to, or resulting from any failure by Purchaser
to obtain or maintain in full force and effect any consent, waiver,
authorization or approval relating to the agreements described in paragraph 6 of
Schedule 3(c) and/or any related cross-defaults. Without limiting the foregoing,
the Indemnified Parties shall have the right, but not the obligation, to
participate at Purchaser's expense in the defense of any claim or action by
counsel of the Indemnified Party's choice and to have their reasonable expenses
in connection therewith promptly reimbursed by Purchaser and shall in any event
use their reasonable best efforts to cooperate with and assist the Purchaser. If
the Purchaser fails timely to defend, contest or otherwise protect against such
suit, action, investigation, claim or proceeding, the Indemnified Parties shall
have the right to do so, including, without limitation, the right to make any
compromise or settlement thereof, and the Indemnified Parties shall be entitled
to recover the entire cost thereof from the Purchaser, including, without
limitation, reasonable attorneys' fees, disbursements and amounts paid as the
result of such suit, action, investigation, claim or proceeding.

                                       15
<PAGE>

                  IN WITNESS WHEREOF, the Seller, the Purchaser and MidAmerican
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.

                                     THE WILLIAMS COMPANIES, INC.

                                     By: /s/ Donald R. Chappell
                                         ------------------------------------
                                         Name: Donald R. Chappell
                                         Title: Senior Vice President and CFO

                                     MEHC INVESTMENT, INC.

                                     By: /s/Douglas L. Anderson
                                         ------------------------------------
                                         Name: Douglas L. Anderson
                                         Title: Vice President

                                     MIDAMERICAN ENERGY HOLDINGS COMPANY.

                                     By: /s/ Douglas L. Anderson
                                         ------------------------------------
                                         Name: Douglas L. Anderson
                                         Title: Senior Vice President

                                       16

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